Document:

Exhibit
10.1

Cutter &
Buck Inc.

2006 Equity Incentive Plan

TABLE OF CONTENTS

	
  

  	
   

  	
  Page

  	
   

  
	
  ARTICLE 1.

  	
  INTRODUCTION

  	
   

  	
  1

  	
   

  
	
  ARTICLE 2.

  	
  ADMINISTRATION

  	
   

  	
  1

  	
   

  
	
  2.1

  	
   

  	
  Committee Composition

  	
   

  	
  1

  	
   

  
	
  2.2

  	
   

  	
  Committee
  Responsibilities

  	
   

  	
  1

  	
   

  
	
  2.3

  	
   

  	
  Committee for
  Non-Officer/Director Grants

  	
   

  	
  1

  	
   

  
	
  ARTICLE 3. 

  	
  SHARES AVAILABLE FOR
  GRANTS

  	
   

  	
  1

  	
   

  
	
  3.1

  	
   

  	
  Basic Limitation

  	
   

  	
  1

  	
   

  
	
  3.2

  	
   

  	
  Share Sub-limitations

  	
   

  	
  2

  	
   

  
	
  3.3

  	
   

  	
  Additional Shares

  	
   

  	
  2

  	
   

  
	
  ARTICLE 4. 

  	
  ELIGIBILITY

  	
   

  	
  2

  	
   

  
	
  4.1

  	
   

  	
  Grants

  	
   

  	
  2

  	
   

  
	
  4.2

  	
   

  	
  Incentive Stock Options

  	
   

  	
  2

  	
   

  
	
  ARTICLE 5. 

  	
  OPTIONS

  	
   

  	
  2

  	
   

  
	
  5.1

  	
   

  	
  Stock Option Agreement

  	
   

  	
  2

  	
   

  
	
  5.2

  	
   

  	
  Number of Shares

  	
   

  	
  2

  	
   

  
	
  5.3

  	
   

  	
  Exercise Price

  	
   

  	
  2

  	
   

  
	
  5.4

  	
   

  	
  Exercisability and Term

  	
   

  	
  3

  	
   

  
	
  5.5

  	
   

  	
  Modification or
  Assumption of Options/No Repricing

  	
   

  	
  3

  	
   

  
	
  ARTICLE 6. 

  	
  PAYMENT FOR OPTION
  SHARES

  	
   

  	
  3

  	
   

  
	
  6.1

  	
   

  	
  General Rule

  	
   

  	
  3

  	
   

  
	
  6.2

  	
   

  	
  Stock Swap

  	
   

  	
  3

  	
   

  
	
  6.3

  	
   

  	
  Exercise/Sale

  	
   

  	
  3

  	
   

  
	
  6.4

  	
   

  	
  Exercise/Pledge

  	
   

  	
  3

  	
   

  
	
  ARTICLE 7. 

  	
  STOCK APPRECIATION
  RIGHTS

  	
   

  	
  3

  	
   

  
	
  7.1

  	
   

  	
  SAR Agreement

  	
   

  	
  3

  	
   

  
	
  7.2

  	
   

  	
  Number of Shares

  	
   

  	
  4

  	
   

  
	
  7.3

  	
   

  	
  Exercise Price

  	
   

  	
  4

  	
   

  
	
  7.4

  	
   

  	
  Exercisability and Term

  	
   

  	
  4

  	
   

  
	
  7.5

  	
   

  	
  Exercise of SARs

  	
   

  	
  4

  	
   

  
	
  7.6

  	
   

  	
  Modification or Assumption
  of SARs/No Repricing

  	
   

  	
  4

  	
   

  
	
  ARTICLE 8. 

  	
  UNRESTRICTED SHARES

  	
   

  	
  4

  	
   

  
	
  8.1

  	
   

  	
  Unrestricted Stock

  	
   

  	
  4

  	
   

  
	
  8.2

  	
   

  	
  Payment for Awards

  	
   

  	
  4

  	
   

  
	
  ARTICLE 9. 

  	
  RESTRICTED SHARES

  	
   

  	
  4

  	
   

  
	
  9.1

  	
   

  	
  Restricted Stock
  Agreement

  	
   

  	
  4

  	
   

  
	
  9.2

  	
   

  	
  Payment for Awards

  	
   

  	
  5

  	
   

  
	
  9.3

  	
   

  	
  Vesting Conditions

  	
   

  	
  5

  	
   

  
	
  9.4

  	
   

  	
  Voting and Dividend
  Rights

  	
   

  	
  5

  	
   

  
	
  ARTICLE 10. 

  	
  UNITS

  	
   

  	
  6

  	
   

  
	
  10.1

  	
   

  	
  Share and Performance
  Units

  	
   

  	
  6

  	
   

  
	
  10.2

  	
   

  	
  Agreement

  	
   

  	
  6

  	
   

  
	
  10.3

  	
   

  	
  Payment for Awards

  	
   

  	
  6

  	
   

  
	
  10.4

  	
   

  	
  Vesting Conditions

  	
   

  	
  6

  	
   

  
	
  10.5

  	
   

  	
  Voting and Dividend
  Rights

  	
   

  	
  7

  	
   

  
							

 

 i
 

 

	
  10.6

  	
   

  	
  Form and Time of
  Settlement of Units

  	
   

  	
  7

  	
   

  
	
  10.7

  	
   

  	
  Creditors’ Rights

  	
   

  	
  7

  	
   

  
	
  ARTICLE 11. 

  	
  PROTECTION AGAINST DILUTION

  	
   

  	
  7

  	
   

  
	
  11.1

  	
   

  	
  Adjustments

  	
   

  	
  7

  	
   

  
	
  11.2

  	
   

  	
  Dissolution or
  Liquidation

  	
   

  	
  8

  	
   

  
	
  ARTICLE 12. 

  	
  CHANGE IN CONTROL

  	
   

  	
  8

  	
   

  
	
  ARTICLE 13. 

  	
  LIMITATION ON RIGHTS

  	
   

  	
  8

  	
   

  
	
  13.1

  	
   

  	
  Retention Rights

  	
   

  	
  8

  	
   

  
	
  13.2

  	
   

  	
  Shareholders’ Rights

  	
   

  	
  8

  	
   

  
	
  13.3

  	
   

  	
  Regulatory Requirements

  	
   

  	
  8

  	
   

  
	
  13.4

  	
   

  	
  Nontransferability

  	
   

  	
  8

  	
   

  
	
  13.5

  	
   

  	
  Section 409A

  	
   

  	
  9

  	
   

  
	
  13.6

  	
   

  	
  Unfunded Status of
  Awards

  	
   

  	
  9

  	
   

  
	
  13.7

  	
   

  	
  No Fractional Shares

  	
   

  	
  9

  	
   

  
	
  13.8

  	
   

  	
  Forfeiture for Cause

  	
   

  	
  9

  	
   

  
	
  ARTICLE 14. 

