Document:

Anna's Linens, Inc. 2005 Omnibus Equity Incentive Plan

 EXHIBIT 10.06 
  
 ANNA’S LINENS, INC. 
  
 2005 OMNIBUS EQUITY INCENTIVE PLAN 
  
 1. Purpose of the Plan 
  
 The purpose of the Plan is to aid the Company and its Affiliates in recruiting and retaining employees, directors, advisors and consultants and to
motivate such employees, directors, advisors and consultants to exert their best efforts on behalf of the Company and its Affiliates by providing incentives through the granting of Awards. The Company expects that it will benefit from the added
interest, which such employees, directors, advisors and consultants will have in the welfare of the Company as a result of their proprietary interest in the Company’s success. 
  
 2. Definitions 
  
 The following capitalized terms used in the Plan have the respective meanings set forth in this Section: 
  

	 	(a)	“Act” means The Securities Exchange Act of 1934, as amended, or any successor thereto. 

  

	 	(b)	“Affiliate” means any entity that is consolidated with the Company for financial reporting purposes or any other entity designated by the Board in which the Company or an
Affiliate has a direct or indirect equity interest of at least twenty percent (20%), measured by reference to vote or value. 

  

	 	(c)	“Award” means an Option, Stock Appreciation Right, Restricted Stock or Other Stock-Based Award granted pursuant to the Plan. 

  

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

  

	 	(e)	“Change in Control” means the occurrence of any of the following events: 

  

	 	(i)	when the Company acquires actual knowledge that any person (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the beneficial owner (as defined in
Rule 13d-3 of the Exchange Act) directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company’s then-outstanding securities; 

  

	 	(ii)	upon the first purchase of Common Stock pursuant to a tender or exchange offer (other than a tender or exchange offer made by the Company); 

  

	 	(iii)	upon the approval by the Company’s shareholders of: (i) a merger or consolidation of the Company with or into another corporation, which does not result in any capital
reorganization or reclassification or other change in 

  

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 the Company’s then-outstanding shares of Common Stock), (ii) a sale or disposition of all or
substantially all of the Company’s assets, or (iii) a plan of liquidation or dissolution of the Company; 
  

	 	(iv)	if during any period of two consecutive years, the individuals who at the beginning of such period constitute the Board of Directors of the Company cease for any reason to
constitute at least a majority thereof, unless the election, or the nomination for election by the Company’ s shareholders, of each new director is approved by a vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period; or 

  

	 	(v)	if the Board of Directors or any designated committee determines, in its sole discretion, that any person (such as that term is used in Sections 13(d) and 14(d) of the Exchange Act)
directly or indirectly exercises a controlling influence over the management or policies of the Company. 

  

	 	(f)	“Code” means The Internal Revenue Code of 1986, as amended, or any successor thereto. 

  

	 	(g)	“Committee” means the Compensation Committee of the Board. 

  

	 	(h)	“Company” means Anna’s Linens, Inc., a Delaware corporation. 

  

	 	(i)	“Disability” means a disability within the meaning of Section 22(e)(3) of the Code, as determined by the Committee. 

  

	 	(j)	“Effective Date” means the date the Company files the pricing amendment to the Form S-1 Registration Statement for the initial public offering of the Shares
(“IPO”) that incorporates a Rule 424(b) prospectus for the IPO. 

  

	 	(k)	“Employment” means (i) a Participant’s employment if the Participant is an employee of the Company or any Subsidiary, (ii) a Participant’s services as a
consultant, if the Participant is a consultant to the Company or any Subsidiary and (iii) a Participant’s services as a non-employee director, if the Participant is a non-employee member of the Board or the board of directors of a Subsidiary;
provided, however, that unless otherwise determined by the Committee, a change in a Participant’s status from employee to non-employee (other than a director of the Company or a Subsidiary) shall constitute a termination of employment
hereunder. 

  

	 	(l)	“Fair Market Value” means, as of any date, the value of the Shares determined as follows: 

  

	 	(i)	if the Shares are then quoted on the Nasdaq National Market System, the last reported sale price on the Nasdaq National Market or, if no such reported sale takes place on such date,
the average of the closing bid and asked prices; 

  

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	 	(ii)	if the Shares are publicly traded and are then listed on a national securities exchange, the last reported sale price or, if no such reported sale takes place on such date, the
average of the closing bid and asked prices on the principal national securities exchange on which the Shares are listed or admitted to trading; 

  

	 	(iii)	if the Shares are publicly traded but are not quoted on the Nasdaq National Market nor listed or admitted to trading on a national securities exchange, the average of the closing
bid and asked prices on such date, as reported by the Wall Street Journal, for the over-the-counter market; or 

  

	 	(iv)	if none of the foregoing is applicable, by the Committee in good faith. 

  

	 	(m)	“ISO” means an Option that is also an incentive stock option granted pursuant to Section 6(e). 

  

	 	(n)	“Option” means a stock option granted pursuant to Section 6. 

  

	 	(o)	“Option Price” means the price for which a Share can be purchased upon exercise of an Option, as determined pursuant to Section 6(a). 

  

	 	(p)	“Other Stock-Based Awards” means awards granted pursuant to Section 9. 

  

	 	(l)	“Participant” means an employee, prospective employee, director, advisor or consultant of the Company or a Subsidiary who is selected by the Committee to participate in
the Plan. 

  

	 	(m)	“Performance-Based Awards” means Restricted Stock awards granted pursuant to Section 8(d) and certain Other Stock-Based Awards granted pursuant to Section 9(b).

  

	 	(n)	“Plan” means the 2005 Omnibus Equity Incentive Plan, as amended from time to time. 

  

	 	(o)	“Restricted Stock” means any Share granted under Section 8. 

  

	 	(p)	“Restricted Stock Units” means the right to receive Shares in the future or their cash equivalent (or both) granted under Section 9. 

  

	 	(p)	“Shares” means shares of common stock of the Company, $0.01 par value per share. 

  

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	 	(q)	“Stock Appreciation Right” means a stock appreciation right granted pursuant to Section 7. 

  

	 	(r)	“Subsidiary” means a subsidiary corporation, as defined in Section 424(f) of the Code (or any successor section thereto), of the Company. 

