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Exhibit 10.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of this 17th
day of May, 2001, by and among Restoration Hardware, Inc., a Delaware
corporation (the "Company"), and the investors named in the attached Schedule I
(each an "Investor" and collectively, the "Investors").
WHEREAS, the Company desires to issue and sell to the Investors,
severally and not jointly, and the Investors desire to acquire, severally and
not jointly, from the Company shares (the "Shares") of the Company's common
stock, par value $0.0001 per share ("Common Stock"), for the consideration
specified in Schedule I hereto (the "Purchase Price"), subject to the terms
herein; and
WHEREAS, the Company and the Investors desire to set forth certain
matters to which they have agreed relating to the Shares.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the parties agree as follows:
ARTICLE I
ISSUANCE OF SHARES; CLOSING
SECTION 1.1 Authorization of Shares. Subject to the terms and conditions
of this Agreement, the Company has authorized the issuance of the Shares
pursuant to this Agreement.
SECTION 1.2 Purchase and Sale of Shares. Subject to the terms and
conditions of this Agreement and in reliance upon the representations and
warranties of the Company contained herein, each Investor agrees to purchase
from the Company, and the Company agrees to sell to such Investor, on the
Closing Date (as hereinafter defined) the aggregate number of Shares set forth
opposite such Investor's name on Schedule I. The Purchase Price for the Shares
has been determined based on the closing price of the Common Stock on The Nasdaq
Stock Market ("Nasdaq") immediately prior to the date hereof.
SECTION 1.3 Closing; Delivery of the Shares at Closing. The completion
of the purchase and sale of the Shares (the "Closing") shall occur at 1 p.m.
local time at the offices of Xxxxxxxx & Xxxxxxxx LLP, 000 Xxxxxx Xxxxxx, Xxx
Xxxxxxxxx, XX 00000, on the date of this Agreement, or at such other location,
date and time as may be mutually agreed upon by the Company and the Investors
purchasing a majority of the Shares (such date being referred to herein as the
"Closing Date"). At the Closing, the Company shall deliver to each Investor one
or more stock certificates representing the number of Shares set forth opposite
such Investor's name on Schedule I hereto, each such certificate to be
registered in the name of such Investor or, if so indicated on Schedule I
hereto, in the name of a nominee designated by such Investor.
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The Company's obligation to issue the Shares to each Investor shall be
subject to the following conditions, any one or more of which may be waived by
the Company: (a) receipt by the Company of a certified or official bank check or
wire transfer of funds in the full amount of the purchase price for the Shares
being purchased hereunder by such Investor at or prior to the Closing Date; (b)
the accuracy of the representations and warranties made by such Investor as of
the date hereof and on the Closing Date and the fulfillment of those
undertakings of such Investor to be fulfilled prior to the Closing; and (c) the
Company shall have obtained any and all consents and waivers necessary for
consummation of the transactions contemplated by this Agreement, except for the
failure to receive consents and waivers, which in the aggregate, would not have
a material adverse effect on the Company, taken as a whole.
Each Investor's obligation to purchase the Shares shall be subject to
the following conditions, any one or more of which may be waived by such
Investor: (a) the accuracy of the representations and warranties of the Company
as of the date hereof and on the Closing Date; and (b) the Investors shall have
received an opinion of Xxxxxxxx & Xxxxxxxx LLP, counsel for the Company,
substantially in the form of Exhibit A hereto.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each Investor that, except
as set forth in the Schedule of Exceptions, dated as of the date hereof (the
"Schedule of Exceptions") attached to this Agreement as Exhibit B (which
Schedule of Exceptions shall be deemed to be representations and warranties to
the Investors and which Schedule of Exceptions shall expressly identify the
specific representation and warranty in this Article II to which such exception
pertains), the statements in this Article II are all true and correct:
SECTION 2.1 Organization and Standing of the Company. The Company is a
corporation duly organized, validly existing and in good standing under, and by
virtue of, the laws of the State of Delaware, and the Company has all requisite
corporate power and authority to own its properties and assets and to carry on
its business as now conducted.
SECTION 2.2 Capitalization.
(a) Authorized. The Company's authorized capital stock consists of a
total of 40,000,000 shares of Common Stock, $0.0001 par value per share, and a
total of 5,000,000 shares of preferred stock of the Company, $0.0001 par value
per share ("Preferred Stock"), of which 28,037 shares of Preferred Stock are
designated as Series A Preferred Stock and 21,217 shares are designated as
Series B Preferred Stock.
(b) Issued and Outstanding. As of May 16, 2001, of the authorized
shares of Common Stock, 19,278,778 shares of Common Stock were issued and
outstanding. Of the
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authorized shares of Preferred Stock, 6,820 shares of Series A Preferred Stock
are issued and outstanding and 8,180 shares of Series B Preferred Stock are
issued and outstanding. All such outstanding shares are validly issued, fully
paid, and non-assessable.
(c) Options, Warrants, Reserved Shares. The Company has reserved
21,217 shares out of the total of 28,037 shares of authorized Series A Preferred
Stock ("Additional Series A Shares") for possible issuance upon the conversion
of the issued and outstanding shares of Series B Preferred Stock. The Company
has also reserved 8,000,000 shares of its Common Stock for possible issuance
upon the conversion of the issued and outstanding shares of Series A Preferred
Stock, including the Additional Series A Shares (the "Conversion Shares").
