Document:

First Amendment to Eighth Amended and Restated Loan and Security Agreement

 Exhibit 10.1 
 FIRST AMENDMENT TO 
 EIGHTH AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 This First Amendment to Eighth Amended and Restated Loan and Security
Agreement (the “First Amendment”) is made as of the 27th day of April, 2007, by and among

 RESTORATION HARDWARE, INC., a corporation organized under the laws of the State of Delaware (the “Lead Borrower”) and THE
MICHAELS FURNITURE COMPANY, INC., a corporation organized under the laws of the State of California (together with the Lead Borrower, individually, a “Borrower” and collectively, the “Borrowers”), each having a
place of business at 15 Koch Road, Suite J, Corte Madera, California 94925; 
 the LENDERS party hereto; 
 BANK OF AMERICA, N.A., a national banking association having a place of business at 100 Federal Street, Boston, Massachusetts 02110, as Agent for the
Lenders; 
 THE CIT GROUP/BUSINESS CREDIT, INC., having a place of business at 300
South Grand Avenue, 10th Floor, Los Angeles, California 90071, as Co-Administrative Agent; and 
 WELLS FARGO RETAIL FINANCE, LLC, having a place of business at One Boston Place, 18th Floor, Boston, Massachusetts 02108, as Documentation Agent; 
 in consideration of the mutual covenants herein contained and benefits to be derived herefrom. 
 WITNESSETH 
 WHEREAS, the parties hereto have entered into an Eighth Amended and Restated Loan and Security Agreement
dated as of June 19, 2006 (as in effect, the “Loan Agreement”); and 
 WHEREAS, the parties hereto have agreed to amend
certain provisions of the Loan Agreement as set forth herein. 
 NOW THEREFORE, it is hereby agreed as follows: 
  

	1.	Definitions: All capitalized terms used herein and not otherwise defined shall have the same meaning herein as in the Loan Agreement. 

  

	2.	Amendment to Cover Page. The cover page of the Loan Agreement is hereby amended by deleting “$150,000,000”. 

  

	3.	Amendments to Section 1. The provisions of Section 1 of the Loan Agreement are hereby amended as follows: 

  

	 	a.	The lead-in paragraph to Section 1 of the Loan Agreement is hereby amended by deleting “$150,000,000” in the third line thereof and substituting “$190,000,000,
as the same may be increased or decreased in accordance with the terms of this Agreement” in its stead. 

  

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	 	b.	Section 1.1 of the Loan Agreement is hereby deleted in its entirety and the following substituted in its stead: 

  

	 	“1.1	Revolving Credit Loans. 

 Each
Lender agrees, severally and not jointly, for so long as no Default or Event of Default exists, to make Revolving Credit Loans to Borrowers from time to time during the period from the date hereof to but not including the last day of the Term, as
requested by Borrowers in the manner set forth in subsection 3.1.1 hereof, up to a maximum principal amount at any time outstanding equal to the lesser of (i) such Lender’s Revolving Loan Commitment minus the product of such
Lender’s Revolving Loan Percentage and the LC Amount plus the amount of LC Obligations that have not been reimbursed by Borrowers or funded with a Revolving Credit Loan, (ii) so long as the Incremental Revolving Loan Commitments are in
effect, the product of such Lender’s Revolving Loan Percentage and an amount equal to the Adjusted Borrowing Base at such time minus the LC Amount plus the amount of LC Obligations that have not been reimbursed by Borrowers or funded
with a Revolving Credit Loan minus the then aggregate of Availability Reserves, if any and (iii) at any time after the Incremental Revolving Loan Commitments are no longer in effect, the product of such Lender’s Revolving Loan
Percentage and an amount equal to the Borrowing Base at such time minus the LC Amount plus the amount of LC Obligations that have not been reimbursed by Borrowers or funded with a Revolving Credit Loan minus the then aggregate of
Availability Reserves, if any. The Revolving Credit Loans shall be further evidenced by, and repayable in accordance with the terms of, the Revolving Notes and shall be secured by all of the Collateral. In no event shall the aggregate of the
Revolving Credit Loans and the LC Amount plus the amount of LC Obligations that have not been reimbursed by Borrowers or funded with a Revolving Credit Loan, exceed the Total Credit Facility (or, in the event that the Incremental Revolving Loan
Commitments have been terminated in accordance with Section 3.13 of this Agreement, the Revolving Credit Maximum Amount). Further, in no event shall (i) the aggregate of the Tranche A Revolving Credit Loans and the LC Amount plus the
amount of LC Obligations that have not been reimbursed by Borrowers or funded with a Revolving Credit Loan at any time exceed the lesser of (x) the Revolving Credit Maximum Amount or (y) the Borrowing Base at such time, and (ii) the
aggregate outstanding amount of Incremental Revolving Credit Loans at any time exceed the lesser of (x) the Incremental Facility Maximum Amount or (y) the Incremental Availability.” 
  

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	 	c.	Section 1.2 of the Loan Agreement is hereby amended by adding “(or, in the event that the Incremental Revolving Loan Commitments have been terminated in accordance with
Section 3.13 of this Agreement, the Borrowing Base)” after the words “Adjusted Borrowing Base” in the ninth line thereof. 

  

	 	d.	Section 1.5 of the Loan Agreement is hereby amended by adding “(or, in the event that the Incremental Revolving Loan Commitments have been terminated in accordance with
Section 3.13 of this Agreement, the Borrowing Base)” after the words “Adjusted Borrowing Base” in the nineteenth line thereof. 

  

	 	e.	Section 1 of the Loan Agreement is hereby amended by adding the following Section 1.7 at the end thereof: 

  

	 	“1.7	Increase in Tranche A Revolving Loan Commitments. 

 1.7.1 Request for Increase. Provided no Default then exists or would arise therefrom, upon notice to the Agent (which shall promptly notify the Lenders), the Lead Borrower may from time to time, request an
increase in the Tranche A Revolving Loan Commitments by an amount not exceeding $75,000,000 in the aggregate for all such requests (each such increase, a “Commitment Increase”); provided that (i) any such request for an
increase shall be in a minimum amount of $15,000,000, and (ii) the Lead Borrower may make a maximum of three such requests. At the time of sending such notice, the Lead Borrower (in consultation with the Agent) shall specify the time period
within which each Lender is requested to respond (which shall in no event be less than ten Business Days from the date of delivery of such notice to the Lenders). 
 1.7.2 Lender Elections to Increase. Each Lender shall notify the Agent within such time period whether or not it agrees to increase
its Tranche A Revolving Loan Commitment and, if so, whether by an amount equal to, greater than, or less than its Revolving Loan Percentage of such requested increase. Any Lender not responding within such time period shall be deemed to have
declined to increase its Tranche A Revolving Loan Commitment. 
 1.7.3 Notification by Agent; Additional Lenders. The
Agent shall notify the Lead Borrower and each Lender of the Lenders’ responses to each request made hereunder. To achieve the full amount of a requested increase and subject to the approval of the Agent and the SwingLine Lender (which approvals
shall not be unreasonably withheld), to the extent that the existing Lenders decline to increase their Tranche A Revolving Loan Commitments, or decline to increase their Tranche A Revolving Loan Commitments to the amount requested by the Lead
Borrower, the Agent, in consultation with the Lead Borrower, will use its reasonable efforts to arrange for other Persons to become a Lender hereunder and to issue commitments in an amount equal to the amount of the increase in the 