  
 3. Shares Subject to the Plan 
  
 The total number of Shares which may be issued under the Plan shall be equal
to six percent (6.0%) of the fully diluted Shares that are outstanding on the date the Company files the pricing amendment to the Form S-1 Registration Statement for the initial public offering of its Shares (“IPO”) that incorporates a
Rule 424(b) prospectus for the IPO, (including 6.0% of the Shares being issued in the IPO), the exact number of Shares that are subject to issuance under the Plan being
                    , of which no more than thirty three and 33/100 percent (33.33%) may be issued in the form of Restricted Stock or Other
Stock-Based Awards payable in Shares. The maximum aggregate number of Shares with respect to which Awards may be granted during a calendar year, net of any Shares which are subject to Awards (or portions thereof) which, during such year, terminate
or lapse without payment of consideration, shall be 200,000 and the maximum number of Shares that may be awarded during a calendar year in the form of Restricted Stock or Other Stock-Based Awards shall be 67,000. The maximum number of Shares with
respect to which Awards may be granted during a calendar year to any Participant shall be 50,000; provided that the maximum number of Shares that may be awarded in the form of Restricted Stock or Other Stock-Based Awards payable in Shares during any
calendar year to any Participant shall be 16,750. The Shares may consist, in whole or in part, of unissued Shares or treasury Shares. The issuance of Shares or the payment of cash upon the exercise of an Award or in consideration of the cancellation
or termination of an Award shall reduce the total number of Shares available under the Plan, as applicable. Shares that are subject to Awards (or portions thereof) that terminate or lapse without the payment of consideration may be granted again
under the Plan. 
  
 4. Administration 
  
 (a) The Plan shall be administered by the Committee, which may delegate its
duties and powers in whole or in part to any subcommittee thereof consisting solely of at least two individuals who are intended to qualify as “Non-Employee Directors” within the meaning of Rule 16b-3 under the Act (or any successor rule
thereto) and, to the extent required by Section 162(m) of the Code (or any successor section thereto), “outside directors” within the meaning thereof. 
  

(b) The Committee shall have the full power and authority to make, and establish the terms and conditions of, any Award to any person eligible to be a
Participant, consistent with the provisions of the Plan and to waive any such terms and conditions at any time (including, without limitation, accelerating or waiving any vesting conditions). Awards may, in the discretion of the Committee, be made
under the Plan in assumption of, or in substitution for, outstanding awards previously granted by the Company or its Affiliates or a company acquired by the Company or with which the Company combines. The number of Shares underlying such substitute
awards shall be counted against the aggregate number of Shares available for Awards under the Plan. 
  

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 (c) The Committee is authorized to interpret the Plan, to establish, amend and rescind any rules and
regulations relating to the Plan, and to make any other determinations that it deems necessary or desirable for the administration of the Plan, and may delegate such authority, as it deems appropriate. The Committee may correct any defect or supply
any omission or reconcile any inconsistency in the Plan in the manner and to the extent the Committee deems necessary or desirable. Any decision of the Committee in the interpretation and administration of the Plan, as described herein, shall lie
within its sole and absolute discretion and shall be final, conclusive and binding on all parties concerned (including, but not limited to, Participants and their beneficiaries or successors). 
  
 (d) The Committee shall require payment of any amount it may determine to be
necessary to withhold for federal, state, local or other taxes as a result of the exercise, grant or vesting of an Award. Unless the Committee specifies otherwise, the Participant may elect to pay a portion or all of such withholding taxes by (a)
delivery of Shares or (b) having Shares withheld by the Company with a Fair Market Value equal to the minimum statutory withholding rate from any Shares that would have otherwise been received by the Participant. 
  
 5. Limitations 
  
 (a) No Award may be granted under the Plan after the fifth anniversary of the meeting of shareholders of the Company at
which the Plan is approved, but Awards granted prior to such fifth anniversary may extend beyond that date. 
  
 (b) No Option or Stock Appreciation Right, once granted hereunder, may be repriced. 
  
 (c) With respect to any Awards granted to a Participant who is a non-employee member of the Board at the time of grant, such
Awards shall be made pursuant to formulas established by the Board in advance of such grant. Any such Awards shall be made at the time such a Participant first becomes a member of the Board and, thereafter, on an annual basis at or following the
annual meeting of stockholders. Such formulas may include any one or more of the following: (i) a fixed number of Options or Stock Appreciation Rights, (ii) a fixed number of Shares of Restricted Stock or a number of Shares of Restricted Stock
determined by reference to a fixed dollar amount (calculated based on the Fair Market Value of a Share on the date of grant), and (iii) Other Stock-Based Awards determined either by reference to a fixed number of Shares or to a fixed dollar amount
(calculated based on the Fair Market Value of a Share on the date of grant). 
  
 6. Terms and Conditions of Options 
  
 Options
granted under the Plan shall be, as determined by the Committee, nonqualified or incentive stock options for federal income tax purposes, as evidenced by the related Award agreements, and shall be subject to the foregoing and the following terms and
conditions and to 
  

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 such other terms and conditions, not inconsistent therewith, as the Committee shall determine, and as evidenced by the
related Award agreement: 
  
 (a) Option Price. The Option
Price per Share shall be determined by the Committee, but shall not be less than 100% of the Fair Market Value of a Share on the date an Option is granted. 
  
 (b) Exercisability. Options granted under the Plan shall be exercisable at such time and upon such terms and conditions as maybe determined by the
Committee, but in no event shall an Option be exercisable more than ten years after the date it is granted, except as may be provided pursuant to Section 15. 
  
 (c) Exercise of Options. Except as otherwise provided in the Plan or in an Award agreement, an Option may be
exercised for all, or from time to time for any part, of the Shares for which it is then exercisable. For purposes of this Section 6, the exercise date of an Option shall be the date a notice of exercise is received by the Company, together with
provision for payment of the full purchase price in accordance with this Section 6(c). The purchase price for the Shares as to which an Option is exercised shall be paid to the Company, as designated by the Committee, pursuant to one or more of the
following methods: (i) in cash or its equivalent (e.g., by check); (ii) in Shares having a Fair Market Value equal to the aggregate Option Price for the Shares being purchased and satisfying such other requirements as may be imposed by the
Committee; provided, that such Shares have been held by the Participant for no less than six months (or such other period as established from time to time by the Committee in order to avoid adverse accounting treatment applying generally accepted
accounting principles); (iii) partly in cash and partly in such Shares or (iv) if there is a public market for the Shares at such time, through the delivery of irrevocable instructions to a broker to sell Shares obtained upon the exercise of the
Option and to deliver promptly to the Company an amount out of the proceeds of such Sale equal to the aggregate Option Price for the Shares being purchased. No Participant shall have any rights to dividends or other rights of a stockholder with
respect to Shares subject to an Option until the Participant has given written notice of exercise of the Option, paid in full for such Shares and, if applicable, has satisfied any other conditions imposed by the Committee pursuant to the Plan.

