Document:

Stock Incentive Plan

 Exhibit 10.2 
 RESTORATION HARDWARE, INC. 
 1998 STOCK INCENTIVE PLAN 
 Amended and Restated on April 9, 2007 
 Amended and Restated on October 9, 2002 
 Amended and Restated on May 16, 2001 
 ARTICLE ONE 
 GENERAL PROVISIONS

  

	 	I.	PURPOSE OF THE PLAN 

 This 1998 Stock Incentive Plan
is intended to promote the interests of Restoration Hardware, Inc., a Delaware corporation, by providing eligible persons with the opportunity to acquire a proprietary interest, or otherwise increase their proprietary interest, in the Corporation as
an incentive for them to remain in the service of the Corporation. 
 Capitalized terms shall have the meanings assigned to such terms in the
attached Appendix. 
  

	 	II.	STRUCTURE OF THE PLAN 

 A. The Plan shall be divided
into five separate equity programs: 
 - the Discretionary Option Grant Program under which eligible persons may, at the discretion of the
Plan Administrator, be granted options to purchase shares of Common Stock, 
 - the Salary Investment Option Grant Program under which
eligible employees may elect to have a portion of their base salary invested each year in special option grants, 
 - the Stock Issuance
Program under which eligible persons may, at the discretion of the Plan Administrator, be issued shares of Common Stock directly, either through the immediate purchase of such shares or as a bonus for services rendered the Corporation (or any Parent
or Subsidiary), and under which eligible persons may, at the discretion of the Plan Administrator, be issued Restricted Stock Units, 
 -
the Automatic Option Grant Program under which eligible non-employee Board members shall automatically receive option grants at periodic intervals to purchase shares of Common Stock, and 
 - the Director Fee Option Grant Program under which non-employee Board members may elect to have all or any portion of their annual retainer fee
otherwise payable in cash applied to a special option grant. 
  

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 B. The provisions of Articles One and Seven shall apply to all equity programs under the Plan and shall
govern the interests of all persons under the Plan. 
  

	 	III.	ADMINISTRATION OF THE PLAN 

 A. Prior to the
Section 12 Registration Date, the Discretionary Option Grant and Stock Issuance Programs shall be administered by the Board. Beginning with the Section 12 Registration Date, the Primary Committee shall have sole and exclusive authority to
administer the Discretionary Option Grant and Stock Issuance Programs with respect to Section 16 Insiders. 
 B. Administration of the
Discretionary Option Grant and Stock Issuance Programs with respect to all other persons eligible to participate in those programs may, at the Board’s discretion, be vested in the Primary Committee or a Secondary Committee, or the Board may
retain the power to administer those programs with respect to all such persons. 
 C. Members of the Primary Committee or any Secondary
Committee shall serve for such period of time as the Board may determine and may be removed by the Board at any time. The Board may also at any time terminate the functions of any Secondary Committee and reassume all powers and authority previously
delegated to such committee. 
 D. Each Plan Administrator shall, within the scope of its administrative functions under the Plan, have full
power and authority (subject to the provisions of the Plan) to establish such rules and regulations as it may deem appropriate for proper administration of the Discretionary Option Grant and Stock Issuance Programs and to make such determinations
under, and issue such interpretations of, the provisions of such programs and any outstanding options or stock issuances thereunder as it may deem necessary or advisable. Decisions of the Plan Administrator within the scope of its administrative
functions under the Plan shall be final and binding on all parties who have an interest in the Discretionary Option Grant and Stock Issuance Programs under its jurisdiction or any option or stock issuance thereunder. 
 E. The Primary Committee shall have the sole and exclusive authority to determine which Section 16 Insiders and other highly compensated Employees
shall be eligible for participation in the Salary Investment Option Grant Program for one or more calendar years. However, all option grants under the Salary Investment Option Grant Program shall be made in accordance with the express terms of that
program, and the Primary Committee shall not exercise any discretionary functions with respect to the option grants made under that program. 
 F. Service on the Primary Committee or the Secondary Committee shall constitute service as a Board member, and members of each such committee shall accordingly be entitled to full indemnification and reimbursement as Board members for their
service on such committee. No member of the Primary Committee or the Secondary Committee shall be liable for any act or omission made in good faith with respect to the Plan or any option grants or stock issuances under the Plan. 
 G. Administration of the Automatic Option Grant and Director Fee Option Grant Programs shall be self-executing in accordance with the terms of those
programs, and no Plan Administrator shall exercise any discretionary functions with respect to any option grants or stock issuances made under those programs. 
  

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	 	IV.	ELIGIBILITY 

 A. The persons eligible to participate
in the Discretionary Option Grant and Stock Issuance Programs are as follows: 
 (i) Employees, 
 (ii) non-employee members of the Board or the board of directors of any Parent or Subsidiary, and 
 (iii) consultants and other independent advisors who provide services to the Corporation (or any Parent or Subsidiary). 
 B. Only Employees who are Section 16 Insiders or other highly compensated individuals shall be eligible to participate in the Salary Investment
Option Grant Program. 
 C. Each Plan Administrator shall, within the scope of its administrative jurisdiction under the Plan, have full
authority to determine, (i) with respect to the option grants under the Discretionary Option Grant Program, which eligible persons are to receive option grants, the time or times when such option grants are to be made, the number of shares to
be covered by each such grant, the status of the granted option as either an Incentive Option or a Non-Statutory Option, the time or times when each option is to become exercisable, the vesting schedule (if any) applicable to the option shares and
the maximum term for which the option is to remain outstanding and (ii) with respect to stock issuances under the Stock Issuance Program, which eligible persons are to receive stock issuances, the time or times when such issuances are to be
made, the number of shares to be issued to each Participant, the vesting schedule (if any) applicable to the issued shares and the consideration for such shares. 
 D. The Plan Administrator shall have the absolute discretion either to grant options in accordance with the Discretionary Option Grant Program or to effect stock issuances and grant Restricted Stock Units, in each
case, in accordance with the Stock Issuance Program. 
 E. Only non-employee Board members shall be eligible to participate in the Automatic
Option Grant and Director Fee Option Grant Programs. 
  

	 	V.	STOCK SUBJECT TO THE PLAN 

 A. The stock issuable
under the Plan shall be shares of authorized but unissued or reacquired Common Stock, including shares repurchased by the Corporation on the open market. The maximum number of shares of Common Stock initially reserved for issuance over the term of
the Plan shall not exceed 5,307,303 shares. In addition, the number of shares of Common Stock reserved for issuance under the Plan will automatically be increased on the first trading day of each calendar year, beginning in calendar year 2000, by an
amount equal to the lesser of three percent 3% of the total number of shares of Common Stock outstanding on the last trading day of the preceding calendar year, or (ii) six percent (6%) of the total outstanding shares immediately following
the initial public offering of the Common Stock. 
  

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 B. No one person participating in the Plan may receive options, separately exercisable stock appreciation
rights, direct stock issuances and Restricted Stock Units for more than 1,000,000 shares of Common Stock in the aggregate per calendar year, beginning with the 1998 calendar year. In connection with a Participant’s commencement of Service, a
Participant may be granted options, separately exercisable stock appreciation rights, direct stock issuances and Restricted Stock Units for up to an additional 500,000 shares of Common Stock which shall not count against the limit set forth in the
previous sentence. 
 C. Shares of Common Stock subject to outstanding options (including options incorporated into this Plan from the
Predecessor Plan) shall be available for subsequent issuance under the Plan to the extent (i) those options expire or terminate for any reason prior to exercise in full or (ii) the options are cancelled in accordance with the
cancellation-regrant provisions of Article Two. Unvested shares and unvested Restricted Stock Units issued under the Plan and subsequently cancelled or repurchased by the Corporation, at the original issue price paid per share, pursuant to the
Corporation’s repurchase rights under the Plan shall be added back to the number of shares of Common Stock reserved for issuance under the Plan and shall accordingly be available for reissuance through one or more subsequent option grants,
direct stock issuances or Restricted Stock Units under the Plan. However, should the exercise price of an option under the Plan be paid with shares of Common Stock or should shares of Common Stock otherwise issuable under the Plan be withheld by the
Corporation in satisfaction of the withholding taxes incurred in connection with the exercise of an option or the vesting of a stock issuance or Restricted Stock Unit under the Plan, then the number of shares of Common Stock available for issuance
under the Plan shall be reduced by the gross number of shares for which the option is exercised or which vest under the stock issuance or the Restricted Stock Unit, and not by the net number of shares of Common Stock issued to the holder of such
option, stock issuance or Restricted Stock Unit. Shares of Common Stock underlying one or more stock appreciation rights exercised under Section V of Article Two of the Plan shall NOT be available for subsequent issuance under the Plan. 