  	
  WITHHOLDING TAXES

  	
   

  	
  9

  	
   

  
	
  14.1

  	
   

  	
  General

  	
   

  	
  9

  	
   

  
	
  14.2

  	
   

  	
  Share Withholding

  	
   

  	
  9

  	
   

  
	
  ARTICLE 15. 

  	
  FUTURE OF THE PLAN

  	
   

  	
  10

  	
   

  
	
  15.1

  	
   

  	
  Term of the Plan

  	
   

  	
  10

  	
   

  
	
  15.2

  	
   

  	
  Amendment or
  Termination

  	
   

  	
  10

  	
   

  
	
  ARTICLE 16. 

  	
  DEFINITIONS

  	
   

  	
  10

  	
   

  
							

 

 

 ii

Cutter &
Buck Inc.

2006 Equity Incentive Plan

ARTICLE
1.   INTRODUCTION

The purpose of the Plan is to promote the long-term
success of the Company and its subsidiaries and the creation of shareholder
value by (a) encouraging Employees, Consultants and Non-Employee Directors
to focus on critical long-range objectives, (b) encouraging the attraction
and retention of Employees, Consultants and Non-Employee Directors with
exceptional qualifications and (c) linking Employees and Non-Employee
Directors directly to shareholder interests through stock ownership. The Plan
seeks to achieve this purpose by providing for Awards in the form of Options
(which may constitute incentive stock options (ISOs) or nonqualified stock
options (NSOs)), stock appreciation rights (SARs), Unrestricted Shares,
Restricted Shares or Units (including Share Units and Performance Units). The
Plan is designed so that Awards granted hereunder intended to comply with the
requirements for “performance-based compensation” under Section 162(m) of
the Code may comply with such requirements and, insofar as may be applicable to
such Awards, the Plan shall be interpreted in a manner consistent with such
requirements.

The Plan shall be governed by, and construed in
accordance with, the laws of the State of Washington (except their
choice-of-law provisions).

ARTICLE
2.   ADMINISTRATION

2.1   Committee
Composition.   The Committee shall administer the Plan. The
Committee shall consist
exclusively of two or more directors of the Company, who shall be appointed by
the Board.

2.2   Committee
Responsibilities.   The Committee shall (a) select the
Employees, Consultants and Non-Employee
Directors who are to receive Awards under the Plan, (b) determine the
type, number, vesting requirements and other features and conditions of such
Awards, (c) interpret the Plan and (d) make all other decisions
relating to the operation of the Plan. The Committee may adopt such rules or
guidelines as it deems appropriate to implement the Plan. The Committee may
only grant those Awards that either comply with the applicable requirements of Section 409A
of the Code or do not result in the deferral of compensation within the meaning
of Section 409A of the Code. The Committee’s determinations under the Plan
shall be final and binding on all persons.

2.3   Committee for
Non-Officer/Director Grants.   The Board may also appoint a
secondary committee of
the Board or a senior executive officer to administer the Plan with respect to
Employees who are not considered officers or directors of the Company under Section 16
of the Exchange Act. That committee or senior executive officer may grant
Awards under the Plan to such Employees and may determine all features and
conditions of such Awards. Within the limitations of this Section 2.3, any
reference in the Plan to the Committee shall include such secondary committee
or senior executive officer, as the case may be.

ARTICLE
3.   SHARES AVAILABLE FOR GRANTS

3.1   Basic Limitation.   Shares
issued pursuant to the Plan shall be authorized but unissued shares. The aggregate number of
Options, SARs, Unrestricted Shares, Restricted Shares or Share Units awarded
under the Plan shall not exceed (a) 600,000 plus (b) the additional
shares of Common Stock described in Section 3.3 plus (c) the shares
of Common Stock that, as of August 10, 2006, were available for issuance
under the Company’s 1995 Employee Stock Option Plan, 1995 Non-Employee Director
Stock Incentive Plan, 1997 Stock Incentive Plan, 1999 Non-Employee Director
Stock Incentive Plan and 2000 Stock Incentive Plan (collectively, the “Prior
Plans”) or that thereafter become available for issuance under the 

 1
 

Prior
Plans in accordance with its terms as in effect on such date. The limitations
of this Section 3.1 and Section 3.2 shall be subject to adjustment
pursuant to Article 11.

3.2   Share
Sub-limitations.   The
aggregate number of Unrestricted Shares, Restricted Shares and Share Units awarded under
the Plan shall not exceed (a) 300,000 plus (b) the additional shares
described in Section 3.3.

3.3   Additional
Shares.   If Restricted Shares are forfeited, then such
Restricted Shares shall again become
available for Awards under the Plan. If Options, SARs or Share Units are
forfeited or terminate for any other reason before being exercised, then the
corresponding shares of Common Stock shall again become available for Awards
under the Plan. If Units are settled, then only the number of shares of Common
Stock (if any) actually issued in settlement of such Units shall reduce the
number available under Sections 3.1 and 3.2 and the balance shall again
become available for Awards under the Plan. If SARs are exercised, then only
the number of shares of Common Stock (if any) actually issued in settlement of
such SARs shall reduce the number available under Sections 3.1 and 3.2 and
the balance shall again become available for Awards under the Plan. If dividend
equivalents are granted, then only the number of shares of Common Stock (if
any) actually issued with respect to such rights shall reduce the number
available under Sections 3.1 and 3.2. Shares that are exchanged by a
Participant or withheld by the Company as full or partial payment in connection
with any Award under the Plan shall be available for subsequent Awards under
the Plan. The foregoing notwithstanding, the aggregate number of shares of
Common Stock that may be issued under the Plan upon the exercise of ISOs shall
not be increased when Restricted Shares, Unrestricted Shares or other shares of
Common Stock are forfeited.

ARTICLE
4.   ELIGIBILITY

4.1   Grants.   Employees,
Consultants and Non-Employee Directors shall be eligible for the grant of NSOs, SARs, Unrestricted
Shares, Restricted Shares, Share Units or Performance Units.

4.2   Incentive Stock
Options.   Only Employees who are common-law employees of
the Company or a
Subsidiary shall be eligible for the grant of ISOs. In addition, an Employee
who owns more than 10% of the total combined voting power of all classes of
outstanding stock of the Company or any of its Subsidiaries shall not be
eligible for the grant of an ISO unless the requirements set forth in
section 422(c)(6) of the Code are satisfied.

ARTICLE
5.   OPTIONS

5.1   Stock Option
Agreement.   Each grant of an Option under the Plan shall be
evidenced by a Stock
Option Agreement between the Optionee and the Company. Such Option shall be
subject to all applicable terms of the Plan and may be subject to any other
terms that are not inconsistent with the Plan. The Stock Option Agreement shall
specify whether the Option is an NSO or an ISO. The provisions of the various
Stock Option Agreements entered into under the Plan need not be identical.

