Document:

exv10w5

 

EXHIBIT 10.5

ULTA SALON, COSMETICS & FRAGRANCE, INC.

RESTRICTED STOCK AGREEMENT — VESTING

(ROBERT DIROMUALDO)

 

 

ULTA SALON, COSMETICS & FRAGRANCE, INC.

RESTRICTED STOCK AGREEMENT – VESTING

(ROBERT DIROMUALDO)

     THIS RESTRICTED AGREEMENT (“Agreement”), made as of June ___, 2004 (the “Date of Issuance”), is
by and between Ulta Salon, Cosmetics & Fragrance, Inc. (the “Company”) and Robert DiRomualdo
(“Director”).

     The Company desires to grant to the Director $.01 par value common shares of the Company
(“Common Stock”), pursuant to the terms of the Second Amendment and Restatement of Ulta Salon,
Cosmetics & Fragrance Inc. Restricted Stock Plan (the “Plan”).

     NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other
good and valuable consideration, the parties agree as follows:

     1. DEFINITIONS. Capitalized terms used herein that are not otherwise defined shall
have the meanings assigned to them in the Plan.

     2. GRANT OF STOCK. As of the date hereof Company hereby grants to Director 200,000
shares of Common Stock (the “Restricted Stock”), subject to the terms and conditions of this
Agreement.

     3. VESTING. Except as otherwise provided hereunder or pursuant to the terms of the
Plan, shares of Restricted Stock may not be sold, assigned, transferred, pledged or otherwise
encumbered from the Date of Issuance until the Director becomes vested in the shares of Restricted
Stock (and restrictions thereon terminate) (the “Vested Shares”) in accordance with the following
schedule:

	 	 	 	 	 
	 	 	Cumulative Percentage of
	 	 	Shares of Restricted Stock
	                              Date	 	Which are Vested Shares
	the Date of Issuance
	 	 	0	%
	February 26, 2005 – February 25, 2006
	 	 	25	%
	February 26, 2006 – February 25, 2007
	 	 	50	%
	February 26, 2007 – February 25, 2008
	 	 	75	%
	February 26, 2008
	 	 	100	%

     Upon a Sale of the Company all shares of Restricted Stock shall become Vested Shares.
Additionally, if the Director ceases to be a member of the Board of Directors of the Company by
reason of death or Disability (as defined below) any time after the Company’s annual meeting of
stockholders (the “Annual Meeting”) occurring in 2005, then all shares of Restricted Stock shall
become Vested Shares. Otherwise, if Director ceases to be a member of the Board of Directors of
the Company for any reason, he shall forfeit any unvested shares of Restricted Stock and such

 

 

shares shall be returned to the Company. For purposes of this Agreement, the term
“Disability” shall mean the mental or physical incapacity of the Director such that Director would
be eligible to receive disability benefits under the Company’s long-term disability plan assuming
for this purpose that Director is eligible for participation in such plan and that Directors
occupation consist of his duties as a member of the Board of Directors prior to such incapacity.

     4. RESTRICTIONS ON COMMON STOCK. Director acknowledges and agrees that the Restricted
Stock is subject to various restrictions set forth in the Plan. Director agrees as a holder of
Restricted Stock to be bound by all terms, conditions and restrictions contained in the Plan.
Director acknowledges that he has received a copy of the Plan.

     5. REPURCHASE RIGHTS.

          (a) In the event the Director (i) is removed as a director of the Company pursuant to Delaware
law, (ii) is slated for election or re-election to the Board of Directors of the Company and
refuses to serve, or (iii) resigns as a director of the Company then, the Vested Shares shall be
subject to repurchase by the Company at their then Fair Market Value (and unvested shares of
Restricted Stock shall be forfeited and returned to the Company) pursuant to the terms and
conditions contained in Section 3 of the Plan.

          (b) In the event the Director is not slated for re-election to the Board of Directors of the
Company, then upon his termination as a director, the Company shall waive its repurchase option
under Section 3 of the Plan with respect to the Vested Shares and the unvested Shares of Restricted
Stock shall be forfeited and returned to the Company. Notwithstanding the foregoing, the Investors
(as defined in the Plan) shall retain their repurchase option under Section 3 of the Plan for any
Vested Shares.

          (c) The Company shall waive its repurchase option under Section 3 of the Plan in the event the
Director ceases to be a member of the Board of Directors of the Company by reason of death or
Disability as follows: (i) if the Director’s service as a director ceases prior to the 2006 Annual
Meeting, the Company will waive its repurchase option as to 25% of the Vested Shares, (ii) if the
Director’s service ceases on or after the 2006 Annual Meeting, but prior to the 2007 Annual
Meeting, the Company shall waive its repurchase option as to 50% of the Vested Shares, (iii) if the
Director’s service ceases on or after the 2007 Annual Meeting, but prior to the 2008 Annual
Meeting, the Company shall waive its repurchase option as to 75% of the Vested Shares, and (iv) if
the Director’s service ceases on or after the 2008 Annual Meeting, the Company shall waive its
repurchase option as to 100% of the Vested Shares. Notwithstanding the foregoing, the Investors
shall retain their repurchase option under the terms and conditions of Section 3 of the Plan.