D. If any change is made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares
or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration, appropriate adjustments shall be made to (i) the maximum number and/or class of securities issuable under the Plan,
(ii) the number and/or class of securities for which any one person may be granted stock options, separately exercisable stock appreciation rights, direct stock issuances and Restricted Stock Units under the Plan per calendar year,
(iii) the number and/or class of securities for which grants are subsequently to be made under the Automatic Option Grant Program to new and continuing non-employee Board members, (iv) the number and/or class of securities and the exercise
price per share in effect under each outstanding option under the Plan, (v) the number and/or class of securities in effect under each outstanding Restricted Stock Unit under the Plan and (vi) the number and/or class of securities and
price per share in effect under each outstanding option incorporated into this Plan from the Predecessor Plan. Such adjustments to the outstanding options are to be effected in a manner which shall preclude the enlargement or dilution of rights and
benefits under such options. The adjustments determined by the Plan Administrator shall be final, binding and conclusive. 
  

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 ARTICLE TWO 
 DISCRETIONARY OPTION GRANT PROGRAM 
  

	 	I.	OPTION TERMS 

 Each option shall be evidenced by one
or more documents in the form approved by the Plan Administrator; provided, however, that each such document shall comply with the terms specified below. Each document evidencing an Incentive Option shall, in addition, be subject to the provisions
of the Plan applicable to such options. 
 A. EXERCISE PRICE. 
 1. The exercise price per share shall be fixed by the Plan Administrator but shall not be less than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the option grant date.

 2. The exercise price shall become immediately due upon exercise of the option and shall, subject to the provisions of Section I of
Article Six and the documents evidencing the option, be payable in cash or check made payable to the Corporation. Should the Common Stock be registered under Section 12 of the 1934 Act at the time the option is exercised, then, subject to
Applicable Laws, the exercise price may also be paid as follows: 
 (i) in shares of Common Stock held for the requisite
period necessary to avoid a charge to the Corporation’s earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date, or 
 (ii) to the extent the option is exercised for vested shares, through a special sale and remittance procedure pursuant to which the
Optionee shall concurrently provide irrevocable instructions to (a) a Corporation-designated brokerage firm to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement
date, sufficient funds to cover the aggregate exercise price payable for the purchased shares plus all applicable Federal, state and local income and employment taxes required to be withheld by the Corporation by reason of such exercise and
(b) the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale. 
 Except to the extent such sale and remittance procedure is utilized, payment of the exercise price for the purchased shares must be made on the Exercise Date. 
 B. EXERCISE AND TERM OF OPTIONS. Each option shall be exercisable at such time or times, during such period and for such number of shares as shall be determined by the Plan Administrator and set forth in the documents
evidencing the option. However, no option shall have a term in excess of ten (10) years measured from the option grant date. 
  

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 C. EFFECT OF TERMINATION OF SERVICE. 
 1. The following provisions shall govern the exercise of any options held by the Optionee at the time of cessation of Service or death: 
 (i) Any option outstanding at the time of the Optionee’s cessation of Service for any reason shall remain exercisable for such period
of time thereafter as shall be determined by the Plan Administrator and set forth in the documents evidencing the option, but no such option shall be exercisable after the expiration of the option term. 
 (ii) Any option exercisable in whole or in part by the Optionee at the time of death may be subsequently exercised by the personal
representative of the Optionee’s estate or by the person or persons to whom the option is transferred pursuant to the Optionee’s will or in accordance with the laws of descent and distribution. 
 (iii) During the applicable post-Service exercise period, the option may not be exercised in the aggregate for more than the number of
vested shares for which the option is exercisable on the date of the Optionee’s cessation of Service. Upon the expiration of the applicable exercise period or (if earlier) upon the expiration of the option term, the option shall terminate and
cease to be outstanding for any vested shares for which the option has not been exercised. However, the option shall, immediately upon the Optionee’s cessation of Service, terminate and cease to be outstanding to the extent the option is not
otherwise at that time exercisable for vested shares. 
 (iv) Should the Optionee’s Service be terminated for Misconduct,
then all outstanding options held by the Optionee shall terminate immediately and cease to be outstanding. 
 2. The Plan Administrator
shall have complete discretion, exercisable either at the time an option is granted or at any time while the option remains outstanding, to: 
 (i) extend the period of time for which the option is to remain exercisable following the Optionee’s cessation of Service from the limited exercise period otherwise in effect for that option to such greater
period of time as the Plan Administrator shall deem appropriate, but in no event beyond the expiration of the option term, and/or 
 (ii) permit the option to be exercised, during the applicable post-Service exercise period, not only with respect to the number of vested shares of Common Stock for which such option is exercisable at the time of the Optionee’s
cessation of Service but also with respect to one or more additional installments in which the Optionee would have vested had the Optionee continued in Service. 
 D. STOCKHOLDER RIGHTS. The holder of an option shall have no stockholder rights with respect to the shares subject to the option until such person shall have exercised the option, paid the exercise price and become a
holder of record of the purchased shares. 
 E. REPURCHASE RIGHTS. The Plan Administrator shall have the discretion to grant options which
are exercisable for unvested shares of Common Stock. Should 

  

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the Optionee cease Service while holding such unvested shares, the Corporation shall have the right to repurchase, at the exercise price paid per share, any
or all of those unvested shares. The terms upon which such repurchase right shall be exercisable (including the period and procedure for exercise and the appropriate vesting schedule for the purchased shares) shall be established by the Plan
Administrator and set forth in the document evidencing such repurchase right. 
 F. LIMITED TRANSFERABILITY OF OPTIONS. During the lifetime
of the Optionee, Incentive Options shall be exercisable only by the Optionee and shall not be assignable or transferable other than by will or by the laws of descent and distribution following the Optionee’s death. Non-Statutory Options shall
be subject to the same restrictions, except that a Non-Statutory Option may, in connection with the Optionee’s estate plan, be assigned in whole or in part during the Optionee’s lifetime to one or more members of the Optionee’s
immediate family or to a trust established exclusively for one or more such family members. The assigned portion may only be exercised by the person or persons who acquire a proprietary interest in the option pursuant to the assignment. The terms
applicable to the assigned portion shall be the same as those in effect for the option immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Plan Administrator may deem appropriate. 

 

	 	II.	INCENTIVE OPTIONS 

 The terms specified below shall
be applicable to all Incentive Options. Except as modified by the provisions of this Section II, all the provisions of Articles One, Two and Seven shall be applicable to Incentive Options. Options which are specifically designated as Non-Statutory
Options when issued under the Plan shall not be subject to the terms of this Section II. 
 A. ELIGIBILITY. Incentive Options may only be
granted to Employees. 
 B. EXERCISE PRICE. The exercise price per share shall not be less than one hundred percent (100%) of the Fair
Market Value per share of Common Stock on the option grant date. 
 C. DOLLAR LIMITATION. The aggregate Fair Market Value of the shares of
Common Stock (determined as of the respective date or dates of grant) for which one or more options granted to any Employee under the Plan (or any other option plan of the Corporation or any Parent or Subsidiary) may for the first time become
exercisable as Incentive Options during any one calendar year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the Employee holds two (2) or more such options which become exercisable for the first time in the
same calendar year, the foregoing limitation on the exercisability of such options as Incentive Options shall be applied on the basis of the order in which such options are granted. 
 D. 10% STOCKHOLDER. If any Employee to whom an Incentive Option is granted is a 10% Stockholder, then the exercise price per share shall not be less than
one hundred ten percent (110%) of the Fair Market Value per share of Common Stock on the option grant date, and the option term shall not exceed five (5) years measured from the option grant date. 
  

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	 	III.	CHANGE IN CONTROL 

 A. Each option outstanding at
the time of a Change in Control but not otherwise fully exercisable shall automatically accelerate so that each such option shall, immediately prior to the effective date of the Change in Control, become exercisable for all of the shares of Common
Stock at the time subject to that option and may be exercised for any or all of those shares as fully-vested shares of Common Stock. However, an outstanding option shall not become exercisable on such an accelerated basis if and to the extent:
(i) such option is, in connection with the Change in Control, to be assumed or otherwise continued in full force or effect by the successor corporation (or parent thereof) pursuant to the terms of the Change in Control transaction,
(ii) such option is to be replaced with a cash incentive program of the successor corporation which preserves the spread existing at the time of the Change in Control transaction on the shares of Common Stock for which the option is not
otherwise at that time exercisable and provides for subsequent payout in accordance with the same vesting schedule applicable to those option shares or (iii) the acceleration of such option is subject to other limitations imposed by the Plan
Administrator at the time of the option grant. 
 B. All outstanding repurchase rights shall also terminate automatically, and the shares of
Common Stock subject to those terminated rights shall immediately vest in full, in the event of any Change in Control, except to the extent: (i) those repurchase rights are to be assigned to the successor corporation (or parent thereof) or
(ii) such accelerated vesting is precluded by other limitations imposed by the Plan Administrator at the time the repurchase right is issued. 
 C. Immediately following the consummation of the Change in Control, all outstanding options shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof) or otherwise continued in
full force and effect pursuant to the terms of the Change in Control transaction. 
 D. Each option which is assumed in connection with a
Change in Control (or is otherwise to continue in effect) shall be appropriately adjusted, immediately after such Change in Control, to apply to the number and class of securities or other property which would have been issuable to the Optionee in
consummation of such Change in Control had the option been exercised immediately prior to such Change in Control. Appropriate adjustments to reflect such Change in Control shall also be made to (i) the exercise price payable per share under
each outstanding option, provided the aggregate exercise price payable for such securities shall remain the same, (ii) the maximum number and/or class of securities available for issuance over the remaining term of the Plan and (iii) the
maximum number and/or class of securities for which any one person may be granted stock options and direct stock issuances under the Plan per calendar year. 
 E. The Plan Administrator shall have full power and authority exercisable, either at the time the option is granted or at any time while the option remains outstanding, to provide for the accelerated vesting of one or
more outstanding options under the Discretionary Option Grant Program upon the occurrence of a Change in Control, whether or not those options are to be assumed or otherwise continued in full force and effect pursuant to the terms of the Change in
Control transaction. In addition, the Plan Administrator may structure one or more of 