  

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Tranche A Revolving Loan Commitments requested by the Lead Borrower and not accepted by the existing Lenders (and the Lead Borrower may also invite
additional Persons to become Lenders subject to the Agent’s consent, which consent shall not be unreasonably withheld) (each such additional Person, together with any Lender which increases its Tranche A Revolving Loan Commitment pursuant to
this Section 1.7, an “Additional Commitment Lender”), provided, however, that without the consent of the Agent, at no time shall the Tranche A Revolving Loan Commitment of any Additional Commitment Lender be less than
$10,000,000. 
 1.7.4 Effective Date and Allocations. If the Tranche A Revolving Loan Commitments are increased in
accordance with this Section, the Agent and the Lead Borrower shall determine the effective date (the “Increase Effective Date”) and the final allocation of such increase. The Agent shall promptly notify the Lead Borrower and the
Lenders of the final allocation of such increase and the Increase Effective Date and on the Increase Effective Date (i) the Tranche A Revolving Loan Commitments under, and for all purposes of, this Agreement shall be increased by the amount of
such Commitment Increase, and (ii) the signature pages to the First Amendment shall be deemed modified, without further action, to reflect the revised Tranche A Revolving Loan Commitments of the Lenders. 
 1.7.5 Conditions to Effectiveness of Increase. As a condition precedent to such increase, (i) the Lead Borrower shall deliver
to the Agent a certificate of the Borrowers dated as of the Increase Effective Date (in sufficient copies for each Lender) signed by an officer of the Lead Borrower (or, in the case of clause (A) below, such Borrower), (A) certifying and
attaching the resolutions adopted by the Borrowers approving or consenting to such increase, and (B) certifying that, before and after giving effect to such increase, (1) the representations and warranties contained in Section 7 and
the other Loan Documents are true and correct on and as of the Increase Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier
date, and except that for purposes of this Section 1.7, the representations and warranties contained in Section 7.1.10 shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of
Section 8.1.3, (ii) the Borrowers, the Agent, and any Additional Commitment Lender who is not an existing Lender shall have executed and delivered a joinder to the Loan Documents in such form as the Agent shall reasonably require;
(iii) the Borrowers shall have paid such fees and other compensation to the Additional Commitment Lenders as the Lead Borrower and such Additional Commitment Lenders shall agree; (iv) the Borrowers shall have paid such arrangement fees to
the Agent as the Lead Borrower and the Agent may agree; (v) the Borrowers shall deliver to the Agent and the Lenders an opinion or opinions, in form and substance reasonably satisfactory to the Agent, 

  

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from counsel to the Borrowers reasonably satisfactory to the Agent and dated such date; (vi) the Borrowers and the Additional Commitment Lenders shall
have delivered such other instruments, documents and agreements as the Agent may reasonably have requested; and (vii) no Default exists or would arise therefrom. The Borrowers shall prepay any Revolving Credit Loans outstanding on the Increase
Effective Date (and pay any additional amounts required pursuant to Section 3.2.5) to the extent necessary to keep the outstanding Revolving Credit Loans ratable with any revised Revolving Loan Percentages arising from any nonratable increase
in the Tranche A Revolving Loan Commitments under this Section 1.7. 
 1.7.6 Conflicting Provisions. This
Section 1.7 shall supersede any provisions to the contrary contained in Section 11.10 of this Agreement.” 
  

	4.	Amendments to Section 2. The provisions of Section 2 of the Loan Agreement are hereby amended as follows: 

  

	 	a.	The provisions of Section 2.3 of the Loan Agreement are hereby amended by adding “, as further supplemented by that certain fee letter dated April 27, 2007”
after “July 29, 2005” in the last line thereof. 

  

	 	b.	The provisions of Section 2.4 of the Loan Agreement are hereby amended by deleting “1.5% per annum” in the second line and substituting “those certain
percentages per annum set forth in the Applicable Margin for standby letter of credit fees and documentary letter of credit fees, as applicable,” in its stead. 

  

	 	c.	The provisions of Section 2.4 of the Loan Agreement are hereby amended by adding “for standby letters of credit or documentary letters of credit, as applicable,”
after the words “Letter of Credit” in the fifth line thereof. 

  

	 	d.	The provisions of Section 2.6 of the Loan Agreement are hereby amended by deleting “Revolving Credit Maximum Amount” in the last line thereof and substituting
“Total Credit Facility” in its stead. 

  

	5.	Amendments to Section 3. The provisions of Section 3 of the Loan Agreement are hereby amended as follows: 

  

	 	a.	The provisions of Section 3.1.1 of the Loan Agreement are hereby amended by deleting the last sentence thereof in its entirety and substituting the following in its stead:

 “In the event that the Incremental Revolving Loan Commitments have not been terminated in accordance with
Section 3.13 hereof, (x) during the period from January 1 through March 31 and October 2 through December 31 of any year, in the event that the aggregate outstanding Tranche A Revolving Credit Loans and 

  

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the LC Amount, plus the amount of LC Obligations that have not been reimbursed by Borrowers or funded with a Tranche A Revolving Credit Loan, exceeds the
Borrowing Base minus the then aggregate of Availability Reserves, all Revolving Credit Loans made thereafter by the Lenders in excess of the Borrowing Base minus the then aggregate of Availability Reserves during such period shall be
deemed to constitute Incremental Revolving Credit Loans, and (y) during the period from April 1 through October 1 of each year, the Borrowers shall be deemed to have automatically made a request pursuant to this Section 3.1.1 for
an Incremental Revolving Credit Loan (which Incremental Revolving Credit Loan shall be a Base Rate Advance unless the Borrowers have given the Agent prior notice of the Borrowers’ election to obtain a LIBOR Advance pursuant to
Section 3.1.5 hereof) in an amount equal to the lesser of (A) the Incremental Facility Maximum Amount or (B) the Incremental Availability, which Incremental Revolving Loan shall remain outstanding during such period (unless required
to be repaid pursuant to Section 3.3 hereof) and shall be adjusted upon Agent’s receipt of the most recent Borrowing Base Certificate as applicable to reflect any increase or decrease in the Incremental Availability, and repaid, if
applicable, by the making of a Tranche A Revolving Credit Loan, and no Tranche A Revolving Credit Loans shall be made hereunder during such period until such time as the aggregate amount of Incremental Revolving Credit Loans is equal to the lesser
of (A) the Incremental Facility Maximum Amount or (B) Incremental Availability. All Tranche A Revolving Credit Loans outstanding on April 1 of each year shall be automatically converted to Incremental Revolving Loans in accordance
with and to the extent required by the prior sentence, and all Incremental Revolving Credit Loans outstanding on October 2 of each year shall be automatically repaid by the making of a Tranche A Revolving Credit Loan in accordance with the
prior sentence. Only Incremental Revolving Credit Loans shall bear interest at the Base Rate plus the Base Rate Margin for Incremental Revolving Credit Loans or at LIBOR plus the LIBOR Margin for Incremental Revolving Credit Loans, as applicable. In
no event shall any Lender be obligated to make any Incremental Revolving Credit Loan in excess of such Lender’s Incremental Revolving Loan Commitment.” 
  

