Document:

exv10w2

Exhibit 10.2

EXECUTION VERSION

ULTA SALON, COSMETICS & FRAGRANCE, INC.

CARL RUBIN EMPLOYMENT AGREEMENT

     This Employment Agreement (the “Agreement”) is entered into as of April 12, 2010, by and
between Ulta Salon, Cosmetics & Fragrance, Inc., a Delaware corporation (the “Company”) and Carl
Rubin (“Executive”).

     1. Duties and Scope of Employment.

          (a) Positions and Duties. Effective May 3, 2010 (the “Commencement Date”) the
Executive will serve as the Company’s Chief Operating Officer and President. In addition, at all
applicable times during the Employment Term the Company will nominate Executive to serve as a
member of the Board of Directors of the Company (the “Board”). Executive will report to the
Company’s Chief Executive Officer. The Board intends to promote Executive to Chief Executive
Officer on January 1, 2011, but in no event later than March 30, 2011. Executive will render such
business and professional services in the performance of Executive’s duties, consistent with
Executive’s position in the Company, as are reasonably assigned to Executive by the Board. The
period Executive is employed by the Company under this Agreement is referred to herein as the
“Employment Term”.

          (b) Obligations. During the Employment Term, Executive will devote Executive’s full
business time and efforts to the Company and Executive will use good faith efforts to discharge
Executive’s obligations under this Agreement to the best of Executive’s ability and in accordance
with each of the Company’s ethics guidelines, conflict of interest policies and code of business
conduct. For the duration of the Employment Term, Executive agrees not to actively engage in any
other employment, occupation, or consulting activity, including serving as a director, without the
prior approval of the Board; provided, however, that Executive may, without the approval of the
Board, serve in any capacity with any civic, educational, or charitable organization, provided such
services do not interfere with Executive’s obligations to Company, as determined by the Board.

     2. Employment Term. The term of Executive’s employment under this Agreement shall
commence on May 2, 2010 (the “Commencement Date”) and shall continue until terminated by either
party (the “Termination Date”). Executive and the Company acknowledge that this employment
relationship may be terminated by either party at any time, upon thirty (30) days written notice to
the other party, provided it may be terminated immediately by the Company for Cause. However, if
the Company terminates Executive without Cause he shall be entitled to the severance and other
benefits as provided in Section 8(a).

     3. Compensation.

          (a) Base Salary. The Company will pay Executive an annual salary of $770,000 as
compensation for all Executive’s services to the Company, subject to review annually, by the
Compensation Committee of the Board (the “Committee”) and adjustment as the Committee based on such
review may determine (such annual salary, as may be adjusted from time to time, to be referred to
herein as “Base Salary”); provided, however, Executive’s Base Salary may not be decreased without Executive’s express written consent unless the

 

 

decrease is pursuant to a general compensation reduction applicable to all, or substantially all,
officers of the Company. The Base Salary will be paid periodically in accordance with the
Company’s normal payroll practices and be subject to all required withholdings and any elected
deductions.

          (b) Special Cash Payment for Lost Benefits. The Executive has represented to the
Company that upon termination of employment with his prior employer he forfeited the right to a
$2,800,000 payment which otherwise would have been payable to Executive if he remained employed
through September, 2010 (the “Lost Benefit”). In order to induce Executive to commence employment
with the Company prior to September, 2010, and provided Executive is not terminated for Cause and
he does not voluntarily terminate his employment prior to such date, the Company will pay Executive
$2,800,000 (the “Special Cash Payment”) with the last Company payroll in August, 2010. In the
event that the Lost Benefit is less than $2,800,000, or Executive recovers from his prior employer
any portion of the Lost Benefit (the “Recovery Amount”), then the Executive will promptly inform
the Company of the amount of the Recovery Amount and the Special Cash Payment shall be reduced by
the Recovery Amount, or in the case where the Special Cash Payment has already been paid, Executive
shall reimburse the Company within seven (7) business days the amount of the Recovery Amount. The
parties agree that Executive has no obligation to take affirmative steps to seek payment of the
Lost Benefit from his prior employer.

