EBHI Eddie Bauer Holdings (MM)

SEATTLE, May 27 /PRNewswire-FirstCall/ -- Eddie Bauer Holdings, Inc. (NASDAQ:EBHI) previously announced the execution of a First Amendment ("First Amendment"), dated April 2, 2009, to the $225 million Amended and Restated Term Loan Agreement with various lenders, Goldman Sachs Credit Partners L.P., as syndication agent, and JP Morgan Chase Bank, N.A., as administrative agent. Consideration for the First Amendment included our agreement to issue to the term loan lenders $0.01 exercise price warrants exercisable for 19.9% of our common stock on a fully-diluted basis, or approximately 7,842,456 shares. The warrants are subject to adjustment for any conversion of our 5.25% Convertible Senior Notes due 2014 ("Convertible Notes") in accordance with the terms of the Convertible Note Covenant of the First Amendment, new capital infusions of less than $40 million (unless otherwise agreed to) and exercise of equity compensation grants. If we fail to either retire or convert into common stock at least 75% in principal value of the $75 million aggregate principal amount of Convertible Notes that we have outstanding, or raise $50 million in new capital with the proceeds used to pay down the principal balance of our term loan (the "Convertible Notes Covenant"), within 90 days following execution of the First Amendment (which time period may be extended under certain circumstances), we may obtain two 60-day extensions of the performance period for the Convertible Notes Covenant. Upon each potential extension of the Convertible Notes Covenant, we will be required to issue additional $0.01 exercise price warrants exercisable for 15% of our common stock on the same fully-diluted basis as the initial warrant issuance.. We requested and received from Nasdaq an exemption under Section 4350(i) of the Nasdaq Marketplace Rules from stockholder approval of the issuance of the warrants. This exception provides that such stockholder approval is not required if the delay in closing the underlying transaction due to the time that it would take to seek stockholder approval would have a significant detrimental impact on our financial viability. Our reliance on this exception was approved by our Audit Committee and by Nasdaq. The grant of this exception permitted us to complete the First Amendment on a timely basis while also retaining our listing on the Nasdaq Global Market. About Eddie Bauer Established in 1920 in Seattle, Eddie Bauer is a specialty retailer that sells outerwear, apparel and accessories for the active outdoor lifestyle. The Eddie Bauer brand is a nationally recognized brand that stands for high quality, innovation, style and customer service. Eddie Bauer products are available at 371 stores throughout the United States and Canada, through catalog sales and online at http://www.eddiebauer.com/. Eddie Bauer participates in a joint venture in Japan and has licensing agreements across a variety of product categories. SAFE HARBOR STATEMENTS This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify these statements by forward-looking words such as "may," "might," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "intends," "potential," qualifiers such as "preliminary", and similar expressions. Forward-looking statements are not guarantees of future events, and the Company can provide no assurance that such statements will be realized. The Company can provide no assurance that events in the future will not negatively impact the Company's liquidity through lender-imposed reserves or vendor demands for payment security, or require the Company to seek additional capital or further amendments to its financing arrangements or, if so required, that such capital will be on available on terms acceptable to the Company. Forward-looking statements contained in this press release are based on estimates and assumptions, which assumptions and estimates may prove to be inaccurate, and involve risks and uncertainties. Actual results may differ from those contemplated by such forward-looking statements as a result of a variety of factors, including a continued downturn in the national and global economies; the ability to meet the covenants contained in the Company's various credit facilities and to service the attendant debt load; changes in consumer confidence and consumer spending patterns; the Company's inability to effectuate the proposed turnaround of Eddie Bauer as a premium quality brand and improve profitability of its retail and outlet stores, catalogs and website operations; the inability to source goods on terms and conditions acceptable to the Company; disruptions in the supply of inventory as a result of concerns about general economic conditions or specific concerns related to the Company; the inability to hire, retain and train key personnel; risks associated with legal and regulatory matters; risks associated with rising energy costs; the volatility of foreign exchange rates as they impact results of operations; risks associated with reliance on information technology; increased levels of merchandise returns not estimated by management; the inability to source requirements from current sourcing agents; disruption in back-end operations; the inability of the Company's joint venture partner to operate the joint venture effectively; the inability to protect trademarks and other proprietary intellectual property rights; unseasonable or severe weather conditions; the Company's inability to use its federal net operating loss carryforwards, whether as a result of lack of future income from tax purposes or otherwise; and the other risks identified in our periodic reports filed pursuant to the Securities Exchange Act of 1934, as amended, including the Company's Annual Report on Form 10-K for the period ended January 3, 2009. The information contained in this release is as of May 27, 2009, and except as required by law, the Company undertakes no obligation to update any of these forward-looking statements. Contacts: Investors and Media Eddie Bauer Holdings, Inc. Marv Toland, Chief Financial Officer 425-755-6310 DATASOURCE: Eddie Bauer CONTACT: Investors and Media, Marv Toland, Chief Financial Officer of Eddie Bauer Holdings, Inc., +1-425-755-6310 Web Site: http://www.eddiebauer.com/

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