	 	b.	The provisions of Section 3.1.5 of the Loan Agreement are hereby amended by deleting “six” in the last line thereof and substituting “eight” in its stead.

  

	 	c.	The provisions of Section 3.1.6 of the Loan Agreement are hereby amended by deleting “six” in the last line thereof and substituting “eight” in its stead.

  

	 	d.	The provisions of Section 3.1.7(ii) of the Loan Agreement are hereby amended by deleting “six” in the fourth line thereof and substituting “eight” in its
stead. 

  

	 	e.	The provisions of Section 3.2.1 of the Loan Agreement are hereby amended by adding the following sentence at the end thereof: 

 “During the period from April 1 through October 1 of each year, the principal amount of all Revolving Credit Loans consisting of Tranche A
Revolving Credit Loans shall be paid in full prior to the payment of Incremental Revolving Credit Loans.” 
  

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	 	f.	Subsections (c), (d) and (e) of Section 3.2.6 of the Loan Agreement are hereby deleted in their entirety and the following substituted in their stead:

 “(c) thereafter, to the payment of all other Obligations (excluding Incremental Revolving Credit Loans, the prepayment
fee pursuant to Section 2.6, Derivative Obligations or other Obligations not arising under the Loan Documents, including, without limitation, the Other Liabilities) for the ratable benefit of the holders thereof to the full extent thereof
(subject to the provisions of this subsection 3.2); 
 (d) thereafter, to the payment of all other Obligations, including the Incremental
Revolving Credit Loans (but excluding the prepayment fee pursuant to Section 2.6, Derivative Obligations or other Obligations not arising under the Loan Documents, including, without limitation, the Other Liabilities) for the ratable benefit of
the holders thereof to the full extent thereof (subject to the provisions of this subsection 3.2); 
 (e) thereafter, to the payment of the
prepayment fee pursuant to Section 2.6 hereof; 
 (f) thereafter, to the payment of all Derivative Obligations or other Obligations not
arising under the Loan Documents, including, without limitation, the Other Liabilities, and all costs, expenses, indemnities and attorneys’ fees incurred in connection with such Derivative Obligations or other Obligations not arising under the
Loan Documents, including, without limitation, the Other Liabilities, then due and payable pro rata to the full extent thereof; and 
 (g )
thereafter, to the extent of any excess of such proceeds, to the payment to or upon the order of Borrowers or to whosoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct.” 
  

	 	g.	The provisions of Section 3.3.1 of the Loan Agreement are hereby amended by adding “(subject to Section 3.2.1 hereof)” after “the outstanding principal
balance of the Revolving Credit Loans” in the tenth line and the eighteenth line thereof. 

  

	 	h.	The provisions of Section 3 of the Loan Agreement are hereby amended by adding the following Section 3.13 at the end thereof: 

  

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	 	“3.13	Termination of Incremental Revolving Loan Commitments 

 At any time that the Borrowers shall have satisfied the Pro Forma Availability Condition, the Lead Borrower (on behalf of the Borrowers) may terminate the Incremental Revolving Loan Commitments in whole but not in
part without penalty or premium. The Borrowers shall pay to the Agent for application as provided herein, at the effective time of any such termination, (i) all Unused Line Fees accrued on the Incremental Revolving Loan Commitments so
terminated, and (ii) all Incremental Revolving Credit Loans to the Borrowers outstanding on such date.” 
  

	6.	Amendments to Section 4. The provisions of Section 4 of the Loan Agreement are hereby amended as follows: 

  

	 	a.	The provisions of Section 4.1 of the Loan Agreement are hereby amended by deleting “June 30, 2011” in the third line thereof and substituting “June 30,
2012” in its stead. 

  

	 	b.	The provisions of Section 4.2.2 of the Loan Agreement are hereby amended by deleting the last sentence thereof in its entirety and by substituting the following in its stead:

 “No section of this Agreement or, except as provided in Section 3.13 hereof, type of Loan available hereunder, may
be terminated singly.” 
  

	7.	Amendments to Section 6. The provisions of Section 6.3 of the Loan Agreement are hereby amended by deleting subsections (c) and (d) of Section 6.3 in
their entirety and substituting the following in their stead: 

 “(c) Borrowers shall pay to Agent all out-of-pocket
expenses incurred by Agent in connection with audit of the books and records and Properties of Borrowers and their Subsidiaries and such other matters as Agent shall deem appropriate in its sole judgment, whether such audits are conducted by
employees of Agent or by third parties hired by Agent; provided that the Borrowers shall be responsible only for the costs and expenses of up to one such audit in any twelve month period following the First Amendment Effective Date unless
(i) an Event of Default shall have occurred and be continuing or (ii) Availability under the Adjusted Borrowing Base (or, if the Incremental Revolving Loan Commitments have been terminated in accordance with Section 3.13, under the
Borrowing Base) is at any time less than $30,000,000 (in which either event the Agent may undertake such additional audits as it deems appropriate at the expense of the Borrowers). Notwithstanding the foregoing limitations on the Borrowers’
obligation to pay the expenses for such audit as set forth above, the Agent may undertake such additional audits in its sole judgment, at the expense of the Lenders. Such out-of-pocket expenses shall be payable on the first day of the month
following the date of issuance by Agent of a request for payment thereof to Borrowers. 
  