  

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the Corporation’s repurchase rights under the Discretionary Option Grant Program so that those rights shall immediately terminate, in whole or in part,
at the time of a Change in Control and shall not be assignable to the successor corporation (or parent thereof), and the shares subject to those terminated repurchase rights shall accordingly vest in full at the time of such Change in Control.

 F. The Plan Administrator shall have full power and authority exercisable, either at the time the option is granted or at any time while
the option remains outstanding, to provide for the accelerated vesting, in whole or in part, of one or more outstanding options under the Discretionary Option Grant Program upon the Involuntary Termination of the Optionee’s Service within a
designated period (not to exceed eighteen (18) months) following the effective date of any Change in Control in which those options do not otherwise accelerate. In addition, the Plan Administrator may structure one or more of the
Corporation’s repurchase rights under the Discretionary Option Grant Program so that those rights will immediately terminate at the time of such Involuntary Termination, and the shares subject to those terminated repurchase rights shall
accordingly vest in full at that time. 
 G. The portion of any Incentive Option accelerated in connection with a Change in Control shall
remain exercisable as an Incentive Option only to the extent the applicable One Hundred Thousand Dollar ($100,000) limitation is not exceeded. To the extent such dollar limitation is exceeded, the accelerated portion of such option shall be
exercisable as a Non-Statutory Option under the Federal tax laws. 
 H. The outstanding options shall in no way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. 
  

	 	IV.	CANCELLATION AND REGRANT OF OPTIONS 

 The Plan
Administrator shall have the authority to effect, at any time and from time to time, with the consent of the affected option holders, the cancellation of any or all outstanding options under the Discretionary Option Grant Program (including
outstanding options incorporated from the Predecessor Plan) and to grant in substitution new options covering the same or different number of shares of Common Stock but with an exercise price per share based on the Fair Market Value per share of
Common Stock on the new grant date. 
  

	 	V.	STOCK APPRECIATION RIGHTS 

 A. The Plan
Administrator shall have full power and authority to grant to selected Optionees tandem stock appreciation rights and/or limited stock appreciation rights. 
 B. The following terms shall govern the grant and exercise of tandem stock appreciation rights: 
 (i) One or more Optionees may be granted the right, exercisable upon such terms as the Plan Administrator may establish, to elect between the exercise of the underlying option for shares of Common Stock and the surrender of that option in
exchange for a distribution from the Corporation in an amount equal to the excess of (a)

  

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the Fair Market Value (on the option surrender date) of the number of shares in which the Optionee is at the time vested under the surrendered option (or
surrendered portion thereof) over (b) the aggregate exercise price payable for such shares. 
 (ii) No such option
surrender shall be effective unless it is approved by the Plan Administrator, either at the time of the actual option surrender or at any earlier time. If the surrender is so approved, then the distribution to which the Optionee shall be entitled
may be made in shares of Common Stock valued at Fair Market Value on the option surrender date, in cash, or partly in shares and partly in cash, as the Plan Administrator shall in its sole discretion deem appropriate. 
 (iii) If the surrender of an option is not approved by the Plan Administrator, then the Optionee shall retain whatever rights the Optionee
had under the surrendered option (or surrendered portion thereof) on the option surrender date and may exercise such rights at any time prior to the later of (a) five (5) business days after the receipt of the rejection notice or
(b) the last day on which the option is otherwise exercisable in accordance with the terms of the documents evidencing such option, but in no event may such rights be exercised more than ten (10) years after the option grant date.

 C. The following terms shall govern the grant and exercise of limited stock appreciation rights: 
 (i) One or more Section 16 Insiders may be granted limited stock appreciation rights with respect to their outstanding options.

 (ii) Upon the occurrence of a Hostile Take-Over, each individual holding one or more options with such a limited stock
appreciation right shall have the unconditional right (exercisable for a thirty (30)-day period following such Hostile Take-Over) to surrender each such option to the Corporation, to the extent the option is at the time exercisable for vested shares
of Common Stock. In return for the surrendered option, the Optionee shall receive a cash distribution from the Corporation in an amount equal to the excess of (A) the Take-Over Price of the shares of Common Stock which are at the time vested
under each surrendered option (or surrendered portion thereof) over (B) the aggregate exercise price payable for such shares. Such cash distribution shall be paid within five (5) days following the option surrender date. 
 (iii) The Plan Administrator shall, at the time the option with such limited stock appreciation right is granted under the Discretionary
Option Grant Program, pre-approve any subsequent exercise of that right in accordance with the terms of this Paragraph C. Accordingly, no further approval of the Plan Administrator or the Board shall be required at the time of the actual option
surrender and cash distribution. 
 (iv) The balance of the option (if any) shall remain outstanding and exercisable in
accordance with the documents evidencing such option. 
  

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 ARTICLE THREE 
 SALARY INVESTMENT OPTION GRANT PROGRAM 
  

	 	I.	OPTION GRANTS 

 The Primary Committee shall have the
sole and exclusive authority to determine the calendar year or years (if any) for which the Salary Investment Option Grant Program is to be in effect and to select the Section 16 Insiders and other highly compensated Employees eligible to
participate in the Salary Investment Option Grant Program for those calendar year or years. Each selected individual who elects to participate in the Salary Investment Option Grant Program must, prior to the start of each calendar year of
participation, file with the Plan Administrator (or its designate) an irrevocable authorization directing the Corporation to reduce his or her base salary for that calendar year by an amount not less than Ten Thousand Dollars ($10,000.00) nor more
than Fifty Thousand Dollars ($50,000.00). The Primary Committee shall have complete discretion to determine whether to approve the filed authorization in whole or in part. To the extent the Primary Committee approves the authorization, the
individual who filed that authorization shall automatically be granted an option under the Salary Investment Grant Program on the first trading day in January of the calendar year for which the salary reduction is to be in effect. 
  

	 	II.	OPTION TERMS 

 Each option shall be a Non-Statutory
Option evidenced by one or more documents in the form approved by the Plan Administrator; provided, however, that each such document shall comply with the terms specified below. 
 A. EXERCISE PRICE. 
 1. The exercise price
per share shall be thirty-three and one-third percent (33-1/3%) of the Fair Market Value per share of Common Stock on the option grant date. 
 2. The exercise price shall become immediately due upon exercise of the option and shall be payable in one or more of the alternative forms authorized under the Discretionary Option Grant Program. Except to the extent the sale and
remittance procedure specified thereunder is utilized, payment of the exercise price for the purchased shares must be made on the Exercise Date. 
 B. NUMBER OF OPTION SHARES. The number of shares of Common Stock subject to the option shall be determined pursuant to the following formula (rounded down to the nearest whole number): 
 X = A divided by (B x 66-2/3%), where 
 X is the number of option shares, 
 A is the dollar amount of the approved reduction in the
Optionee’s base salary for the calendar year, and 
  

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 B is the Fair Market Value per share of Common Stock on the option grant date.

 C. EXERCISE AND TERM OF OPTIONS. The option shall become exercisable in a series of twelve (12) successive equal monthly installments
upon the Optionee’s completion of each calendar month of Service in the calendar year for which the salary reduction is in effect. Each option shall have a maximum term of ten (10) years measured from the option grant date. 
 D. EFFECT OF TERMINATION OF SERVICE. Should the Optionee cease Service for any reason while holding one or more options under this Article Three, then
each such option shall remain exercisable, for any or all of the shares for which the option is exercisable at the time of such cessation of Service, until the earlier of (i) the expiration of the ten (10)-year option term or (ii) the
expiration of the three (3)-year period measured from the date of such cessation of Service. Should the Optionee die while holding one or more options under this Article Three, then each such option may be exercised, for any or all of the shares for
which the option is exercisable at the time of the Optionee’s cessation of Service (less any shares subsequently purchased by Optionee prior to death), by the personal representative of the Optionee’s estate or by the person or persons to
whom the option is transferred pursuant to the Optionee’s will or in accordance with the laws of descent and distribution. Such right of exercise shall lapse, and the option shall terminate, upon the earlier of (i) the expiration of the
ten (10)-year option term or (ii) the three (3)-year period measured from the date of the Optionee’s cessation of Service. However, the option shall, immediately upon the Optionee’s cessation of Service for any reason, terminate and
cease to remain outstanding with respect to any and all shares of Common Stock for which the option is not otherwise at that time exercisable. 
  