          (c) Annual Incentive. Executive will be eligible to earn an annual cash incentive
compensation with respect to each fiscal year of the Company (each, a “Fiscal Year”) payable for
the achievement of performance goals established by the Committee under the Company’s annual
incentive plan applicable to senior officers of the Company. During the Employment Term,
Executive’s target annual incentive shall be 100% of Base Salary (“Target Annual Incentive”), with
a maximum annual incentive of 200% of Base Salary, subject to the terms of the annual incentive
plan. The actual earned annual cash incentive (“Annual Incentive”), if any, payable to Executive
will depend upon the extent to which the applicable performance goals specified by the Committee
are achieved. For the 2010 Fiscal Year, the Executive’s Annual Incentive shall not be less than
100% of Base Salary, multiplied by a fraction the numerator of which is the number of days in the
Fiscal Year elapsed from the Commencement Date and the denominator is 365. Any Annual Incentive
shall be paid to Executive no later than two and one-half months following the end of the Fiscal
Year to which such Annual Incentive relates (the “Incentive Payment Date”).

          (d) Equity.

          (i) Special Hire Restricted Share Grant. On the Commencement Date, Executive
shall be granted that number of shares of restricted common stock of the Company equal to
$2,775,000 divided by the average of the closing prices of the common stock over the
fourteen (14) days preceding the Commencement Date (the “Restricted Shares”). The
Restricted Shares shall be granted pursuant to the Restricted Share Agreement in the form
set forth on Exhibit A, and unless otherwise provided herein, shall vest in full on December
29, 2011, subject to Executive’s continued service to the Company hereunder.

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          (ii) Special Hire Option Grant. On the Commencement Date Executive shall be
granted an option to purchase that number of shares of the Company’s common stock with a
Black-Scholes value equal to $2,400,000 (the “Initial Option”). The actual number of shares
granted pursuant to this Initial Option shall be not less than 300,000 or more than 500,000
shares. The Initial Option shall be subject to the terms of the Company’s standard form
option agreement in the form set forth on Exhibit B, except that for purposes thereof
“Cause” shall have the meaning set forth in Section 8(f) of this Agreement and any dispute
over whether Executive has been terminated for Cause shall be resolved in accordance with
Section 15 of this Agreement. Unless otherwise provided herein, the Initial Option shall
vest and become exercisable with respect to one-fourth (1/4th) of the shares of
Company common stock subject thereto on February 1, 2011 and on each anniversary of such
date (each a “Vesting Date”), such that the Initial Option shall be fully vested and
exercisable on February 1, 2014, in each case subject to Executive’s continued service to
the Company hereunder.

          (iii) Long Term Incentive Program. Executive shall participate in the
Company’s long term incentive program (“LTIP”) beginning in 2011 at the same time LTIP
grants are made to other Company executives. Under the LTIP, Executive shall receive annual
equity awards with a value equal to 200% of his Base Salary subject to the terms of the
equity incentive plan pursuant to which the LTIP award is granted and the form award
agreements applicable to senior officers of the Company from time to time.

          (iv) Future Equity Grants. The Company shall consider making additional equity
grants to the Executive for the 2013 and 2014 Fiscal Years based on Company performance, in
addition to those that would normally be available to the Executive pursuant to Section
3(d)(iii).

     4. Executive Benefits. During the Employment Term, Executive will be eligible to
participate in all Company employee benefit plans, policies, and arrangements that are applicable
to other senior executives of the Company, in accordance with the terms of such arrangements and as
such plans, policies, and arrangements may exist from time to time.

     5. Relocation and Temporary Living and Commuting Expenses. Executive agrees to
relocate permanently to the Chicago area as soon as practical, with the intent to accomplish the
relocation by September 1, 2010. The Company will reimburse Executive for (a) a reasonable number
of house hunting trips for himself and his family from Florida to the Chicago area, (b) moving
expenses from Florida to his new home in the Chicago area (including packing, transportation and
unpacking services by a professional mover of the Executive’s choosing), (c) reasonable temporary
living expenses in the Chicago area, and (d) commuting expenses to and from his home in Florida
from May 1, 2010 until September 1, 2010, or such later date as agreed by the Chairman of the
Company. The reasonableness of expenses shall be determined by the Chairman of the Company.