5.2   Number of Shares.   Each
Stock Option Agreement shall specify the number of shares of Common Stock subject to the
Option, which shall be subject to adjustment in accordance with Article 11.
Options granted to any Employee in a single fiscal year of the Company shall
not cover more than 50,000 shares of Common Stock, except that Options granted
to a new Employee in the fiscal year of the Company in which his or her service
as an Employee first commences shall not cover more than 100,000 shares of
Common Stock. The limitation set forth in the preceding sentence shall be
subject to adjustment in accordance with Article 11.

5.3   Exercise Price.   Each
Stock Option Agreement shall specify the Exercise Price; provided that the Exercise Price under an
Option shall in no event be less than 100% of the Fair Market Value of a share
of Common Stock on the date of grant.

 2
 

5.4   Exercisability
and Term.   Each Stock Option Agreement shall specify the date
or event when all or any
installment of the Option is to become exercisable. The Stock Option Agreement
shall also specify the term of the Option; provided that the term of an ISO
shall in no event exceed 10 years from the date of grant. A Stock Option
Agreement may provide for accelerated exercisability in the event of the
Optionee’s death, disability or retirement or other events and may provide for
expiration prior to the end of its term in the event of the termination of the
Optionee’s Service. Options may be awarded in combination with SARs, and such
an Award may provide that the Options will not be exercisable unless the
related SARs are forfeited.

5.5   Modification or
Assumption of Options/No Repricing.   Within the limitations of
the Plan, the Committee
may modify Options, or assume outstanding options granted by another issuer,
provided that no Option shall be repriced. The foregoing notwithstanding, no
modification of an Option shall, without the consent of the Optionee, alter or
impair his or her rights or obligations under such Option.

ARTICLE
6.   PAYMENT FOR OPTION SHARES

6.1   General Rule.   The
entire Exercise Price of shares of Common Stock issued upon exercise of Options shall be payable
in cash or cash equivalents at the time when such shares of Common Stock are
purchased, except as follows:

(a)           In
the case of an ISO granted under the Plan, payment shall be made only pursuant
to the express provisions of the applicable Stock Option Agreement. The Stock
Option Agreement may specify that payment may be made in any form(s) described
in this Article 6.

(b)           In
the case of an NSO, the Committee may at any time accept payment in any form(s)
described in this Article 6.

6.2   Stock Swap.   To
the extent that this Section 6.2 is applicable, all or any part of the
Exercise Price may be
paid by surrendering, or attesting to the ownership of, shares of Common Stock
that are already owned by the Optionee. Such shares of Common Stock shall be
valued at their Fair Market Value on the date when the new shares of Common
Stock are purchased under the Plan. If originally received pursuant to any
Company benefit plan, shares of Common Stock swapped in payment of the Exercise
Price must have been held by the Optionee for at least six months.

6.3   Exercise/Sale.   To
the extent that this Section 6.3 is applicable, all or any part of the
Exercise Price and any
withholding taxes may be paid by delivering (on a form prescribed by the
Company) an irrevocable direction to a securities broker approved by the
Company to sell all or part of the shares of Common Stock being purchased under
the Plan and to deliver all or part of the sales proceeds to the Company.

6.4   Exercise/Pledge.   To
the extent that this Section 6.4 is applicable, all or any part of the Exercise Price and any
withholding taxes may be paid by delivering (on a form prescribed by the
Company) an irrevocable direction to pledge all or part of the shares of Common
Stock being purchased under the Plan to a securities broker or lender approved
by the Company, as security for a loan, and to deliver all or part of the loan
proceeds to the Company.

ARTICLE
7.   STOCK APPRECIATION RIGHTS

7.1   SAR Agreement.   Each
grant of an SAR under the Plan shall be evidenced by an SAR Agreement between the
Participant and the Company. Such SAR shall be subject to all applicable terms
of the Plan and may be subject to any other terms that are not inconsistent
with the Plan. The provisions of the various SAR Agreements entered into under
the Plan need not be identical.

 3
 

7.2   Number of Shares.   Each
SAR Agreement shall specify the number of shares of Common Stock to which the SAR pertains
and shall provide for the adjustment of such number in accordance with Article 11.
SARs granted to any Participant in a single calendar year shall in no event
pertain to more than 50,000 shares of Common Stock, except that SARs granted to
a new Employee in the fiscal year of the Company in which his or her service as
an Employee first commences shall not cover more than 100,000 shares of Common
Stock. The limitation set forth in the preceding sentence shall be subject to
adjustment in accordance with Article 11.

7.3   Exercise Price.   Each
SAR Agreement shall specify the Exercise Price; provided that the Exercise Price under an SAR
shall in no event be less than 100% of the Fair Market Value of a share of
Common Stock on the date of grant.

7.4   Exercisability
and Term.   Each SAR Agreement shall specify the date when all
or any installment of
the SAR is to become exercisable. The SAR Agreement shall also specify the term
of the SAR. An SAR Agreement may provide for accelerated exercisability in the
event of the Optionee’s death, disability or retirement or other events and may
provide for expiration prior to the end of its term in the event of the
termination of the Optionee’s Service. SARs may be awarded in combination with
Options, and such an Award may provide that the SARs will not be exercisable
unless the related Options are forfeited.

7.5   Exercise of SARs.   Upon
exercise of an SAR, the Participant (or any person having the right to exercise the SAR after
his or her death) shall receive from the Company (a) shares of Common
Stock, (b) cash or (c) a combination of shares of Common Stock and cash,
as the Committee shall determine. The amount of cash and/or the Fair Market
Value of shares of Common Stock received upon exercise of SARs shall, in the
aggregate, be equal to the amount by which the Fair Market Value (on the date
of surrender) of the shares of Common Stock subject to the SARs exceeds the
Exercise Price.

7.6   Modification or
Assumption of SARs/No Repricing.   Within the limitations of the
Plan, the Committee may
modify SARs, or assume outstanding stock appreciation rights granted by another
issuer, provided that no SAR shall be repriced. The foregoing notwithstanding,
no modification of an SAR shall, without the consent of the Optionee, alter or
impair his or her rights or obligations under such SAR.

ARTICLE
8.   UNRESTRICTED SHARES

8.1   Unrestricted
Stock.   The Committee may grant shares of Common Stock that
have no restrictions.
Such Unrestricted Shares shall be subject to all applicable terms of the Plan
and may be subject to any other terms that are not inconsistent with the Plan. In
no event shall the number of Unrestricted Shares which are granted to any
Participant in a single fiscal year exceed 50,000, except that Unrestricted
Shares granted to a new Employee in the fiscal year of the Company in which his
or her service as an Employee first commences shall not exceed 100,000 shares,
subject to adjustment in accordance with Article 11.

8.2   Payment for
Awards.   Unrestricted Shares may be awarded under the Plan for
such consideration
consisting of any tangible or intangible property or benefit to the Company as
the Committee may determine, including cash, promissory notes, services
performed and contracts for services to be performed.

ARTICLE
9.   RESTRICTED SHARES

9.1   Restricted Stock
Agreement.   Each grant of Restricted Shares under the Plan
shall be evidenced by a
Restricted Stock Agreement between the recipient and the Company. Such
Restricted Shares shall be subject to all applicable terms of the Plan and may
be subject to any other terms that are 

 4
 

not
inconsistent with the Plan. The provisions of the various Restricted Stock
Agreements entered into under the Plan need not be identical.