  
 (d) Deferral. In the sole discretion of the Committee,
in accordance with procedures established by the Committee, the Participant may be permitted to defer the issuance of Shares deliverable upon the exercise of an Option for a specified period or until a specified date 
  
 (e) ISOs. The Committee may grant Options under the Plan that are
intended to be ISOs. Such ISOs shall comply with the requirements of Section 422 of the Code (or any successor section, thereto). No ISO may be granted to any Participant who at the time of such grant, owns more than ten percent of the total
combined voting power of all classes of stock of the Company or of any Subsidiary, unless (i) the Option Price for such ISO is at least 110% of the Fair Market Value of a Share on the date the ISO is granted and (ii) the date on which such ISO
terminates is a date not later than the day preceding the fifth anniversary of the date on which the ISO is granted. Any Participant who disposes of Shares acquired upon the exercise of an ISO either (i) within two years after the date of grant of
such ISO or (ii) within one year after 
  

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 the transfer of such Shares to the Participant, shall notify the Company of such disposition and of the amount realized
upon such disposition. All Options granted under the Plan are intended to be nonqualified stock options, unless the applicable Award agreement expressly states that the Option is intended to be an ISO. If an Option is intended to be an ISO, and if
for any reason such Option (or portion thereof) shall not qualify as an ISO, then, to the extent of such nonqualification, such Option (or portion thereof) shall be regarded as a nonqualified stock option granted under the Plan; provided that such
Option (or portion thereof) otherwise complies with the Plan’s requirements relating to nonqualified stock options. In no event shall any member of the Committee, the Company or any Subsidiary (or their respective employees, officers or
directors) have any liability to any Participant (or any other person) due to the failure of an Option to qualify for any reason as an ISO. 
  
 (f) Limitations on ISOs. The aggregate Fair Market Value (determined as of the date of grant) of Shares with respect to which ISOs are
exercisable for the first time by a Participant during any calendar year (under the Plan or under any other stock option plan of the Company or any Subsidiary) shall not exceed $100,000. If the Fair Market Value of Shares on the date of grant with
respect to which ISOs are exercisable for the first time by a Participant during any calendar year exceeds $100,000, the Options for the first $100,000 worth of Shares to become exercisable in such calendar year shall be ISOs and the Options for the
amount in excess of $100,000 that become exercisable in that calendar year shall be nonqualified stock options. In the event that the Code or the regulations promulgated thereunder are amended after the Effective Date to provide for a different
limit on the Fair Market Value of Shares permitted to be subject to ISOs, such different limit shall be automatically incorporated herein and shall apply to any ISOs granted after the effective date of such amendment. 
  
 (g) Attestation. Wherever in this Plan or any agreement evidencing an
Award a Participant is permitted to pay the exercise price of an Option or taxes relating to the exercise of an Option by delivering Shares, the Participant may, subject to procedures satisfactory to the Committee, satisfy such delivery requirement
by presenting proof of beneficial ownership of such Shares, in which case the Company shall treat the Option as exercised without further payment and/or shall withhold such number of Shares from the Shares acquired by the exercise of the Option, as
appropriate. 
  
 7. Terms and Conditions of Stock Appreciation Rights

  
 (a) Grants. The Committee may grant (i) a Stock
Appreciation Right independent of an Option or (ii) a Stock Appreciation Right in connection with an Option, or a portion thereof. A Stock Appreciation Right granted pursuant to clause (ii) of the preceding sentence (A) may be granted at the time
the related Option is granted or at any time prior to the exercise or cancellation of the related Option, (B) shall cover the same number of Shares covered by an Option (or such lesser number of Shares as the Committee may determine) and (C) shall
be subject to the same terms and conditions as such Option except for such additional limitations as are contemplated by this Section 7 (or such additional limitations as may be included in an Award agreement). 
  

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 (b) Terms. The exercise price per Share of a Stock Appreciation Right shall be an amount
determined by the Committee but in no event shall such amount be less than the Fair Market Value of a Share on the date the Stock Appreciation Right is granted; provided, however, that notwithstanding the foregoing in the case of a Stock
Appreciation Right granted in conjunction with an Option, or a portion thereof, the exercise price may not be less than the Option Price of the related Option. Each Stock Appreciation Right granted independent of an Option shall entitle a
Participant upon exercise to an amount equal to (i) the excess of (A) the Fair Market Value on the exercise date of one Share over (B) the exercise price per Share, times (ii) the number of Shares covered by the Stock Appreciation Right. Each Stock
Appreciation Right granted in conjunction with an Option, or a portion thereof, shall entitle a Participant to surrender to the Company the unexercised Option, or any portion thereof, and to receive from the Company in exchange therefore an amount
equal to (i) the excess of (A) the Fair Market Value on the exercise date of one Share over (B) the Option Price per Share, times (ii) the number of Shares covered by the Option, or portion thereof, which is surrendered. Payment shall be made in
Shares or in cash, or partly in Shares and partly in cash (any such Shares valued at such Fair Market Value), all as shall be determined by the Committee. Stock Appreciation Rights may be exercised from time to time upon actual receipt by the
Company of written notice of exercise stating the number of Shares with respect to which the Stock Appreciation Right is being exercised. The date a notice of exercise is received by the Company shall be the exercise date. No fractional Shares will
be issued in payment for Stock Appreciation Rights, but instead cash will be paid for a fraction or, if the Committee should so determine, the number of Shares will be rounded downward to the next whole Share. 
  
 (c) Limitations. The Committee may impose, in its discretion, such
conditions upon the exercisability or transferability of Stock Appreciation Rights as it may deem fit. 
  
 8. Restricted Stock 
  
 (a) Grant. Subject to the provisions of the Plan, the Committee shall determine the number of Shares of Restricted Stock to be granted to each Participant, the duration of the period during which, and the conditions, if any, under
which, the Restricted Stock may be forfeited to the Company, and the other terms and conditions of such Awards; provided that not less than 80% of the Shares of Restricted Stock shall remain subject to forfeiture for at least three years after the
date of grant, subject to earlier termination of such potential for forfeiture in whole or in part in the event of a Change in Control or the death, disability or other termination of the Participant’s Employment. 
  
 (b) Transfer Restrictions. Shares of Restricted Stock may not be sold,
assigned, transferred, pledged or otherwise encumbered, except as provided in the Plan or the applicable Award agreement. Certificates, or other evidence of ownership, issued in respect of Shares of Restricted Stock shall be registered in the name
of the Participant and deposited by such Participant, together with a stock power endorsed in blank, with the Company. After the lapse of the restrictions applicable to such Shares of Restricted Stock, the Company shall deliver such certificates, or
other evidence of ownership, to the Participant or the Participant’s legal representative. 
  