     6. Expenses. During the Employment Term, the Company will reimburse Executive for
reasonable travel, entertainment, and other expenses incurred by Executive in the furtherance of
the performance of Executive’s duties hereunder, in accordance with the Company’s expense
reimbursement policy as in effect from time to time. The Company will also reimburse

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Executive for his reasonable attorneys’ fees incurred in connection with the preparation,
negotiation and execution of this Agreement, up to a maximum of $40,000.

     7. Termination of Employment. In the event Executive’s employment with the Company
terminates for any reason, Executive will be entitled to any (a) unpaid Base Salary accrued up to
the effective date of termination; (b) pay for accrued but unused vacation; (c) vested benefits or
compensation as provided under the terms of any employee benefit and compensation agreements or
plans applicable to Executive; and (d) unreimbursed business expenses required to be reimbursed to
Executive (the “Accrued Benefits”). In addition, if the termination is by the Company without
Cause, Executive will be entitled to the amounts and benefits specified in Section 8. Upon
termination of employment, Executive will automatically resign from the Board.

     8. Severance and Other Benefits.

          (a) Termination Without Cause. If Executive’s employment is terminated by the Company
without Cause (as defined below), then subject to Section 9, Executive will receive the following
which are collectively referred to as the “Severance Benefits”:

          (i) payment of an amount equal to eighteen months of Base Salary (less applicable tax
withholdings), paid in substantially equal installments in accordance with the Company’s
normal payroll policies;

          (ii) an amount equal to the Annual Incentive which Executive would have earned based on
the Company’s performance in the Fiscal Year of such termination, multiplied by a fraction
the numerator of which is the number of days in the Fiscal Year elapsed through the
effective date of termination (the “Termination Date”) and the denominator is 365;

          (iii) the Special Cash Payment less any Recovery Amount if such termination is prior to
payment of the Special Cash Payment;

          (iv) full vesting in the Restricted Shares, to the extent not already vested on his
date of termination; and

          (v) acceleration of vesting in an additional one-fourth (1/4) of the Initial Option to
the extent not previously fully vested on such date of termination.

     In the event the Company (A) does not give Executive the title of Chief Executive Officer
before March 30, 2011 or continue to provide him with that title during the Employment Term or (B)
reduces Executive’s Base Salary in violation of this Agreement, then Executive after notice to the
Company and the Company not remedying any such failure or breach, will be entitled to resign within
one month of such event and it will be treated under this Agreement as a termination without Cause.

          (b) Death and Disability. If Executive’s employment is terminated by reason of death
or upon qualification of Executive for long-term disability benefits under the Company’s long-term
disability plan prior to payment of the Special Cash Payment, then in

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addition to all Accrued Benefits, and subject to Section 9, Executive will also be entitled to
the Special Cash Payment, less any Recovery Amount.

          (c) Payment of Severance Benefits. Subject to Section 10, the Severance Benefits
under 8(a)(i)-(iii) shall be paid as follows:

          (i) any amount payable under Section 8(a)(i) which is exempt from Section 409A of the
Code shall commence on the first regularly scheduled payroll date following the Release
Effective Date (as defined in Section 9(a));

          (ii) any amount payable under Section 8(a)(i) which is not exempt from Section 409A of
the Code shall commence on the first regularly scheduled payroll date following the
sixty-ninth day following the Termination Date;

          (iii) any amount payable under Section 8(a)(ii) which is exempt from Section 409A of
the Code shall be paid on the later of the Incentive Payment Date or the first regularly
scheduled payroll date following the Release Effective Date;

          (iv) any amount payable under Section 8(a)(ii) which is not exempt from Section 409A of
the Code shall be paid on the later of the Incentive Payment Date or the first regularly
scheduled payroll date following the sixty-ninth day following the Termination Date; and

          (v) the amount payable under Section 8(a)(iii) shall be paid on the first regularly
scheduled payroll date following the Release Effective Date.

          (d) Voluntary Termination or Termination for Cause. If Executive’s employment is
terminated voluntarily or is terminated for Cause by the Company, then, except for the Accrued
Benefits all payments of compensation by the Company to Executive hereunder will terminate
immediately.