9.2   Payment for
Awards.   Restricted Shares may be awarded under the Plan for
such consideration
consisting of any tangible or intangible property or benefit to the Company as
the Committee may determine, including cash, promissory notes, services
performed and contracts for services to be performed.

9.3   Vesting
Conditions.   Each Award of Restricted Shares may or may not be
subject to vesting. Vesting
shall occur, in full or in installments, upon satisfaction of the conditions
specified in the Restricted Stock Agreement. The Committee may include among
such conditions the requirement that the performance of the Company or a
business unit of the Company for a specified period equal or exceed a target
determined in advance by the Committee. Such target shall be based on any one
or combination of the following performance criteria:  (a) achievement of a specified
percentage increase or quantitative level in the Company’s shareholder return
as compared to a comparator group as determined by the Committee, (b) achievement
of a specified percentage increase or quantitative level in the trading price
of the Company’s Common Stock, (c) achievement of a specified percentage
increase or quantitative level in the results of operations, such as sales,
earnings, cash flow, economic profit or return on investment (including return
on equity, return on invested capital or return on assets) of the Company or of
a subsidiary or division or other segment of the Company for which the
participant has responsibilities, or (d) achievement of a specified
percentage increase or quantitative level in the other financial results, such
as profit margins, expense reduction or asset management goals of the Company
or of a subsidiary or division or other segment of the Company for which the
participant has responsibilities.. The Committee shall identify such conditions
not later than the 90th day of such period, and before 25% of such
period has elapsed. The Committee shall certify in writing prior to payout that
such conditions and any other material terms were in fact satisfied. Approved
minutes of a meeting of the Committee may be treated as such written
certification.

In no event shall the number of Restricted Shares
which are subject to performance-based vesting conditions and which are granted
to any Participant in a single fiscal year exceed 50,000, except that
Restricted Shares granted to a new Employee in the fiscal year of the Company
in which his or her service as an Employee first commences shall not exceed
100,000 shares, subject to adjustment in accordance with Article 11.

If the participant’s employment with the Company or
Subsidiary is terminated before the end of the period of time, designated by
the Committee, over which Restricted Shares may be earned (a “Performance Cycle”)
for any reason other than retirement, disability, or death, the participant
shall forfeit all rights with respect to any Restricted Shares that were being
earned during the Performance Cycle. The Committee, in its sole discretion, may
establish guidelines providing that if a participant’s employment is terminated
before the end of a Performance Cycle by reason of retirement, disability, or
death, the participant shall be entitled to a prorated payment with respect to
any shares of Restricted Stock that were being earned during the Performance
Cycle. Alternatively, a Restricted Stock Agreement may provide for accelerated
vesting in the event of the Participant’s death, disability or retirement or
other events.

9.4   Voting and
Dividend Rights.   The holders of Restricted Shares awarded
under the Plan shall have
the voting, dividend and other rights as set forth in their Restricted Stock
Agreement, and may have the same voting, dividend and other rights as the
Company’s other shareholders. A Restricted Stock Agreement may require that the
holders of Restricted Shares invest any cash dividends received in additional
Restricted Shares. Such additional Restricted Shares shall be subject to the
same conditions and restrictions as the Award with respect to which the
dividends were paid.

 5
 

ARTICLE
10.   UNITS

10.1   Share and
Performance Units.   Units
may either be Share Units or Performance Units. Share Units are designated in
shares of Common Stock and Performance Units are designated in a dollar amount
of cash.

10.2   Agreement.   Each
grant of Units under the Plan shall be evidenced by an Agreement between the recipient and the
Company. Such Units shall be subject to all applicable terms of the Plan and
may be subject to any other terms that are not inconsistent with the Plan. The
provisions of the various Share Unit or Performance Unit Agreements entered
into under the Plan need not be identical. Units may be granted in
consideration of a reduction in the recipient’s other compensation.

10.3   Payment for
Awards.   To the extent that an Award is granted in the form of
Share Units or Performance
Units no cash consideration shall be required of the Award recipients.

10.4   Vesting
Conditions.   Each Award of Units may or may not be subject to
vesting. Vesting shall occur,
in full or in installments, upon satisfaction of the conditions specified in
the Unit Agreement. The Committee may include among such conditions the
requirement that the performance of the Company or a business unit of the
Company for a specified period of one or more years equal or exceed a target
determined in advance by the Committee. Such target shall be based on any one
or combination of the following performance criteria:  (a) achievement of a specified
percentage increase or quantitative level in the Company’s shareholder return
as compared to a comparator group as determined by the Committee, (b) achievement
of a specified percentage increase or quantitative level in the trading price
of the Company’s Common Stock, (c) achievement of a specified percentage
increase or quantitative level in the results of operations, such as sales,
earnings, cash flow, economic profit or return on investment (including return
on equity, return on invested capital or return on assets) of the Company or of
a subsidiary or division or other segment of the Company for which the
participant has responsibilities, or (d) achievement of a specified
percentage increase or quantitative level in the other financial results, such
as profit margins, expense reduction or asset management goals of the Company
or of a subsidiary or division or other segment of the Company for which the
participant has responsibilities.   The
Committee shall determine such conditions not later than the 90th day of such period, and before 25% of such
period has elapsed. The Committee shall certify in writing prior to payout that
such conditions and any other material terms were in fact satisfied. Approved
minutes of a meeting of the Committee may be treated as such written
certification.

In no event shall the number of Share Units which are
subject to performance-based vesting conditions and which are granted to any
Participant in a single fiscal year exceed 50,000, subject to adjustment in
accordance with Article 11. In no event shall the dollar value of
Performance Units which are subject to performance-based vesting conditions and
which are granted to any Participant in a single fiscal year exceed $500,000.

If the participant’s employment with the Company or
Subsidiary is terminated before the end of the period of time, designated by
the Committee, over which Units may be earned (a “Performance Cycle”) for any
reason other than retirement, disability, or death, the participant shall
forfeit all rights with respect to any Units that were being earned during the
Performance Cycle. The Committee, in its sole discretion, may establish
guidelines providing that if a participant’s employment is terminated before
the end of a Performance Cycle by reason of retirement, disability, or death,
the participant shall be entitled to a prorated payment with respect to any
Units that were being earned during the Performance Cycle. Alternatively, a
Share Unit or Performance Unit Agreement may provide for accelerated vesting in
the event of the Participant’s death, disability or retirement or other events.

 6

10.5   Voting and
Dividend Rights.   The holders of Units shall have no voting
rights. Prior to settlement
or forfeiture, any Share Unit awarded under the Plan may, at the Committee’s
discretion as evidenced in the Unit Agreement, carry with it a right to dividend
equivalents. Such right entitles the holder to be credited with an amount equal
to all cash dividends paid on one share of Common Stock while the Share Unit is
outstanding. Dividend equivalents may be converted into additional Share Units.
Settlement of dividend equivalents may be made in the form of cash, in the form
of shares of Common Stock, or in a combination of both. Prior to distribution,
any dividend equivalents that are not paid shall be subject to the same
conditions and restrictions as the Share Units to which they attach.