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 (c) Dividends. Dividends paid on any Shares of Restricted Stock may be paid directly to the
Participant, withheld by the Company subject to vesting of the Restricted Shares pursuant to the terms of the applicable Award agreement, or may be reinvested in additional Shares of Restricted Stock, as determined by the Committee in its sole
discretion. 
  
 (d) Performance-Based Grants.
Notwithstanding anything to the contrary herein, certain Shares of Restricted Stock granted under this Section 8 may, at the discretion of the Committee, be granted in a manner which is intended to be deductible by the Company under Section 162(m)
of the Code (or any successor section thereto). The restrictions applicable to such Restricted Stock shall lapse based wholly or partially on the attainment of written performance goals approved by the Committee for a performance period established
by the Committee (i) while the outcome for that performance period is substantially uncertain and (ii) no more than 90 days after the commencement of the performance period to which the performance goal relates or, if less, the number of days which
is equal to 25 percent of the relevant performance period. The performance goals, which must be objective, shall be based upon one or more of the criteria set forth in Section 9(b) below. The Committee shall determine in its discretion whether, with
respect to a performance period, the applicable performance goals have been met with respect to a given Participant and, if they have, shall so certify prior to the release of the restrictions on the Shares. 
  
 9. Other Stock-Based Awards 
  
 (a) Generally. The Committee, in its sole discretion, may grant or
sell Awards of Shares and Awards that are valued in whole or in part by reference to, or are otherwise based on the Fair Market Value of’ Shares, such as, for example Restricted Stock Units (“Other Stock-Based Awards”). Such Other
Stock-Based Awards shall be in such form, and dependent on such conditions, as the Committee shall determine, including, without limitation, the right to receive, or vest with respect to, one or more Shares or the equivalent cash value of such
Shares (or both) upon the completion of a specified period of service, the occurrence of an event and/or the attainment of performance objectives. Other Stock-Based Awards may be granted alone or in addition to any other Awards granted under the
Plan. Subject to the provisions of the Plan, the Committee shall determine the number of Shares to be awarded to a Participant under (or otherwise related to) such Other Stock-Based Awards; whether such Other Stock-Based Awards shall be settled in
cash, Shares or a combination of cash and Shares; and all other terms and conditions of such Awards (including, without limitation, the vesting provisions thereof and provisions ensuring that all Shares so awarded and issued shall be fully paid and
non-assessable). The maximum amount of Other Stock-Based Awards that may be granted during a calendar year to any Participant shall be: (x) with respect to Other Stock-Based Awards that are denominated or payable in Shares, 6,700 Shares and (y) with
respect to Other Stock-Based Awards that are not denominated or payable in Shares, $50,000. Notwithstanding any other provision, with respect to (i) Other Stock-Based Awards settled in Shares that are subject to time-based vesting, not less than 80%
of such Other Stock Based Awards payable in Shares shall vest and become payable at least three years after the date of grant, subject to earlier vesting in whole or in part in the event of a Change in Control or the death, disability or other
termination of the Participants employment, and (ii) Other Stock-Based Awards settled in Shares that are subject to vesting upon the attainment of performance objectives, the minimum performance period shall be one year. 
  

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 (b) Performance-Based Awards. Notwithstanding anything to the contrary herein, certain Other
Stock-Based Awards granted under this Section 9 may be granted in a manner which is intended to be deductible by the Company under Section 162(m) of the Code (or any successor section thereto) (“Performance-Based Awards”). A
Participant’s Performance-Based Award shall be determined based on the attainment of written performance goals approved by the Committee for a performance period of not less than one year established by the Committee (i) while the outcome for
that performance period is substantially uncertain and (ii) no more than 90 days after the commencement of the performance period to which the performance goal relates or, if less, the number of days which is equal to 25 percent of the relevant
performance period. The performance goals, which must be objective, shall be based upon one or more of the following criteria: (i) consolidated earnings before or after taxes (including earnings before interest, taxes, depreciation and
amortization); (ii) net income; (iii) operating income; (iv) earnings per Share; (v) book value per Share; (vi) return on shareholders’ equity; (vii) expense management; (viii) return on investment; (ix) improvements in capital structure; (x)
profitability of an identifiable business unit or product; (xi) maintenance or improvement of profit margins; (xii) stock price; (xiii) market share; (xiv) revenues or sales; (xv) costs; (xvi) cash flow; (xvii) working capital and (xviii) return on
assets. The foregoing criteria may relate to the Company, one or more of its Subsidiaries or one or more of its or their divisions or units, Company-wide or based on geographic area or location, or any combination of the foregoing, and may be
applied on an absolute basis and/or be relative to one or more peer group companies or indices, or any combination thereof, all as the Committee shall determine. In addition, to the degree consistent with Section 162(m) of the Code (or any successor
section thereto), the performance goals may be calculated without regard to extraordinary items. The Committee shall determine whether, with respect to a performance period, the applicable performance goals have been met with respect to a given
Participant and, if they have, shall so certify and ascertain the amount of the applicable Performance-Based Award. No Performance-Based Awards will be paid for such performance period until such certification is made by the Committee. The amount of
the Performance-Based Award actually paid to a given Participant may be less than the amount determined by the applicable performance goal formula, at the discretion of the Committee. The amount of the Performance-Based Award determined by the
Committee for a performance period shall be paid to the Participant at such time as determined by the Committee in its sole discretion after the end of such performance period; provided, however, that a Participant may, if and to the extent
permitted by the Committee and consistent with the provisions of Section 162(m) of the Code and applicable regulations under the Code, elect to defer payment of a Performance-Based Award. 
  
 10. Adjustments Upon Certain Events 
  
 Notwithstanding any other provisions in the Plan to the contrary, the following provisions shall apply to all Awards granted under the Plan: 

 
 (a) Generally. In the event of any change in the outstanding
Shares after the Effective Date by reason of any Share dividend or split, reorganization, recapitalization, merger, 
  

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 consolidation, spin-off, combination, combination or transaction or exchange of Shares or other corporate exchange, or
any distribution to shareholders of Shares other than regular cash dividends or any transaction similar to the foregoing, the Committee in its sole discretion and without liability to any person may make such substitution or adjustment, if any, as
it deems to be equitable, as to (i) the number or kind of Shares or other securities issued or reserved for issuance pursuant to the Plan or pursuant to outstanding Awards, (ii) the maximum number of Shares for which Awards (including limits
established for Restricted Stock or Other Stock-Based Awards) may be granted during a calendar year to any Participant, (iii) the Option Price or exercise price of any Stock Appreciation Right and/or (iv) any other affected terms of such Awards.