Except for (a) the conversion privileges of the Series A Preferred Stock, (b)
the conversion privileges of the Series B Preferred Stock, and (c) as of April
27, 2001, outstanding options to purchase or commitments to issue 2,724,285
shares of Common Stock, warrants for 550,000 shares of Common Stock pursuant to
existing credit agreements and an additional 581,574 shares of Common Stock
reserved for issuance, either directly or through options to employees,
directors, agents and consultants to the Company, there are not outstanding any
options, warrants, rights (including conversion or preemptive rights) or
agreements for the purchase or acquisition from the Company of any shares of its
capital stock.
SECTION 2.3 Validity of this Agreement. All corporate action on the part
of the Company, its officers and its directors necessary for the authorization,
execution and delivery of, and the performance of all obligations of the Company
under this Agreement and the authorization, issuance, reservation for issuance
and delivery of all of the Shares being sold under this Agreement has been taken
or will be taken prior to the Closing. This Agreement is a valid and binding
obligation of the Company enforceable in accordance with its terms, subject, as
to enforcement of remedies, to applicable bankruptcy, insolvency, moratorium,
reorganization and similar laws affecting creditors' rights generally and to
general equitable principles. The execution and delivery by the Company of this
Agreement and the performance by the Company of its obligations hereunder and
the issuance, sale, and delivery of the Shares, will not (i) conflict with, or
result in any breach of any of the terms of, or constitute a default under, the
articles of organization or by-laws of the Company; or (ii) result in the
creation of any lien, charge or encumbrance upon any of the Company's properties
or assets, nor conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel or require any notice under any agreement,
instrument, covenant, or other restriction or arrangement to which the Company
is a party or by which it or any of its properties or assets is bound, except
where such lien, charge, encumbrance, conflict, breach or default would not have
a material adverse effect on the business, financial condition, properties,
operations or results of operations of the Company.
SECTION 2.4 Governmental Consent, etc. No consents, approvals, orders,
authorizations or registrations, qualifications, designations, declarations or
filings with any foreign, federal, state or local governmental authority on the
part of the Company (collectively, "Governmental Consents") are required in
connection with the consummation of the transactions contemplated herein or
performance of the Company's obligations hereunder, and all Governmental
Consents shall have been obtained prior to and be effective as of the Closing.
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SECTION 2.5 Valid Issuance of Shares. The Shares, when issued, sold and
delivered in accordance with the terms of this Agreement, will be duly
authorized and validly issued, fully paid and nonassessable.
SECTION 2.6 SEC Documents. The Common Stock of the Company is registered
pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the Company has filed all reports, schedules, forms,
statements and other documents required to be filed by it with the Securities
and Exchange Commission (the "SEC") pursuant to the reporting requirements of
the Exchange Act, including material filed pursuant to Section 13(a) or 15(d),
in addition to one or more registration statements and amendments thereto
heretofore filed by the Company with the SEC (all of the foregoing including
filings incorporated by reference therein being referred to herein as the "SEC
Documents"). The Company has delivered or made available to the Investors
(including via XXXXX) true and complete copies of all SEC Documents (including,
without limitation, proxy information and solicitation materials and
registration statements) filed with the SEC since April 14, 1998. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the SEC
promulgated thereunder and other federal, state and local laws, rules and
regulations applicable to such SEC Documents, and none of the SEC Documents
contained any untrue statement of a material fact or omitted to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in the SEC
Documents comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC or other
applicable rules and regulations with respect thereto.
SECTION 2.7 Securities Laws. All notices, filings, registrations, or
qualifications under state securities or "blue sky" laws, which are required in
connection with the offer, issuance, sale and delivery of the Shares pursuant to
this Agreement, have been, or will be, completed by the Company.
SECTION 2.8 Compliance. The Company is not in any violation, breach,
default, modification or termination of any term of its charter document or its
bylaws or any provision of any foreign or domestic state or federal judgment,
decree, order, statute, rule or regulation applicable to or binding upon it,
which such violation, breach, default, modification or termination, individually
or in the aggregate, would have a material adverse effect on the business,
financial condition, properties, operations or results of operations of the
Company.
SECTION 2.9 Nasdaq Compliance. The Company's Common Stock is registered
pursuant to Section 12(g) of the Exchange Act and listed on Nasdaq, and the
Company has not been contacted by the National Association of Securities
Dealers, Inc. ("NASD"), either orally or in writing, concerning potential
delisting of the Common Stock from the NASDAQ National Market System.
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ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE INVESTORS
Each Investor, severally and not jointly, hereby acknowledges,
represents, warrants and agrees as follows:
SECTION 3.1 Investor Representations. The Investor represents and
warrants to, and covenants with, the Company that: (i) the Investor is an
"accredited investor" as defined in Regulation D under the Securities Act of
1933 (the "Securities Act") and the Investor is also knowledgeable,
sophisticated and experienced in making, and is qualified to make, decisions
with respect to investments in shares presenting an investment decision like
that involved in the purchase of the Shares, including investments in comparable
companies, and has requested, received, reviewed and considered all information
it deemed relevant in making an informed decision to purchase the Shares; (ii)
the Investor is acquiring the number of Shares set forth on Schedule I hereto in
the ordinary course of its business and for its own account for investment only
and with no present intention of distributing any of such Shares or any
arrangement or understanding with any other persons regarding the distribution
of such Shares; (iii) the Investor will not, directly or indirectly, offer,
sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy,
purchase or otherwise acquire or take a pledge of) any of the Shares except in
compliance with the Securities Act, applicable state securities laws and the
respective rules and regulations promulgated thereunder; and (iv) the Investor
has, in connection with its decision to purchase the number of Shares set forth
on Schedule I hereto, relied only upon the representations and warranties of the
Company contained herein. Subject to Article IV herein, the Investor understands
that its acquisition of the Shares has not been registered under the Securities
Act or registered or qualified under any state securities law in reliance on
specific exemptions therefrom, which exemptions may depend upon, among other
things, the bona fide nature of the Investor's investment intent as expressed
herein.