     6. NO ASSURANCES OF SERVICES. Nothing in this Agreement confers any right on the
Director to continue as a director of the Company, or shall affect in any way the stockholders of
the Company’s right to terminate the Director as a director at any time.

     7. SUBJECT TO COVENANTS. Director hereby agrees that the Restricted Stock issued
hereunder is subject to and conditioned upon Director’s execution and full compliance with the
terms of the Agreement Regarding Non Competition, Non Solicitation and Confidential

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Information (the “Non-Compete Agreement”) as set forth on Exhibit A hereto. If
Director breaches any term of the Non-Compete Agreement he shall forfeit all rights to future
vesting in any unvested shares of Restricted Stock.

     8. SECURITIES LAWS. Director represents and warrants to the Company that she is
acquiring the Restricted Stock for her own account for investment purposes only and that she has no
agreement, understanding, arrangement or intent to subdivide, sell assign or transfer any portion
of or interest in the Restricted Stock to any other person.

     9. AMENDMENTS. Any amendment, alteration, suspension, discontinuation, cancellation
or termination of the provisions of this Agreement that would impair the rights of the Director or
any beneficiary of the Director shall not be effective without the consent of the Director or the
beneficiary of the Director, as the case may be.

     10. MISCELLANEOUS.

          (a) Severability. Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will
not affect any other provision or any other jurisdiction, but this Agreement will be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision
had never been contained herein.

          (b) Successors and Assigns. Except as otherwise provided herein, this Agreement shall
bind and inure to the benefit of and be enforceable by Director, the Company, the Investors and
their respective successors and assigns (including subsequent holders of Director Stock); provided
that the rights and obligations of Director under this Agreement shall not be assignable except as
permitted in connection with a permitted transfer of Restricted Stock under the Plan.

          (c) Choice of Law. The corporate law of the State of Delaware will govern all
questions concerning the relative rights of the Company and the holders of Common Stock. All other
questions concerning the construction, validity and interpretation of this Agreement will be
governed by the internal law, and not the law of conflicts, of the State of Delaware.

          (d) Notices. All notices and other communications under this Agreement shall be in
writing. Unless and until the Director is notified in writing to the contrary, all notices,
communications and documents directed to the Company and related to the Agreement, if not delivered
by hand, shall be mailed, addressed as follows:

Ulta Salon, Cosmetics & Fragrance, Inc.

1135 Arbor Drive

Romeoville, Illinois 60446

Attn: Chief Financial Officer

     Unless and until the Company is notified in writing to the contrary, all notices,
communications and documents intended for the Director and related to this Agreement, if not

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delivered by hand, shall be delivered by registered first-class mail, telex, telecopier, or
air courier guaranteeing overnight delivery to Director’s last known address as shown on the
Company’s books. All mailings and deliveries related to this Agreement shall be deemed received
only when actually received.

     IN WITNESS WHEREOF, the Company and the Director have executed this Agreement as of the Date
of Issuance.

ULTA SALON, COSMETICS & FRAGRANCE INC.

By: /s/ Lyn Kirby

Its: Chief Executive Officer

DIRECTOR

/s/ Robert DiRomualdo

Robert DiRomualdo

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EXHIBIT A

AGREEMENT REGARDING

NONCOMPETITION, NONSOLICITATION

AND CONFIDENTIAL INFORMATION

RECITALS

          WHEREAS Ulta Salon, Cosmetics & Fragrance, Inc. (“Ulta”) is a Delaware corporation engaged,
inter alia, in the business of providing hairdressing, beauty salon and other spa services and
selling perfume, fragrances, cosmetics, salon products, beauty aids and related goods and services
at retail and acting as a distributor of such goods throughout North America, including the sales
of such goods by means of the Internet;

          WHEREAS Ulta has proprietary and confidential information which it wishes to safeguard and
keep confidential;

          WHEREAS Ulta has strong relationships with its customer base, and is using the Ulta Beauty
Club and other marketing efforts to develop regular and near permanent relationships with certain
of its customers, all of which has been and is being accomplished through the expenditure of
extensive time, effort and resources and which it wishes to maintain;

          WHEREAS, Ulta has hired, trained and developed an unusual and extraordinary workforce through
the expenditure of extensive time, effort and resources and which it wishes to retain;

          WHEREAS, in my position as a consultant to Ulta and as a director of Ulta, if elected, I will
be in a position to receive proprietary and confidential information regarding Ulta if disclosed or
used by me in any way would be harmful to the economic interests of Ulta.