  
 (b) Change in Control. In the event of a Change in
Control after the Effective Date, the Committee may, but shall not be obligated to, (A) accelerate, vest or cause the restrictions to lapse with respect to, all or any portion of an Award or (B) cancel Awards for fair value (as determined in the
sole discretion of the Committee) which, in the case of Options and Stock Appreciation Rights, may equal the excess, if any, of value of the consideration to be paid in the Change in Control transaction to holders of the same number of Shares
subject to such Options or Stock Appreciation Rights (or, if no consideration is paid in any such transaction, the Fair Market Value of the Shares subject to such Options or Stock Appreciation Rights) over the aggregate exercise price of such
Options or Stock Appreciation Rights or (C) provide for the issuance of substitute Awards that will substantially preserve the otherwise applicable terms of any affected Awards previously granted hereunder as determined by the Committee in its sole
discretion or (D) provide that for a period of at least 30 days prior to the Change in Control, such Options shall be exercisable as to all shares subject thereto and that upon the occurrence of the Change in Control, such Options shall terminate
and be of no further force and effect. 
  
 11. No Right to Employment or Awards

  
 The granting of an Award under the Plan shall impose no
obligation on the Company or a Subsidiary to continue the Employment of a Participant and shall not lessen or affect the Company’s or Subsidiary’s right to terminate the Employment of such Participant. No Participant or other person shall
have any claim to be granted any Award, and there is no obligation for uniformity of treatment of Participants, or holders of Awards. The terms and conditions of Awards and the Committee’s determinations and interpretations with respect thereto
need not be the same with respect to each Participant (whether or not such Participants are similarly situated). 
  
 12. Successors and Assigns 
  
 The Plan shall be binding on all successors and assigns of the Company and a Participant, including without limitation, the estate of such Participant and
the executor, administrator or trustee of such estate, or any receiver or trustee in bankruptcy or representative of the Participant’s creditors. 
  

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 13. Nontransferability of Awards 
  
 Unless otherwise determined by the Committee, an Award shall not be transferable or assignable by the Participant otherwise
than by will or by the laws of descent and distribution. During the lifetime of a Participant, an Award may be exercised only by the Participant. Any Award that is exercisable after the death of a Participant may be exercised by the legatees,
personal representatives or distributees of the Participant. 
  
 14. Amendments
or Termination 
  
 The Board or the Committee may amend,
alter or discontinue the Plan, but no amendment, alteration or discontinuation shall be made, (a) without the approval of the shareholders of the Company, if such action would (except as is provided in Section 10 of the Plan), increase the total
number of Shares reserved for the purposes of the Plan or increase the maximum number of Shares of Restricted Stock or Other Stock-Based Awards that may be awarded hereunder, or the maximum number of Shares for which Awards may be granted to any
Participant, (b) without the consent of a Participant, if such action would diminish any of the rights of the Participant under any Award theretofore granted to such Participant under the Plan or (c) to Section 5(b), relating to repricing of Options
or Stock Appreciation Rights, to permit such repricing; provided, however, that the Committee may amend the Plan in such manner as it deems necessary to permit the granting of Awards meeting the requirements of the Code or other applicable laws.

  
 15. International Participants 
  
 With respect to Participants who may reside or work outside the United
States of America and who are not (and who are not expected to be) “covered employees” within the meaning of Section 162(m) of the Code, the Committee may, in its sole discretion, amend the terms of the Plan or Awards with respect to such
Participants in order to conform such terms with the requirements of local law or to obtain more favorable tax or other treatment for a Participant, the Company or a Subsidiary. 
  
 16. Other Benefit Plans 
  
 All Awards shall constitute a special incentive payment to the Participant and shall not be taken into account in computing the amount of salary or
compensation of the Participant for the purpose of determining any benefits under any pension, retirement, profit-sharing, bonus, life insurance or other benefit plan of the Company or under any agreement between the Company and the Participant,
unless such plan or agreement specifically provides otherwise. 
  
 17. Choice
of Law 
  
 The Plan shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to conflicts of laws, and except as otherwise provided in the pertinent Award agreement, any and all disputes between a Participant and the Company or any Subsidiary relating to an
Award shall be brought only in a state or federal court of competent jurisdiction sitting in Wilmington, Delaware. 
  

 12 

 18. Effectiveness of the Plan 
  
 The Plan shall be effective as of the Effective Date, subject to the approval of the shareholders of the Company at or prior
to the Effective Date. 
  

 13Form of Incentive Stock Option Agreement

 EXHIBIT 10.07 
  
 ANNA’S LINENS, INC. 
  
 2005 OMNIBUS EQUITY INCENTIVE PLAN 
 INCENTIVE STOCK OPTION AGREEMENT 
  
 WHEREAS, the Company has
adopted the Plan (as defined below), the terms of which are hereby incorporated by reference and made a part of this Agreement; and 
  
 WHEREAS, the Committee has determined that it would be in the best interests of the Company and its stockholders to grant the Option provided for herein to the
Participant pursuant to the Plan and the terms set forth herein. 
  
 NOW,
THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties agree as follows: 
  
 1. Definitions. Whenever the following terms are used in this Agreement, they shall have the meanings set forth below. Capitalized terms not otherwise
defined herein shall have the same meanings as in the Plan. 
  

	 	a)	“Cause” includes (and is not limited to) dishonesty with respect to the Company or any Affiliate, insubordination, substantial malfeasance or non-feasance of duty,
unauthorized disclosure of confidential information, and conduct substantially prejudicial to the business of the Company or any Subsidiary. The determination of the Committee as to the existence of “Cause” will be conclusive on the
Participant and the Company. 

  

	 	b)	“Disability” means, “Disability” as defined in an employment agreement between the Company or any of its Affiliates and the Participant or, if not defined
therein or if there shall be no such agreement, “disability” of the Participant shall have the meaning ascribed to such term in the Plan. 

  

	 	c)	“Expiration Date” means the date set forth on the Notice (as defined below). 

  

	 	d)	 “Good Reason” means (i) a breach by the Company or any Subsidiary of any employment or consulting agreement to which the Participant is a party and (ii)
following a Change in Control, (x) the failure of the Company to pay or cause to be paid the Participant’s base salary or annual bonus when due or (y) any substantial and sustained diminution in the Participant’s authority or
responsibilities materially inconsistent with the Participant’s position; provided that either of the events described in clauses (x) and (y) will constitute Good Reason only if the Company fails to cure such event within 30 days after receipt
from the Participant of written notice of the event which constitutes Good Reason; provided, further, that “Good Reason” will cease to exist for an event on the sixtieth (60th) day following the later of its occurrence or the
Participant’s 

  

	 	 
knowledge thereof, unless the Participant has given the Company written notice of his or her termination of employment for Good Reason prior to such date.