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 (d) From time to time, Agent may, at Borrowers’ expense, obtain appraisals conducted by such
appraisers (who may be personnel of Agent) as are satisfactory to Agent; provided that the Borrowers shall be responsible only for the costs and expenses of up to one such appraisal in any twelve month period following the First Amendment
Effective Date unless (i) an Event of Default shall have occurred and be continuing or (ii) Availability under the Adjusted Borrowing Base (or, if the Incremental Revolving Loan Commitments have been terminated in accordance with
Section 3.13, under the Borrowing Base) is at any time less than $30,000,000 (in which either event the Agent may undertake such additional appraisals as it deems appropriate at the expense of the Borrowers). Notwithstanding the foregoing
limitations on the Borrowers’ obligation to pay the expenses for such appraisals as set forth above, the Agent may undertake such additional appraisals in its sole judgment, at the expense of the Lenders. Such out-of-pocket expenses shall be
payable on the first day of the month following the date of issuance by Agent of a request for payment thereof to Borrowers.” 
  

	8.	Amendments to Section 8. The provisions of Section 8 of the Loan Agreement are hereby amended as follows: 

  

	 	a.	Section 8.1.4 of the Loan Agreement is hereby deleted in its entirety and the following substituted in its stead: 

 “8.1.4 Borrowing Base Certificates. On the first Monday of each fiscal month (or more frequently as the Borrowers may elect), Borrowers shall
deliver to Agent a Borrowing Base Certificate as of the last day of the immediately preceding month, with such supporting materials as Agent shall reasonably request; provided that if (a) a Default or Event of Default exists or
(b) Availability under the Adjusted Borrowing Base (or, if the Incremental Revolving Loan Commitments have been terminated in accordance with Section 3.13, under the Borrowing Base) is at any time less than $30,000,000, such Borrowing Base
Certificate shall, at the election of Agent, be furnished on Monday of each week for the previous week ending Saturday.” 
  

	 	b.	Section 8.2.3 of the Loan Agreement is hereby amended by deleting “$10,000,000” in clause (iv) thereof and substituting “$30,000,000” in its stead.

  

	 	c.	Section 8.2.18 of the Loan Agreement is hereby deleted in its entirety and the following substituted in its stead: 

 “8.2.18 Fixed Charge Coverage Ratio. In the event that Availability under the Adjusted Borrowing Base (or, in the event that the Incremental
Revolving Loan 

  

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Commitments have been terminated in accordance with Section 3.13 hereof, under the Borrowing Base) shall at any time be less than $15,000,000, the
Borrowers shall not permit the Fixed Charge Coverage Ratio to be less than 1.0:1.0 (as determined pursuant to the most recent Compliance Certificate delivered by the Borrowers to the Agent pursuant to Section 8.1.3(d) hereof) until such time as
Availability under the Adjusted Borrowing Base (or, in the event that the Incremental Revolving Loan Commitments have been terminated in accordance with Section 3.13 hereof, under the Borrowing Base) has been equal to or greater than
$15,000,000 for at least thirty (30) days.” 
  

	9.	Amendment to Section 11. Section 11.10 of the Loan Agreement is hereby amended by adding “or Section 3.2.6 or the aggregate amount of the Commitment
Increases permitted pursuant to Section 1.7 hereof” after “amend Section 1.2” in clause (12) thereof. 

  

	10.	Amendment to Section 12. Section 12 of the Loan Agreement is hereby amended as follows: 

  

	 	a.	Section 12.5 of the Loan Agreement is hereby amended by adding “including, without limitations, the Additional Commitment Lenders” at the end thereof.

  

	 	b.	Section 12.8 of the Loan Agreement is hereby amended by deleting the notice address for the Agent and substituting the following in its stead: 

 Bank of America, N.A. 
 100 Federal Street, 9th Floor 
 Boston, Massachusetts
02110 
 Attention: Mr. Stephen Garvin 
 Facsimile No. (617) 434-6685 
  

	 	c.	Section 12.16 of the Loan Agreement is hereby amended by adding the following at the end thereof: 

 “IN THE EVENT ANY LEGAL PROCEEDING IS FILED IN A COURT OF THE STATE OF CALIFORNIA (THE “COURT”) BY OR AGAINST ANY PARTY IN
CONNECTION WITH ANY CONTROVERSY, DISPUTE OR CLAIM DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY) (EACH, A
“CLAIM”) AND THE WAIVER SET FORTH IN CLAUSE (i) OF THE PRECEEDING PARAGRAPH IS NOT ENFORCEABLE IN SUCH ACTION OR PROCEEDING, THE PARTIES HERETO AGREE AS FOLLOWS: 
 (1) WITH THE EXCEPTION OF THE MATTERS SPECIFIED IN SUBPARAGRAPH 2 BELOW, ANY CLAIM WILL BE RESOLVED BY A GENERAL REFERENCE PROCEEDING IN
ACCORDANCE WITH THE PROVISIONS OF CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 638 THROUGH 645.1. 
  

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 (2) THE FOLLOWING MATTERS SHALL NOT BE SUBJECT TO A REFERENCE PROCEEDING:
(A) NON-JUDICIAL FORECLOSURE OF ANY SECURITY INTERESTS IN REAL OR PERSONAL PROPERTY, (B) EXERCISE OF SELF-HELP REMEDIES (INCLUDING SET-OFF), (C) APPOINTMENT OF A RECEIVER AND (D) TEMPORARY, PROVISIONAL OR ANCILLARY REMEDIES
(INCLUDING WRITS OF ATTACHMENT, WRITS OF POSSESSION, TEMPORARY RESTRAINING ORDERS OR PRELIMINARY INJUNCTIONS). THIS AGREEMENT DOES NOT LIMIT THE RIGHT OF ANY PARTY TO EXERCISE OR OPPOSE ANY OF THE RIGHTS AND REMEDIES DESCRIBED IN CLAUSES
(A)—(D) AND ANY SUCH EXERCISE OR OPPOSITION DOES NOT WAIVE THE RIGHT OF ANY PARTY TO A REFERENCE PROCEEDING PURSUANT TO THIS AGREEMENT. 
 (3) UPON THE WRITTEN REQUEST OF ANY PARTY, THE PARTIES SHALL SELECT A SINGLE REFEREE, WHO SHALL BE A RETIRED JUDGE OR JUSTICE. IF THE PARTIES DO NOT AGREE UPON A REFEREE WITHIN TEN DAYS OF SUCH WRITTEN REQUEST, THEN,
ANY PARTY MAY REQUEST THE COURT TO APPOINT A REFEREE PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 640(B). A REQUEST FOR APPOINTMENT OF A REFEREE MAY BE HEARD ON AN EX PARTE OR EXPEDITED BASIS, AND THE PARTIES AGREE THAT IRREPARABLE HARM
WOULD RESULT IF EX PARTE RELIEF IS NOT GRANTED. 
 (4) ALL PROCEEDINGS AND HEARINGS CONDUCTED BEFORE THE REFEREE, EXCEPT FOR
TRIAL, SHALL BE CONDUCTED WITHOUT A COURT REPORTER, EXCEPT WHEN ANY PARTY SO REQUESTS, A COURT REPORTER WILL BE USED AND THE REFEREE WILL BE PROVIDED A COURTESY COPY OF THE TRANSCRIPT. THE PARTY MAKING SUCH REQUEST SHALL HAVE THE OBLIGATION TO
ARRANGE FOR AND PAY COSTS OF THE COURT REPORTER, PROVIDED THAT SUCH COSTS, ALONG WITH THE REFEREE’S FEES, SHALL ULTIMATELY BE BORNE BY THE PARTY WHO DOES NOT PREVAIL, AS DETERMINED BY THE REFEREE. 
 (5) THE REFEREE SHALL APPLY THE RULES OF DISCOVERY AND EVIDENCE APPLICABLE TO PROCEEDINGS AT LAW IN THE STATE OF 