AGREEMENT

          THEREFORE, in consideration of my service as a consultant and as a director of Ulta, if
elected, and for other good and valuable consideration, the sufficiency of which is hereby
acknowledged, I hereby agree to abide by the terms and conditions of this Agreement Regarding
Noncompetition, Nonsolicitation and Confidential Information.

          I HAVE READ THE FOLLOWING AGREEMENT AND HAVE HAD AN OPPORTUNITY TO CONSULT WITH AN ATTORNEY OF
MY CHOICE (AT MY EXPENSE) PRIOR TO THE SIGNING OF THIS AGREEMENT. I UNDERSTAND THAT MY SIGNING
THIS AGREEMENT IS A CONDITION OF MY CONSULTING AGREEMENT AND MY ELECTION AS A DIRECTOR OF ULTA.

	 	 	 	 	 
	 

	 	 	 	 
	 

	 	Robert DiRomualdo	 	 

 

 

     1. Noncompetition With Ulta. I understand and agree that I may receive valuable Confidential
Information of Ulta and exposure to key suppliers and regular and near permanent customers of Ulta,
including the membership and operations of the Ulta Beauty Club and similar programs and Ulta’s
plans and procedures for conducting its business on the World Wide Web/Internet (“Internet”). I,
therefore, agree that, during my Noncompete Period, I will not, directly or indirectly, own (in
whole or in part), organize, consult with, be employed by, advise, be a partner of or joint
venturer with, be a director or managing member of, or otherwise assist any Competitor within my
applicable Restricted Area.

     2. Ownership of Equity in Competitors. I understand and agree that I will receive valuable
Confidential Information of Ulta and may obtain exposure to key suppliers and regular and near
permanent customers of Ulta, including the membership and operations of the Ulta Beauty Club and
similar programs. I, therefore, agree that, during my Noncompete Period, I will not, directly or
indirectly, purchase any equity securities of any corporation (other than as a shareholder or
beneficial owner directly or indirectly owning five percent (5%) or less of the outstanding
securities of a public company, publicly traded partnership or mutual fund) which is a Competitor.

     3. Nonsolicitation of Employees. I understand and agree that Ulta has expended and will
continue to expend enormous time, effort and resources in the hiring, training and development of
an unusual and extraordinary workforce whose identity and ability I would not learn but for my
status as a consultant or director of Ulta. Therefore, I agree that, during my Nonsolicitation
Period, I will not, without Ulta’s consent directly or indirectly, (a) hire, employ, retain or
solicit, or attempt to hire, employ, retain or solicit, any employee of Ulta to work for, contract
with, become a partner with or otherwise be retained by any person, company (except Ulta), firm,
organization or other entity engaged in any business in which Ulta is engaged; (b) assist or advise
any person, company (except Ulta), firm, organization or other entity in such hiring, employing,
retaining, soliciting, or attempting to hire, employ, retain or solicit employees of Ulta; or (c)
encourage any employee to be hired, employed, retained or solicited by any person, company (except
Ulta), firm, organization or other entity. This paragraph shall not apply to the solicitation and
hiring of employees of Ulta who perform strictly clerical duties for Ulta.

     4. Nonsolicitation of Customers. I understand and agree that I will receive valuable
Confidential Information of Ulta and may obtain exposure to key suppliers and regular and near
permanent customers of Ulta, including the membership and operations of the Ulta Beauty Club and
similar programs. I, therefore, agree that, for my Nonsolicitation Period, I will not, directly or
indirectly, call upon, solicit or otherwise contact any customers, or potential customers, of Ulta
with whom I had contact during my term as a director of Ulta.

     5. Nonsolicitation of Suppliers. I understand and agree that I will receive valuable
Confidential Information of Ulta with respect to its relationships with suppliers of Ulta and that
such relationships and the right to purchase and distribute products from many such suppliers are
limited by such suppliers and constitute a valuable asset of Ulta. I, therefore, agree that, for
my Nonsolicitation Period, I will not, directly or indirectly, call upon, solicit or otherwise
contact any suppliers of Ulta with whom I had contact during my term as a consultant or director of
Ulta for purposes of introducing such supplier to a Competitor of Ulta or for purposes of inducing
or

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encouraging any such supplier to sell any such product line to any other retailer that seeks
to become a Competitor.

     6. Confidentiality of Information. I understand that during my term as a consultant or
director of Ulta I will be exposed to Ulta’s Confidential Information. I agree to keep such
information strictly confidential. Except as required by virtue of a subpoena or other court order
which has also been served on Ulta, I agree not to disclose any Confidential Information to any
person, company, firm, organization or other entity nor to make use, nor to allow any other person,
company (except Ulta), firm, organization or other entity to make use, of Confidential Information.