  

	 	e)	“Plan” means the Anna’s Linen, Inc. 2005 Omnibus Equity Incentive Plan, as the same may be amended, supplemented or modified from time to time.

  

	 	f)	“Retirement” means a termination of employment by the Participant (i) following the attainment of age      with ten (10) or more years of
service with the Company or any Affiliate or (ii) pursuant to a retirement plan or early retirement program of the Company or any Affiliate. 

  

	 	g)	“Vested Portion” means, at any time, the portion of an Option which has become vested, as described in Section 3 of this Agreement. 

  
 2. Grant of Option. The Company hereby grants to the Participant the right
and option (the “Option”) to purchase, on the terms and conditions hereinafter set forth, the number of Shares set forth on the Notice of Grant of Stock Option (the “Notice”), subject to adjustment as set forth in the Plan. The
purchase price of the Shares subject to the Option (the “Option Price”) shall be as set forth on the Notice. The Option is intended to be an Incentive Stock Option, and as such is intended to be treated as an option that complies with
Section 422 of the Internal Revenue Code of 1986, as amended. 
  
 3. Vesting of the Option. 
  
 (a) In
General. Subject to Sections 3(b) and 3(c), the Option shall vest and become exercisable at such times as are set forth in the Notice. 
  
 (b) Change in Control. Notwithstanding the foregoing, in the event of a Change in Control, the unvested portion of the Option, to the
extent not previously cancelled or forfeited, shall immediately become vested and exercisable upon the earlier of (i) the first anniversary of the Change in Control or (ii) the termination of the Participant’s Employment (A) by the Company
other than for Cause (unless such termination is due to death or Disability) or (B) by the Participant for Good Reason. 
  
 (c) Termination of Employment. If the Participant’s Employment with the Company and its Affiliates terminates for any reason
(including, unless otherwise determined by the Committee, a Participant’s change in status from an employee to a non-employee (other than director of the Company or any Affiliate)), the Option, to the extent not then vested, shall be
immediately canceled by the Company without consideration; provided, however, that if the Participant’s Employment terminates due to death, Disability or Retirement, the unvested portion of the Option, to the extent not previously cancelled or
forfeited, shall immediately become vested and exercisable. The Vested Portion of the Option shall remain exercisable for the period set forth in Section 4(a) of this Agreement. If the Participant is absent from work with the Company or with an
Affiliate because of a temporary disability (any disability other than a 

  

 2 

 
Disability), or on an approved leave of absence for any purpose, the Participant shall not, during the period of any such absence, be deemed, by virtue of
such absence alone, to have terminated Employment, except to the extent that the Committee so determines. 
  
 4. Exercise of Option. 
  
 (a) Period of Exercise. Subject to the provisions of the Plan and this Agreement, and the terms of any employment agreement entered into
by the Participant and the Company or a Subsidiary that provides for treatment of Options that is more favorable to the Participant than clauses (i) - (vii) of this Section 4(a), the Participant may exercise all or any part of the Vested Portion of
the Option at any time prior to the Expiration Date. Notwithstanding the foregoing, if the Participant’s Employment terminates prior to the Expiration Date, the Vested Portion of the Option shall remain exercisable for the period set forth
below. If the last day on which the Option may be exercised, whether the Expiration Date or due to a termination of the Optionee’s Employment prior to the Expiration Date, is a Saturday, Sunday or other day that is not a trading day on the
Nasdaq National Market (the “Nasdaq”) or, if the Company’s Shares are not then listed on Nasdaq, such other stock exchange or trading system that is the primary exchange on which the Company’s Shares are then traded, then the
last day on which the Option may be exercised shall be the preceding trading day on Nasdaq or such other stock exchange or trading system. 
  
 (i) Death or Disability. If the Participant’s Employment with the Company or any Subsidiary terminates due to the Participant’s
death or Disability, the Participant (or his or her representative) may exercise the Vested Portion of the Option for a period ending on the earlier of (A) one hundred eighty (180) days following the date of such termination and (B) the Expiration
Date; 
  
 (ii) Retirement. If the
Participant’s Employment with the Company or any Subsidiary terminates due to the Participant’s Retirement, the Participant may exercise the Vested Portion of the Option for a period ending on the earlier of (A) ninety (90) days following
the date of such termination and (B) the Expiration Date; provided, that if the Company or any Subsidiary has given the Participant notice that the Participant’s Employment is being terminated for Cause prior to the Participant’s election
to terminate due to the Participant’s Retirement, then the provisions of Section 4(a)(v) shall control; 
  
 (iii) Unsatisfactory Performance; Voluntary Termination without Good Reason. If the Participant’s Employment with the Company or any
Subsidiary is terminated by the Company or the Subsidiary (other than after a Change in Control as set forth in Section 4(a)(vi)) for unsatisfactory performance, but not for Cause (as determined in its sole discretion by the Company or the
Subsidiary), or the Participant voluntarily terminates Employment at any time without Good Reason, the Participant may exercise the Vested Portion of the Option for a period ending on the earlier of (A) ninety (90) days following the date of such
termination and (B) the Expiration Date; provided, that if the Company or any Subsidiary has given the Participant notice that the Participant’s Employment is being terminated for Cause prior to the Participant’s election to voluntarily
terminate Employment without Good Reason, then the provisions of Section 4(a)(v) shall control; 
  

 3 

 (iv) Termination other than for Cause. Subject to the provision of Section 4(a)(vi), if
the Participant’s Employment with the Company or any Subsidiary is terminated by the Company or the Subsidiary for any reason other than by the Company or the Subsidiary for Cause, unsatisfactory performance or due to the Participant’s
death or Disability, the Participant may exercise the Vested Portion of the Option for a period ending on the earlier of (A) ninety (90) days following the date of such termination and (B) the Expiration Date; 
  
 (v) Termination by the Company for Cause. If the
Participant’s Employment with the Company or any Subsidiary is terminated by the Company or the Subsidiary for Cause, the Vested Portion of the Option shall immediately terminate in full and cease to be exercisable; and 
  
 (vi) After a Change in Control. If the Participant’s
Employment with the Company or any Subsidiary terminates after a Change in Control due to a termination by the Company other than for Cause or due to the Participant’s resignation for Good Reason, the Participant may exercise the Vested Portion
of the Option for a period ending on the earlier of (A) ninety (90) days following the date of such termination and (B) the Expiration Date. 
  