  

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CALIFORNIA TO THE REFERENCE PROCEEDING AND SHALL DETERMINE ALL ISSUES IN ACCORDANCE WITH APPLICABLE LAW. THE REFEREE SHALL BE EMPOWERED TO ENTER EQUITABLE AS
WELL AS LEGAL RELIEF AND RULE ON ANY MOTION WHICH WOULD BE AUTHORIZED IN A TRIAL, INCLUDING MOTIONS FOR DEFAULT JUDGMENT OR SUMMARY JUDGMENT. THE REFEREE SHALL REPORT HIS DECISION, WHICH REPORT SHALL ALSO INCLUDE FINDINGS OF FACT AND CONCLUSIONS OF
LAW.” 
  

	11.	Amendments to Appendix A. The provisions of Appendix A to the Loan Agreement are hereby amended as follows: 

  

	 	a.	The definition of “Adjusted Borrowing Base” is hereby deleted in its entirety and the following substituted in its stead: 

 “Adjusted Borrowing Base” – means, at any time of calculation, an amount equal to the sum of the following: 
 (a) The product of (i) 100% multiplied by (ii) the Appraised Inventory Liquidation Value of Eligible Inventory of the
Lead Borrower and the Canadian Affiliate (net of Inventory Reserves); plus 
 (b) The lesser of (x) the product of
(i) 90% multiplied by (ii) the Appraised Inventory Liquidation Value of Eligible Inventory of Michaels (net of Inventory Reserves) or (y) $2,000,000; plus 
 (c) The product of (i) the amount of Eligible Credit Card Receivables of the Lead Borrower and the Canadian Affiliate (net of
Receivables Reserves) multiplied by (ii) 90%; 
 provided, however, that until the Agent obtains a perfected security interest in
the Canadian Assets, the amounts set forth in clauses (a) and (c) attributable to the Canadian Affiliate shall not be included in the Adjusted Borrowing Base calculation; and provided further that Eligible In-Transit Inventory shall not
constitute more than twenty percent (20%) of the Eligible Inventory at any time.” 
  

	 	b.	The definition of “Applicable Margin” is hereby deleted in its entirety and the following substituted in its stead: 

 “Applicable Margin” – as of the First Amendment Effective Date, the percentages with respect to the Base Rate Revolving Portion
(other than Incremental Revolving Credit Loans), the LIBOR Revolving Portion (other than Incremental Revolving Credit Loans), the Incremental Revolving Credit Loans, the Standby Letter of Credit Fees and the Documentary Letter of Credit Fees set
forth in Level I below: 
  

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	 Level
	  	 Average Net
Availability
	  	 Base
 Rate
 Margin
	  	 LIBOR
 Margin
	  	 Base Rate
Margin
for
Incremental
Revolving
Credit
 Loans
	  	 LIBOR
 Margin for
Incremental
Revolving
Credit
 Loans
	  	 Standby
 Letter
 of
 Credit
 Fees
	  	 Documentary
Letter of
 Credit Fees

	 I
	  	>$40,000,000	  	0%	  	1.00%	  	0%	  	2.00%	  	0.75%	  	0.50%
	 II
	  	 <=$40,000,000
 and
 >$20,000,000
	  	0%	  	1.25%	  	0%	  	2.00%	  	1.00%	  	0.625%
	 III
	  	<=$20,000,000	  	0%	  	1.50%	  	0%	  	2.00%	  	1.25%	  	0.75%

 The Applicable Margin shall thereafter be adjusted quarterly as of the first day of each fiscal
quarter of the Borrowers commencing with the fiscal quarter beginning August 7, 2007, based upon the Borrowers’ Average Net Availability for the immediately preceding fiscal quarter. Upon the occurrence and during the continuance of an
Event of Default, at the option of the Agent or at the direction of the Majority Lenders, interest shall be immediately increased to that set forth in Level III (even if the Average Net Availability requirements for a different Level have been met)
and interest shall accrue at the rate set forth in Section 2.1.2.” 
  

	 	c.	The definition of “Borrowing Base” is hereby deleted in its entirety and the following substituted in its stead: 

 “Borrowing Base” – means, at any time of calculation, an amount equal to the sum of the following: 
 (a) The product of (i) 90% multiplied by (ii) the Appraised Inventory Liquidation Value of Eligible Inventory of the Lead
Borrower and the Canadian Affiliate (net of Inventory Reserves); plus 
 (b) The lesser of (x) the product of
(i) 90% multiplied by (ii) the Appraised Inventory Liquidation Value of Eligible Inventory of Michaels (net of Inventory Reserves) or (y) $2,000,000; plus 
 (c) The product of (i) the amount of Eligible Credit Card Receivables of the Lead Borrower and the Canadian Affiliate (net of
Receivables Reserves) multiplied by (ii) 90%; 
  

 13 

 provided, however, that until the Agent obtains a perfected security interest in the Canadian Assets, the
amounts set forth in clauses (a) and (c) attributable to the Canadian Affiliate shall not be included in the Borrowing Base calculation; and provided further that Eligible In-Transit Inventory shall not constitute more than twenty percent
(20%) of the Eligible Inventory at any time.” 
  

	 	d.	The definition of “Obligations” is hereby deleted in its entirety and the following substituted in its stead: 

 “Obligations” – all Loans, all LC Obligations and all other advances, debts, liabilities, obligations, covenants and duties,
together with all interest, fees and other charges thereon, owing, arising, due or payable from Borrowers to any Lender or Agent, for its own benefit and the benefit of the Lenders, or from Borrowers to Bank or to any other affiliate of Bank of
America, of any kind or nature, present or future, whether or not evidenced by any note, guaranty or other instrument, whether arising under the Agreement or any of the other Loan Documents or otherwise, including, without limitation, the Other
Liabilities, whether direct or indirect (including those acquired by assignment), absolute or contingent, primary or secondary, due or to become due, now existing or hereafter arising and however acquired, including without limitation any Derivative
Obligations owing to Agent, any Lender or Bank and all interest and fees that accrue after the commencement by or against any Borrower or any Affiliate thereof of any proceeding under any bankruptcy or insolvency laws naming such Person as the
debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.” 
  

	 	e.	The definition of “Receivables Advance Rate” is hereby deleted in its entirety. 