SECTION 3.2 Compliance With Securities Laws. The Investor hereby
covenants with the Company not to make any sale of the Shares without complying
with the provisions of this Agreement, and without effectively causing the
prospectus delivery requirement under the Securities Act to be satisfied (unless
the Investor is selling such Shares in a transaction not subject to the
prospectus delivery requirements), and the Investor acknowledges that the
certificates evidencing the Shares will be imprinted with a legend that
prohibits their transfer except in accordance therewith.
SECTION 3.3 Authority of Investor; Validity of this Agreement. The
Investor further represents and warrants to, and covenants with, the Company
that (i) the Investor has full right, power, authority and capacity to enter
into this Agreement and to consummate the transactions contemplated hereby and
has taken all necessary action to authorize the execution, delivery and
performance of this Agreement, and (ii) this Agreement constitutes a valid and
binding obligation of the Investor enforceable against the Investor in
accordance with its terms, subject, as to enforcement of remedies, to applicable
bankruptcy, insolvency, moratorium,
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reorganization and similar laws affecting creditors' rights generally and to
general equitable principles. The execution and delivery by the Investor of this
Agreement and the performance by the Investor of its obligations hereunder and
the purchase of the Investor's Shares, will not conflict with, or result in any
breach of any of the terms of, or constitute a default under, where applicable,
the internal fund restrictions of the Investor's fund(s) or the governing
documents of such fund(s).
SECTION 3.4 Investment Decision by Investor. The Investor understands
that nothing in this Agreement or any other materials presented to the Investor
in connection with the purchase and sale of the Shares constitutes legal, tax or
investment advice. The Investor has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its purchase of the Shares.
ARTICLE IV
REGISTRATION RIGHTS
SECTION 4.1 Registration of Shares.
(a) In order to cause the Shares then held by each
Investor to be registered under the Securities Act so as to permit the sale
thereof as set forth in this Section 4.1, the Company shall use its reasonable
best efforts to prepare and file with the SEC, within fifteen (15) days after
the Closing Date, a registration statement in such form as is then available
under the Securities Act (the "Registration Statement"); provided, however, that
each Investor shall provide all such information and materials and take all such
action as may be required or reasonably requested in order to permit the Company
to comply with all applicable requirements of the Securities Act, the Exchange
Act, the NASD and Nasdaq and to obtain any desired acceleration of the effective
date of the Registration Statement, such provision of information and materials
to be a condition precedent to the obligations of the Company pursuant to this
Section 4.1 to register the Shares held by such Investor. The offerings made
pursuant to the Registration Statement shall not be underwritten.
(b) Subject to Section 4.2 hereof, the Company shall
(i) prepare and file with the SEC the Registration Statement in accordance with
Section 4.1 hereof with respect to the Shares and shall use its reasonable best
efforts to cause the Registration Statement to become effective within sixty
(60) days after the Registration Statement is filed with the SEC and to keep the
Registration Statement effective until the sooner to occur of (A) the date on
which all the Shares included within the Registration Statement have been sold,
(B) the date on which all Investors, respectively, may sell in compliance with
any applicable volume limitations under Rule 144 all of their Shares within a
three month period under Rule 144 of the Securities Act, or (C) the second
anniversary of the Closing Date; (ii) prepare and file with the SEC such
amendments to the Registration Statement and amendments or supplements to the
prospectuses used in connection therewith as may be necessary to comply with the
provisions of the Securities Act with respect to the sale or other disposition
of the Shares registered by the Registration
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Statement; (iii) furnish to each Investor such number of copies of any
prospectuses (including any preliminary prospectus and any amended, combined or
supplemented prospectus) in conformity with the requirements of the Securities
Act, and such other documents, as each Investor may reasonably request in order
to effect the offering and sale of the Shares to be offered and sold, but only
while the Company shall be required under the provisions hereof to cause the
Registration Statement to remain effective; (iv) use its reasonable best efforts
to register or qualify the Shares covered by the Registration Statement under
the securities or blue sky laws of such jurisdictions as each Investor shall
reasonably request (provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such jurisdiction where it
has not been qualified), and do any and all other acts or things which may be
necessary or advisable to enable each Investor to consummate the public sale or
other disposition of the Shares in such jurisdictions; (v) notify each Investor,
promptly after it shall receive notice thereof, of the date and time the
Registration Statement and each post-effective amendment to such Registration
Statement becomes effective or a supplement to any prospectus forming a part of
such Registration Statement has been filed; and (vi) promptly reissue, or
promptly authorize and instruct its transfer agent to reissue, unlegended
certificates at the request of any Investor thereof upon such Investor's
delivery of original certificates representing the Shares tendered for sale
pursuant to the effective Registration Statement, and to promptly respond to
broker's inquiries made of the Company in connection with such sales, in each
case with a view to reasonably assisting the Investor to complete such sale
during such period of effectiveness.