	 	III.	CHANGE IN CONTROL/HOSTILE TAKE-OVER 

 A. In the
event of any Change in Control while the Optionee remains in Service, each outstanding option held by such Optionee under this Salary Investment Option Grant Program shall automatically accelerate so that each such option shall, immediately prior to
the effective date of the Change in Control, become fully exercisable with respect to the total number of shares of Common Stock at the time subject to such option and may be exercised for any or all of those shares as fully-vested shares of Common
Stock. Immediately following the consummation of the Change in Control, each automatic option grant shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof) or otherwise continued in
full force and effect pursuant to the terms of the Change in Control transaction. 
 B. Upon the occurrence of a Hostile Take-Over, the
Optionee shall have a thirty (30)-day period in which to surrender to the Corporation each outstanding option granted him or her under the Salary Investment Option Grant Program. The Optionee shall in return be entitled to a cash distribution from
the Corporation in an amount equal to the excess of (i) the Take-Over Price of the shares of Common Stock at the time subject to the surrendered option (whether or not the Optionee is otherwise at the time vested in those shares) over
(ii) the aggregate exercise price payable for such shares. Such cash distribution shall be paid within five (5) days following the surrender of the option to the Corporation. The Primary Committee shall, 

  

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at the time the option with such limited stock appreciation right is granted under the Salary Investment Option Grant Program, pre-approve any subsequent
exercise of that right in accordance with the terms of this Paragraph B. Accordingly, no further approval of the Primary Committee or the Board shall be required at the time of the actual option surrender and cash distribution. 
 C. Each option which is assumed in connection with a Change in Control shall be appropriately adjusted, immediately after such Change in Control, to
apply to the number and class of securities or other property which would have been issuable to the Optionee in consummation of such Change in Control had the option been exercised immediately prior to such Change in Control. Appropriate adjustments
shall also be made to the exercise price payable per share under each outstanding option, provided the aggregate exercise price payable for such securities shall remain the same. 
 D. The grant of options under the Salary Investment Option Grant Program shall in no way affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. 
  

	 	IV.	REMAINING TERMS 

 The remaining terms of each option
granted under the Salary Investment Option Grant Program shall be the same as the terms in effect for option grants made under the Discretionary Option Grant Program. 
 ARTICLE FOUR 
 STOCK ISSUANCE PROGRAM 
  

	 	I.	STOCK ISSUANCE TERMS 

 Shares of Common Stock may be
issued under the Stock Issuance Program through direct and immediate issuances without any intervening option grants. Each such stock issuance shall be evidenced by a Stock Issuance Agreement which complies with the terms specified below.

 A. PURCHASE PRICE. 
 1. The
purchase price per share shall be fixed by the Plan Administrator, but shall not be less than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the issuance date. 
 2. Subject to the provisions of Section I of Article Seven, shares of Common Stock may be issued under the Stock Issuance Program for any of the
following items of consideration which the Plan Administrator may deem appropriate in each individual instance: 
 (i) cash or
check made payable to the Corporation, or 
  

 13 

 (ii) past services rendered to the Corporation (or any Parent or Subsidiary). 

B. VESTING PROVISIONS. 
 1. The Plan
Administrator may issue shares of Common Stock under the Stock Issuance Program which are fully and immediately vested upon issuance or which are to vest in one or more installments over the Participant’s period of Service or upon attainment of
specified performance objectives. Alternatively, the Plan Administrator may issue share right awards under the Stock Issuance Program which shall entitle the recipient to receive a specified number of shares of Common Stock upon the attainment of
one or more performance goals established by the Plan Administrator. Upon the attainment of such performance goals, fully-vested shares of Common Stock shall be issued in satisfaction of those share right awards. 
 2. Any new, substituted or additional securities or other property (including money paid other than as a regular cash dividend) which the Participant
may have the right to receive with respect to the Participant’s unvested shares of Common Stock by reason of any stock dividend, stock split, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding
Common Stock as a class without the Corporation’s receipt of consideration shall be issued subject to (i) the same vesting requirements applicable to the Participant’s unvested shares of Common Stock and (ii) such escrow
arrangements as the Plan Administrator shall deem appropriate. 
 3. The Participant shall have full stockholder rights with respect to any
shares of Common Stock issued to the Participant under the Stock Issuance Program, whether or not the Participant’s interest in those shares is vested. Accordingly, the Participant shall have the right to vote such shares and to receive any
regular cash dividends paid on such shares. 
 4. Should the Participant cease to remain in Service while holding one or more unvested
shares of Common Stock issued under the Stock Issuance Program or should the performance objectives not be attained with respect to one or more such unvested shares of Common Stock, then those shares shall be immediately surrendered to the
Corporation for cancellation, and the Participant shall have no further stockholder rights with respect to those shares. To the extent the surrendered shares were previously issued to the Participant for consideration paid in cash or cash equivalent
(including the Participant’s purchase-money indebtedness), the Corporation shall repay to the Participant the cash consideration paid for the surrendered shares and shall cancel the unpaid principal balance of any outstanding purchase-money
note of the Participant attributable to the surrendered shares. 
 5. The Plan Administrator may in its discretion waive the surrender and
cancellation of one or more unvested shares of Common Stock which would otherwise occur upon the cessation of the Participant’s Service or the non-attainment of the performance objectives applicable to those shares. Such waiver shall result in
the immediate vesting of the Participant’s interest in the shares of Common Stock as to which the waiver applies. Such waiver may be effected at any time, whether before or after the Participant’s cessation of Service or the attainment or
non-attainment of the applicable performance objectives. 
  

 14 

	 	II.	RESTRICTED STOCK UNIT TERMS 

 Restricted Stock Units
may be issued under the Stock Issuance Program without any intervening option grants and such Restricted Stock Units shall be evidenced by a Restricted Stock Unit Award Agreement which complies with the terms specified below. 
 A. VESTING PROVISIONS. 
 The Plan
Administrator may issue Restricted Stock Units under the Stock Issuance Program which are fully and immediately vested upon issuance or which are to vest in one or more installments over the Participant’s period of Service or upon attainment of
specified performance objectives. Upon vesting of the Restricted Stock Units, cash or shares of Common Stock shall be issued in satisfaction of the Restricted Stock Units unless deferred. The vesting provisions applicable to a Participant’s
Restricted Stock Unit grant shall be set forth in the applicable Restricted Stock Unit Award Agreement. 
 B. OTHER PROVISIONS. 

1. The terms and conditions of the Restricted Stock Unit shall be set forth in the applicable Restricted Stock Unit Award Agreement. 
 2. The Participant shall not have full stockholder rights with respect to the shares of Common Stock underlying the Restricted Stock Units under the
Stock Issuance Program until the shares of Common Stock have been issued. 
 3. Should the Participant cease to remain in Service while
holding one or more unvested Restricted Stock Units or should the performance objectives not be attained with respect to one or more such unvested Restricted Stock Units issued under the Stock Issuance Program, such Restricted Stock Units shall be
deemed immediately reconveyed to the Corporation and the Corporation shall thereafter be the legal and beneficial owner of the Restricted Stock Units. 
 4. The Plan Administrator may in its discretion waive the surrender and cancellation of one or more unvested Restricted Stock Units which would otherwise occur upon the cessation of the Participant’s Service or
the non-attainment of the performance objectives applicable to those Restricted Stock Units. Such waiver shall result in the immediate vesting of the Participant’s interest in the Restricted Stock Units as to which the waiver applies. Such
waiver may be effected at any time, whether before or after the Participant’s cessation of Service. 
  

