EXHIBIT 10.1


 


EMPLOYMENT
AGREEMENT


 


This Employment Agreement, effective as of May 24, 2004 (the “Agreement”),
is by and between Restoration Hardware, Inc., a Delaware corporation (the “Company”),
and STEPHEN GORDON (“EXECUTIVE”), and supercedes that certain Severance
Agreement, by and between the Company and Executive, dated as of March 21,
2001 (“Severance Agreement”).


 


1.                          POSITION
AND RESPONSIBILITIES


 


a.               Position. 
Executive is employed by the Company to render services to the Company
on a part-time basis in the position of Founder/Merchant, reporting to the
Chief Executive Officer, as set forth in more detail on Exhibit A hereto.  Executive shall perform the duties and
responsibilities as described in Exhibit A. 
Executive shall abide by the rules, regulations, and practices as
adopted or modified from time to time in the Company’s sole discretion.


 


b.               Other Activities. 
Except upon the prior written consent of the Company, Executive will
not, during the term of this Agreement, (i) engage, directly or indirectly,
in any other business activity (whether or not pursued for pecuniary advantage)
that interferes with Executive’s duties and responsibilities hereunder or
create a conflict of interest with the Company or (ii) engage, directly or
indirectly, in any other business activity that is competitive with the
Company.


 


c.               No Conflict.  Executive represents and warrants that
Executive’s execution of this Agreement, Executive’s employment with the
Company, and the performance of Executive’s proposed duties under this
Agreement shall not violate any obligations Executive may have to any other
employer, person or entity, including any obligations with respect to
proprietary or confidential information of any other person or entity.


 


d.               Location.  Executive shall continue to perform his duties
at the Company’s headquarters in Corta Madera, California.  Throughout the term of his employment under
this Agreement, Executive shall be entitled to use the office and
administrative space used by Executive immediately before the effective date of
this Agreement.


 


2.                          COMPENSATION
AND BENEFITS


 


a.               Base Salary.  In consideration of the services to be rendered
under this Agreement, the Company shall pay Executive a salary at the rate of
Three


 





















 


Hundred Seventy-Five Thousand Dollars ($375,000)
per year (“Base Salary”).  The Base
Salary shall be paid in accordance with the Company’s regularly established
payroll practices.  Executive’s Base
Salary will be reviewed from time to time in accordance with the established
procedures of the Company for adjusting salaries for similarly situated
employees and may be adjusted in the sole discretion of the Company.


 


b.               Benefits. 
Executive shall be eligible to participate in the health and welfare
benefits made generally available by the Company to other officers of the
Company, in accordance with the benefit plans established by the Company, and
as may be amended from time to time in the Company’s sole discretion.  In addition, Executive shall be entitled to
the following:


 


(i)                         Discretionary Incentive Bonus:  Entitlement to an incentive bonus, if any,
will be subject to the recommendation of the Company’s Chief Executive Officer,
in his sole discretion, to the Compensation Committee of the Board of Directors
of the Company and approval of the Compensation Committee, in its sole
discretion.


 


(ii)                      Car Allowance:  Executive shall be entitled to a monthly car
allowance of $1,100.


 


(iii)                   Tax Preparation Benefit:  Executive shall be entitled to reimbursement
of up to $5,000 annually for costs incurred to prepare Executive’s annual
income tax returns.


 


(iv)                  Disability Insurance:  Executive shall be entitled to disability
insurance that will provide a full annual salary benefit in the event Executive
is terminated by the Company due to a Disability (as defined in
Section 4(c) of this Agreement) pursuant to the terms of this Agreement or
coverage otherwise is triggered during the term of this Agreement or as
otherwise provided under such disability insurance policy.


 


(v)                     Personal Assistant:  Executive shall be entitled to the use of a
personal assistant on a half-time basis during the term of this Agreement.


 


c.               Expenses. 
The Company shall reimburse Executive for reasonable business expenses
incurred in the performance of Executive’s duties hereunder in accordance with
the Company’s expense reimbursement guidelines.