SECTION 4.2 Transfer of Shares; Delayed Filing; Suspension.
(a) Each Investor agrees that it will not effect any
disposition of the Shares or its right to purchase the Shares that would
constitute a sale within the meaning of the Securities Act except as
contemplated in the Registration Statement referred to in Section 4.1 or under
Rule 144 of the Securities Act, and that it will promptly notify the Company of
any changes in the information set forth in the Registration Statement regarding
the Investor or its plan of distribution of the Shares. Following effectiveness
of the Registration Statement, the Company may require each Investor
participating in the Registration Statement to furnish to the Company such
information regarding the Investor and the distribution of the Shares by such
Investor as the Company may from time to time reasonably require for inclusion
in the Registration Statement, and the Company may exclude from such
Registration Statement the Shares of any Investor that fails to furnish such
information.
(b) Notwithstanding the Company's obligation to file
the Registration Statement under Section 4.1 hereof, if the Company shall
furnish to the Investors a certificate signed by the President and Chief
Executive Officer of the Company stating that, in the good faith judgment of the
Company, it would be detrimental to the Company and its stockholders for the
Registration Statement to be filed at such time and it is therefore essential to
defer the filing of the Registration Statement, the Company shall have the right
to defer such filing for a period of not more than thirty (30) days beyond the
date specified under Section 4.1(a) above. In addition and notwithstanding
anything to the contrary set forth in this Agreement, the Company may restrict
disposition of the Shares under the Registration Statement
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filed pursuant to Section 4.1 hereof, and each Investor will not be able to
dispose of such Shares, if the Company shall have delivered a notice in writing
to such Investor stating that a delay in the disposition of the Shares is
necessary because the Company, in its reasonable judgment, has determined in
good faith that such sales would require public disclosure by the Company of
material nonpublic information that is not included in the Registration
Statement and that immediate disclosure of such information would be detrimental
to the Company. In no event shall the Company, without the prior written consent
of an Investor, disclose to such Investor any of the facts or circumstances
regarding the material nonpublic information giving rise to either the delay in
filing the Registration Statement or the restriction in disposition of such
Shares. In the event of the delivery of any such notice by the Company, the
Company shall use its reasonable best efforts to amend the Registration
Statement and/or amend or supplement the related prospectus if necessary and to
take all other actions necessary to allow the proposed sale to take place as
promptly as possible, subject, however, to the right of the Company to delay
further sales of the Shares until the conditions or circumstances referred to
above have ceased to exist or have been disclosed. Such right to delay sales of
the Shares (i) shall not be exercised by the Company more than twice in any
twelve (12) month period and (ii) shall not exceed ninety (90) days in the
aggregate (and no longer than forty-five (45) days as to any single delay) in
any twelve (12) month period.
SECTION 4.3 Expenses. All of the out-of-pocket expenses incurred by the
Company in complying with its obligations under this Article IV in connection
with the registration of the Shares, including, without limitation, all SEC,
Nasdaq and blue sky registration and filing fees, printing expenses, transfer
agents' and registrars' fees, and the reasonable fees and disbursements of the
Company's outside counsel and independent accountants shall be paid by the
Company. The Company shall not be responsible to pay any legal fees for any
Investor or any selling expenses of any Investor (including, without limitation,
any broker's fees or commissions, including underwriter commissions).
SECTION 4.4 Indemnification. In the event of any offering registered
pursuant to this Article IV:
(a) The Company agrees to indemnify and hold harmless
each Investor whose Shares are included in the Registration Statement, each of
its officers, directors and partners and each person controlling such Investor
within the meaning of Section 15 of the Securities Act, from and against any
losses, claims, damages or liabilities to which such Investor, or any such
officer, director, partner or controlling person may become subject (under the
Securities Act or otherwise) insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of, or are
based upon, any untrue statement of a material fact contained in the
Registration Statement or any omission to state therein a fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading, and the Company will
reimburse each such Investor and each of its officers, directors and partners
and each person controlling such Investor, as the case may be, for any
reasonable legal and any other expenses reasonably incurred in connection with
investigating, preparing or defending any such loss, claim, damage or liability;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss,
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claim, damage or liability arises out of or is based upon (i) any untrue
statement or omission, made in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Investor
specifically for use in the preparation of the Registration Statement, (ii) the
failure of such Investor to comply with the covenants and agreements applicable
to such Investor contained in Sections 3.2 or 4.2 hereof (timely delivery by
such Investor of the most recent prospectus provided to such Investor by the
Company shall not constitute such a failure), or (iii) any untrue statement or
omission made in any prospectus and corrected in an amended prospectus that was
delivered to such Investor on a timely basis.
(b) Each Investor whose Shares are included in the
Registration Statement agrees to indemnify and hold harmless the Company, each
of its officers and directors and each person controlling the Company within the
meaning of Section 15 of the Securities Act from and against any losses, claims,
damages or liabilities to which the Company, or any such officer, director or
controlling person may become subject (under the Securities Act or otherwise),
in so far as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon, (i) the failure
by such Investor to comply with the covenants and agreements applicable to such
Investor contained in Section 3.2 or 4.2 hereof respecting the sale of the
Shares (timely delivery by such Investor of the most recent prospectus provided
to such Investor by the Company shall not constitute such a failure), or (ii)
any untrue statement of a material fact contained in the Registration Statement
or any omission to state therein a fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they are made, not misleading if such untrue statement or omission was made in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Investor specifically for use in the preparation
of the Registration Statement, and such Investor will reimburse the Company and
each of its officers, directors or controlling persons, as the case may be, for
any reasonable legal and any other expenses reasonably incurred in connection
with investigating, preparing or defending any such loss, claim, damage or
liability; provided, however, that any indemnification obligations of such
Investor pursuant to this Agreement shall be limited, in the aggregate, to the
aggregate net proceeds received by such Investor as a result of the sale of its
Shares under the Registration Statement.