          (e) Sole Right to Severance. This Agreement is intended to represent Executive’s sole
entitlement to severance payments and benefits in connection with the termination of Executive’s
employment.

          (f) Cause. For purposes of this Agreement, the Initial Option and the Restricted
Shares, “Cause” shall mean termination of the Executive’s employment by the company, determined in
the sole discretion of the Board, due to (i) the commission by the Executive of an act of fraud or
embezzlement, or the unauthorized, intentional or grossly negligent disclosure of confidential
information which is injurious to the Company, (ii) a willful breach of any fiduciary duty owed to
the Company or any term of this Agreement, (iii) indictment for a felony or any crime involving
fraud, dishonesty or moral turpitude, (iv) intentional misconduct as an employee of the Company,
including, but not limited to, knowing and intentional violation by the Executive of written
policies of the Company or specific directions of the Board or superior officers of the Company,
which policies or directives are neither illegal (or do not involve illegal conduct) nor do they
require the Executive to violate reasonable business ethical standards, (v) the failure of the
Executive after written notice from the Company, substantially to perform his duties in accordance
with his position under this

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Agreement (other than as a result of disability), which failure is not cured within 10 days of
receipt of such notice, or (vi) Executive’s engaging in willful misconduct which may reasonably
result in injury to the reputation or business prospects of the Company; whether or not any such
events are discovered or known by the Company at the time of the Executive’s termination; provided
that if any of the foregoing events is capable of being cured, then with respect to the first
occurrence of such event the Company will provide written notice of Executive describing the nature
of such event and Executive will thereafter have 10 business days to cure such event. For purposes
of this Section 8(f) an act or failure to act shall be considered “willful” only if done or omitted
to be done without the Executive’s good faith reasonable belief that such act or failure to act was
in the best interests of the Company.

     9. Conditions to Receipt of Severance; No Duty to Mitigate.

          (a) Separation Agreement and Release of Claims. The receipt of Severance Benefits
will be subject to Executive signing, not revoking and returning to the Company within sixty (60)
days of Executive’s termination of employment a general release of all claims against the Company
and its affiliates in a form reasonably acceptable to the Company, with such release of claims
being effective on the eighth day following its execution, provided that it is not revoked (the
“Release Effective Date”). No Severance Benefits hereunder will be paid or provided until the
release becomes effective.

          (b) Confidential Information and Protective Covenants Agreement. As a condition to
Executive’s employment with the Company, Executive shall enter into the Company’s standard form of
employee confidential information and protective covenants agreement, but modified to provide that
Executive’s non-solicitation covenant shall be thirty-six months following termination and
non-compete covenant shall be eighteen months following termination (the “Confidential Information
and Protective Covenants Agreement”). During the Employment Term, Executive further agrees to
execute any updated versions of the Confidential Information and Protective Covenants Agreement
(any such updated version also referred to as the “Confidential Information and Protective
Covenants Agreement”) as may be required of substantially all of the Company’s executive officers,
but in no event shall the restricted period be longer than that set forth above. The receipt of
Severance Benefits will be subject to Executive’s continued compliance with the terms of the
Confidential Information and Protective Covenants Agreement.

          (c) No Duty to Mitigate. Executive will not be required to mitigate the amount of any
Severance Benefits, nor will any earnings that Executive may receive from any other source reduce
any such Severance Benefits.

     10. Section 409A.

          (a) Separation from Service. Notwithstanding anything in this Agreement to the
contrary, any compensation or benefits payable under this Agreement that constitutes “nonqualified
deferred compensation” (“Deferred Compensation”) within the meaning of Section 409A of the Code,
and which is designated under this Agreement as payable upon Executive’s termination of employment
shall be payable only upon Executive’s “separation from

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service” with the Company within the meaning of Section 409A of the Code (a “Separation from
Service”).