     7. Return of Documents and Electronic Media. At the termination of my relationship as either
a consultant or director with Ulta, I agree to promptly return to Ulta any and all confidential and
proprietary documents and other tangible Confidential Information and data, regardless of the form
in which it is recorded, as well as any and all copies and reproductions of such documents or other
tangible Confidential Information and data (regardless of the form of such copies or
reproductions), which I (i) received or obtained from or on behalf of Ulta or (ii) prepared,
compiled or collected during the course of my directorship with Ulta. I specifically agree not to
retain any copies of any Confidential Information. I further agree that upon Ulta’s request, I
will execute a sworn statement certifying that I have complied with this paragraph.

     8. Definitions.

     (a) A “Competitor,” as used herein, shall mean any person, company (except Ulta),
firm, organization or other entity which is substantially similar to the business in which Ulta is
engaged during my term as a consultant or director with Ulta. A business shall be deemed to be
substantially similar to that of Ulta if it has a business strategy and product mix (including,
without limitation, Sephora) which is similar to that of Ulta at the time in question or if it has
the intent to develop such a business.

     (b) “Confidential Information,” as used herein, shall mean any and all confidential
and proprietary documents, information or other data (whether recorded or otherwise) not publicly
known or available and otherwise not know in the retail or wholesale hair styling, beauty salon,
spa services, fragrance, cosmetics, salon products or beauty aid/products industries or trades
concerning Ulta and its businesses, customers, potential customers, suppliers, marketing plans,
advertising, contracts, potential contracts, strategies, forecasts, pricing, methods, practices,
techniques, business plans, financial plans, research, development, manufacturing, purchasing,
accounting, engineering, know-how, technical data, processes and product development and/or any
other trade secrets of Ulta.

     (c) My “Noncompete Period” shall be a period beginning at the time I was first elected
as a director of Ulta and ending two years following the termination of my relationship as either a
consultant to or as a director of Ulta, whichever is later.

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     (d) My “Nonsolicitation Period” shall be a period beginning at the time I first serve
as a consultant for Ulta and ending two years following the termination of my relationship as
either a consultant to or as a director of Ulta, whichever is later.

     (e) My “Restricted Area” shall be on the Internet an within the United States, Canada
or Mexico.

     9. Injunctive Relief. I understand and agree that any violation of this Agreement will cause
immediate and irreparable harm to Ulta, the exact extent of which will be difficult to ascertain,
and that the remedies at law for any such violation could not adequately compensate Ulta.
Therefore, I agree that Ulta shall be entitled to specific performance and/or immediate,
preliminary and permanent injunctive relief for any violations of this Agreement. Ulta shall be
entitled to such relief without the necessity of proving actual damages. I waive any necessity for
the posting of a bond.

     10. Choice of Law; Jurisdiction; Venue; Other Enforcement Issues. This Agreement shall be
governed by the laws of the State of Illinois. Ulta and I, both, irrevocably consent to the
jurisdiction of the United States District Court for the Northern District of Illinois and to the
Illinois Circuit Court of Cook County to adjudicate any disputes arising out of this Agreement.
Ulta and I, both, further agree that, to the extent permitted by law, venue for all disputes
arising under or related to this Agreement shall be in Chicago, Illinois. By entering into this
Agreement, Ulta expressly does not release, compromise or waive any rights, remedies, claims or
causes of action it may have against me for violation of any law, including without limitation the
Illinois Trade Secrets Act, 765 ILCS 1065 et seq. or similar laws that may be applicable in other
states.

     11. Breach of Covenants. I acknowledge and agree that any breach by me of any of the
covenants or agreements contained herein during the period of my directorship shall be grounds for
immediate forfeiture of such directorship and forfeiture of any accrued and unpaid fees or other
compensation and any stock options, as liquidated damages. I acknowledge that any such liquidated
damages shall be in addition to, and not exclusive of, any and all other rights and remedies Ulta
may exercise against me. In the event Ulta is required to enforce any of its rights hereunder, I
shall be obligated to reimburse Ulta for all reasonable costs and expenses, including reasonable
attorney’s fees, incurred by Ulta in connection with the enforcement of its rights hereunder.

     12. Nonassignment. I shall not assign, sell, transfer, delegate or otherwise dispose of any
rights or obligations under this Agreement.

     13. Voluntary Agreement. I expressly acknowledge that I have voluntarily executed this
Agreement and that I have had the opportunity to be represented and advised by counsel concerning
the terms and conditions of this Agreement as well as my execution thereof.