	 	III.	CHANGE IN CONTROL 

 A. All of the Corporation’s
outstanding repurchase rights under the Stock Issuance Program shall terminate automatically, and all the shares of Common Stock subject to those terminated rights and all unvested Restricted Stock Units shall immediately vest in full, in the event
of any Change in Control, except to the extent (i) those repurchase rights with respect to stock issuances and those forfeiture rights with respect to Restricted Stock Units are to be assigned to the successor corporation (or parent thereof) in
connection with such Change in 

  

 15 

 
Control transaction or are otherwise to continue in full force and effect pursuant to the terms of the Change in Control transaction or (ii) such
accelerated vesting is precluded by other limitations imposed in the Stock Issuance Agreement. 
 B. The Plan Administrator shall have the
discretionary authority, exercisable either at the time the unvested shares are issued or any time while the Corporation’s repurchase rights remain outstanding under the Stock Issuance Program, to provide that those rights shall automatically
terminate upon the occurrence of a Change in Control and shall not be assignable to the successor corporation (or parent thereof), and the shares of Common Stock subject to those terminated rights shall immediately vest at the time of such Change in
Control. 
 C. The Plan Administrator shall have the discretionary authority, exercisable either at the time the unvested Restricted Stock
Units are issued or any time while the Restricted Stock Units remain subject to a right of forfeiture to the Corporation, to provide that those rights shall automatically terminate upon the occurrence of a Change in Control and shall not be
assignable to the successor corporation (or parent thereof), and the shares of Common Stock subject to those Restricted Stock Units shall immediately vest at the time of such Change in Control. 
 D. The Plan Administrator shall have the discretionary authority, exercisable either at the time the unvested shares are issued or any time while the
Corporation’s repurchase rights remain outstanding under the Stock Issuance Program or at any time Restricted Stock Units remain outstanding, to provide that those rights and those forfeiture provisions applicable to Restricted Stock Units
shall automatically terminate, in whole or in part, and the shares of Common Stock subject to those terminated rights and those Restricted Stock Units shall immediately vest, in the event the Participant’s Service should subsequently terminate
by reason of an Involuntary Termination within a designated period (not to exceed eighteen (18) months) following the effective date of any Change in Control transaction in which those repurchase rights and/or forfeiture rights are assigned to
the successor corporation (or parent thereof) or are otherwise continued in effect. 
  

	 	IV.	SHARE ESCROW/LEGENDS 

 Unvested shares may, in the
Plan Administrator’s discretion, be held in escrow by the Corporation until the Participant’s interest in such shares vests or may be issued directly to the Participant with restrictive legends on the certificates evidencing those unvested
shares. 
 ARTICLE FIVE 
 AUTOMATIC OPTION GRANT PROGRAM 
  

	 	I.	OPTION TERMS 

 A. GRANT DATES. Option grants shall
be made on the dates specified below: 
 1. Each individual serving as a non-employee Board member on the Underwriting Date shall
automatically be granted at that time a Non- Statutory Option to purchase 14,000 shares of Common Stock, provided that individual has not previously been in the employ of the Corporation or any Parent or Subsidiary. 
  

 16 

 2. Each individual who is first elected or appointed as a non-employee Board member at any time after
the Underwriting Date shall automatically be granted, on the date of such initial election or appointment, a Non-Statutory Option to purchase 15,000 shares of Common Stock, provided that individual has not previously been in the employ of the
Corporation or any Parent or Subsidiary. 
 3. On the date of each Annual Stockholders Meeting held after the Underwriting Date, each
individual who is to continue to serve as an Eligible Director, whether or not that individual is standing for re-election to the Board at that particular Annual Meeting, shall automatically be granted a Non-Statutory Option to purchase 7,500 shares
of Common Stock, provided such individual has served as a non-employee Board member for at least six (6) months. There shall be no limit on the number of such 7,500-share option grants any one Eligible Director may receive over his or her
period of Board service, and non-employee Board members who have previously been in the employ of the Corporation (or any Parent or Subsidiary) or who have otherwise received a stock option grant from the Corporation prior to the Underwriting Date
shall be eligible to receive one or more such annual option grants over their period of continued Board service. 
 B. EXERCISE PRICE.

 1. The exercise price per share shall be equal to one hundred percent (100%) of the Fair Market Value per share of Common Stock on
the option grant date. 
 2. The exercise price shall be payable in one or more of the alternative forms authorized under the Discretionary
Option Grant Program. Except to the extent the sale and remittance procedure specified thereunder is utilized, payment of the exercise price for the purchased shares must be made on the Exercise Date. 
 C. OPTION TERM. Each option shall have a term of ten (10) years measured from the option grant date. 
 D. EXERCISE AND VESTING OF OPTIONS. Each option shall be immediately exercisable for any or all of the option shares. However, any shares purchased under
the option shall be subject to repurchase by the Corporation, at the exercise price paid per share, upon the Optionee’s cessation of Board service prior to vesting in those shares. Each 14,000-share option granted on the Underwriting Date and
each initial 15,000-share grant shall vest, and the Corporation’s repurchase right shall lapse, in a series of three (3) successive equal annual installments over the Optionee’s period of continued service as a Board member, with the
first such installment to vest upon the Optionee’s completion of one (1) year of Board service measured from the option grant date. Each annual 7,500-share automatic option shall vest, and the Corporation’s repurchase right shall
lapse, in a series of three (3) successive equal annual installments over the Optionee’s period of continued service as a Board member, with the first such installment to vest upon the Optionee’s completion of one (1) year of
Board service measured from the option grant date. 
  

 17 

 E. TERMINATION OF BOARD SERVICE. The following provisions shall govern the exercise of any options held
by the Optionee at the time the Optionee ceases to serve as a Board member: 
 (i) The Optionee (or, in the event of
Optionee’s death, the personal representative of the Optionee’s estate or the person or persons to whom the option is transferred pursuant to the Optionee’s will or in accordance with the laws of descent and distribution) shall have a
twelve (12)-month period following the date of such cessation of Board service in which to exercise each such option. 
 (ii)
During the twelve (12)-month exercise period, the option may not be exercised in the aggregate for more than the number of vested shares of Common Stock for which the option is exercisable at the time of the Optionee’s cessation of Board
service. 
 (iii) Should the Optionee cease to serve as a Board member by reason of death or Permanent Disability, then all
shares at the time subject to the option shall immediately vest so that such option may, during the twelve (12)-month exercise period following such cessation of Board service, be exercised for all or any portion of those shares as fully-vested
shares of Common Stock. 
 (iv) In no event shall the option remain exercisable after the expiration of the option term. Upon
the expiration of the twelve (12)- month exercise period or (if earlier) upon the expiration of the option term, the option shall terminate and cease to be outstanding for any vested shares for which the option has not been exercised. However, the
option shall, immediately upon the Optionee’s cessation of Board service for any reason other than death or Permanent Disability, terminate and cease to be outstanding to the extent the option is not otherwise at that time exercisable for
vested shares. 
  

	 	II.	CHANGE IN CONTROL/HOSTILE TAKE-OVER 

 A. The shares
of Common Stock subject to each option outstanding at the time of a Change in Control but not otherwise vested shall automatically vest in full so that each such option shall, immediately prior to the effective date of such Change in Control, become
exercisable for all of those shares as fully-vested shares of Common Stock and may be exercised for all or any portion of those vested shares. Immediately following the consummation of the Change in Control, each automatic option grant shall
terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof) or otherwise continued in full force and effect pursuant to the terms of the Change in Control transaction. 
 B. All outstanding repurchase rights shall automatically terminate, and the shares of Common Stock subject to those terminated rights shall immediately
vest in full, in the event of any Change in Control. 
 C. Upon the occurrence of a Hostile Take-Over, the Optionee shall have a thirty
(30)-day period in which to surrender to the Corporation each of his or her outstanding automatic option grants. The Optionee shall in return be entitled to a cash distribution from the Corporation in an amount equal to the excess of (i) the
Take-Over Price of the shares of 

  

 18 

 
Common Stock at the time subject to each surrendered option (whether or not the Optionee is otherwise at the time vested in those shares) over (ii) the
aggregate exercise price payable for such shares. Such cash distribution shall be paid within five (5) days following the surrender of the option to the Corporation. No approval or consent of the Board or any Plan Administrator shall be
required in connection with such option surrender and cash distribution. 
 D. Each option which is assumed in connection with a Change in
Control (or otherwise continued in full and effect) shall be appropriately adjusted, immediately after such Change in Control, to apply to the number and class of securities or other property which would have been issuable to the Optionee in
consummation of such Change in Control had the option been exercised immediately prior to such Change in Control. Appropriate adjustments shall also be made to the exercise price payable per share under each outstanding option, provided the
aggregate exercise price payable for such securities shall remain the same. 
 E. The grant of options under the Automatic Option Grant
Program shall in no way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or
assets. 
  

	 	III.	REMAINING TERMS 

 The remaining terms of each option
granted under the Automatic Option Grant Program shall be the same as the terms in effect for option grants made under the Discretionary Option Grant Program. 
 ARTICLE SIX 
 DIRECTOR FEE OPTION GRANT PROGRAM 
  

	 	I.	OPTION GRANTS 

 The Plan Administrator shall have
the sole and exclusive authority to determine the calendar year or years (if any) the Director Fee Option Grant Program is to be in effect. When the Director Fee Option Grant Program is in effect, each non-employee Board member may elect to apply
all or any portion of the annual retainer fee otherwise payable in cash for his or her service on the Board to the acquisition of a special option grant under this Director Fee Option Grant Program. Such election must be filed with the
Corporation’s Chief Financial Officer prior to first day of the calendar year for which the annual retainer fee which is the subject of that election is otherwise payable. Each non-employee Board member who files such a timely election shall
automatically be granted an option under this Director Fee Option Grant Program on the first trading day in January in the calendar year for which the annual retainer fee which is the subject of that election would otherwise be payable in cash.