          (b) Specified Executive. Notwithstanding any of the foregoing, if the Executive is
deemed by the Company at the time of Executive’s Separation from Service by the Company to be a
“specified employee” for purposes of Section 409A(a)(2)(B)(i) of the of the Internal Revenue Code
of 1986, as amended (the “Code”), to the extent delayed commencement of any portion of the Deferred
Compensation to which Executive is entitled under this Agreement is required in order to avoid
taxation to the Executive under Section 409A(a)(2)(B)(i) of the Code, such portion of Executive’s
Deferred Compensation shall not be provided to him prior to the earlier of (i) the expiration of
the six-month period measured from the date of Executive’s Separation from Service with the Company
or (ii) the date of Executive’s death. Upon the expiration of the applicable Code Section
409A(a)(2)(B)(i) period, all deferred payments shall be paid to Executive in a lump sum on the
first business day following, and any remaining payments due under the Agreement shall be paid as
otherwise provided herein.

          (c) Installments. Notwithstanding the foregoing or any other provisions of this
Agreement, the Company and Executive agree that, for purposes of the limitations on nonqualified
deferred compensation under Code Section 409A, each payment of compensation under this Agreement
shall be treated as a separate payment of compensation for purposes of applying Code Section 409A.

          (d) In-Kind Benefits and Expense Reimbursements. Notwithstanding anything to the
contrary in this Agreement, in-kind benefits and reimbursements provided under this Agreement
during any tax year of the Executive shall not affect in-kind benefits or reimbursements to be
provided in any other tax year of the Executive and are not subject to liquidation or exchange for
another benefit. Notwithstanding anything to the contrary in this Agreement, reimbursement
requests must be timely submitted by the Executive and, if timely submitted, reimbursement payments
shall be made to the Executive as soon as administratively practicable following such submission,
but in no event later than December 31st of the calendar year following the calendar year in which
the expense was incurred. In no event shall the Executive be entitled to any reimbursement
payments after December 31st of the calendar year following the calendar year in which the expense
was incurred. This paragraph shall only apply to in-kind benefits and reimbursements that would
result in taxable compensation income to the Executive.

     11. Indemnification and Insurance. The Company will cover Executive under the
Company’s insurance policies and, subject to applicable law, will be provided indemnification to
the maximum extent permitted by the Company’s bylaws, and Certificate of Incorporation, with such
insurance coverage and indemnification to be in accordance with the Company’s standard practices
for senior executive officers but on terms no less favorable than provided to any other Company
senior executive officer or director.

     12. Assignment. This Agreement will be binding upon and inure to the benefit of (a)
the heirs, executors, and legal representatives of Executive upon Executive’s death and (b) any
successor of the Company. Any successor of the Company will be deemed substituted for the Company
under the terms of this Agreement for all purposes. For this purpose,

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“successor” means any person, firm, corporation, or other business entity which at any time, whether by
purchase, merger, or otherwise, directly or indirectly acquires all or substantially all of the
assets or business of the Company.

     13. Notices. All notices, requests, demands, and other communications called for
hereunder will be in writing and will be deemed given (a) on the date of delivery if delivered
personally, (b) one day after being sent by a well established commercial overnight service, (c)
upon confirmation of receipt if sent by facsimile or electronically, or (d) four days after being
mailed by first class mail and addressed to the parties or their successors at the following
addresses, or at such other addresses as the parties may later designate in writing:

If to the Company:

Ulta Salon, Cosmetics & Fragrance, Inc.

Attn: General Counsel

1000 Remington Boulevard

Suite 120

Bolingbrook, IL 60440

With a copy to:

Latham & Watkins LLP

233 South Wacker Drive, Suite 5800

Chicago, Illinois 60606

Fax: (312) 993-9767

Attention: Robin Struve

If to Executive:

at the last residential address known by the Company as provided by Executive in
writing.

With a copy to:

Seyfarth Shaw LLP

131 S. Dearborn Street, Suite 2400

Chicago, Illinois 60603

Fax: (312) 460-7965

Attention: Gerald Maatman

     14. Severability. If any provision hereof becomes or is declared by a court of
competent jurisdiction to be illegal, unenforceable, or void, this Agreement will continue in full
force and effect without said provision.