  

	 	f.	The definition of “Revolving Credit Loan” is hereby deleted in its entirety and the following substituted in its stead: 

 “Revolving Credit Loan” – collectively, the Incremental Revolving Credit Loans and the Tranche A Revolving Credit Loans made
hereunder. 
  

	 	g.	The definition of “Revolving Credit Maximum Amount” is hereby deleted in its entirety and the following substituted in its stead: 

 “Revolving Credit Maximum Amount” – $175,000,000, as such amount may be increased pursuant to Section 1.7 hereof. 

 

	 	h.	The definition of “Revolving Loan Commitment” is hereby deleted in its entirety and the following substituted in its stead: 

 “Revolving Loan Commitment” – with respect to any Lender, the sum of such Lender’s Incremental Revolving Loan Commitment plus
such Lender’s Tranche A Revolving Loan Commitment, and with respect to all Lenders, the sum of all such Lenders’ Incremental Revolving Loan Commitments plus such Lenders’ Tranche A Revolving Loan Commitments. 
  

 14 

	 	i.	The definition of “Total Credit Facility” is hereby deleted in its entirety and the following substituted in its stead: 

 “Total Credit Facility” – $190,000,000, as such amount may be increased or decreased pursuant to the terms hereof. 
  

	 	j.	The following definitions are hereby added to the Loan Agreement in appropriate alphabetical order: 

  

	 	i.	“Additional Commitment Lender” – as defined in subsection 1.7.3 of the Agreement. 

  

	 	ii.	“Bank Product” – any services or facilities provided to any Borrower by the Agent, any Lender or any of their respective Affiliates (but excluding Cash
Management Services) on account of (a) credit cards, (b) purchase cards, (c) merchant services constituting a line of credit, and (d) leasing. 

  

	 	iii.	“Cash Management Services” – any one or more of the following types or services or facilities provided to any Borrower by the Agent, any Lender or any of their
respective Affiliates: (a) ACH transactions, (b) cash management services, including, without limitation, controlled disbursement services, treasury, depository, overdraft, and electronic funds transfer services, (c) foreign exchange
facilities, (d) credit or debit cards, and (e) merchant services not constituting a Bank Product. 

  

	 	iv.	“Commitment Increase” – as defined in subsection 1.7.1 of the Agreement. 

  

	 	v.	“First Amendment” – that certain First Amendment to Eighth Amended and Restated Loan and Security Agreement dated as of April 27, 2007 by and among the
Borrowers, the Agent and the Lenders. 

  

	 	vi.	“First Amendment Effective Date” – April 27, 2007. 

  

	 	vii.	“Increase Effective Date” – as defined in subsection 1.7.4 of the Agreement. 

  

	 	viii.	“Incremental Facility Maximum Amount”– $15,000,000. 

  

 15 

	 	ix.	“Incremental Revolving Loan Commitment” – (a) with respect to any Lender, the amount of such Lender’s Revolving Loan Commitment with respect to
Incremental Revolving Credit Loans, as set forth below such Lender’s name on the signature page to the First Amendment, and (b) with respect to all Lenders, the aggregate amount of such Lenders’ Revolving Loan Commitments with respect
to Incremental Revolving Credit Loans, in an aggregate amount not to exceed the Incremental Facility Maximum Amount. 

  

	 	x.	“Other Liabilities” – (a) any Cash Management Services furnished to any of the Borrowers or any of their Subsidiaries and/or (b) any transaction with the
Agent, any Lender or any of their respective Affiliates, which arises out of any Bank Product entered into with any Borrower and any such Person, as each may be amended from time to time. 

  

	 	xi.	“Pro Forma Availability Condition” – for any date of calculation with respect to the termination of the Incremental Revolving Loan Commitments, the projected
average Availability for each of the twelve fiscal months following, and after giving effect to, such termination, will be equal to or greater than $30,000,000. 

  

	 	xii.	“Tranche A Revolving Credit Loans” – all Revolving Credit Loans made by the Lenders pursuant to Section 1.1 of this Agreement other than Incremental
Revolving Credit Loans. 

  

	 	xiii.	“Tranche A Revolving Loan Commitment” – (a) with respect to any Lender, the amount of such Lender’s Revolving Loan Commitment with respect to Tranche A
Revolving Credit Loans, as set forth below such Lender’s name on the signature page to the First Amendment, and (b) with respect to all Lenders, the aggregate amount of such Lenders’ Revolving Loan Commitments with respect to Tranche
A Revolving Credit Loans, in an aggregate amount not to exceed the Revolving Credit Maximum Amount. 

  

	12.	Amendments to Exhibits. Exhibits 8.1.3(d) and 8.1.3(h) to the Loan Agreement are hereby deleted in their entirety and the Exhibits 8.1.3(d) and 8.1.3(h) attached hereto
substituted in their stead. 

  

	13.	Conditions to Effectiveness. This First Amendment shall not be effective until each of the following conditions precedent have been fulfilled to the satisfaction of the
Agent: 

  

	 	a.	This First Amendment shall have been duly executed and delivered by the parties hereto. The Agent shall have received a fully executed copy hereof and of each other document
required hereunder, including, without limitation, amended and restated Revolving Notes. 

  

 16 

	 	b.	No material misstatements shall have been made in any of the materials furnished to the Agent or to the Lenders prior to the closing of this First Amendment. The Agent shall be
satisfied that any financial statements and projections delivered to it fairly present the business and financial condition of the Borrowers and their Subsidiaries, taken as a whole, and that there have been no material adverse change in the assets,
business, financial condition or income of the Borrowers and their Subsidiaries, taken as a whole, since the date of the most recent financial information delivered to the Agent; provided that with respect to projected financial information
furnished to the Agent or the Lenders, such projections were prepared in good faith on the basis of assumptions believed to be reasonable at the time. 

  

	 	c.	All action on the part of the Borrowers necessary for the valid execution, delivery and performance by the Borrowers of this First Amendment shall have been duly and effectively
taken. The Agent shall have received from the Borrowers true copies of their respective resolutions authorizing the transactions described herein, each certified by their secretary or other appropriate officer to be true and complete.

  

	 	d.	The Borrowers shall have paid the Agent the fees due in connection herewith. 

  

	 	e.	No Default or Event of Default shall have occurred and be continuing. 

  

	 	f.	The Borrowers shall have provided such additional instruments and documents to the Administrative Agent as the Administrative Agent and its counsel may have reasonably requested.