     14. Entire Agreement; Waivers; Modification. This Agreement is intended by the parties to be
the complete, exclusive and final expression of Ulta’s and my agreement with respect to
non-compete, non-solicitation and confidentiality provisions set forth above and supersedes, and
may not be contradicted by, or modified or supplemented by, evidence of any

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prior or contemporaneous agreement as to such matters, and no extrinsic evidence whatsoever
may be introduced to vary the terms of this Agreement. No waiver of any of the provisions of this
Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed or
construed as a further, continuing or subsequent waiver of any such provision or as a waiver of any
other provision of this Agreement. No failure to exercise and no delay in exercising any right,
remedy or power hereunder shall preclude any other or further exercise of any other right, remedy
or power provided herein or by law or in equity. Ulta and I expressly agree that (i) this
Agreement shall survive any termination or cessation of my term as a director of Ulta, whether the
same be initiated or caused by either me or Ulta and regardless of the reason or merits for such
termination or cessation and (ii) this Agreement may not be altered, amended, changed, terminated
or modified in any respect except by a written instrument clearly expressing the intent to so
modify this Agreement signed by me and an officer or director of Ulta.

     15. Blue Pencil; Severability. If any term, provision, covenant or condition of this
Agreement is held by a court of competent jurisdiction to exceed the limitations permitted by
applicable law, as determined by such court in such action, then the provisions will be deemed
reformed to the maximum less restrictive limitations permitted by applicable law and the parties
hereby expressly acknowledge their desire that in such event such action be taken. Notwithstanding
the foregoing, Ulta and I further agree that if any term, provision, covenant or condition of this
Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the provisions shall remain in full force and effect and in no way shall be affected,
impaired or invalidated.

     16. Descriptive Headings. Descriptive headings contained herein are for reference only and in
no way define, limit, extend or describe the scope of this Agreement or any provisions thereof.

5exv10w6

 

 EXHIBIT 10.6

STOCK PURCHASE AGREEMENT

     This Stock Purchase Agreement (this “Agreement”), dated as of December ___, 2006, is
by and among ULTA SALON, COSMETICS & FRAGRANCE, INC., a Delaware corporation (“Ulta” or the
“Company”) and CHARLES R. WEBER (“Executive”).

Recitals

     A. Executive was employed as an executive officer of the Company.

     B. On October 6, 2006 (“Retirement Date”), Executive retired from the Company.

     C. As of the date hereof, Executive holds 334,680 shares of Ulta common stock, par value $0.01
per share (“Common Stock”) and options to purchase up to 1,214,894 shares of Common Stock
(“Options”) issued to Executive under the Second Amended and Restated Stock Option Plan,
dated December 1, 1998 (the “Stock Option Plan”) and the 2002 Equity Incentive Plan, dated
June 17, 2002 (the “Equity Incentive Plan”). Attached hereto as Exhibit A is a
chart detailing Executive’s Options and the respective exercise price for such Options.

     D. The Company and Executive desire to provide Executive certain liquidity with respect to his
shares of Common Stock and Options.

Agreement

     In consideration of the foregoing, and the representations, warranties, covenants and
conditions set forth below, the parties hereto hereby agree as follows:

     1. Purchase of Securities, etc.

          (a) Purchase of Common Stock and Exercise of Options. Concurrently with the execution
of this Agreement and subject to all of the terms and conditions hereof, Executive shall (i) sell,
exchange, assign, transfer and convey to the Company, and the Company shall purchase and accept for
exchange from Executive, all of the Common Stock held by Executive as of the date of this
Agreement, free and clear of all liens, for a purchase price equal to $5.80 per share of Common
Stock.

          (b) Exercise of Options. Concurrently and in connection with the transactions set
forth in Section 1(a), Executive shall exercise all of his Options, pursuant to the terms
of and for the exercise price set forth in the agreements governing such Options, using the shares
of Common Stock and/or proceeds therefrom under Section 1(a) in payment of the exercise price. In
connection with such exercise of Options, the Company shall immediately repurchase 414,894 shares
of Common Stock issueable upon exercise of Options for a purchase price equal to $5.80 per share of
Common stock.

          (c) Tax Withholding. The Company shall withhold $2,486, 260.76, for taxes due upon
exercise of the Options. Executive acknowledges and agrees that such withholding is in excess of
the amount of withholding that the Company would be required by law to withhold based on income
and employment taxes due upon exercise of the Options, but that Executive has

 

 

           requested that the Company withhold such amount. Provided, that the Company timely remit such
amount to the applicable state and federal tax authorities, Executive shall hold the Company
harmless from any liability relating to the amount of such withholdings.