     15. Arbitration.

          (a) General. In consideration of Executive’s service to the Company, its promise to
arbitrate all employment related disputes, and Executive’s receipt of the

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compensation and other benefits paid to Executive by the Company, at present and in the
future, Executive agrees that any and all controversies, claims, or disputes with anyone (including
the Company and any employee, officer, director, shareholder, or benefit plan of the Company in
their capacity as such or otherwise) arising out of, relating to, or resulting from Executive’s
service to the Company under this Agreement or otherwise or the termination of Executive’s service
with the Company, including any breach of this Agreement, will be subject to binding arbitration
under the Illinois Uniform Arbitration Act, 710 ILCS 5/1 et seq. (the “Rules”), and pursuant to
Illinois law. Disputes which Executive agrees to arbitrate, and thereby agrees to waive any right
to a trial by jury, include any statutory claims under state or federal law, including, but not
limited to, claims under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities
Act of 1990, the Age Discrimination in Employment Act of 1967, the Older Workers Benefit Protection
Act, the Illinois Human Rights Act, and Chicago Human Rights Ordinance, claims of harassment,
discrimination, or wrongful termination, and any statutory claims. Executive further understands
that this Agreement to arbitrate also applies to any disputes that the Company may have with
Executive.

          (b) Procedure. Executive agrees that any arbitration will be administered by the
American Arbitration Association (“AAA”) and that a neutral arbitrator will be selected in a manner
consistent with its National Rules for the Resolution of Employment Disputes. The arbitration
proceedings will be held in Chicago, Illinois and will allow for discovery according to the rules
set forth in the National Rules for the Resolution of Employment Disputes or Illinois Code of Civil
Procedure. Executive agrees that the arbitrator will have the power to decide any motions brought
by any party to the arbitration, including motions for summary judgment and/or adjudication and
motions to dismiss and demurrers, prior to any arbitration hearing. Executive agrees that the
arbitrator will issue a written decision on the merits. Executive understands the Company will pay
for any administrative or hearing fees charged by the arbitrator or AAA except that Executive will
pay the filing fees associated with any arbitration Executive initiates. Executive agrees that the
arbitrator will administer and conduct any arbitration in a manner consistent with the Rules and
that to the extent that the AAA’s National Rules for the Resolution of Employment Disputes conflict
with the Rules, the Rules will take precedence.

          (c) Remedy. Except as provided by the Rules and the Federal Arbitration Act,
arbitration will be the sole, exclusive, and final remedy for any dispute between Executive and the
Company under this Agreement. Accordingly, except as provided for by the Rules and the Federal
Arbitration Act, neither Executive nor the Company will be permitted to pursue court action
regarding claims that are subject to arbitration under this Agreement. Notwithstanding, the
arbitrator will not have the authority to disregard or refuse to enforce any lawful Company policy,
and the arbitrator will not order or require the Company to adopt a policy not otherwise required
by law which the Company has not adopted. Nothing contained in this Agreement shall interfere with
the Company’s rights to enforce the Confidential Information & Protective Covenants Agreement in
accordance with its terms.

          (d) Availability of Injunctive Relief. In addition to the right under the Rules and
the Federal Arbitration Act to petition the court for provisional relief, Executive agrees that any
party also may petition the court for injunctive relief where either party alleges or claims a
violation of this Agreement or the Confidential Information and Protective Covenants

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Agreement or any other agreement regarding trade secrets, confidential information,
nonsolicitation or Illinois Code Chapter 820.

          (e) Administrative Relief. Executive understands that this Agreement does not
prohibit Executive from pursuing an administrative claim with a local, state, or federal
administrative body such as the Illinois Department of Labor, the Equal Employment Opportunity
Commission, or the workers’ compensation board. This Agreement does, however, preclude Executive
from pursuing court action regarding any such claim.

          (f) Voluntary Nature of Agreement. Executive acknowledges and agrees that Executive
is executing this Agreement voluntarily and without any duress or undue influence by the Company or
anyone else. Executive further acknowledges and agrees that Executive has carefully read this
Agreement and that Executive has asked any questions needed for Executive to understand the terms,
consequences, and binding effect of this Agreement, including that Executive is waiving Executive’s
right to a jury trial. Finally, Executive agrees that Executive has been provided an opportunity
to seek the advice of an attorney of Executive’s choice before signing this Agreement.

     16. Integration. This Agreement represents the entire agreement and understanding
between the parties as to the subject matter herein and supersedes all prior or contemporaneous
agreements whether written or oral. No waiver, alteration, or modification of any of the
provisions of this Agreement will be binding unless in a writing that specifically references this
Section and is signed by duly authorized representatives of the parties hereto.