(c) Promptly after receipt by any indemnified person of
a notice of a claim or the beginning of any action in respect of which indemnity
is to be sought against an indemnifying person pursuant to this Section 4.4,
such indemnified person shall notify the indemnifying person in writing of such
claim or of the commencement of such action, but the omission to so notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party under this Section 4.4 (except to the extent that such
omission materially and adversely affects the indemnifying party's ability to
defend such action) or from any liability otherwise than under this Section 4.4.
Subject to the provisions hereinafter stated, in case any such action shall be
brought against an indemnified person, the indemnifying person shall be entitled
to participate therein, and, to the extent that it shall elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid notice
from such indemnified party, shall be entitled to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified person. After notice
from the indemnifying person to such indemnified person of its election to
assume the defense thereof, such indemnifying person shall
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not be liable to such indemnified person for any legal expenses subsequently
incurred by such indemnified person in connection with the defense thereof,
provided, however, that if there exists or shall exist a conflict of interest
that would make it inappropriate, in the opinion of counsel to the indemnified
person, for the same counsel to represent both the indemnified person and such
indemnifying person or any affiliate or associate thereof, the indemnified
person shall be entitled to retain its own counsel at the expense of such
indemnifying person; provided, further, that no indemnifying person shall be
responsible for the fees and expenses of more than one separate counsel
(together with appropriate local counsel) for all indemnified parties. In no
event shall any indemnifying person be liable in respect of any amounts paid in
settlement of any action unless the indemnifying person shall have approved the
terms of such settlement; provided that such consent shall not be unreasonably
withheld. No indemnifying person shall, without the prior written consent of the
indemnified person, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified person is or could have been a
party and indemnification could have been sought hereunder by such indemnified
person, unless such settlement includes an unconditional release of such
indemnified person from all liability on claims that are the subject matter of
such proceeding.
(d) If the indemnification provided for in this Section
4.4 is unavailable to or insufficient to hold harmless an indemnified party
under subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative fault of the Company on the one hand and
the Investors on the other in connection with the statements or omissions or
other matters which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, in the case of an untrue statement or omission, whether the untrue
statement or omission relates to information supplied by the Company on the one
hand or an Investor on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The Company and the Investors agree that it would not be
just and equitable if contribution pursuant to this subsection (d) were
determined by pro rata allocation (even if the Investors were treated as one
entity for such purpose) or by any other method of allocation which does not
take into account the equitable considerations referred to above in this
subsection (d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include any
reasonable legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), no Investor shall be
required to contribute any amount in excess of the amount by which the net
amount received by such Investor from the sale of the Shares to which such loss
relates exceeds the amount of any damages which such Investor has otherwise been
required to pay by reason of such untrue statement or omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
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(e) The parties to this Agreement hereby acknowledge
that they are sophisticated business persons who were represented by counsel
during the negotiations regarding the provisions hereof including, without
limitation, the provisions of this Section 4.4, and are fully informed regarding
said provisions. They further acknowledge that the provisions of this Section
4.4 fairly allocate the risks in light of the ability of the parties to
investigate the Company and its business in order to assure that adequate
disclosure is made in the Registration Statement as required by the Securities
Act and the Exchange Act.
SECTION 4.5 Termination of Conditions and Obligations. The conditions
precedent imposed by Article III or this Article IV upon the transferability of
the Shares shall cease and terminate as to any particular number of the Shares
when such Shares shall have been sold or otherwise disposed of in accordance
with the intended method of disposition set forth in the Registration Statement
covering such Shares or at such time as an opinion of counsel satisfactory to
the Company shall have been rendered to the effect that such conditions are not
necessary in order to comply with the Securities Act.
SECTION 4.6 Listing. The Company shall take the necessary steps to
comply in all material respects with the requirements of Nasdaq with respect to
the issuance of the Shares and the listing thereof.
ARTICLE V
SURVIVAL AND INDEMNIFICATION
SECTION 5.1 Survival. Notwithstanding any examination made by or on
behalf of any party hereto, the knowledge of any party or the acceptance by any
party of any certificate or opinion, each representation and warranty contained
herein shall survive the Closing and shall be fully effective and enforceable
for one year after the Closing, and each covenant contained herein shall survive
the Closing and shall be fully effective and enforceable.
SECTION 5.2 Indemnification.