10.6   Form and
Time of Settlement of Units.   Settlement of vested Units may be
made in the form of (a) cash,
(b) shares of Common Stock (Unrestricted Shares or Restricted Shares) or (c) any
combination of both, as determined by the Committee. Methods of converting
Units into cash may include (without limitation) a method based on the average
Fair Market Value of shares of Common Stock over a series of trading days. Vested
Units may be settled in a lump sum or in installments. The distribution may
occur or commence when all vesting conditions applicable to the Units have been
satisfied or have lapsed, or it may be deferred to any later date. The amount
of a deferred distribution may be increased by an interest factor or by dividend
equivalents. Until an Award of Share Units is settled, the number of such Share
Units shall be subject to adjustment pursuant to Article 11.

10.7   Creditors’
Rights.   A holder of Units shall have no rights other than
those of a general creditor
of the Company. Units represent an unfunded and unsecured obligation of the
Company, subject to the terms and conditions of the applicable Share Unit or
Performance Unit Agreement.

ARTICLE
11.   PROTECTION AGAINST DILUTION

11.1   Adjustments.   Upon or in contemplation of any
reclassification, recapitalization, stock split (including a stock split
in the form of a share dividend) or reverse stock split (“stock split”); any
merger, combination, consolidation, or other reorganization; any spin-off,
split-up, or similar extraordinary dividend distribution in respect of shares
of Common Stock (whether in the form of securities or property); any exchange
of shares of Common Stock or other securities of the Company, or any similar,
unusual or extraordinary corporate transaction in respect of shares of Common
Stock; or a sale of all or substantially all the assets of the Company as an
entirety; then the Committee shall, in such manner, to such extent (if any) and
at such time as it deems appropriate and equitable in the circumstances:

(a)           proportionately adjust any or all of (A) the
number and type of shares of Common Stock (or other securities) that thereafter
may be made the subject of Awards (including the specific share limits,
maximums and numbers of shares set forth elsewhere in this Plan), (B) the
number, amount and type of shares of Common Stock (or other securities or
property) subject to any or all outstanding Awards, (C) the grant,
purchase, or exercise price of any or all outstanding Awards, (D) the
securities, cash or other property deliverable upon exercise of any or all
outstanding Awards, or (E) the performance standards appropriate to any or
all outstanding Awards, or

(b)           make provision for a cash payment or
for the assumption, substitution or exchange of any or all outstanding
share-based Awards or the cash, securities or property deliverable to the
holder of any or all outstanding share-based Awards, based upon the
distribution or consideration payable to holders of the outstanding shares of
Common Stock upon or in respect of such event.

The Committee may adopt such valuation methodologies
for outstanding Awards as it deems reasonable in the event of a cash or
property settlement and, in the case of Options, SARs or similar rights, but
without limitation on other methodologies, may base such settlement solely upon
the excess if any of the per share amount payable upon or in respect of such
event over the grant price of the Award, unless otherwise provided in, or by
authorized amendment to, the Award or provided in another applicable 

 7
 

agreement with the
Participant. With respect to any ISO, in the discretion of the Committee, the
adjustment may be made in a manner that would cause the Option to cease to
qualify as an ISO.

11.2   Dissolution or
Liquidation.   To the extent not previously exercised, settled
or assumed, Options,
SARs, Share Units and Performance Units shall terminate immediately prior to
the dissolution or liquidation of the Company.

ARTICLE
12.   CHANGE IN CONTROL

Unless otherwise
determined by the Committee at the time of grant and evidenced in an agreement
pursuant to which Awards are granted, in the event of a Change in Control:

(a)           any Award carrying a right to
exercise that was not previously exercisable and vested shall become fully
exercisable and vested; and

(b)           the restrictions, payment conditions,
and forfeiture conditions applicable to any other Award granted under the Plan
shall lapse and such Awards shall be deemed fully vested, and any performance
conditions imposed with respect to Awards shall be deemed to be fully achieved.

However, payment of an Award shall not be accelerated
unless the Change in Control also constitutes a “change in the ownership or
effective control of the corporation, or in the ownership of a substantial
portion of the assets of the corporation,” within the meaning of Section 409A(2)(A)(v) of
the Code.

ARTICLE
13.   LIMITATION ON RIGHTS

13.1   Retention Rights.   Neither
the Plan nor any Award granted under the Plan shall be deemed to give any individual a right
to remain an Employee, Consultant or Non-Employee Director. The Company and its
Subsidiaries reserve the right to terminate the Service of any Employee,
Consultant or Non-Employee Director at any time, with or without cause, subject
to applicable laws, the Company’s Restated Articles of Incorporation and Bylaws
and a written employment agreement (if any).

13.2   No Rights to
Awards; No Shareholder Rights.   No recipient shall have any
claim to be granted any
Award under the Plan, and there is no obligation for uniformity of treatment of
recipients. Unless otherwise provided in this Plan or in any Award, a
Participant shall have no dividend rights, voting rights or other rights as a
shareholder with respect to any shares of Common Stock covered by his or her
Award prior to the time when a stock certificate for such shares of Common
Stock is issued or, if applicable, the time when he or she becomes entitled to
receive such shares of Common Stock by filing any required notice of exercise
and paying any required Exercise Price. No adjustment shall be made for cash
dividends or other rights for which the record date is prior to such time,
except as expressly provided in the Plan.

13.3   Regulatory
Requirements.   Any other provision of the Plan notwithstanding,
the obligation of the
Company to issue shares of Common Stock under the Plan shall be subject to all
applicable laws, rules and regulations and such approval by any regulatory
body as may be required. The Company reserves the right to restrict, in whole
or in part, the delivery of shares of Common Stock pursuant to any Award prior
to the satisfaction of all legal requirements relating to the issuance of such
shares of Common Stock related to their registration, qualification or listing
or to an exemption from registration, qualification or listing.

13.4   Nontransferability.   Unless
otherwise provided in an agreement for an Award, Awards shall not be transferable by a
recipient of an Award except by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined under the Code or
Title I of ERISA, and shall be exercisable during the lifetime of a recipient
only by such recipient or his or her guardian or legal representative.

 8
 

13.5   Section 409A.   If
any provision of this Plan, an Award agreement, or a plan pursuant to which Awards are granted would
cause compensation to be includable in a recipient’s income pursuant to Section 409A(a)(1)(A) of
the Code, such provision shall be void, and the Plan, Award agreement, or such
plan shall be amended retroactively in such a way as to achieve substantially
similar economic results without causing such inclusion.

13.6   Unfunded Status
of Awards.   The Plan is intended to constitute an “unfunded”
plan for incentive
compensation. With respect to any payments not yet made to a recipient pursuant
to an Award, nothing contained in the Plan or any Award shall give any such
recipient any rights that are greater than those of a general creditor of the
Company.