     17. Waiver of Breach. The waiver of a breach of any term or provision of this
Agreement, which must be in writing, will not operate as or be construed to be a waiver of any
other previous or subsequent breach of this Agreement.

     18. Survival. The Confidential Information and Protective Covenants Agreement, the
Company’s and Executive’s responsibilities under Sections 7, 8, 9, 11, 12, 14 and 15 will survive
the termination of this Agreement.

     19. Headings. All captions and section headings used in this Agreement are for
convenient reference only and do not form a part of this Agreement.

     20. Tax Withholding. All payments made pursuant to this Agreement will be subject to
withholding of applicable taxes.

     21. Governing Law. This Agreement will be governed by the laws of the State of
Illinois (with the exception of its conflict of laws provisions).

     22. Acknowledgment. Executive acknowledges that he has had the opportunity to discuss
this matter with and obtain advice from Executive’s private attorney, has had sufficient time to,
and has carefully read and fully understands all the provisions of this Agreement, and is knowingly
and voluntarily entering into this Agreement.

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     23. Counterparts. This Agreement may be executed in counterparts, and each
counterpart will have the same force and effect as an original and will constitute an effective,
binding agreement on the part of each of the undersigned.

[signature page to follow]

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EXECUTION VERSION

     IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the
Company by a duly authorized officer, as of the day and year written below.

	 	 	 

	COMPANY:

	 	Date: 04/12/2010

	 	 	 	 	 
	ULTA SALON, COSMETICS & FRAGRANCE, INC.

 	 	 
	By:  	/s/ Dennis K. Eck
 	 	 
	 	Title: Non-Executive Chairman of the Board 	 	 
	 	 	 	 
	 

	 	 	 

	EXECUTIVE:

	 	Date: 04/14/2010

	 	 	 	 	 
	 	 	 
	/s/ Carl Rubin
 	 	 
	 	 	 
	 	 	 
	 

[SIGNATURE PAGE TO CARL RUBIN EMPLOYMENT AGREEMENT]exv10w3

 Exhibit 10.3

ULTA SALON, COSMETICS & FRAGRANCE, INC.

2007 INCENTIVE AWARD PLAN

RESTRICTED STOCK AWARD AGREEMENT

          Ulta Salon, Cosmetics & Fragrance, Inc. (the “Company”) pursuant to the Ulta Salon, Cosmetics
& Fragrance, Inc. 2007 Incentive Award Plan (the “Plan”) hereby grants ___ shares of it’s common,
par value $0.01 per share (the “Restricted Stock”), to Carl Rubin (the “Participant”) subject to
the restrictions on transfer and forfeiture and other limitations set forth in this Restricted
Stock Award Agreement (the “Agreement”) and the Plan on
this 10th  day of May, 2010. Unless otherwise
defined herein, capitalized terms shall have the same meanings as set forth in the Plan.

          1. Vesting Schedule. The Restricted Stock is subject to the restrictions on transfer
set forth in Section 2 and may be forfeited as provided in Section 3, until vested. The
Participant shall vest in the Restricted Stock on the earlier of:

(a) December 29, 2011; or

(b) The date the Participant’s employment is terminated by the Company without Cause
(as defined in the Employment Agreement dated April 12, 2010 by and between the
Company and the Participant (the “Employment Agreement”); provided, that Participant
complies with the requirements of Section 9 of the Employment Agreement.
Notwithstanding any provision of the Plan, any dispute over whether the Participant
has been terminated for Cause shall be resolved in accordance with Section 15 of the
Employment Agreement.

          2. Limits on Transfer. The Participant may not sell, pledge, transfer, subject to
lien, assign or otherwise hypothecate the Restricted Shares unless and until the Restricted Shares
have vested, and all other terms and conditions set forth in this Agreement and the Plan have been
satisfied. Any attempt to do so contrary to the provisions of this Agreement shall be null and
void.

          3. Forfeiture. Unless otherwise provided in this Agreement, until vested the
Restricted Stock shall be subject to forfeiture upon the termination of Participant’s employment
with the Company.