  

	 	II.	OPTION TERMS 

 Each option shall be a Non-Statutory
Option governed by the terms and conditions specified below. 
  

 19 

 A. EXERCISE PRICE. 
 1. The exercise price per share shall be thirty-three and one-third percent (33-1/3%) of the Fair Market Value per share of Common Stock on the option grant date. 
 2. The exercise price shall become immediately due upon exercise of the option and shall be payable in one or more of the alternative forms authorized
under the Discretionary Option Grant Program. Except to the extent the sale and remittance procedure specified thereunder is utilized, payment of the exercise price for the purchased shares must be made on the Exercise Date. 
 B. NUMBER OF OPTION SHARES. The number of shares of Common Stock subject to the option shall be determined pursuant to the following formula (rounded
down to the nearest whole number): 
 X = A divided by (B x 66-2/3%), where 
 X is the number of option shares, 
 A is the
portion of the annual retainer fee subject to the non- employee Board member’s election, and 
 B is the Fair Market Value per share of
Common Stock on the option grant date. 
 C. EXERCISE AND TERM OF OPTIONS. The option shall become exercisable in a series of twelve
(12) equal monthly installments upon the Optionee’s completion of each month of Board service over the twelve (12)-month period measured from the grant date. Each option shall have a maximum term of ten (10) years measured from the
option grant date. 
 D. TERMINATION OF BOARD SERVICE. Should the Optionee cease Board service for any reason (other than death or Permanent
Disability) while holding one or more options under this Director Fee Option Grant Program, then each such option shall remain exercisable, for any or all of the shares for which the option is exercisable at the time of such cessation of Board
service, until the earlier of (i) the expiration of the ten (10)-year option term or (ii) the expiration of the three (3)-year period measured from the date of such cessation of Board service. However, each option held by the Optionee
under this Director Fee Option Grant Program at the time of his or her cessation of Board service shall immediately terminate and cease to remain outstanding with respect to any and all shares of Common Stock for which the option is not otherwise at
that time exercisable. 
 E. DEATH OR PERMANENT DISABILITY. Should the Optionee’s service as a Board member cease by reason of death or
Permanent Disability, then each option held by such Optionee under this Director Fee Option Grant Program shall immediately become exercisable for all the shares of Common Stock at the time subject to that option, and the option may be exercised for
any or all of those shares as fully-vested shares until the earlier of (i) the expiration of the ten (10)-year option term or (ii) the expiration of the three (3)-year period measured from the date of such cessation of Board service.

  

 20 

 Should the Optionee die after cessation of Board service but while holding one or more options under this
Director Fee Option Grant Program, then each such option may be exercised, for any or all of the shares for which the option is exercisable at the time of the Optionee’s cessation of Board service (less any shares subsequently purchased by
Optionee prior to death), by the personal representative of the Optionee’s estate or by the person or persons to whom the option is transferred pursuant to the Optionee’s will or in accordance with the laws of descent and distribution.
Such right of exercise shall lapse, and the option shall terminate, upon the earlier of (i) the expiration of the ten (10)-year option term or (ii) the three (3)-year period measured from the date of the Optionee’s cessation of Board
service. 
  

	 	III.	CHANGE IN CONTROL/HOSTILE TAKE-OVER 

 A. In the
event of any Change in Control while the Optionee remains a Board member, each outstanding option held by such Optionee under this Director Fee Option Grant Program shall automatically accelerate so that each such option shall, immediately prior to
the effective date of the Change in Control, become fully exercisable with respect to the total number of shares of Common Stock at the time subject to such option and may be exercised for any or all of those shares as fully-vested shares of Common
Stock. Immediately following the consummation of the Change in Control, each automatic option grant shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof) or otherwise continued in
full force and effect pursuant to the terms of the Change in Control transaction. 
 B. Upon the occurrence of a Hostile Take-Over, the
Optionee shall have a thirty (30)-day period in which to surrender to the Corporation each outstanding option granted him or her under the Director Fee Option Grant Program. The Optionee shall in return be entitled to a cash distribution from the
Corporation in an amount equal to the excess of (i) the Take-Over Price of the shares of Common Stock at the time subject to each surrendered option (whether or not the Optionee is otherwise at the time vested in those shares) over
(ii) the aggregate exercise price payable for such shares. Such cash distribution shall be paid within five (5) days following the surrender of the option to the Corporation. No approval or consent of the Board or any Plan Administrator
shall be required in connection with such option surrender and cash distribution. 
 C. Each option which is assumed in connection with a
Change in Control shall be appropriately adjusted, immediately after such Change in Control, to apply to the number and class of securities or other property which would have been issuable to the Optionee in consummation of such Change in Control
had the option been exercised immediately prior to such Change in Control. Appropriate adjustments shall also be made to the exercise price payable per share under each outstanding option, provided the aggregate exercise price payable for such
securities shall remain the same. 
 D. The grant of options under the Director Fee Option Grant Program shall in no way affect the right of
the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. 
  

 21 

	 	IV.	REMAINING TERMS 

 The remaining terms of each option
granted under this Director Fee Option Grant Program shall be the same as the terms in effect for option grants made under the Discretionary Option Grant Program. 
 ARTICLE SEVEN 
 MISCELLANEOUS 
  

	 	I.	FINANCING 

 The Plan Administrator may permit any
Optionee or Participant to pay the option exercise price under the Discretionary Option Grant Program or the purchase price of shares issued under the Stock Issuance Program by delivering a full-recourse, interest bearing promissory note payable in
one or more installments but only to the extent that the acceptance or terms of the promissory note would not violate an Applicable Law (and, in the case of an Incentive Option, the determination regarding whether payment of the option exercise
price may be made with a promissory note shall be made at the time of grant). The terms of any such promissory note (including the interest rate and the terms of repayment) shall be established by the Plan Administrator in its sole discretion,
provided, however, that the promissory note shall bear interest at a market rate based on the rate environment at the date the option is exercised or the shares are purchased and taking into account the credit standing of the Optionee or
Participant. Further, such market rate shall be determined so as not to (i) be less than the minimum rate required by the federal tax laws to avoid the imputation of interest income to the Corporation and compensation income to the Optionee or
Participant and (ii) result in an accounting compensation charge to the Corporation. In no event may the maximum credit available to the Optionee or Participant exceed the sum of (i) the aggregate option exercise price or purchase price
payable for the purchased shares plus (ii) any Federal, state and local income and employment tax liability incurred by the Optionee or the Participant in connection with the option exercise or share purchase. 
  

	 	II.	TAX WITHHOLDING 

 A. The Corporation’s
obligation to deliver shares of Common Stock upon the exercise of options or the issuance or vesting of such shares or the issuance or vesting of such shares underlying Restricted Stock Units under the Plan shall be subject to the satisfaction of
all applicable Federal, state and local income and employment tax withholding requirements. 
 B. The Plan Administrator may, in its
discretion, provide any or all holders of Non-Statutory Options, Restricted Stock Units or unvested shares of Common Stock under the Plan (other than the options granted or the shares issued under the Automatic Option Grant or Director Fee Option
Grant Program) with the right to use shares of Common Stock in satisfaction of all or part of the Taxes incurred by such holders in connection with the exercise of their options, the vesting of Restricted Stock Units or the vesting of their shares.
Such right may be provided to any such holder in either or both of the following formats: 
  

 22 

 Stock Withholding: The election to have the Corporation withhold, from the shares of Common Stock
otherwise issuable upon the exercise of such Non-Statutory Option, the vesting of Restricted Stock Units or the vesting of such shares, a portion of those shares with an aggregate Fair Market Value equal to the minimum amount of the Taxes required
to be withheld by the Corporation. 
 Stock Delivery: The election to deliver to the Corporation, at the time the Non-Statutory Option is
exercised, Restricted Stock Units vest or the shares vest, one or more shares of Common Stock previously acquired by such holder (other than in connection with the option exercise or share vesting triggering the Taxes) with an aggregate Fair Market
Value equal to the percentage of the Taxes (not to exceed one hundred percent (100%)) designated by the holder (but only to the extent that such delivery of shares of Common Stock would not result in an accounting compensation charge with
respect to the shares of Common Stock used to pay the exercise price unless otherwise determined by the Plan Administrator; generally an accounting charge will result if the shares of Common Stock used to pay the Taxes were acquired less than six
months before the option exercise or share vesting). 
  