(a) The Company shall indemnify each Investor, its
stockholders, partners, officers, directors, employees, agents and
representatives against any damages, claims, losses, liabilities and expenses
(including reasonable counsel fees and expenses) which may be suffered or
incurred by any of them as a result of a breach of any representation, warranty
or covenant made by the Company in this Agreement;
(b) Each Investor agrees to indemnify the Company and
its stockholders, officers, directors, employees, agents and representatives
against any damages, claims, losses, liabilities and expenses (including
reasonable counsel fees and other expenses) which may be suffered or incurred by
it as a result of any breach of any representation, warranty, or covenant made
by such Investor in this Agreement; provided, however, that any indemnification
obligations of such Investor pursuant to this Agreement shall be limited, in the
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aggregate, to the net proceeds received by such Investor as a result of the sale
of its Shares under the Registration Statement; and
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to this Section 5.2, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing of the occurrence
of the facts and circumstances giving rise to such claim. The failure of any
person to deliver the notice required by this Section 5.2(c) shall not in any
way affect the indemnifying party's indemnification obligations hereunder except
and only to the extent that the indemnifying party is actually prejudiced
thereby. In case any such proceeding shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate therein and, to the
extent that it shall, jointly with any other indemnifying party similarly
notified, assume the defense thereof, with counsel satisfactory to such
indemnified party and shall pay as incurred the fees and expenses of such
counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel or pay its own expenses.
Notwithstanding the foregoing, the indemnifying party shall pay as incurred the
fees and expenses of the counsel retained by the indemnified party in the event
(i) the indemnifying party and the indemnified party shall have mutually agreed
to the retention of such counsel or (ii) the named parties to any such
proceedings (including any impleaded parties) include both the indemnifying
party and the indemnified party and representations of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. The indemnifying party shall not be liable for any settlement of
any proceeding effected without its written consent (which shall not be
unreasonably withheld) but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a party
may designated by notice hereunder, and shall be either (i) delivered by hand,
(ii) made by telex, telecopy or facsimile transmission, (iii) sent by overnight
courier, or (iv) sent by registered mail, return receipt requested, postage
prepaid.
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If to an Investor: The address specified for such Investor on Schedule I.
If to the Company: Restoration Hardware, Inc.
00 Xxxx Xxxx, Xxxxx X
Xxxxx Xxxxxx, XX 00000
Attention: Xxxx Xxxxxxxx
Facsimile: (000) 000-0000
With a copy to: Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
All notices, requests, consents and other communications hereunder shall be
deemed to have been given together (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth above;
(ii) if by telex, telecopy or facsimile transmission, one (1) day after the time
that receipt thereof has been acknowledged by electronic confirmation or
otherwise; (iii) if sent by overnight courier, on the next business day
following the day such notice is delivered to the courier service; or (iv) if
sent by registered mail, on the 5th business day following the day such mailing
is made.
SECTION 6.2 Entire Agreement. This Agreement, including exhibits, or other
documents referred to herein or that specifically indicate that they were
delivered to the Investors in connection with this Agreement, embodies the
entire agreement and understanding between the parties hereto with respect to
the subject matter hereof and supersedes all prior oral or written agreements
and understandings relating to the subject matter hereof (other than the
non-disclosure and confidentiality agreements, if any, between the Company and
the Investors signed in anticipation of an equity financing in the Company). No
statement, representation, warranty, covenant or agreement of any kind not
expressly set forth in this Agreement shall affect, or be used to interpret,
change or restrict, the express terms and provisions of this Agreement.
SECTION 6.3 Amendments. The terms and provisions of the Agreement may be
modified, amended or waived, or consent for the departure therefrom granted,
only by written consent of the Company and the Investors holding at least 50% of
the Shares then held by all Investors. No such waiver or consent shall be deemed
to be an Agreement, whether or not similar. Each such waiver or consent shall be
effective only in the specific instance and for the purpose for which it was
given, and shall not constitute a continuing waiver or consent.
SECTION 6.4 Assignment. The rights and obligations under this Agreement
may not be assigned by any party hereto without the prior written consent of the
Company and the Investors holding in the aggregate at least 50% of the Shares
then held by all Investors, which consent shall not be unreasonably withheld,
except that an Investor may transfer its rights and obligations to an
"affiliate" (as such term is defined under Rule 144 of the Securities Act) of
such
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Investor, provided that any such transferee agrees in writing to assume all of
the obligations and liabilities of its transferor hereunder and agrees itself to
be bound hereby all in accordance with and pursuant to a duly executed written
instrument in form reasonably satisfactory to the Company.
SECTION 6.5 Benefit. All statements, representations, warranties,
covenants and agreements in this Agreement shall be binding on the parties
hereto and shall inure to the benefit of the respective successors and permitted
assigns of each party hereto. Nothing in this Agreement shall be construed to
create any rights or obligations except among the parties hereto, and no person
or entity shall be regarded as a third-party beneficiary of this Agreement.
SECTION 6.6 Governing Law. This Agreement and the rights and obligations
of the partied hereunder shall be construed in accordance with and governed by
the laws of the state of California, without giving effect to the conflict of
law principles thereof.
SECTION 6.7 Severability. In the event that any court of competent
jurisdiction shall determine that any provision, or any portion thereof,
contained in this Agreement shall be unreasonable or unenforceable in any
respect, then such provision shall be deemed limited to the extent that such
court deems it reasonable and enforceable, and as so limited shall remain in
full force and effect. In the event that such court shall deem any such
provision, or portion thereof, wholly unenforceable, the remaining provisions of
this Agreement shall nevertheless remain in full force and effect.
SECTION 6.8 Headings and Captions. The headings and captions of the
various subdivisions of this Agreement are for convenience of reference only and
shall in no way modify, or affect the meaning or constructions of any of the
terms or provisions hereof.