 (b) Method of Exercise. 
  
 (i) Subject to Section 4(a) of this Agreement, the Vested Portion of an Option may be exercised by delivering to the Company at its
principal office written notice of intent to so exercise; provided that the Option may be exercised with respect to whole Shares only. Such notice shall specify the number of Shares for which the Option is being exercised, shall be signed (whether
or not in electronic form) by the person exercising the Option and shall make provision for the payment of the Option Price. Payment of the aggregate Option Price shall be paid to the Company, at the election of the Committee, pursuant to one or
more of the following methods: (A) in cash, or its equivalent; (B) by transferring Shares having a Fair Market Value equal to the aggregate Option Price for the Shares being purchased to the Company and satisfying such other requirements as may be
imposed by the Committee; provided that such Shares have been held by the Participant for no less than six (6) months (or such other period as established from time to time by the Committee or generally accepted accounting principles); (C) partly in
cash and partly in Shares; or (D) if there is a public market for the Shares at such time, subject to such rules as may be established by the Committee, through delivery of irrevocable instructions to a broker to sell the Shares otherwise
deliverable upon the exercise of the Option and to deliver promptly to the Company an amount equal to the aggregate Option Price. No Participant shall have any rights to dividends or other rights of a stockholder with respect to the Shares subject
to the Option until the issuance of the Shares. 
  
 (ii) Notwithstanding any other provision of the Plan or this Agreement to the contrary, absent an available exemption to registration or qualification, the Option may not be exercised prior to the completion of any registration or
qualification of the Option or the Shares under applicable state and federal securities or other laws, or under any ruling or 

  

 4 

 
regulation of any governmental body or national securities exchange that the Committee shall in its sole reasonable discretion determine to be necessary or
advisable. 
  
 (iii) Upon the Company’s
determination that the Option has been validly exercised as to any of the Shares, the Company shall issue certificates in the Participant’s name for such Shares. However, the Company shall not be liable to the Participant for damages relating
to any delays in issuing the certificates to the Participant, any loss by the Participant of the certificates, or any mistakes or errors in the issuance of the certificates or in the certificates themselves. 
  
 (iv) In the event of the Participant’s death, the
Vested Portion of an Option shall remain vested and exercisable by the Participant’s executor or administrator, or the person or persons to whom the Participant’s rights under this Agreement shall pass by will or by the laws of descent and
distribution as the case may be, to the extent set forth in Section 4(a) of this Agreement. Any heir or legatee of the Participant shall take rights herein granted subject to the terms and conditions hereof. 
  
 (v) As a condition to the exercise of any Option evidenced
by this Agreement, the Participant agrees to hold, for a period of twelve (12) months following the date of such exercise, a number of Shares issued pursuant to such exercise, equal 75% (rounded down to the nearest whole Share) of the quotient of
(A) and (B), where (A) is the product of (1) the number of Shares exercised by the Participant multiplied by (2) fifty percent (50%) of the excess of the Fair Market Value of a Share on the date of exercise over the exercise price and (B) is the
Fair Market Value of a Share on the date of exercise. The holding requirement related to Shares that is established in this Section 4(b)(v) shall terminate with respect to the Options evidenced by this Agreement (as well as any Shares issued
pursuant to exercise of such Options) on the first anniversary of the date of termination of the Participant’s Employment with the Company or its Affiliates. 
  
 (c) Limitations and Restrictions. 
  
 (i) If Participant sells or otherwise disposes of any of the Shares acquired pursuant to the Option on or
before the later of: (1) the date two years after the Date of Grant, and (2) the date one year after transfer of such Shares to Participant upon exercise of the Option, Participant immediately shall notify the Company in writing of such disposition.
Participant agrees that Participant may be subject to income tax withholding by the Company on the compensation income recognized by Participant from the early disposition by payment in the manner set forth in paragraph 8. 
  
 (ii) The aggregate Fair Market Value (determined as of the
date of grant) of Shares with respect to which the Option is exercisable for the first time by Participant during any calendar year (under the Plan or under any other stock option plan of the Company or any Subsidiary) shall not exceed $100,000. If
the Fair Market Value of Shares on the date of grant with respect to which the Option is exercisable for the first time by Participant during any calendar year exceeds $100,000, only the Options for the first $100,000 worth of Shares to become
exercisable in such calendar year shall comply with Section 422 of the Code and 

  

 5 

 
Options for the amount in excess of $100,000 that become exercisable in that calendar year shall be non-qualified stock options. In the event that the Code
or the regulations promulgated thereunder are amended after the Effective Date to provide for a different limit on the Fair Market Value of Shares permitted to be subject to incentive stock options, such different limit shall be automatically
incorporated herein and shall apply to the unexercised portion of this Option after the effective date of such amendment, provided such regulations are intended to apply to pre-existing options. 
  
 (iii) Participant understands and acknowledges that for
purposes of this Agreement, Participant must be an employee of the Company or a Subsidiary. Termination of Participant’s employment with the Company or a Subsidiary in order to provide service to the Company or a Subsidiary in any other
capacity, such as a consultant or as an employee of a consultant providing services to the Company or a Subsidiary will not comply with the requirements of Section 422 of the Code and will result in the unexercised portion of the Option to be
treated as a non-qualified stock option. 
  
 5. No Right to
Continued Employment. Neither the Plan nor this Agreement shall be construed as giving the Participant the right to be retained in the Employment of the Company or any Subsidiary. Further, the Company or a Subsidiary may at any time dismiss the
Participant or discontinue any other relationship, free from any liability or any claim under the Plan or this Agreement, except as otherwise expressly provided herein. 
  
 6. Legend on Certificates. The certificates representing the Shares purchased by exercise of an Option shall be subject to
such stop transfer orders and other restrictions as the Committee may deem reasonably advisable under the Plan or the rules, regulations, and other requirements of the Securities and Exchange Commission, Nasdaq or any stock exchange upon which such
Shares are listed, any applicable federal or state laws and the Company’s Certificate of Incorporation and Bylaws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such
restrictions. 
  
 7. Transferability. Unless otherwise determined
by the Committee, an Option may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the Participant otherwise than by will or by the laws of descent and distribution, and any such purported assignment,
alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company or any Subsidiary. 
  
 8. Withholding. The Participant may be required to pay to the Company or a Subsidiary and the Company or the Subsidiary shall have the right and is hereby
authorized to withhold from any payment due or transfer made under the Option or under the Plan or from any compensation or other amount owing to a Participant the amount (in cash, Shares, other securities, other Awards or other property) of any
applicable withholding taxes in respect of the Option, its exercise, or any payment or transfer under the Option or under the Plan and to take such action as may be necessary in the option of the Company to satisfy all obligations for the payment of
such taxes. 
  