 


d.               Stock Option.  Executive will be awarded a stock option
pursuant to the Company’s 1998 Stock Incentive Plan, as amended and restated,
to acquire up to 150,000 shares of the common stock of the Company at an
exercise price per share equal to the fair market value of one share of the
Company’s common stock on the date of grant. 
The foregoing stock option shall have a ten year term, shall vest
annually over the three (3) year Term of Employment (unless earlier vested
pursuant to Section 3(b) of this Agreement) in accordance with the Company’s
1998 Stock Incentive Plan’s vesting schedule and shall otherwise


 


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be issued in accordance with the Company’s
standard form of Notice of Grant of Stock Option and Stock Option
Agreement.  The Company acknowledges and
agrees that such shares of common stock issued pursuant to the Company’s 1998
Stock Incentive Plan are, or shall be at the time of exercise of the stock
option (or any portion thereof), registered pursuant to a registration
statement on Form S-8, provided that the Company continues to be subject to the
reporting requirements of the Securities Exchange Act of 1934, as amended.


 


3.                          TERM
OF EMPLOYMENT; TERMINATION OF EMPLOYMENT


 


a.               Term of Employment.  
The term of this Agreement shall be for three (3) years following the
effective date of this Agreement (“Term of Employment”).  During the Term of Employment, the Company
may terminate Employee’s employment with the Company at any time, without any
advance notice, for any reason or no reason at all.  Upon expiration of the Term of Employment,
the Company shall pay to Executive any compensation then due and owing.  Thereafter, all obligations of the Company
under this Agreement shall cease.


 


b.               Severance.  In
the event that the Company terminates the employment of Executive during the
Term of Employment without Cause, or Executive terminates his employment for
Good Reason, Executive shall receive, subject to Executive’s continued
compliance with the terms of Section 6(b) of this Agreement regarding
non-interference, his then-current Base Salary, payable in periodic
installments, in the form of salary continuation in accordance with the Company’s
normal payroll practices for the lesser of (i) two (2) years from the date
of termination of employment if Executive’s employment is so terminated at any
time prior to the second anniversary of this Agreement and (ii) one (1)
year from the date of termination of employment if Executive’s employment is so
terminated at any time thereafter during the Term of Employment.  In addition, Executive shall be entitled to
receive (i) any bonus already approved by the Compensation Committee of
the Board of Directors of the Company in accordance with Section 2(b)(i)
of this Agreement and (ii) continued medical benefit coverage for himself
and his eligible dependents until the earlier of the date that Executive
becomes entitled to medical benefits from another employer or the end of the
period of Base Salary continuation, subject to Executive’s payment of
applicable premiums, if any, at the same rate that would have applied had
Executive remained in the employment of the Company.  Executive shall also receive full and immediate
vesting of any unvested portion of the stock option granted in accordance with
this Agreement.  Executive’s eligibility
for salary continuation and medical benefit coverage is conditioned on
Executive having first signed a release agreement in a form acceptable to the
Company containing terms and conditions for the release of any and all claims
against the Company through the effective date of that


 


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Agreement. 
Notwithstanding the foregoing, any payment or benefit (within the
meaning of Section 280G(b)(2) of the Internal Revenue Code (“IRC”)) provided to
Executive under this Section 3(b) (collectively referred to as the “Payment”)
shall not exceed the maximum amount necessary to avoid subjecting the Payment
to the excise tax imposed by IRC Section 4999. 
Executive shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise, and no
such payment shall be offset or reduced by the amount of any compensation or
benefits provided to Executive in any subsequent employment.


 


4.                          TERMINATION
OF EMPLOYMENT


 