          (d) Closing Consideration; Remaining Shares Held. In connection with the transactions
contemplated hereby, the Company shall deliver to an account designated by Executive, a total
closing payment of $759,932.30. After the consummation of the transactions contemplated by this
Agreement, Executive shall continue to own and hold 800,000 shares of Common Stock, 400,000 of
which shall be deemed acquired pursuant to options granted under the Stock Option Plan and 400,000
of which shall be deemed acquired pursuant to options granted under the Equity Incentive Plan, and
which shall remain subject to the terms and restrictions of the Stock Option Plan, the Equity
Incentive Plan and the Second Amended and Restated Reclassification Agreement, dated as of December
18, 2000, as applicable and as each may be amended from time to time. Executive and the Company
agree that Executive’s termination of employment is a “Retirement” for purposes of the Stock Option
Plan and the Equity Incentive Plan. In addition, for purposes of clarification, Executive and the
Company acknowledge and agree that if so requested by an underwriter (or any representative of an
underwriter) in connection with any registration of the Company’s securities under the Securities
Act of 1933, as amended, Executive shall not sell or otherwise transfer any Ulta securities held by
the Executive (including, without limitation, shares of the Company’s preferred stock) for a period
of no less than 180 days following the public offering of the Company’s securities.

     2. Representations and Warranties of Executive. Executive represents and warrants
that:

          (a) Executive has full legal capacity, power and authority to execute and deliver this
Agreement. This Agreement has been duly authorized, executed and delivered by Executive and this
Agreement is the legal, valid and binding obligation of Executive, enforceable against him in
accordance with the terms hereof and thereof, subject to (i) the effect of bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, fraudulent transfer, preferential transfer or
distribution laws and other similar laws now or hereafter in effect relating to or affecting the
rights of creditors generally; and (ii) the effect of (A) general principles of equity, including
without limitation concepts of materiality, reasonableness, good faith and fair dealing and the
possible unavailability of specific performance or injunctive relief, regardless of whether
considered in a proceeding in equity or at law and (B) the discretion of any court in which an
action is brought.

          (b) Executive has such knowledge and experience in financial and business matters that he is
capable of evaluating the merits and risks of such transaction, is able to incur a complete loss of
such investment and is able to bear the economic risk of such investment for an indefinite period
of time.

          (c) As of the date hereof Executive holds of record and beneficially owns 1,549,574 shares of
Common Stock and the Options free and clear of all Liens. There are no outstanding powers of
attorney executed by Executive that would affect his ability to exercise the Options or transfer
the Common Stock to the Company free and clear of all liens.

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     3. Representations and Warranties of the Company . The Company represents and
warrants to Executive that:

          (a) The Company has the requisite power and authority to execute and deliver this Agreement.
This Agreement has been duly authorized, executed and delivered by the Company and this Agreement
is a legal, valid and binding obligation of the Company, enforceable against it in accordance with
its respective terms, subject to (i) the effect of bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance, fraudulent transfer, preferential transfer or distribution laws
and other similar laws now or hereafter in effect relating to or affecting the rights of creditors
generally; and (ii) the effect of (A) general principles of equity, including without limitation
concepts of materiality, reasonableness, good faith and fair dealing and the possible
unavailability of specific performance or injunctive relief, regardless of whether considered in a
proceeding in equity or at law and (B) the discretion of any court in which an action is brought.

     4. Restrictive Covenant. As a condition to and in consideration of the Company’s
obligations hereunder, Executive agrees to execute and abide by the terms of the Secrecy,
Non-Competition and Non-Solicitation Agreement attached hereto as Exhibit B.

     5. Miscellaneous.

          (a) Binding Effect; No Assignment; Benefits. This Agreement shall be binding upon and
inure to the benefit of the parties to this Agreement and their respective successors and assigns.
Nothing in this Agreement, express or implied, is intended or shall be construed to give any person
other than the parties to this Agreement or their respective successors or assigns any legal or
equitable right, remedy or claim under or in respect of any agreement or any provision contained
herein.

          (b) Survival. All covenants, agreements, representations and warranties made herein
shall survive the execution and delivery hereof.

          (c) Waiver. A party hereto may by written notice to the other parties (i) extend the
time for the performance of any of the obligations or other actions of the other parties under this
Agreement; (ii) waive compliance with any of the conditions or covenants of the other party
contained in this Agreement; and (iii) waive or modify performance of any of the obligations of the
other party under this Agreement. Except as provided in the preceding sentence, no action taken
pursuant to this Agreement, including, without limitation, any investigation by or on behalf of any
party, shall be deemed to constitute a waiver by the party taking such action of compliance with
any representations, warranties, covenants or agreements contained herein. The waiver by any party
hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver
of any preceding or succeeding breach and no failure by any party to exercise any right or
privilege hereunder shall be deemed a waiver of such party’s rights or privileges hereunder or
shall be deemed a waiver of such party’s rights to exercise the same at any subsequent time or
times hereunder.