          4. Legend. Certificates representing the Restricted Stock issued pursuant to this
Agreement shall, until all applicable restrictions imposed pursuant to this Agreement lapse or
shall have been removed and the Restricted Stock shall thereby have become vested or forfeited
hereunder, bear the following legend:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN VESTING
REQUIREMENTS AND MAY BE SUBJECT TO FORFEITURE UNDER THE TERMS OF A RESTRICTED STOCK
AWARD AGREEMENT, BY AND BETWEEN ULTA SALON, COSMETICS & FRAGRANCE, INC. AND THE
REGISTERED OWNER OF SUCH SHARES,

 

AND SUCH SHARES MAY NOT BE, DIRECTLY OR INDIRECTLY, OFFERED, TRANSFERRED, SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNDER ANY CIRCUMSTANCES,
EXCEPT PURSUANT TO THE PROVISIONS OF SUCH AGREEMENT.”

          5. Delivery of Restricted Stock. Notwithstanding, unless otherwise determined by the
Committee or required by any applicable law, rule or regulation, the Company shall not deliver to
the Participant certificates evidencing shares of Stock issued in connection with the Restricted
Stock until vested and instead such shares shall be deposited in a restricted stock account for the
Participant at the Company’s transfer agent. The Company reserves the right at its sole discretion
to change the financial institution in which the shares are deposited. The certificate
representing the Restricted Stock will not be delivered to the Participant unless and until the
shares have vested pursuant to the terms of the Plan and this Agreement and all other terms and
conditions in this Agreement and under the Plan have been satisfied. The Company may deliver the
Restricted Stock, once vested and all other terms and conditions of this Agreement have been
satisfied, by electronic delivery of the shares into a brokerage account designated by the
Participant, and shall not be required to deliver actual physical shares certificates.

          6. Withholding. The Company has the authority to deduct or withhold, or require
Participant to remit to the Company, an amount sufficient to satisfy applicable federal, state,
local and foreign taxes arising from the Restricted Stock. Participant may satisfy his tax
obligation, in whole or in part: (a) with the consent of the Company by having the Company withhold
shares otherwise to be delivered with a Fair Market Value equal to the minimum amount of the tax
withholding obligation; or (b) by payment in cash or check. No shares of Restricted Stock will be
delivered to the Participant as provided in Section 5, unless and until all tax withholding
obligations have been satisfied.

          7. Rights as Stockholder. Participant is entitled to all dividends paid with respect
to the Restricted Stock. Participant is entitled to vote all shares of the Restricted Stock.

          8. Employment. This Agreement does not constitute a contract of employment, and does
not confer on the Participant the right to be retained in the employ of the Company or any
Subsidiary.

          9. No Additional Rights. Participation in the Plan is voluntary. The value of the
Restricted Stock is an extraordinary item that is not part of normal or expected compensation for
purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses,
long-service awards, pensions or retirement benefits or similar payments unless specifically and
otherwise provided in such plans. Rather, the awarding of the Restricted Stock under the Plan
represents a mere investment.

          10. Limitations on Plan Rights. The Restricted Stock is granted under and governed by
the terms and conditions of the Plan. By acceptance of the Restricted Stock, Participant
acknowledges and agrees that the Plan is discretionary in nature and may be amended, cancelled, or
terminated by the Company, in its sole discretion, at any time. The grant

2

 

of the Restricted Stock under the Plan is a one-time benefit and does not create any
contractual or other rights to receive a grant of restricted stock or benefits in lieu of
restricted stock in the future. Future grants of restricted stock, if any, will be at the sole
discretion of the Company, including, but not limited to, the timing of the grant, the number of
restricted shares, and vesting provisions. The Plan has been introduced voluntarily by the Company
and it accordance with the provisions of the Plan may be terminated by the Company at any time. By
acceptance of the Restricted Stock, Participant consents to the provisions of the Plan and this
Agreement.

	 	 	 	 	 
	 	COMPANY:

ULTA SALON, COSMETICS & FRAGRANCE, INC., a Delaware

corporation

 	 
	 	By:  	 	 
	 	 	Name:  	Joseph C. Addante 	 
	 	 	Title:  	Vice President of Finance 	 
	 

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