13.7   No Fractional
Shares.   No fractional shares of Stock shall be issued or
delivered pursuant to the
Plan or any Award. The Committee shall determine whether cash or other Awards
shall be issued or paid in lieu of such fractional shares or whether such
fractional shares or any rights thereto shall be forfeited or otherwise
eliminated.

13.8   Forfeiture For
Cause.   Notwithstanding any other provision of this Plan to the
contrary, if the
recipient engages in conduct which constitutes Cause prior to, or during the
twelve month period following, the exercise of the Option or the vesting of the
Award, the Administrator (or its delegate) may:

(a)           rescind the exercise of any Option
exercised during the period beginning 12 months prior to through 24 months
after the recipient’s termination of employment or service with the Company or
its Subsidiary and cancel all outstanding Awards within 24 months after the
recipient’s termination of employment or service with the Company or its
Subsidiary, and

(b)           demand that the recipient pay over to
the Company the proceeds (less the recipient’s purchase price, if any) received
by the recipient upon (i) the sale, transfer or other transaction involving
the Shares acquired upon the exercise of any Option exercised during the period
beginning twelve months prior to through 24 months after the recipient’s
termination of employment or service with the Company or its Subsidiary or (ii) the
vesting of any Award within 12 months prior to through 24 months after the
recipient’s termination of employment or service with the Company or its
Subsidiary, in such manner and on such terms and conditions as may be required,
and, without limiting any other remedy the Company or its Subsidiary may have,
the Company shall be entitled to set-off against the amount of any such
proceeds any amount owed the recipient by the Company or its Subsidiary to the
fullest extent permitted by law.

ARTICLE
14.   WITHHOLDING TAXES

14.1   General.   To
the extent required by applicable federal, state, local or foreign law, a
Participant or his or
her successor shall make arrangements satisfactory to the Company for the
satisfaction of any withholding tax obligations that arise in connection with
the Plan. The Company shall not be required to issue any shares of Common Stock
or make any cash payment under the Plan until such obligations are satisfied.

14.2   Share
Withholding.   To the extent that applicable law subjects a Participant
to tax withholding
obligations, the Committee may permit such Participant to satisfy all or part
of such obligations by having the Company withhold all or a portion of any
shares of Common Stock that otherwise would be issued to him or her or by
surrendering all or a portion of any shares of Common Stock that he or she
previously acquired. Such shares of Common Stock shall be valued at their Fair
Market Value on the date when they are withheld or surrendered.

 9
 

ARTICLE
15.   FUTURE OF THE PLAN

15.1   Term of the Plan.   The
Plan, as set forth herein, shall become effective, subject to approval by the Company’s shareholders,
on the date the Board adopts the Plan and shall remain in effect for a period
of 10 years unless earlier terminated under Section 15.2.

15.2   Amendment or
Termination.   The Board may, at any time and for any reason,
amend or terminate the
Plan. An amendment of the Plan shall be subject to the approval of the Company’s
shareholders only to the extent required by applicable laws, regulations or
rules. No Awards shall be granted under the Plan after the termination thereof.
The termination of the Plan, or any amendment thereof, shall not affect any
Award previously granted under the Plan.

ARTICLE
16.   DEFINITIONS

16.1   “Award”
means any award of an Option, a SAR, an Unrestricted Share, a Restricted Share,
a Share Unit or a
Performance Unit under the Plan, including dividend equivalent rights at the
discretion of the Committee.

16.2   “Board”
means the Company’s Board of Directors, as constituted from time to time.

16.3   “Cause”
means (a) the unauthorized use or disclosure of the confidential
information or trade secrets
of the Company, which use or disclosure causes material harm to the Company, (b) conviction
of, or a plea of “guilty” or “no contest” to, a felony under the laws of the
United States or any State thereof, (c) gross negligence, (d) willful
misconduct or (e) a failure to perform assigned duties that continues
after the Participant has received written notice of such failure. The
foregoing, however, shall not be deemed an exclusive list of all acts or
omissions that the Company (or the Subsidiary employing the Participant) may
consider as grounds for the discharge of the Participant without Cause.

16.4   “Change
in Control” means:

(a)           The consummation of a merger or
consolidation of the Company with or into another entity or any other corporate
reorganization, if persons who were not shareholders of the Company immediately
prior to such merger, consolidation or other reorganization own immediately
after such merger, consolidation or other reorganization 50% or more of the
voting power of the outstanding securities of each of (i) the continuing
or surviving entity and (ii) any direct or indirect parent corporation of
such continuing or surviving entity;

(b)           The sale, transfer or other
disposition of all or substantially all of the Company’s assets;

(c)           A change in the composition of the
Board as a result of which fewer than 50% of the incumbent directors are
directors who either (i) had been directors of the Company on the date 24
months prior to the date of the event that may constitute a Change in Control
(the “original directors”) or (ii) were elected, or nominated for
election, to the Board with the affirmative votes of at least a majority of the
aggregate of the original directors who were still in office at the time of the
election or nomination and the directors whose election or nomination was
previously so approved; or

(d)           Any transaction as a result of which
any person is the “beneficial owner” (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing at least 25% of the total voting power represented by the Company’s
then outstanding voting securities. For purposes of this Paragraph (d),
the term “person” shall have the same meaning as when used in sections 13(d) and
14(d) of the Exchange Act but shall exclude (i) a trustee or other
fiduciary holding securities under an employee benefit plan of the Company or
of a Subsidiary and (ii) a corporation owned directly or indirectly by the
shareholders of the Company in substantially the same proportions as their
ownership of the common stock of the Company.

 10
 

A transaction shall
not constitute a Change in Control if its sole purpose is to change the state
of the Company’s incorporation or to create a holding company that will be
owned in substantially the same proportions by the persons who held the Company’s
securities immediately before such transaction.

16.5   “Code”
means the Internal Revenue Code of 1986, as amended.

16.6   “Committee”
means the Compensation Committee of the Company’s Board, with respect to Awards granted to Employees
and Consultants and means the Corporate Governance, Nominating and Succession
Committee of the Company’s Board with respect to Awards granted to Non-Employee
Director; provided, however, that Board may, if it so chooses, retain authority
to administer all or any part of the Plan and, to the extent the Board does so,
references in the Plan to “Committee” shall mean and be references to the
Board. The Committee shall at all times satisfy the provisions of Rule 16b-3,
Section 162(m) of the Code and applicable NASD rules.

16.7   “Consultant”
means a consultant or adviser who provides bona fide services to the Company or
Subsidiary as an
independent contractor. Service as a Consultant shall be considered employment
for all purposes of the Plan, except as provided in Section 4.1.

16.8   “Company”
means Cutter & Buck Inc., a Washington corporation.

16.9   “Employee”
means a common-law employee of the Company or a Subsidiary.

16.10   “Exchange
Act” means the Securities Exchange Act of 1934, as amended.