          (d) Amendment. This Agreement may be amended, modified or supplemented only by a
written instrument executed by Executive and the Company.

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          (e) Applicable Law. This Agreement shall be governed by and construed in accordance
with the laws of Illinois, without giving effect to any choice or conflict of law provision or rule
that would cause the application of any laws other than the law of the State of Illinois.

          (f) Section and Other Headings. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or interpretation of
this Agreement.

          (g) Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original and all of which together shall be deemed to be one and
the same instrument.

4

 

     IN WITNESS WHEREOF, the Company and Charles R. Weber have executed this Agreement as of the
day and year first above written.

	 	 	 	 	 	 	 	 	 
	 	 	ULTA SALON, COSMETICS & FRAGRANCE,
INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 

Name:
	 	 
	 

	 	 	 	 	 	Its:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	CHARLES R. WEBER	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name: Charles R. Weber	 	 

ULTA SALON COSMETICS & FRAGRANCE, INC.

Signature Page to Stock Purchase Agreement

 

 

EXHIBIT A

CHARLES R. WEBER OPTIONS

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Shares	 	 	 	 	 	 	 	 	 	 
	Option	 	 	 	 	 	Subject to	 	 	Exercise	 	 	Already	 	 	Remaining	 
	Date	 	Type	 	 	Options	 	 	Price	 	 	Exercised	 	 	to Acquire	 
	9/16/1996
	 	NQ	 	 	35,000	 	 	$	0.100	 	 	 	26,250	 	 	 	8,750	 
	5/30/1997
	 	NQ	 	 	259,574	 	 	$	0.100	 	 	 	194,680	 	 	 	64,894	 
	9/18/1998
	 	NQ	 	 	455,000	 	 	$	0.105	 	 	 	113,750	 	 	 	341,250	 
	7/18/2001
	 	NQ	 	 	400,000	 	 	$	0.700	 	 	 	 	 	 	 	400,000	 
	5/1/2002
	 	NQ*	 	 	303,847	 	 	$	1.040	 	 	 	 	 	 	 	303,847	 
	5/1/2002
	 	ISO*	 	 	96,153	 	 	$	1.040	 	 	 	 	 	 	 	96,153	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Subtotal
	 	 	 	 	 	 	1,549,574	 	 	 	 	 	 	 	334,680	 	 	 	1,214,894	 

 

	
	*Option dated May 1, 2002 stated that all 400,000 shares
were ISO’s,
but the four-year cliff-vested award exceeded the $100,000 annual limit.

 

 

EXHIBIT B

SALON•COSMETICS•FRAGRANCE

SECRECY, NON-COMPETITION

AND NON-SOLICITATION AGREEMENT

DEFINITIONS

As used in this Agreement:

The COMPANY means ULTA Salon, Cosmetics, Fragrances, Inc., and any of their successors or
assigns purchasers, acquirers, and of their existing subsidiaries, divisions or affiliates.
Affiliates of the COMPANY are any corporation, entity, or organization at least 50% owned by the
COMPANY, by ULTA Salon, Cosmetics, Fragrances, Inc. or by any subsidiary of ULTA Salon, Cosmetics,
Fragrances, Inc.

I means Charles R. Weber, also referred to by the use of first person pronouns, such as me and my.

CONFIDENTIAL INFORMATION means information disclosed to me or known by me as a result of my
employment by the COMPANY, not generally known to the trade or industry in which the COMPANY is
engaged, about products, processes, technologies, customers, clients, suppliers, employees,
services and strategies of the COMPANY, including, but not limited to, research, development,
manufacturing, pricing, purchasing, finance, computer software, computer hardware, automated
systems, marketing, merchandising, beauty club programs, branding, selling, sales volumes or
strategies, names or significance of the COMPANY’S suppliers, customers or clients or their
employees or representatives, preferences, needs or requirements, purchasing histories, or other
supplier or customer or client-specific information or related knowledge.

CONFLICTING BUSINESS means any person, company (except Ulta), firm, organization or other
entity which is engaged in the business of providing hairdressing, beauty salon and other spa
services and selling perfume, fragrances, cosmetics, salon products, beauty aids and related goods
and services at retail, including sales of goods over the World Wide Web/, and acting as a
distributor of such goods throughout North America and with a business strategy and product mix
similar to that of the Company or with the intent to develop such a business; provided, however,
that any person, company, firm, organization or entity engaged primarily in the manufacturing of
cosmetics, perfumes, fragrances, salon products, beauty aids and related goods shall not be a
Conflicting Business so long as its business is limited primarily to the manufacture, distribution
and/or the exclusive sales of the products it so manufacturers.