	 	III.	EFFECTIVE DATE AND TERM OF THE PLAN 

 A. The Plan
shall become effective immediately at the Plan Effective Date. However, the Salary Investment Option Grant Program and the Director Fee Option Grant Program shall not be implemented until such time as the Primary Committee may deem appropriate.
Options may be granted under the Discretionary Option Grant at any time on or after the Plan Effective Date. However, no options granted under the Plan may be exercised, and no shares shall be issued under the Plan, until the Plan is approved by the
Corporation’s stockholders. If such stockholder approval is not obtained within twelve (12) months after the Plan Effective Date, then all options previously granted under this Plan shall terminate and cease to be outstanding, and no
further options shall be granted and no shares shall be issued under the Plan. 
 B. The Plan shall serve as the successor to the Predecessor
Plan, and no further option grants or direct stock issuances shall be made under the Predecessor Plan after the Section 12 Registration Date. All options outstanding under the Predecessor Plan on the Section 12 Registration Date shall be
incorporated into the Plan at that time and shall be treated as outstanding options under the Plan. However, each outstanding option so incorporated shall continue to be governed solely by the terms of the documents evidencing such option, and no
provision of the Plan shall be deemed to affect or otherwise modify the rights or obligations of the holders of such incorporated options with respect to their acquisition of shares of Common Stock. 
 C. One or more provisions of the Plan, including (without limitation) the option/vesting acceleration provisions of Article Two relating to Changes in
Control, may, in the Plan Administrator’s discretion, be extended to one or more options incorporated from the Predecessor Plan which do not otherwise contain such provisions. 
 D. The Plan shall terminate upon the earliest to occur of (i) April 19, 2008, (ii) the date on which all shares available for issuance
under the Plan shall have been issued as 

  

 23 

 
fully-vested shares or (iii) the termination of all outstanding options in connection with a Change in Control. Should the Plan terminate on
April 19, 2008, then all option grants and unvested stock issuances outstanding at that time shall continue to have force and effect in accordance with the provisions of the documents evidencing such grants or issuances. 
  

	 	IV.	AMENDMENT OF THE PLAN 

 A. The Board shall have
complete and exclusive power and authority to amend or modify the Plan in any or all respects. However, no such amendment or modification shall adversely affect the rights and obligations with respect to stock options or unvested stock issuances at
the time outstanding under the Plan unless the Optionee or the Participant consents to such amendment or modification. In addition, certain amendments may require stockholder approval pursuant to applicable laws or regulations. 
 B. Options to purchase shares of Common Stock may be granted under the Discretionary Option Grant and Salary Investment Option Grant Programs and shares
of Common Stock may be issued under the Stock Issuance Program that are in each instance in excess of the number of shares then available for issuance under the Plan, provided any excess shares actually issued under those programs shall be held in
escrow until there is obtained stockholder approval of an amendment sufficiently increasing the number of shares of Common Stock available for issuance under the Plan. If such stockholder approval is not obtained within twelve (12) months after
the date the first such excess issuances are made, then (i) any unexercised options granted on the basis of such excess shares shall terminate and cease to be outstanding and (ii) the Corporation shall promptly refund to the Optionees and
the Participants the exercise or purchase price paid for any excess shares issued under the Plan and held in escrow, together with interest (at the applicable Short Term Federal Rate) for the period the shares were held in escrow, and such shares
shall thereupon be automatically cancelled and cease to be outstanding. 
 C. The Plan was adopted by the Board and the stockholders during
April of 1998. On May 16, 2001, the Board adopted and approved an amendment and restatement of the Plan (a) to increase the number of shares of Common Stock available for issuance under the Plan and (b) to adopt a limit on the maximum
number of shares of Common Stock with respect to which options, separately exercisable stock appreciation rights and direct stock issuances may be granted to any Participant in any calendar year to comply with the performance-based compensation
exception to the deduction limit of Section 162(m) of the Code, which amendments are subject to approval by the stockholders of the Corporation. On October 9, 2002, the Board adopted and approved an amendment and restatement of the Plan to
amend, among other things, certain terms of Article Two, Article Three, Article Five, Article Six, Article Seven and the Appendix which amendments do not require approval by the stockholders of the Corporation and shall be
effective as of October 9, 2002 on a prospective basis. On April __, 2007, the Board adopted and approved an amendment and restatement of the Plan to add the ability to make grants of Restricted Stock Units under the Stock Issuance
Program of the Plan, which amendment is not subject to approval by the stockholders of the Corporation. 
  

 24 

	 	V.	USE OF PROCEEDS 

 Any cash proceeds received by the
Corporation from the sale of shares of Common Stock under the Plan shall be used for general corporate purposes. 
  

	 	VI.	REGULATORY APPROVALS 

 A. The implementation of the
Plan, the granting of any stock option under the Plan and the issuance of any shares of Common Stock (i) upon the exercise of any granted option or (ii) under the Stock Issuance Program shall be subject to the Corporation’s
procurement of all approvals and permits required by regulatory authorities having jurisdiction over the Plan, the stock options granted under it and the shares of Common Stock issued pursuant to it. 
 B. No shares of Common Stock or other assets shall be issued or delivered under the Plan unless and until there shall have been compliance with all
applicable requirements of Federal and state securities laws, including the filing and effectiveness of the Form S-8 registration statement for the shares of Common Stock issuable under the Plan, and all applicable listing requirements of any stock
exchange (or the Nasdaq National Market, if applicable) on which Common Stock is then listed for trading. 
  

	 	VII.	NO EMPLOYMENT/SERVICE RIGHTS 

 Nothing in the Plan
shall confer upon the Optionee or the Participant any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or
retaining such person) or of the Optionee or the Participant, which rights are hereby expressly reserved by each, to terminate such person’s Service at any time for any reason, with or without cause. 
 APPENDIX 
 The following definitions shall be
in effect under the Plan: 
 A. APPLICABLE LAWS shall mean the legal requirements relating to the administration of stock option plans, if
any, under applicable provisions of federal securities laws, state corporate and securities laws, the Code, the rules of any applicable stock exchange or national market system, and the rules of any foreign jurisdiction applicable to the granting of
stock options and the issuance of shares of Common Stock to residents therein. 
 B. AUTOMATIC OPTION GRANT PROGRAM shall mean the automatic
option grant program in effect under Article Two of the Plan. 
 C. BOARD shall mean the Corporation’s Board of Directors. 

D. CHANGE IN CONTROL shall mean a change in ownership or control of the Corporation effected through any of the following transactions: 
 (i) a merger or consolidation in which securities possessing more than fifty percent (50%) of the total combined voting power of the
Corporation’s outstanding securities are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction; 
  

 25 

 (ii) the sale, transfer or other disposition of all or substantially all of the
Corporation’s assets in complete liquidation or dissolution of the Corporation; 
 (iii) the acquisition, directly or
indirectly, by any person or related group of persons (other than the Corporation or a person that directly or indirectly controls, is controlled by, or is under common control with, the Corporation) of beneficial ownership (within the meaning of
Rule 13d-3 of the 1934 Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation’s outstanding securities pursuant to a tender or exchange offer made directly to the
Corporation’s stockholders; or 
 (iv) a change in the composition of the Board over a period of thirty-six
(36) consecutive months or less such that a majority of the Board members ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who either (A) have been Board members continuously since
the beginning of such period or (B) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (A) who were still in office at the time the Board approved
such election or nomination. 
 E. CODE shall mean the Internal Revenue Code of 1986, as amended. 
 F. COMMON STOCK shall mean the Corporation’s common stock. 
 G. CORPORATION shall mean Restoration Hardware, Inc., a Delaware corporation, and its successors. 
 H.
DIRECTOR FEE OPTION GRANT PROGRAM shall mean the special stock option grant in effect for non-employee Board members under Article Six of the Plan. 
 I. DISCRETIONARY OPTION GRANT PROGRAM shall mean the discretionary option grant program in effect under Article Two of the Plan. 
 J. ELIGIBLE DIRECTOR shall mean a non-employee Board member eligible to participate in the Automatic Option Grant Program in accordance with the eligibility provisions of Article One. 
 K. EMPLOYEE shall mean an individual who is in the employ of the Corporation (or any Parent or Subsidiary), subject to the control and direction of the
employer entity as to both the work to be performed and the manner and method of performance. 
 L. EXERCISE DATE shall mean the date on
which the Corporation shall have received written notice of the option exercise. 
 M. FAIR MARKET VALUE per share of Common Stock on any
relevant date shall be determined in accordance with the following provisions: 
  