16.11   “Exercise
Price,” in the case of an Option, means the amount for which one share of
Common Stock may be
purchased upon exercise of such Option, as specified in the applicable Stock
Option Agreement. “Exercise Price,” in the case of an SAR, means an amount, as
specified in the applicable SAR Agreement, which is subtracted from the Fair
Market Value of one share of Common Stock in determining the amount payable
upon exercise of such SAR.

16.12   “Fair
Market Value” means the market price of a share of Common Stock, determined by
the Committee in good
faith on such basis as it deems appropriate. Whenever
possible, the determination of Fair Market Value by the Committee shall be
based on the closing price on the date of the Award as reported by NASDAQ, or
the primary exchange or quotation system on which the Common Stock is then
trading. Such determination shall be conclusive and binding on all persons.

16.13   “ISO”
means any Option intended to be and designated as an incentive stock option
described in Section 422(b) of
the Code.

16.14   “NSO”
means a stock option not described in Sections 422 or 423 of the Code.

16.15   “Non-Employee
Director” means a member of the Company’s Board who is not an Employee.

16.16   “Option”
means an NSO or an ISO granted under the Plan and entitling the holder to purchase shares of Common
Stock.

16.17   “Optionee”
means an individual or estate who holds an Option.

16.18   “Participant”
means an individual or estate who holds an Award.

16.19   “Performance
Unit” means a bookkeeping entry representing the equivalent of one U.S. Dollar, as awarded under
the Plan.

16.20   “Performance
Unit Agreement” means the agreement between the Company and the recipient of a Performance Unit that
contains the terms, conditions and restrictions pertaining to such Performance
Unit.

 11
 

16.21   “Plan”
means this Cutter & Buck Inc. 2006 Equity Incentive Plan, as amended
from time to time.

16.22   “Restricted
Share” means a share of Common Stock awarded under the Plan, with such restrictions as set forth
in the applicable Restricted Stock Agreement.

16.23   “Restricted
Stock Agreement” means the agreement between the Company and the recipient of a Restricted Share that
contains the terms, conditions and restrictions pertaining to such Restricted
Share.

16.24   “SAR”
means a stock appreciation right granted under the Plan.

16.25   “SAR
Agreement” means the agreement between the Company and a Participant that
contains the terms,
conditions and restrictions pertaining to his or her SAR.

16.26   “Service”
means service as an Employee or Non-Employee Director.

16.27   “Stock
Option Agreement” means the agreement between the Company and an Optionee that contains the terms,
conditions and restrictions pertaining to his or her Option.

16.28   “Share
Unit” means a bookkeeping entry representing the equivalent of one share of
Common Stock, as awarded
under the Plan.

16.29   “Share
Unit Agreement” means the agreement between the Company and the recipient of a Share Unit that contains
the terms, conditions and restrictions pertaining to such Share Unit.

16.30   “Subsidiary”
means any corporation (other than the Company) in an unbroken chain of corporations beginning with
the Company, if each of the corporations other than the last corporation in the
unbroken chain owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain. A
corporation that attains the status of a Subsidiary on a date after the
adoption of the Plan shall be considered a Subsidiary commencing as of such
date.

16.31    “Unit”
means either a Share Unit or Performance Unit.

16.32    “Unrestricted
Share” means a share of Common Stock awarded under the Plan.

 12Exhibit 10.2

TRIPLICATE
ORIGINAL

[DATE]

 

 

INCENTIVE
STOCK OPTION AGREEMENT

 

Whereas, [RECIPIENT NAME] (the
“Optionee”) is a valued executive or key employee of Cutter & Buck
Inc., a Washington corporation (the “Company”) or a Subsidiary, this INCENTIVE
STOCK OPTION AGREEMENT (“Agreement”) is made by and between the Company and the
“Optionee” granting an incentive stock option for a total of [NO. OF SHARES]
shares of Common Stock (hereinafter the “Option”) of the Company to the “Optionee”
at the price determined as provided in, and in all respects subject to, the
terms, definitions and provisions of the Cutter & Buck Inc. 2006
Equity Incentive Plan (the “Plan”) adopted by the Company, which is
incorporated by reference herein.  For
purposes of this Agreement, the term “shares” shall be deemed to apply to
shares of Common Stock of the Company as of the date hereof.

1.             Incentive Stock Option.  The parties hereto understand and agree that
the Option granted under this Agreement is intended to qualify as an “incentive
stock option” within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended from time to time (the “Code”), to the extent the
Option meets the statutory requirements thereunder.  Notwithstanding this intention, Optionee
acknowledges that: (i) the Code contains a number of limitations and
disqualifications relating to incentive stock options; and (ii) the Optionee is
not assured of receiving incentive stock option treatment with respect to this
Option.

2.             Option Price. 
The option price is $[PRICE] for each share, being one hundred percent
(100%) of the Fair Market Value of the Company’s Common Stock, as determined in
accordance with Sections 5.3 and 16.12 of the Plan.

3.             Vesting and Exercise of Option.  The Option granted under this Agreement shall
vest and be exercisable in accordance with the following provisions.

a.             Schedule of Vesting and Rights to Exercise.  The Option shall be vested and exercisable in
equal one-third (1/3) amounts on each twelve (12) month anniversary of the date
of grant. Subject to the foregoing, the Option may be exercised in whole
or in part with respect to all or any portion of the shares to which it
relates.  However, the Option may not at any time be exercised for
a fractional number of shares.

b.             Method of Exercise.  The Option shall be exercisable by a written
notice which shall:

(i).                                  State the election to exercise the Option, the
number of shares in respect of which it is being exercised, the person in whose
name the stock certificate or certificates for such shares of Common Stock is
to be registered, her address and Social Security Number (or if more than one,
the names, addresses and Social Security Numbers of such person);

 

(ii).                               Contain such representations and agreements as to the Optionee’s investment
intent with respect to such shares of Common Stock, acquired by exercise of the
Option, as may be satisfactory to the Company’s counsel;

(iii).                            Be signed by the person or persons entitled to the Option and, if the
Option is being exercised by any person or persons other than the Optionee, be
accompanied by proof, satisfactory to counsel for the Company, of the right of
such person or persons to exercise the Option;

(iv).                           Be delivered in person or by certified mail to the Board of Directors
of the Company at the Company’s principal place of business; and

(v).                              Be accompanied by payment of the purchase price
for the shares which the Optionee elects to purchase.  Such payment may be made in whole or in part
(A) in cash (by check) or (B) by any of the available means set forth in
Sections 6.2, 6.3 or 6.4 of the Plan” The surrender of shares of Common Stock
must not cause the Company to recognize compensation expense with respect to
the option for financial reporting purposes. 
The certificate or certificates for shares of Common Stock as to which
the Option shall be exercised shall be registered in the name of the person or
persons exercising the Option unless another person is specified pursuant to
(b)(ii) above.