a.               Termination for Cause. 
The Company may terminate Executive’s employment for Cause at any time
during the Term of Employment.  Upon a
termination for Cause, the Company shall pay to Executive all compensation to
which Executive is entitled up through the date of termination, subject to any
other rights or remedies of Executive under law; and thereafter all obligations
of the Company under this Agreement shall cease.  For purposes of this Agreement, “Cause” shall
mean:  if Executive has been convicted of
a felony involving fraud or dishonesty, or the termination is evidenced by a
resolution adopted in good faith by a majority of the Board of Directors of the
Company to the effect that Executive (i) intentionally and continually failed
substantially to perform his reasonably assigned duties with the Company, which
failure continued for a period of at least thirty (30) days after a written
notice of demand for substantial performance has been delivered to Executive
specifying the manner in which Executive has failed substantially to perform,
or (ii) intentionally engaged in conduct which is demonstrably and materially
injurious to the Company; provided, that no termination of Executive’s
employment shall be for Cause as set forth in clause (ii) above until there
shall have been delivered to Executive a copy of a written notice setting forth
the conduct set forth in clause (ii) and specifying the particulars thereof in
detail.  No act, nor failure to act,
shall be considered “intentional” unless Executive has acted, or failed to act,
with a lack of good faith and with a lack of reasonable belief that Executive’s
action or failure to act was in the best interest of the Company.


 


b.               By Death. 
Executive’s employment shall terminate automatically upon Executive’s
death.  Upon a termination as a result of
Executive’s death, the Company shall pay to Executive’s beneficiaries or
estate, as appropriate, any compensation then due and owing.  Thereafter, all obligations of the Company
under this Agreement shall cease. 
Nothing in this Section 4.b. shall affect any entitlement of Executive’s
heirs or devisees to the benefits of any life insurance plan or other applicable
benefits to which they are entitled as a result of Executive’s death.


 


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c.               By Disability.  If
Executive suffers from a Disability, then, to the extent permitted by law, the
Company may terminate Executive’s employment. 
“Disability” shall mean that Executive is unable to carry out the
responsibilities and functions of the position held by Executive by reason of
any physical or mental impairment for more than 120 days in any twelve-month
period.  Upon a termination as a result
of Executive’s Disability, the Company shall pay to Executive all compensation
to which he is entitled up through the date of termination, and thereafter all
obligations of the Company under this Agreement shall cease.  Nothing in this Agreement shall affect
Executive’s rights under any disability plan in which Executive is a
participant.


 


d.               For Good Reason. 
Executive’s termination shall be for “Good Reason” if Executive provides
written notice to the Company’s Chief Executive Officer and the Board of
Directors of the Company of the Good Reason within thirty (30) days of the
event constituting Good Reason and provides the Company with a period of twenty
(20) days to cure the event constituting Good Reason and the Company fails to
cure the Good Reason within that period. 
For purposes of this Agreement, “Good Reason” shall mean either (A) a
material reduction in Executive’s Base Salary or (B) a relocation of Executive’s
place of employment by more than fifty (50) miles, provided and only if such
change, reduction or relocation is effected by the Company without Executive’s
consent.


 


5.                          TERMINATION
OBLIGATIONS


 


a.               Return of Property.  Executive agrees that all property (including
without limitation all equipment, tangible proprietary information, documents,
records, notes, contracts and computer-generated materials) furnished to or
created or prepared by Executive incident to Executive’s employment belongs to
the Company and shall be promptly returned to the Company upon termination of
Executive’s employment.


 


b.               Termination and Cooperation.  Upon termination of Executive’s employment with
the Company, Executive shall be deemed to have terminated all employment
positions then held with the Company and its affiliates and from all positions
as a director of any of the Company’s subsidiaries but not as a director of the
Company itself.  Following any
termination of employment, Executive shall cooperate with the Company in the
winding up of pending work on behalf of the Company and the orderly transfer of
work to other employees.  Executive shall
also cooperate with the Company, at the Company’s expense to the extent allowed
by law, in the defense of any action brought by any third party against the
Company that relates to Executive’s employment by the Company, whether brought
before or after Executive’s termination of employment with the Company.


 


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6.                          CONFIDENTIAL
INFORMATION; PROHIBITION ON THIRD PARTY INFORMATION