 26 

 (i) If the Common Stock is at the time traded on the Nasdaq National Market, then the
Fair Market Value shall be the closing selling price per share of Common Stock on the date in question, as such price is reported by the National Association of Securities Dealers on the Nasdaq National Market. If there is no closing selling price
for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists. 
 (ii) If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question on the Stock Exchange determined by the Plan Administrator to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange. If
there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists. 
 (iii) For purposes of any option grants made on the Underwriting Date, the Fair Market Value shall be deemed to be equal to the price per
share at which the Common Stock is to be sold in the initial public offering pursuant to the Underwriting Agreement. 
 N. HOSTILE TAKE-OVER
shall mean the acquisition, directly or indirectly, by any person or related group of persons (other than the Corporation or a person that directly or indirectly controls, is controlled by, or is under common control with, the Corporation) of
beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation’s outstanding securities pursuant to a tender or exchange
offer made directly to the Corporation’s stockholders which the Board does not recommend such stockholders to accept. 
 O. INCENTIVE
OPTION shall mean an option which satisfies the requirements of Code Section 422. 
 P. INVOLUNTARY TERMINATION shall mean the
termination of the Service of any individual which occurs by reason of: 
 (i) such individual’s involuntary dismissal or
discharge by the Corporation for reasons other than Misconduct, or 
 (ii) such individual’s voluntary resignation
following (A) a change in his or her position with the Corporation which materially reduces his or her duties and responsibilities or the level of management to which he or she reports, (B) a reduction in his or her level of compensation
(including base salary, fringe benefits and target bonus under any corporate-performance based bonus or incentive programs) by more than fifteen percent (15%) or (C) a relocation of such individual’s place of employment by more than
fifty (50) miles, provided and only if such change, reduction or relocation is effected by the Corporation without the individual’s consent. 
  

 27 

 Q. MISCONDUCT shall mean the commission of any act of fraud, embezzlement or dishonesty by the Optionee
or Participant, any unauthorized use or disclosure by such person of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional misconduct by such person adversely affecting the business or
affairs of the Corporation (or any Parent or Subsidiary) in a material manner. The foregoing definition shall not be deemed to be inclusive of all the acts or omissions which the Corporation (or any Parent or Subsidiary) may consider as grounds for
the dismissal or discharge of any Optionee, Participant or other person in the Service of the Corporation (or any Parent or Subsidiary). 
 R. 1934 ACT shall mean the Securities Exchange Act of 1934, as amended. 
 S. NON-STATUTORY OPTION shall mean an option not intended
to satisfy the requirements of Code Section 422. 
 T. OPTIONEE shall mean any person to whom an option is granted under the
Discretionary Option Grant, Salary Investment Option Grant, Automatic Option Grant or Director Fee Option Grant Program. 
 U. PARENT shall
mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. 
 V. PARTICIPANT shall mean any person who is issued shares of Common Stock under the Stock Issuance Program. 
 W. PERMANENT
DISABILITY OR PERMANENTLY DISABLED shall mean the inability of the Optionee or the Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment expected to result in death or to be
of continuous duration of twelve (12) months or more. However, solely for purposes of the Automatic Option Grant and Director Fee Option Grant Programs, Permanent Disability or Permanently Disabled shall mean the inability of the non-employee
Board member to perform his or her usual duties as a Board member by reason of any medically determinable physical or mental impairment expected to result in death or to be of continuous duration of twelve (12) months or more. 
 X. PLAN shall mean the Corporation’s 1998 Stock Incentive Plan, as set forth in this document. 
 Y. PLAN ADMINISTRATOR shall mean the particular entity, whether the Primary Committee, the Board or the Secondary Committee, which is authorized to
administer the Discretionary Option Grant and Stock Issuance Programs with respect to one or more classes of eligible persons, to the extent such entity is carrying out its administrative functions under those programs with respect to the persons
under its jurisdiction. 
  

 28 

 Z. PLAN EFFECTIVE DATE shall mean April 19, 1998, the date on which the Board adopted the Plan.

 AA. PREDECESSOR PLAN shall mean the Corporation’s 1995 Stock Option Plan in effect immediately prior to the Plan Effective Date
hereunder. 
 BB. PRIMARY COMMITTEE shall mean the committee of two (2) or more non- employee Board members appointed by the Board to
administer the Discretionary Option Grant and Stock Issuance Programs with respect to Section 16 Insiders and to administer the Salary Investment Option Grant Program solely with respect to the selection of the eligible individuals who may
participate in such program. 
 CC. RESTRICTED STOCK UNIT shall mean an award which may be earned in whole or in part upon the passage of
time (or may be vested immediately) or upon attainment of performance conditions established by the Plan Administrator and which may be settled for cash, shares of Common Stock or other securities or a combination of cash, shares of Common Stock or
other securities as established by the Plan Administrator. 
 DD. RESTRICTED STOCK UNIT AWARD AGREEMENT shall mean the agreement entered into
by the Corporation and the Participant at the time of issuance of Restricted Stock Units under the Stock Issuance Program. 
 EE. SALARY
INVESTMENT OPTION GRANT PROGRAM shall mean the salary investment option grant program in effect under Article Three of the Plan. 
 FF.
SECONDARY COMMITTEE shall mean a committee of one or more Board members appointed by the Board to administer the Discretionary Option Grant and Stock Issuance Programs with respect to eligible persons other than Section 16 Insiders. 

GG. SECTION 12 REGISTRATION DATE shall mean the date on which the Common Stock is first registered under Section 12 of the 1934 Act. 

HH. SECTION 16 INSIDER shall mean an officer or director of the Corporation subject to the short-swing profit liabilities of Section 16 of the
1934 Act. 
 II. SERVICE shall mean the performance of services for the Corporation (or any Parent or Subsidiary) by a person in the capacity
of an Employee, a non- employee member of the board of directors or a consultant or independent advisor, except to the extent otherwise specifically provided in the documents evidencing the option grant or stock issuance. 
 JJ. STOCK EXCHANGE shall mean either the American Stock Exchange or the New York Stock Exchange. 
 KK. STOCK ISSUANCE AGREEMENT shall mean the agreement entered into by the Corporation and the Participant at the time of issuance of shares of Common
Stock under Article Four of the Stock Issuance Program. 
  

 29 

 LL. STOCK ISSUANCE PROGRAM shall mean the stock issuance program in effect under the Plan. 
 MM. SUBSIDIARY shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations
in such chain. 
 NN. TAKE-OVER PRICE shall mean the greater of (i) the Fair Market Value per share of Common Stock on the date the
option is surrendered to the Corporation in connection with a Hostile Take-Over or (ii) the highest reported price per share of Common Stock paid by the tender offeror in effecting such Hostile Take-Over. However, if the surrendered option is
an Incentive Option, the Take-Over Price shall not exceed the clause (i) price per share. 
 OO. TAXES shall mean the Federal, state and
local income and employment tax liabilities incurred by the holder of Non-Statutory Options or unvested shares of Common Stock in connection with the exercise of those options or the vesting of those shares. 
 PP. 10% STOCKHOLDER shall mean the owner of stock (as determined under Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent or Subsidiary). 
 QQ. UNDERWRITING AGREEMENT shall mean the
agreement between the Corporation and the underwriter or underwriters managing the initial public offering of the Common Stock. 
 RR.
UNDERWRITING DATE shall mean the date on which the Underwriting Agreement is executed and priced in connection with an initial public offering of the Common Stock. 
  

 30Summary of Compensation

 Exhibit 10.3 
 Restoration Hardware, Inc. 
 Summary of Compensation of Named Executive Officers for Fiscal Year
2006 
 The current base salaries for the current named executive officers of the Company (as set forth in the Company’s proxy
statement filed on June 4, 2007) are as follows: 
  

						
	 Name
	  	 Title
	  	Annual Salary
	 Gary G. Friedman
	  	President, Chief Executive Officer and Chairman	  	$	650,000
			
	 Ken Dunaj
	  	Chief Operating Officer	  	$	500,000
			
	 Chris Newman
	  	Senior Vice President and Chief Financial Officer	  	$	395,000
			
	 Bonnie McConnell-Orofino
	  	Chief Merchandising Officer	  	$	370,000
			
	 Vivian C. Macdonald
	  	Vice President, Corporate Controller	  	$	262,500

 As previously disclosed, the Company also has approved fiscal year 2007 minimum, target and
maximum level bonus objectives for the Management Incentive Plan. The amount of the award of any cash bonuses under the Company’s Management Incentive Plan for fiscal year 2007 performance will be based on the Company’s achievement of
specified results with respect to EBT for fiscal year 2007. If the minimum, target or maximum performance objectives are met, participants will receive a bonus payment under the Management Incentive Plan, with the specific amount that such
participant receives dependent on his or her individual performance. The amount that could be received by the Company’s President and Chief Executive Officer under the Management Incentive Plan ranges from between 20% of base salary to up to
200% of base salary, with a target bonus amount of 100% of base salary. For the Company’s other named executive officers, the amount such officers could receive under the Management Incentive Plan ranges from 4% to 8% of base salary to up to
80% to 120% of base salary, with target bonus amounts ranging from 30% to 50% of base salary.

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