     I recognize that the business in which the COMPANY is engaged is extremely competitive and
that I am in possession of CONFIDENTIAL INFORMATION which I received as a result of my employment.
I recognize that CONFIDENTIAL INFORMATION is significant to the COMPANY’S competitive position and
that the COMPANY therefore expects

 

 

me to keep it secret and also expects me not to compete with the COMPANY during a period of two
years from the date hereof.

     Accordingly, in consideration of the entering into the Stock Purchase Agreement dated as of
even date herewith by and between the Company and me, and my continued holding of common stock of
the Company:

	1.	 	I recognize that CONFIDENTIAL INFORMATION is of great value to the COMPANY, that the COMPANY
has legitimate business interests in protecting its CONFIDENTIAL INFORMATION, and that the
disclosure to anyone not authorized to receive such information, including a CONFLICTING
BUSINESS, will cause immediate irreparable injury to the COMPANY. Unless I first secure the
COMPANY’S written consent, I will not disclose, use in any way, disseminate, lecture upon or
publish CONFIDENTIAL INFORMATION. I understand and agree that my obligations not to disclose,
use in any way, disseminate, lecture upon or publish CONFIDENTIAL INFORMATION shall continue
until such information is no longer confidential. Specifically, I agree not to disclose any
CONFIDENTIAL INFORMATION to Highland Capital Partners or any of its officers, directors or
investors.

	2.	 	For a period of twenty-four (24) months after the date of this Agreement, I will not render
own, consult with, advise, or otherwise render services, directly or indirectly, to any
CONFLICTING BUSINESS in the United States or Canada, I also agree that for a period of
twenty-four (24) months from the date of this Agreement, I will not own, consult with, advise
or otherwise render services to any organization or person to engage in a start up
organization that utilizes any CONFIDENTIAL INFORMATION, and/or creates a business model,
product mix, services mix that replicates the COMPANY’S in any manner. Nothing contained
herein shall prohibit me from owning less than one percent (1%) of the outstanding equity
securities of a CONFLICTING BUSINESS.

	3.	 	I also agree that for a period of twelve (12) months after the date of this Agreement I will
not solicit or hire on my own behalf, or on behalf of others, any COMPANY employee, supplier
or contractor.

	4.	 	To enable the COMPANY to monitor my compliance with the obligations imposed by this
Agreement, I agree to inform the COMPANY of the identity of any new employer and of my job
title and responsibilities, and will continue to so inform the COMPANY, in writing, any time I
change employment during the twenty-four (24) months following the date of this Agreement.

	5.	 	I have returned all property belonging to the COMPANY, including any computer equipment and
all copies of correspondence, memoranda, reports, notebooks, drawings, photographs, or other
documents in any form whatsoever (including information contained in computer memory or on any
computer disk) relating in any way to the affair of the COMPANY and which were entrusted to me
or obtained by me at any time during my employment with the COMPANY.

	6.	 	I understand and acknowledge that if I violate this Agreement or am about to violate this
Agreement by disclosing or using CONFIDENTIAL INFORMATION or accepting employment with a
CONFLICTING BUSINESS, the COMPANY shall have the right, and be entitled to, in addition to any
other remedies it may have, injunctive relief; in other words,

 

 

	 	 	I understand and acknowledge that the COMPANY can bar me from disclosing or using such
information, bar me from accepting such employment or rendering such services for a period of
twenty-four (24) months from the date hereof.

	7.	 	I hereby consent and agree to assignment by the COMPANY of this Agreement and all rights and
obligations hereunder including but not limited to, an assignment in connection with any
merger, sale, transfer or acquisition by the COMPANY or relating to all ( part of its assets,
divisions and/or affiliates).

	8.	 	This Agreement shall be interpreted according to the laws of the State of Illinois without
regard to the conflict of law rules thereof I agree that any action relating to or arising out
of this Agreement may be brought in the courts of the State of Illinois or if subject matter
jurisdiction exists, in the United States District Court for the Northern District of
Illinois. I consent to personal jurisdiction and venue in both such courts and to service of
process by United States Mail or express courier service in any such action.

	9.	 	In the event that any provision of this Agreement is invalidated or unenforceable under
applicable law, that shall not affect the validity or enforceability of the remaining
provisions. To the extent that any provision of this Agreement is unenforceable because it is
overbroad, that provision shall be limited to the extent required by applicable law and
enforced as so limited.

I ACKNOWLEDGE HAVING READ, EXECUTED AND RECEIVED A COPY OF THIS AGREEMENT, and agree that
with respect to the subject matter hereof it is my entire agreement with the COMPANY,
superseding any previous oral or written communications, representations, understandings,
or agreements with the COMPANY or any of its officials or representatives.

	 	 	 	 	 	 	 
	 

	 	DATE:	 	 	 	 
	 

	 	 	 	 

	 	 

	 	 	 	 	 
	 

	 	 

	 	 
	 

	 	Charles R. Weber

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