 


a.               Confidential Information
Agreement.  Executive shall hold in confidence for the
benefit of the Company all secret or confidential information, knowledge or
data, including proprietary information and trade secrets, relating to the
Company and its businesses, which shall have been obtained by Executive prior
to or in the course of Executive’s employment by the Company (“Confidential
Information”), provided, however, that Confidential Information shall not
retain its status as such if the Confidential Information (i) is publicly known
through no act or omission of Executive, (ii) becomes available to Executive on
a non-confidential basis from a source other than the Company, provided that
such source is not bound by a confidentiality agreement with, or other
obligation of secrecy to, the Company or another party, or (iii) is know
by Executive prior to receiving it from the Company, provided that such
information is not subject to another confidentiality agreement with, or other
obligation of secrecy to, the Company or another party.  Executive also shall have the right to
disclose Confidential Information to the extent required by law, provided that
Executive first gives prompt written notice to the Company regarding the
intention to make such disclosure and, provided, further, Executive requests
confidential treatment of such Confidential Information to the fullest extent
permitted by law. Whether before or after termination of Executive’s employment
with the Company, Executive shall not, without the prior written consent of the
Company, communicate or divulge any Confidential Information, other than to the
Company and to those persons or entities designated by the Company or as
otherwise is reasonably necessary for Executive to carry out his or her
responsibilities as an executive of the Company.


 


b.               Non-Interference.  Executive acknowledges that, because of
Executive’s position in the Company, Executive will have access to Confidential
Information belonging to the Company.  To
preserve and protect this information and the assets of the Company, and in
consideration of the severance and benefits provided to Executive under this
Agreement, Executive agrees that during the term of Executive’s employment and
for the longer of either (i) the period during which Executive continues to
receive, or except for Executive’s voluntary waiver of salary continuation or
breach of this Section 6.b. Executive would be entitled to receive, salary
continuation pursuant to the terms of this Agreement and (ii) one (1) year
after the termination of Executive’s employment with the Company, in addition
to Executive’s other obligations hereunder or under any other proprietary
information agreement between Executive and the Company, Executive shall not,
for Executive or any third party, directly or indirectly (a) divert or
attempt to divert from the Company any business of any kind, including without
limitation the solicitation of or interference with any of its customers,
clients, members, business partners or


 


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suppliers, (b) solicit, raid, entice or
induce, either directly or through a third party, any current or former
employee of the Company to be employed by another person, or either directly or
through a third party hire or otherwise employ any current or former employee
of the Company, or (c) work in any capacity that would compete directly
with the Company.  In addition to any
other remedies to which Company would be entitled, in the event of a breach of
this Section 6.b. by Executive, all salary continuation and other benefits
to which Executive would be entitled shall cease.


 


c.               Non-Disclosure of Third Party
Information.  Executive represents and warrants and
covenants that Executive shall not disclose to the Company, or use, or induce
the Company to use, any confidential or proprietary information or trade
secrets of others at any time, and Executive acknowledges and agrees that any
violation of this provision shall be grounds for Executive’s immediate
termination and could subject Executive to substantial civil liabilities and
criminal penalties.  Executive further
specifically and expressly acknowledges that no officer or other employee or
representative of the Company has requested or instructed Executive to disclose
or use any such third party confidential or proprietary information or trade
secrets.


 


7.                          AMENDMENTS;
WAIVERS; REMEDIES


 


This Agreement may not be amended or waived
except by a writing signed by Executive and by a duly authorized representative
of the Company other than Executive. 
Failure to exercise any right under this Agreement shall not constitute
a waiver of such right.  Any waiver of
any breach of this Agreement shall not operate as a waiver of any subsequent
breaches.  All rights or remedies
specified for a party herein shall be cumulative and in addition to all other
rights and remedies of the party hereunder or under applicable law.


 


8.                          ASSIGNMENT;
BINDING EFFECT


 


a.               Assignment. 
The performance of Executive is personal hereunder, and Executive agrees
that Executive shall have no right to assign and shall not assign or purport to
assign any rights or obligations under this Agreement.  This Agreement may be assigned or transferred
by the Company, and nothing in this Agreement shall prevent the consolidation,
merger or sale of the Company or a sale of any or all or substantially all of
its assets.


 


b.               Binding Effect.  Subject to the foregoing restriction on
assignment by Executive, this Agreement shall inure to the benefit of and be
binding upon each of the parties; the affiliates, officers, directors, agents,
successors and assigns of the Company; and the heirs, devisees, spouses, legal
representatives and successors of Executive.