The exercise of the Option shall be in no event
restricted by the fact that at the time of exercise some portion of a
previously granted incentive stock option remains outstanding.

c.             Restrictions on Exercise.  The Option may not be exercised if the
issuance of the shares upon such exercise would constitute a violation of any
applicable federal or state securities or other law or valid regulation.  If originally received pursuant to any
Company benefit plan, shares of Common Stock swapped in payment of the exercise
price must have been held by Optionee for at least six (6) months.  As a condition to the exercise of the Option
the Company may require the person exercising the Option to make any
representation and warranty to the Company as the Company’s counsel believes
may be required by any applicable law or regulations.

4.             Disposition. The Optionee will notify the Company
in writing within fifteen (15) days after the date of any disposition of any of
the shares of the Common Stock issued upon exercise of the Option that occurs
within two (2) years after the date of the Option grant or within one (1) year
after such shares of Common Stock are transferred upon exercise of the Option;

5.             Non-transferability of the Option.  Except as otherwise provided herein, the
Option may not be sold, pledged, assigned or transferred in any manner, other
than by will or the laws of descent and distribution, and may be exercised
during the lifetime of the Optionee only by the Optionee or by the guardian or
legal representative of the Optionee.

6.             Termination of Employment.  Except as set forth below, the Option may
only be exercised while the Optionee is an employee of the Company.

a.             If the Optionee’s employment is terminated for any
reason (including, without limitation, due to death, disability or retirement)
prior to the full vesting of the Option, the Option 

 2
 

 

shall be modified such that immediately upon such
termination the Option shall be reduced to that number of shares of Common
Stock of the Company equal to the number of shares previously vested,
and that portion of the Option covering all other shares shall be
forfeited and canceled.

b.             If the Optionee’s employment is terminated for any
reason (including, without limitation, due to death, disability or retirement),
the Optionee may exercise the Option (to the extent that the Optionee was
entitled to exercise it at the date of termination) but only within such period
of time ending on the earlier of (i) ninety (90) days after such
termination (or in the event of death or disability, within six (6) months of
the date of death or disability), or (ii) the expiration of the term of the
Option as set forth below. If, after termination, the Optionee (or, in the
event of death, the Optionee’s estate) does not exercise the Option within the
time specified in the Option Agreement, the Option shall terminate, and the
shares covered by the Option shall revert to and again become available for
issuance under the Plan. In no case shall the Option continue to vest
during the limited period of exercisability following the Optionee’s
termination from employment provided for in this Section 6.  During such period the Option may only be
exercised with respect to the number of shares for which it was exercisable at
the time of such termination from employment.

7.             Term of Option. 
The Option may not be exercised more than ten (10) years from the date
of original grant of the Option or, if sooner, three (3) months after Optionee’s
employment with the Company terminates, unless employment is terminated as a
result of death or disability, in which case the right of the Optionee or his
or her representative to exercise the Option shall expire six (6) months
following such termination, and may be exercised during such term only in
accordance with the Plan and the terms of the Option.

8.             Termination of the Plan; No
Right to Future Grants; Extraordinary Item of Compensation.  By entering into this Agreement, the Optionee
acknowledges: (i) that the Plan is discretionary in nature and may be suspended
or terminated by the Board at any time; (ii) that the grant of the Option is a
one-time benefit which does not create any contractual or other right to
receive future grants of options, or benefits in lieu of options; (iii) that
all determinations with respect to any such future grants, including, but not
limited to, the times when options shall be granted, the number of shares
subject to each option, the option price, and the time or times when each
option shall be exercisable, will be at the sole discretion of the Company; and
(iv) that the Optionee’s participation in the Plan is voluntary.

9.             Plan; Restrictions.  In all respects this Agreement and the Option
granted herein shall be subject to the terms and provisions of the Plan which
has been, or is being, provided, or otherwise made available, to the Optionee
and is incorporated herein by reference. Accordingly, the rights of the
Optionee under this Agreement and the shares of Common Stock of the Company
which the Optionee may purchase hereunder are subject to certain restrictions
as set forth in the Plan.

10.           Rights Prior to Exercise of Option.
 The Optionee shall have no rights as a
shareholder with respect to the shares of Company stock subject to the Option
until the exercise of his rights hereunder and the issuance and delivery to
Optionee of a certificate or certificates evidencing such shares.

11.           Data Privacy.  By entering into this Agreement, the Optionee:
(a) authorizes the Company and any agent of the Company administering the Plan
or providing Plan recordkeeping 

 3
 

 

services, to
disclose to the Company or any of its subsidiaries such information and data as
the Company shall request in order to facilitate the grant of options and the
administration of the Plan; (b) waives any data privacy rights he or she may
have with respect to such information; and (c) authorizes the Company to store
and transmit such information in electronic form.

12.           Applicable Laws and Consent to
Jurisdiction.  The validity,
construction, interpretation and enforceability of this Agreement shall be
determined and governed by the laws of the State of Washington without giving
effect to the principles of conflicts of laws. For the purpose of litigating
any dispute that arises under this Agreement, the parties hereby consent to
exclusive jurisdiction in State and agree that such litigation shall be
conducted in the courts of King County, Washington or the federal courts of the
United States for the Western District of Washington.

13.           Severability.  The provisions of this Agreement are severable
and if any one or more provisions may be determined to be illegal or otherwise
unenforceable, in whole or in part, the remaining provisions, and any partially
unenforceable provision to the extent enforceable in any jurisdiction, shall
nevertheless be binding and enforceable.

14.           Waiver.  The waiver by the Company of a breach of any
provision of this Agreement by Optionee shall not operate or be construed as a
waiver of any subsequent breach by Optionee.

15.           Binding Effect.  The provisions of this Agreement shall be
binding upon the parties hereto, their successors and assigns, including,
without limitation, the estate of the Optionee and the executors,
administrators or trustees of such estate and any receiver, trustee in
bankruptcy or representative of the creditors of the Optionee.

16.           Construction.  This Agreement is subject to and shall be
construed in accordance with the Plan, the terms of which are explicitly made
applicable hereto. Unless otherwise defined herein, capitalized terms in this
Agreement shall have the same definitions as set forth in the Plan. In the
event of any conflict between the provisions hereof and those of the Plan, the
provisions of the Plan shall govern.

17.           Counter Originals. 
This Agreement may be executed in triplicate counterpart originals.

	
  DATE OF GRANT: [                    ]
  

  
	
   

  
	
  CUTTER & BUCK INC.

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  

 

 4
 

 

Optionee acknowledges and represents that he is
familiar with the terms and provisions of the Cutter & Buck Inc. 2006
Equity Incentive Plan and hereby accepts the Option subject to all the terms
and provisions thereof and hereof. 
Optionee also acknowledges that he has received a copy of the Prospectus
describing the Plan and important legal and tax issues related to the Option.  Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Corporate
Governance, Nominating and Succession Committee of the Board of Directors of
Cutter & Buck upon any questions arising under this Agreement or the
Plan.

 

	
  DATED:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  [                    ],
  Optionee

  	
   

  	
   

  
				

 

 

 5

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