SECTION 6.9 No Waiver of Rights, Powers and Remedies. No failure or
delay by a party hereto in exercising any right, power or remedy under this
Agreement, and no course of dealing between the parties hereto, shall operate as
a waiver of any such right, power or remedy of the party. No single or partial
exercise of any right, power or remedy under this Agreement by a party hereto,
nor any abandonment or discontinuance of steps to enforce any such right, power
or remedy, shall preclude such party from other or further exercise thereof or
the exercise of any other right, power or remedy hereunder. The election of any
remedy by a party hereto shall not constitute a waiver of the right of such
party to pursue other available remedies. No notice to or demand on a party not
expressly required under this Agreement shall entitle the party receiving such
notice or demand to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the party giving such
notice or demand to any other or further action in any circumstances without
such notice or demand.
SECTION 6.10 Expenses. Except as provided in Section 4.3, Section 4.4 or
Section 5.2, each of the parties shall pay its own fees and expenses (including
the fees of any attorneys, accountants, appraisers or others engaged by such
party) in connection with this Agreement and the transactions contemplated
hereby whether or not the transactions contemplated hereby are consummated.
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SECTION 6.11 Brokers. Except as set forth in Section 6.11 of the
Schedule of Exceptions, each of the parties hereto represents and warrants to
the other that no broker, finder or other financial consultant has acted on its
behalf in connection with this Agreement or the transactions contemplated hereby
in such a way as to create any liability on the other. Each of the parties
hereto agrees to indemnify and save the other harmless from any claim or demand
for commission, or for other compensation by any broker, finder, financial
consultant or similar agent claiming to have been employed by or on behalf of
such party and to bear the cost of legal expenses incurred in defending against
any such claim.
SECTION 6.12 Public Announcements. The Company, on the one hand, and the
Investors, on the other hand, agree to consult promptly with each other prior to
issuing any press release or otherwise making any public statement with respect
to this Agreement or the transactions contemplated hereby, agree to provide to
the other party for review a copy of any such press release or statement, and
shall not issue any such press release or make any such public statement prior
to such consultation and review, unless required by applicable law or any
disclosure obligations of the SEC or Nasdaq.
SECTION 6.13 Counterparts. This Agreement may be executed in one or more
counterparts, and by different parties hereto on separate counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
SECTION 6.14 Further Assistance. In case at any time after the Closing
any further action is necessary or desirable to carry out the purposes of this
Agreement, the Company and each Investor will take such further action as the
other party may reasonably request, all at the sole cost and expense of the
requesting party (unless the requesting party is entitled to indemnification
under Article IV or V).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Company and the Investors have executed this
Stock Purchase Agreement as of the day and year first above written.
RESTORATION HARDWARE, INC.
By: /s/ Xxxx Xxxxxxxx
-----------------------------------
Name: Xxxx Xxxxxxxx
Title: Chief Executive Officer
[INVESTOR]
By:
-----------------------------------
Name:
Title:
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IN WITNESS WHEREOF, the Company and the Investors have executed this Stock
Purchase Agreement as of the day and year first above written.
RESTORATION HARDWARE, INC.
By:
-----------------------------------
Name:
Title:
THISBE & CO FOR THE BENEFIT OF FIDELITY
SMALL CAP AMERICA FUND
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Assistant Treasurer
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IN WITNESS WHEREOF, the Company and the Investors have executed this Stock
Purchase Agreement as of the day and year first above written.
RESTORATION HARDWARE, INC.
By:
-----------------------------------
Name:
Title:
BANGLE & CO FOR THE BENEFIT OF FIDELITY
COMMONWEALTH TRUST:
FIDELITY SMALL CAP RETIREMENT FUND
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Assistant Treasurer
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IN WITNESS WHEREOF, the Company and the Investors have executed this Stock
Purchase Agreement as of the day and year first above written.
RESTORATION HARDWARE, INC.
By:
-----------------------------------
Name:
Title:
MAG & CO FOR THE BENEFIT OF FIDELITY
CAPITAL TRUST:
FIDELITY SMALL CAP SELECTOR
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Assistant Treasurer
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IN WITNESS WHEREOF, the Company and the Investors have executed this Stock
Purchase Agreement as of the day and year first above written.
RESTORATION HARDWARE, INC.
By:
------------------------------------------
Name:
Title:
BARON SMALL CAP FUND,
a series of Baron Asset Fund
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Vice President and General Counsel
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IN WITNESS WHEREOF, the Company and the Investors have executed this Stock
Purchase Agreement as of the day and year first above written.
RESTORATION HARDWARE, INC.
By:
-----------------------------------
Name:
Title:
ALFANAR U.S. CAPITAL VALUE
By: /s/ Xxxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Manager, Apex Capital LLC
Authorized Investment Advisor
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IN WITNESS WHEREOF, the Company and the Investors have executed this Stock
Purchase Agreement as of the day and year first above written.
RESTORATION HARDWARE, INC.
By:
-----------------------------------
Name:
Title:
PERMAL U.S. OPPORTUNITIES
By: /s/ Xxxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Manager, Apex Capital LLC
Authorized Investment Advisor
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IN WITNESS WHEREOF, the Company and the Investors have executed this Stock
Purchase Agreement as of the day and year first above written.
RESTORATION HARDWARE, INC.
By:
-----------------------------------
Name:
Title:
ZAXIS PARTNERS, L.P.
By: /s/ Xxxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Manager, Apex Capital LLC
General Partner
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IN WITNESS WHEREOF, the Company and the Investors have executed this Stock
Purchase Agreement as of the day and year first above written.
RESTORATION HARDWARE, INC.