  

	14.	Miscellaneous. 

  

	 	a.	Except as provided herein, all terms and conditions of the Loan Agreement and the other Loan Documents remain in full force and effect. The Borrowers each hereby ratify, confirm,
and reaffirm all of the representations, warranties and covenants therein contained. Without limiting the generality of the foregoing, each Borrower hereby acknowledges, confirms and agrees that all Collateral shall continue to secure the
Obligations as modified and amended pursuant to this First Amendment and any future modifications, amendments, substitutions or renewals thereof. 

  

	 	b.	Without limiting any of the provisions of the Loan Agreement or other Loan Documents, the Borrowers shall pay all reasonable costs and expenses incurred by the Agent in connection
with this First Amendment, including, without limitation, all reasonable attorneys’ fees. 

  

	 	c.	 This First Amendment may be executed in several counterparts and by each party on a separate counterpart, each of which when so executed and delivered, each 

  

 17 

	 	 
shall be an original, and all of which together shall constitute one instrument. Delivery of an executed counterpart of a signature page hereto by telecopy
or by electronic email in .pdf format shall be effective as delivery of a manually executed counterpart hereof. 

  

	 	d.	This First Amendment expresses the entire understanding of the parties with respect to the matters set forth herein and supersedes all prior discussions or negotiations hereon. Any
determination that any provision of this First Amendment or any application hereof is invalid, illegal or unenforceable in any respect and in any instance shall not affect the validity, legality, or enforceability of such provision in any other
instance, or the validity, legality or enforceability of any other provisions of this First Amendment. 

  

	 	e.	This First Amendment shall be governed by and construed in accordance with the laws of the State of California. 

 [signature pages follow] 
  

 18 

 IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be executed as of the date
first above written. 
  

			
	 RESTORATION HARDWARE, INC.,
 as Lead
Borrower

		
	By:	 	 /s/ Chris Newman

	Name:	 	Chris Newman
	Title:	 	SVP & SFO
	
	 THE MICHAELS FURNITURE
 COMPANY, INC., as a
Borrower

		
	By:	 	 /s/ Chris Newman

	Name:	 	Chris Newman
	Title:	 	SVP & SFO

			
	 BANK OF AMERICA, N.A.,
 as Agent and as a
Lender

		
	By:	 	 /s/ Mark D. Twomey

		 	Mark D. Twomey
		 	Vice President
	
	 100 Federal Street
 Boston, Massachusetts
02110
 Tranche A Revolving Loan Commitment:
 $75,219,667
 Incremental Revolving Loan Commitment:
 $ 6,447,000

			
	 THE CIT GROUP/BUSINESS CREDIT, INC.,
 as
Co-Administrative Agent and as a Lender

		
	By:	 	 /s/ Adrian Avalos

	Name:	 	Adrian Avalos
	Title:	 	Vice President
	
	 300 South Grand Avenue, 10th Floor
 Los Angeles, California 90071
 Tranche A Revolving Loan Commitment:
 $41,447,000
 Incremental Revolving Loan Commitment:
 $ 3,553,000

			
	 WELLS FARGO RETAIL FINANCE, LLC,
 as
Documentation Agent and as a Lender

		
	By:	 	 /s/ Emily J. Abrahamson

	Name:	 	Emily J. Abrahamson
	Title:	 	Assistant Vice President
	
	 One Boston Place, 18th Floor
 Boston, Massachusetts 02108
 Tranche A Revolving Loan Commitment:
 $58,333,333
 Incremental Revolving Loan Commitment:
 $ 5,000,000Key Manager Incentive Plan for 2007

 Exhibit 10.2 
 

 
 

 
 Key Manager Incentive Plan (KMIP) — KMIP is designed to reward executives, senior managers and senior technical
leaders for achievement of specific company performance objectives. KMIP participants directly influence the achievement of these critical company objectives. 
 KMIP incentive is computed as a pre-determined percentage of base salary, and is determined by the performance of the company. Additionally, an individual’s earned KMIP incentive can be modified, positively or negatively, by an
Individual Performance Factor. The Company’s performance metrics for 2007 KMIP are Operating Margin % and Revenue. 
 KMIP is an annual plan with a semi-annual payout opportunity and if earned, is paid following a public announcement of the first half (2nd quarter) and year-end financial results. 

 Table of Contents 
  

					
	1.0	  	PURPOSE	  	3
			
	2.0	  	TERM	  	3
			
	3.0	  	PLAN ADMINISTRATION	  	3
			
	4.0	  	MISCELLANEOUS	  	3
			
	5.0	  	ELIGIBILITY	  	4
			
	6.0	  	TARGET INCENTIVES	  	4
			
	7.0	  	INCENTIVE DETERMINATION	  	6

  

 2 

	1.0	PURPOSE 

 The purpose of the AMI Semiconductor, Inc.
Key Manager Incentive Plan (“Plan”) is to reward executives, senior managers and senior technical leaders (AMI Semiconductor and its subsidiaries) for the achievement of company objectives. 
  

	2.0	TERM 

 The term of the Plan is 12 months, commencing
on January 1, 2007 and ending December 31, 2007. 
  

	3.0	PLAN ADMINISTRATION 

 The Board of Directors of the
Company approves the Company’s semi-annual and annual Operating Plans including targets for Operating Margin % and Revenue. The Company’s Board reviews and approves the specific Operating Margin % and Revenue targets for KMIP Payouts.

 At mid year, the Board of Directors may change (up or down) second half targets or the targets can remain the same. 
 Additionally the Compensation Committee reviews and recommends KMIP Incentive Targets, reviews plan results and recommends payouts and Individual
Performance Factors for the CEO and CFO for approval by the Company’s board of directors. The Compensation Committee also reviews and approves KMIP Incentive Targets, payouts and Individual Performance Factors for other Executive Managers.

 For non-executive management participants, the Plan will be administered by a Plan Committee consisting of the Senior Vice President of
Human Resources, Chief Financial Officer and Chief Executive Officer (“Plan Committee”). The Plan Committee will have responsibility to review and approve the eligibility and target incentive amounts for non-Executive Managers. The
Individual Performance Factor for non-Executive Managers is determined by the employee’s executive management and the CEO. 
  

	4.0	MISCELLANEOUS 

  

	 	A.	This plan provides guidelines only and is not established to grant to any participant any contractual rights. AMI Semiconductor, Inc. (“AMIS”) reserves the absolute right
to change this Plan, with or without notice, at any time. 

  

	 	B.	Nothing in this Plan shall be construed to create or to imply the creation of a term contract between AMIS and any participant nor a guarantee of employment for any specific period
of time. 

  

	 	C.	AMIS reserves the unilateral right to terminate participation in the Plan of any individual(s) at any time, with or without cause and with or without prior written notice.

  

	 	D.	All incentive payments under the Plan are subject to the total discretion of AMIS, and, prior to distribution pursuant to the provisions of the Plan, incentive payments may be
reduced or eliminated entirely if business considerations of AMIS so require. 