 


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9.                          SEVERABILITY


 


If any provision of this Agreement shall be
held by a court or arbitrator to be invalid, unenforceable, or void, such
provision shall be enforced to the fullest extent permitted by law, and the
remainder of this Agreement shall remain in full force and effect.  In the event that the time period or scope of
any provision is declared by a court or arbitrator of competent jurisdiction to
exceed the maximum time period or scope that such court or arbitrator deems
enforceable, then such court or arbitrator shall reduce the time period or
scope to the maximum time period or scope permitted by law.


 


10.                   ARBITRATION


 


a.               Agreement To Arbitrate
Claims.  The Company and Executive agree that any
existing or future dispute, controversy, claim or action (“dispute” or “claim”)
arising out of the retention or employment of Executive by the Company, the
termination of that employment, or arising under this Agreement shall be
resolved by final and binding arbitration. 
Such arbitration shall occur in accordance with the National Rules for
the Resolution of Employment Disputes of the American Arbitration Association.


 


b.               Scope of Disputes and Claims to
Be Arbitrated.
Company and Executive understand and agree that this Agreement shall apply to
any and all disputes arising from or relating to Executive’s hiring, employment
with or termination of employment by the Company or arising under this
Agreement. This agreement to arbitrate applies to disputes arising in tort or
contract, pursuant to statute, regulation or otherwise, now in existence or
which may in the future be enacted, amended or judicially recognized, including
but not limited to the following:


 


(i)                         claims for fraudulent inducement of
contract or breach of contract or contractual obligation, whether such alleged
contract or obligation be oral, written, express, or implied by fact or law;


 


(ii)                      claims of fraud, or wrongful termination,
including violation of public policy and constructive discharge;


 


(iii)                   claims of discrimination or harassment under any
and all state and federal statutes that prohibit discrimination in employment,
as well as claims for violation of any other state or federal statute except as
set forth below;


 


(iv)                  claims of non-payment or incorrect payment of
wages, commissions, bonuses, severance, Executive fringe benefits, stock
options and the like, whether such claims be pursuant to alleged express or
implied contract or obligation, equity, the California Labor Code, the Fair
Labor Standards Act, the Employee Retirement Income Securities Act, and


 


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any other local, state or federal law concerning
wages, compensation or Executive benefits;


 


(v)                     claims for infliction of emotional distress,
misrepresentation, interference with contract or prospective economic
advantage, violation of public policy, defamation, unfair business practices,
and any other tort or tort-like causes of action relating to or arising from
the employment relationship or the formation or termination thereof; and


 


(vi)                  claims arising out of or relating to the grant,
exercise, vesting and/or issuance of equity in the Company or options to
purchase equity in the Company.


 


c.               Sole and Exclusive Remedy. 
The Company and Executive understand and agree that except for such
limited post-arbitration judicial review as may be permitted by law,
arbitration of such disputes, as provided for herein, shall be the sole and
exclusive mechanism for resolving any and all existing and future disputes, and
that no other forum for dispute resolution will be available to either party.  The only exceptions are the claims identified
below, which may be resolved in any appropriate fora, including courts of law,
as required by the laws then in effect:


 


(i)                         claims for benefits under the workers’
compensation, unemployment insurance and state disability insurance laws; or


 


(ii)                      claims concerning the validity,
infringement or enforceability of any trade secret, patent right, copyright,
trademark, or any other intellectual or confidential property right held or
sought by the Company.


 


d.               Decision of Arbitrator Binding;
Waiver of Trial Before Court, Jury or Government Agency. 
Company and Executive understand and agree that arbitration shall be
instead of a trial before a court or jury, or a hearing before a government
agency.  The Company and Executive
understand and agree that the decision of the arbitrator shall be final and
binding on both the Company and Executive, and it shall provide the exclusive
remedy(ies) for resolving any and all disputes between the Company and
Executive, as provided herein, and it shall be enforceable by any court having
proper jurisdiction.


 


THE COMPANY AND EXECUTIVE FURTHER
UNDERSTAND AND AGREE THAT BY SIGNING THIS AGREEMENT, EACH IS EXPRESSLY WAIVING
ANY AND ALL RIGHTS TO A TRIAL BEFORE A COURT OR JURY OR BEFORE A GOVERNMENT
AGENCY REGARDING ANY DISPUTE OR CLAIM WHICH EACH NOW HAS OR MAY IN THE FUTURE
HAVE, AS PROVIDED FOR HEREIN.