 6 

 9. Securities Laws. Upon the acquisition of any Shares pursuant to the exercise of an Option, the
Participant will make or enter into such written representations, warranties and agreements as the Committee may reasonably request in order to comply with applicable securities laws or with this Agreement. 
  
 10. Notices. Any notice under this Agreement shall be addressed to the
Company in care of its Corporate Secretary at the principal executive office of the Company, with a copy to the Director, Human Resources, at the principal executive office of the Company, and to the Participant at the address appearing in the
personnel records of the Company for the Participant or to either party at such other address as either party hereto may hereafter designate in writing to the other. Any such notice shall be deemed effective upon receipt thereof by the addressee.

  
 11. Personal Data. The Company, the Participant’s local
employer and the local employer’s parent company or companies may hold, collect, use, process and transfer, in electronic or other form, certain personal information about the Participant for the exclusive purpose of implementing, administering
and managing the Participant’s participation in the Plan. Participant understands that the following personal information is required for the above named purposes: his/her name, home address and telephone number, office address (including
department and employing entity) and telephone number, e-mail address, date of birth, citizenship, country of residence at the time of grant, work location country, system employee ID, employee local ID, employment status (including international
status code), supervisor (if applicable), job code, title, salary, bonus target and bonuses paid (if applicable), termination date and reason, tax payer’s identification number, tax equalization code, US Green Card holder status, contract type
(single/dual/multi), any shares of stock or directorships held in the Company, details of all stock option grants (including number of grants, grant dates, exercise price, vesting type, vesting dates, expiration dates, and any other information
regarding options that have been granted, canceled, vested, unvested, exercisable, exercised or outstanding) with respect to the Participant, estimated tax withholding rate, brokerage account number (if applicable), and brokerage fees (the
“Data”). Participant understands that Data may be collected from the Participant directly or, on Company’s request, from Participant’s local employer. Participant understands that Data may be transferred to third parties
assisting the Company in the implementation, administration and management of the Plan, including the brokers approved by the Company, the broker selected by the Participant from among such Company-approved brokers (if applicable), tax consultants
and the Company’s software providers (the “Data Recipients”). Participant understands that some of these Data Recipients may be located outside the Participant’s country of residence, and that the Data Recipient’s country
may have different data privacy laws and protections than the Participant’s country of residence. Participant understands that the Data Recipients will receive, possess, use, retain and transfer the Data, in electronic or other form, for the
purposes of implementing, administering and managing the Participant’s participation in the Plan, including any requisite transfer of such Data as may be required for the administration of the Plan and/or the subsequent holding of shares of
common stock on the Participant’s behalf by a broker or other third party with whom the Participant may elect to deposit any shares of common stock acquired pursuant to the Plan. Participant understands that Data will be held only as long as
necessary to implement, administer and manage the Participant’s participation in the Plan. Participant understands that Data may also be made available to public authorities as required by law, e.g., to the U.S. government. Participant 

  

 7 

 
understands that the Participant may, at any time, review Data and may provide updated Data or corrections to the Data by written notice to the Company.
Except to the extent the collection, use, processing or transfer of Data is required by law, Participant may object to the collection, use, processing or transfer of Data by contacting the Company in writing. Participant understands that such
objection may affect his/her ability to participate in the Plan. Participant understands that he/she may contact the Company’s Director of Human Resources to obtain more information on the consequences of such objection. 
  
 12. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to conflicts of laws, and any and all disputes between the Participant and the Company or any Subsidiary relating to the Option shall be brought only in a state or federal court of
competent jurisdiction sitting in either Los Angeles County or Orange County, California and the Participant and the Company and any Affiliate hereby irrevocably submit to the jurisdiction of any such court and irrevocably agree that venue for any
such action shall be only in any such court. 
  
 13. Entire
Agreement. This Agreement, together with the Notice and the Plan, embodies the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written agreements and
understandings relating to the subject matter hereof. No statement, representation, warranty, covenant or agreement not expressly set forth in this Agreement or the Notice shall affect or be used to interpret, change or restrict, the express terms
and provisions of this Agreement or the Notice; provided, that this Agreement and the Notice shall be subject to and governed by the Plan, and in the event of any inconsistency between the provisions of this Agreement or the Notice and the
provisions of the Plan, the provisions of the Plan shall govern. 
  
 14. Modifications And Amendments. The terms and provisions of this Agreement and the Notice may be modified or amended as provided in the Plan. 
  
 15. Waivers And Consents. Except as provided in the Plan, the terms and provisions of this Agreement and the Notice may be waived, or consent for the
departure therefrom granted, only by a written document executed by the party entitled to the benefits of such terms or provisions. No such waiver or consent shall be deemed to be or shall constitute a waiver or consent with respect to any other
terms or provisions of this Agreement or the Notice, whether or not similar. Each such waiver or consent shall be effective only in the specific instance and for the purpose for which it was given, and shall not constitute a continuing waiver or
consent. 
  
 16. Reformation; Severability. If any provision of
this Agreement or the Notice (including any provision of the Plan that is incorporated herein by reference) shall hereafter be held to be invalid, unenforceable or illegal, in whole or in part, in any jurisdiction under any circumstances for any
reason, (i) such provision shall be reformed to the minimum extent necessary to cause such provision to be valid, enforceable and legal while preserving the intent of the parties as expressed in, and the benefits of the parties provided by, this
Agreement, the Notice and the Plan or (ii) if such provision cannot be so reformed, such provision shall be severed from this Agreement or the Notice and an equitable adjustment shall be made to this Agreement or the Notice (including, without
limitation, addition of necessary further provisions) 

  

 8 

 
so as to give effect to the intent as so expressed and the benefits so provided. Such holding shall not affect or impair the validity, enforceability or
legality of such provision in any other jurisdiction or under any other circumstances. Neither such holding nor such reformation or severance shall affect the legality, validity or enforceability of any other provision of this Agreement, the Notice
or the Plan. 
  
 17. Receipt of Documents. By entering into this
Agreement, the Participant agrees and acknowledges that (i) the Participant has received and read a copy of the Plan and (ii) the Option is granted pursuant to the Plan and is therefore subject to all of the terms of the Plan. 
  
 IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the      day of                     , 200   at
                                        .

  

					
	COMPANY
	
	ANNA’S LINENS INC.
		
	By:	 	 
	 	 	 Its:
	 	 

					
	
	PARTICIPANT
	
	 
	 Name:
	 	 

  

 9

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