Coldwater Creek Inc. Notice of Grant of Incentive Stock Option

Reduction in Option

Shares Upon Change in

Status

Termination for

Misconduct

If your Service terminates because of your death, then your Option will expire at the close of business at Company headquarters on the date 12 months after the date of death. During that 12-month period, your estate or heirs may exercise the vested portion of your Option.

In addition, if you die during the three-month period described in connection with a regular termination (i.e., a termination of your Service not on account of your death, Disability or Misconduct), and a vested portion of your Option has not yet been exercised, then your Option will instead expire on the date 12 months after your termination date. In such a case, during the period following your death up to the date 12 months after your termination date, your estate or heirs may exercise the vested portion of your Option.

For purposes of this Option, your Service does not terminate when you go on a bona fide employee leave of absence that was approved by the Corporation in writing, if the terms of the leave provide for continued Service crediting, or when continued Service crediting is required by applicable law. However, your Service will be treated as terminating 90 days after you went on employee leave, unless your right to return to active work is guaranteed by law or by a contract. Your Service terminates in any event when the approved leave ends unless you immediately return to active employee work.

The Corporation determines, in its sole discretion, which leaves count for this purpose, and when your Service terminates for all purposes under the Plan.

assumed by the successor corporation (or parent thereof) or to be replaced with a comparable option to purchase shares of the capital stock of the successor corporation (or parent thereof) or (ii) this Option is to be replaced with a cash incentive program of the successor corporation which preserves the spread existing on the Option Shares at the time of the Corporate Transaction and provides for subsequent pay-out in accordance with the same exercise schedule in effect for this Option pursuant to the option exercise schedule set forth above (but only to the extent such program would not result in the imposition of excise tax under section 409A of the Code). The determination of option comparability under clause (i) shall be made by the Plan Administrator, and such determination shall be final, binding and conclusive.

This Option shall terminate and cease to be outstanding immediately upon the consummation of such Corporate Transaction, except to the extent assumed by the successor corporation or parent thereof in connection with such Corporate Transaction. To the extent this Option is assumed in connection with a Corporate Transaction, appropriate adjustments shall be made, immediately after such Corporate Transaction, so that the Option shall apply to the number and class of securities which would have been issuable you in consummation of such Corporate Transaction had this Option been exercised immediately prior to such Corporate Transaction, and appropriate adjustments shall also be made to the Exercise Price, provided that the aggregate Exercise Price shall remain the same.

When you wish to exercise this Option, you may do so through the Corporation’s e*trade account with the user name and password supplied to you by the Corporation. You can access this account on the e*trade website at www.etrade.com. If someone else wants to exercise this Option after your death, that person must prove to the Corporation’s satisfaction that he or she is entitled to do so.

Your right to exercise this Option, and to transfer or sell shares of Common Stock acquired upon any such exercise, may be subject to additional conditions or requirements under the Corporation’s Insider Trading Policy.

When you exercise this Option, you must include payment of the exercise price for the shares you are purchasing. Payment may be made in one (or a combination) of the following forms:

• Cash, your personal check, a cashier’s check, a money order or another cash equivalent acceptable to the Corporation.

• Surrender of shares of Common Stock which have been owned by you for more than six months and which have a Fair Market Value, determined as of the Exercise Date, equal to the exercise price.

• If approved in advance by the Plan Administrator if you are either an executive officer or a director of the Corporation, by delivery on a form prescribed by the Corporation of an irrevocable direction (i) to a

During your lifetime, only you (or, in the event of your legal incapacity or incompetency, your guardian or legal representative) may exercise the Option. You cannot transfer or assign this Option. For instance, you may not sell this Option or use it as security for a loan. If you attempt to do any of these things, this Option will immediately become invalid. You may, however, dispose of this Option in your will or it may be transferred upon your death by the laws of descent and distribution.

Regardless of any marital property settlement agreement, the Corporation is not obligated to honor a notice of exercise from your spouse, nor is the Corporation obligated to recognize your spouse’s interest in your Option in any other way.

Sale of Option Shares Within One Year of

Exercise Only Through

e*trade

The text of the Plan is incorporated in this Agreement by reference. Capitalized terms used but not defined in this Agreement are defined in the Plan, and have the meaning set forth in the Plan. The terms and provisions of the Plan will control in the event any provision of this Agreement or the attached cover sheet is inconsistent.

This Agreement, the attached cover sheet and the Plan constitute the entire understanding between you and the Corporation regarding this Option. Any prior agreements, commitments or negotiations concerning this Option are superseded.