 


e.               Place of Arbitration. 
The Company and Executive understand and agree that arbitration of
disputes provided for herein shall take place in San


 


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Francisco, California.  If, at the time the dispute in question
arises, Executive lives and works more than one hundred (100) miles from San
Francisco, California, then Executive has the option of requesting that the
arbitration take place in the county in which the Company has an executive
office that is nearest to Executive’s residence at the time the dispute in
question arises.


 


f.                 Costs of Arbitration. 
The Company and Executive understand and agree that the arbitrator’s fee
will be borne solely by the Company. 
Additionally, the Company will bear all other costs related to the
arbitration, assuming such costs are not expenses that Executive would be
required to bear if he were bringing an action in a court of law.  The Company and Executive shall each bear
their own attorneys’ fees incurred in connection with the arbitration, and the
arbitrator will not have authority to award attorneys’ fees unless a statute at
issue in the dispute or other appropriate law authorizes the award of attorneys’
fees to the prevailing party, in which case the arbitrator shall have the
authority to make an award of attorneys’ fees as permitted by the applicable
statute.


 


g.              Procedure. 
The arbitration shall be conducted in accordance with the National Rules
for the Resolution of Employment Disputes of the American Arbitration
Association.


 


h.              Written Arbitration Decision.  The
Company and Executive understand and agree that, in any arbitration arising
from this agreement to arbitrate, the arbitrator will be required to issue a
written arbitration decision that clearly sets forth the essential findings on
which that award is based.


 


i.                 Preservation of Remedies.  The
Company and Executive understand and agree that, in any arbitration arising
from this agreement to arbitrate, Executive and the Company will preserve all
remedies to which each would otherwise be entitled in a court of law, except as
limited under the terms of this Agreement.


 


j.                 Necessary Minimum Standard of
Discovery.  The Company and Executive understand and agree
that, in any arbitration arising from this agreement to arbitrate, the Company
and Executive will be entitled to discovery in accordance with the provisions
of California Code of Civil Procedure Section 1283(a).


 


k.             Knowing and Voluntary Agreement
to Arbitrate.  The Company and Executive have been advised
to consult with attorneys of their own choosing before agreeing to arbitrate,
and have had an opportunity to do so.


 


THE COMPANY AND EXECUTIVE HAVE
READ THIS AGREEMENT TO ARBITRATE CAREFULLY AND UNDERSTAND THAT BY SIGNING IT,
EACH IS WAIVING ALL RIGHTS TO A TRIAL OR HEARING BEFORE A COURT OR


 


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JURY OR GOVERNMENT AGENCY OF ANY
AND ALL DISPUTES AS PROVIDED FOR HEREIN.


 


11.                   GOVERNING
LAW


 


a.               Governing Law.  The Company and Executive understand and agree
that this Agreement, including the obligation to arbitrate, and its validity,
construction and performance shall be governed by, and construed in accordance
with, the laws of the State of California without regard to conflict of law
principles.


 


b.               No Employee Benefit Plan.  The
parties specifically intend that this Agreement and the provision of benefits
hereunder shall not constitute an “employee benefit plan” subject to any of the
provisions of the Employee Retirement Income Security Act of 1974, as amended.


 


12.                   INTERPRETATION


 


This Agreement shall be construed as a whole,
according to its fair meaning, and not in favor of or against any party.  Sections and section headings contained in
this Agreement are for reference purposes only, and shall not affect in any
manner the meaning or interpretation of this Agreement.  Whenever the context requires, references to
the singular shall include the plural and the plural the singular.


 


13.                   CERTAIN
OBLIGATIONS SURVIVE TERMINATION OF AGREEMENT


 


Sections 3(b), 5, 6(a),
6(b), and 9 through 15 of this Agreement shall survive the termination of this
Agreement.