  

 3 

	5.0	ELIGIBILITY 

 To be eligible for the KMIP, the
following requirements must be met: 
  

	 	•	 	 Generally, to receive payment pursuant to the Plan, the employee must be employed by AMIS throughout the period of time during which the performance criteria set
forth in the Plan are measured, and also must be employed by AMIS up to and including the date on which any such payment pursuant to the Plan is made. Partial year participants may be eligible to receive a pro-rata KMIP incentive for the first half
if the participant is an active AMIS employee on or before March 31 or on or before September 30 for the second half. 

  

	 	•	 	 Participants who receive a performance rating during the plan year of development required (DR) are typically ineligible for payout. 

 

	 	•	 	 Resignation by a plan participant or termination of employment from AMIS automatically disqualifies the participant from the Plan. 

  

	 	•	 	 Participation in the Plan in no way affects or restricts AMIS’s unqualified right at any time to make any organizational changes that it may deem appropriate
(including, but not limited to, position reassignment). These changes may change or eliminate the employee’s participation in the KMIP plan. 

  

	 	•	 	 Employees on leave for more than 50% of the KMIP period are not eligible for that period’s KMIP payout. 

  

	 	•	 	 Other issues of eligibility will be determined by the Plan Committee. 

  

	6.0	TARGET INCENTIVES 

  

	 	A.	At the start of the Plan term, a target incentive percentage will be set for each participant, based upon level in the organization and approved as described in section 3.0. Each
participant’s specific incentive target will be communicated in an individual KMIP notice letter. 

  

	 	B.	Target incentives for all participants will be expressed as a percentage of annual base salary as of June 30 of the plan year for mid year incentive payments and as of
December 31 of the plan year for year-end incentive payments. 

  

	 	C.	For purposes of the Plan, “base salary” will be defined as: 

  

	 	•	 	 Belgium employees will be gross monthly salary x 13.92. 

  

	 	•	 	 France, Italy, Switzerland and Philippines employees will be gross monthly salary x 13 

  

	 	•	 	 Czech Republic employees will be gross monthly salary x 12.5 

  

	 	•	 	 US, Bulgaria, Canada, UK, Korea, and Germany employees will be gross monthly salary x 12 

  

	 	•	 	 The base salary excludes any incentive payments under the Plan or any of the AMIS’s other incentive compensation programs, sales incentive programs,
differentials, or other payments in addition to base salary. The formula for calculating KMIP is included below: 

  

 4 

 Mathematical Representation of Formula for Calculating KMIP Payments 
 First Half of the Year = S x (50% x IIP) x CPF1 x IPF1

 Second Half of the Year = S x (50% x IIP) x CPF2 x IPF2  
  

							
	Where	 	S	 	=	 	Base Salary (as of June 30 for first half and December 31 for second half)
		 	I I P	 	=	 	Individual Incentive Percentage (pre-determined)
		 	IPF1	 	=	 	Individual Performance Factor for first half year
		 	IPF2	 	=	 	Individual Performance Factor for second half year
		 	CPF1	 	=	 	Company Performance Factor for first half of the year
		 	CPF2	 	=	 	Company Performance Factor for second half of the year

  

	 	D.	For net guaranteed salaried in Belgium, target incentives will be expressed as a percentage of 70% of the annual net guaranteed salary. For purposes of the plan, annual net
guaranteed salary will be the net monthly salary of June 30 x 13.92 for the first half (mid year) incentive and December 31 x 13.92 for the second half (year end) incentive. The net monthly salary excludes any incentive payments under the
plan or any of the AMIS’s other incentive compensation programs, sales incentive programs, differentials or other payments in addition to base salary. 

  

	 	E.	Employees hired into an eligible position during the Plan term will have their target incentive set based upon their level in the organization. Since the target incentive percentage
applies to base salary paid during the Plan term, the incentive will be automatically pro-rated from the month they are eligible to participate. An employee hired into an eligible position must start on or before March 31st for the first half
(mid year) incentive and on or before September 30th for the second half (year end) incentive to be eligible for the incentive, unless otherwise approved by the Committee or as part of an approved Executive Offer. 

  

	 	 F.
	 Employees newly promoted into an eligible position during the Plan term will have their target incentive set based upon
their level in the organization, similar to a new hire in Part E above. If the promotion occurs during the focal review period, they will be eligible for the full 12-month KMIP incentive. If the promotion occurs at any other time during the Plan
term, the incentive will be pro-rated from the month they are eligible to participate. An employee promoted into an eligible position must be promoted on or before March 31st for the first half and on or before September 30th for the second half to be eligible for KMIP incentive. 

  

	 	 G.
	 Employees who are promoted into a higher pay grade while already participating in the KMIP will have their target
incentive set based upon their post-promotion level in the organization if the promotion occurs during the focal review period, or if promoted on or before March 31st for the first half payout and on or before September 30th for the second half and year end payouts. Employees who are promoted into a higher pay grade while already participating in the KMIP will have their annual target incentive remain at their
pre-promotion level in the organization if promoted after March 31st for the first half payout and after
September 30th for the second half and year end payouts. Incentive payments will not be pro-rated over two
different target incentives within the same half year. 

  

 5 

	7.0	INCENTIVE DETERMINATION 

  

	 A.
	 Company Performance Factor: The Company Performance Factor will be measured by achievement of Operating Margin %
and Revenue goals established and set forth in the company’s Operating Plan for 2007 as approved by the Board. The 1st and 2nd half matrixes are attached in Exhibit A. 

  

	B.	Individual Performance Factor: The Individual Performance Factor is discretionary and can range from 0.5 to 1.5 and represents two components. The first component is
recognition for individual performance for the plan year. The second component supports retention of the key employee for the coming plan year. Any bonus amount paid above 1.0 is subject to the payback provision described in section D.

  

	C.	Bonus Repayment Agreement: The portion of KMIP bonus resulting from a performance factor greater than 1.0 is subject to a pro-rated one-year “vesting schedule”.
While the retention component of the bonus is paid with the earned KMIP, the employee will be required to repay the unvested portion of the retention component of the bonus if the employee voluntarily terminates employment with AMIS within one
(1) year of the bonus payment, as per the KMIP Performance Factor Bonus Agreement (see Attachment A). The repayment agreement states that the repayment amount will be reduced by one/twelfth (1/12) for each full month of AMIS employment the
employee completes after receiving the retention component of the KMIP bonus. All KMIP participants must sign the Performance Factor Bonus Agreement before receiving any KMIP payout greater than 1.0. 

  

	 D.
	 If the company achieves the goals above the Threshold amounts, incentive payments will be made in July or August for the
1st Half of the year. Payments for the 2nd Half of the year will be made, if earned, in February or March of the following year as the audited financial statements of the Company are approved.

  

 6

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