By:
-----------------------------------
Name:
Title:
ZAXIS EQUITY NEUTRAL, L.P.
By: /s/ Xxxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Manager, Apex Capital LLC
General Partner
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IN WITNESS WHEREOF, the Company and the Investors have executed this Stock
Purchase Agreement as of the day and year first above written.
RESTORATION HARDWARE, INC.
By:
-----------------------------------
Name:
Title:
ZAXIS OFFSHORE
By: /s/ Xxxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Manager, Apex Capital LLC
Authorized Investment Advisor
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IN WITNESS WHEREOF, the Company and the Investors have executed this Stock
Purchase Agreement as of the day and year first above written.
RESTORATION HARDWARE, INC.
By:
-----------------------------------
Name:
Title:
POLLAT, XXXXX & CO. INC.
By: /s/ Xxxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Manager, Apex Capital LLC
Authorized Investment Advisor
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IN WITNESS WHEREOF, the Company and the Investors have executed this Stock
Purchase Agreement as of the day and year first above written.
RESTORATION HARDWARE, INC.
By:
-----------------------------------
Name:
Title:
XXXXXXXX X. XXXXX
By: /s/ Xxxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Manager, Apex Capital LLC
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IN WITNESS WHEREOF, the Company and the Investors have executed this Stock
Purchase Agreement as of the day and year first above written.
RESTORATION HARDWARE, INC.
By:
-----------------------------------
Name:
Title:
XXXXX X. XXXXXXX & XXXXXX X. XXXXXXX,
TTEES FOR THE XXXXXXX REVOCABLE TRUST
By: /s/ Xxxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Manager, Apex Capital LLC
Authorized Investment Advisor
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IN WITNESS WHEREOF, the Company and the Investors have executed this Stock
Purchase Agreement as of the day and year first above written.
RESTORATION HARDWARE, INC.
By:
-----------------------------------
Name:
Title:
SMALLCAP WORLD FUND, INC., by Capital
Research and Management Company, its
investment advisor
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Secretary
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IN WITNESS WHEREOF, the Company and the Investors have executed this Stock
Purchase Agreement as of the day and year first above written.
RESTORATION HARDWARE, INC.
By:
-----------------------------------
Name:
Title:
AMERICAN FUNDS INSURANCE SERIES,
GLOBAL SMALL CAPITALIZATION FUND, by
Capital Research and Management Company,
its investment advisor
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Secretary
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IN WITNESS WHEREOF, the Company and the Investors have executed this Stock
Purchase Agreement as of the day and year first above written.
RESTORATION HARDWARE, INC.
By:
-----------------------------------
Name:
Title:
BUCKINGHAM RAF PARTNERS, L.P.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
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IN WITNESS WHEREOF, the Company and the Investors have executed this Stock
Purchase Agreement as of the day and year first above written.
RESTORATION HARDWARE, INC.
By:
-----------------------------------
Name:
Title:
THE JEWEL FUND, L.P.
By: /s/ Xxxxx Xxxxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Managing Principal
Jewel Investments, LLC
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IN WITNESS WHEREOF, the Company and the Investors have executed this Stock
Purchase Agreement as of the day and year first above written.
RESTORATION HARDWARE, INC.
By:
-----------------------------------
Name:
Title:
THE JEWEL QP FUND, L.P.
By: /s/ Xxxxx Xxxxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Managing Principal
Jewel Investments, LLC
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IN WITNESS WHEREOF, the Company and the Investors have executed this Stock
Purchase Agreement as of the day and year first above written.
RESTORATION HARDWARE, INC.
By:
-----------------------------------
Name:
Title:
XXXXXX PARTNERS L.P.
By: /s/ Xxxxxxxx Xxxxxx
-----------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Managing Principal
Xxxxxx Capital Management
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IN WITNESS WHEREOF, the Company and the Investors have executed this Stock
Purchase Agreement as of the day and year first above written.
RESTORATION HARDWARE, INC.
By:
-----------------------------------
Name:
Title:
XXXXXX-XXXXXXX PARTNERS L.P.
By: /s/ Xxxxxxxx Xxxxxx
-----------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Managing Principal
Xxxxxx Capital Management
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IN WITNESS WHEREOF, the Company and the Investors have executed this Stock
Purchase Agreement as of the day and year first above written.
RESTORATION HARDWARE, INC.
By:
-----------------------------------
Name:
Title:
XXXXXX-GEPT L.P.
By: /s/ Xxxxxxxx Xxxxxx
-----------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Managing Principal
Xxxxxx Capital Management
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IN WITNESS WHEREOF, the Company and the Investors have executed this Stock
Purchase Agreement as of the day and year first above written.
RESTORATION HARDWARE, INC.
By:
-----------------------------------
Name:
Title:
WHITTIER VENTURES, LLC
By: /s/ Xxxxx X. Xxxx
-----------------------------------
Name: Xxxxx X. Xxxx
Title: President
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IN WITNESS WHEREOF, the Company and the Investors have executed this Stock
Purchase Agreement as of the day and year first above written.
RESTORATION HARDWARE, INC.
By:
-----------------------------------
Name:
Title:
XXXXXX XXXXXXXX
By: /s/ Xxxxxx Xxxxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Individual
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LIST OF SCHEDULES AND EXHIBITS
Schedule I: List of Investors
Exhibit A: Opinion of Xxxxxxxx & Xxxxxxxx LLP
Exhibit B: Schedule of Exceptions
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