 


14.                   ENTIRE
AGREEMENT


 


This Agreement supercedes the Severance
Agreement and any other agreement between the Company and Executive in
connection with Executive’s employment or compensation by the Company, except
this Agreement shall not supersede any proprietary information agreement
between the Company and Executive, and this Agreement is intended to be the
final, complete, and exclusive statement of the terms of Executive’s employment
by the Company and may not be contradicted by evidence of any prior or
contemporaneous statements or agreements, except for agreements specifically
referenced herein.  To the extent that
the practices, policies or procedures of the Company, now or in the future,
apply to Executive and are inconsistent with the terms of this Agreement, the
provisions of this Agreement shall control. 
Any subsequent change in Executive’s duties, position, or compensation
will not affect the validity or scope of this Agreement.


 


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15.                   EXECUTIVE
ACKNOWLEDGEMENT


 


EXECUTIVE ACKNOWLEDGES EXECUTIVE HAS HAD THE
OPPORTUNITY TO CONSULT LEGAL COUNSEL CONCERNING THIS AGREEMENT, THAT EXECUTIVE
HAS READ AND UNDERSTANDS THE AGREEMENT, THAT EXECUTIVE IS FULLY AWARE OF ITS
LEGAL EFFECT, AND THAT EXECUTIVE HAS ENTERED INTO IT FREELY BASED ON EXECUTIVE’S
OWN JUDGMENT AND NOT ON ANY REPRESENTATIONS OR PROMISES OTHER THAN THOSE
CONTAINED IN THIS AGREEMENT.


 


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IN WITNESS WHEREOF,
the parties have duly executed this Agreement as of the date first written
above.


 


	
  Restoration Hardware, inc.:

  	
  Stephen Gordon:

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Gary Friedman

  	
   

  	
  /s/ S. J. Gordon

  	
   

  
	
   

  	
  Gary Friedman

  	
  S.J. Gordon

  
	
   

  	
   

  
	
  Title:

  	
  Chief Executive Officer

  	
   

  
						



 


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EXHIBIT A


 


A.                                   The
Company and Executive agree that Executive shall seek to devote approximately
80 days per calendar year (or such proportionately lesser number of days for
any partial calendar year during the Term of Employment) in performing services
under this Agreement, provided that each of the Company and Executive acknowledge
that such calendar day amount shall be considered by both parties as a goal
rather than a requirement under this Agreement and that performance of a lesser
or greater amount, as necessary, to perform Executive’s services under this
Agreement shall be the expectation of both parties hereto.


 


B.                                     The
job duties of Executive shall be the following:


 


Supporting the Company in merchandising,
concepting and sourcing vendor goods domestically and internationally.


 


The above shall include, without limitation:


 


1.                           Involvement
(to the extent not conflicting with other activities undertaken by Executive on
behalf of the Company) in those certain regularly scheduled merchandising
meetings, including without limitation as set forth below:


 


a.               “Winter,
Spring, Fall and Holiday Seasonal Concept Meetings” with merchants, the Company’s
product development team, the Company’s product design team and the Company’s
Chief Executive Officer for purposes of strategizing both new concepts and the
Company’s business strategy;


 


b.              “Winter,
Spring, Fall and Holiday Assortment Review Meetings” to define the Company’s
competitive strategy, to review physical samples and to address pro forma
business plan metrics based on agreed upon assortments;


 


c.               The
“Annual Holiday Re-cap Meeting” to review successes and misses as well as
define initial strategies for the next upcoming holiday season;


 


d.              The
“Annual Holiday Buy-Plan Meeting” for sku-by-sku, seasonal
department-by-department inventory commitments and sales plan finalization;


 


e.               The
“Annual Holiday Floor Plan Review Meeting” to review all samples and gain
concurrence on the placement of and planned volume of approved product;


 


f.                 Finalization
of windows and associated marketing meetings for both retail and catalog; and


 


g.              “April
(Spring) and August (Fall) Strategy Offsite Meetings.”


 


2.                           Proactive
domestic and international sourcing trips per Founder/Merchant discretion.


 


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3.                           Domestic
and international travel for sourcing and concepting with merchant teams per
the direction of the Company’s Chief Executive Officer.


 


4.                           Periodic
concepting/brainstorming/idea generation meetings with the Company’s product
design and product development teams.


 


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