1
Exhibit 10.2
May __, 2001
Restoration Hardware, Inc.
00 Xxxx Xxxx, Xxxxx X
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx X. Xxxxxxxx
Re: Consent and Waiver Regarding Additional Financing
Ladies and Gentlemen:
Reference is made to the Amended and Restated Investor Rights Agreement, dated
as of March 21, 2001 (the "Agreement"), by and among Restoration Hardware, Inc.
(the "Company") and certain investors listed on Schedule A thereto (the "2001
Investors"), one of whom is the undersigned (the "Investor"). Defined terms used
in this letter but not defined herein shall have the meanings ascribed to them
in the Agreement.
The Company contemplates a new financing in which the Company shall sell shares
of common stock, $0.0001 par value per share, of the Company ("Common Stock") to
certain purchasers (the "New Investors") in a private placement transaction
(hereinafter, the "Transaction") pursuant to which the New Investors shall
receive resale registration rights. Such rights shall involve the filing by the
Company of one or more resale shelf registration statements for resale of the
New Investors' Common Stock (the "Resale Shelf Registration") on a basis that is
not subordinated to the registration rights of the 2001 Investors. Moreover, the
registration rights of the New Investors are not subordinated to the
registration rights of current holders of registrable securities under the
Restated Investors Rights Agreement, dated as of May 16, 1997, by and among the
Company and certain persons named therein and, accordingly, the Company is
obtaining a separate consent and waiver to the Transaction and Resale Shelf
Registration from such current holders.
The Investor is the beneficial owner of shares of Series A Preferred Stock,
Series B Preferred Stock and/or Common Stock, all of which are, or are deemed to
be, "Registrable Securities" under the Agreement. Because the Investor supports
and encourages the decision by the Company to enter into and to consummate the
Transaction with the New Investors, the Investor hereby consents, pursuant to
the terms of Section 2.8 of the Agreement, to the Resale Shelf Registration and
to the Company entering into the Transaction and granting to the New Investors
the registration rights contemplated thereunder. The Investor also hereby fully,
unconditionally, irrevocably and without reserve waives its rights under the
Agreement to participate in the Resale Shelf Registration.
2
Restoration Hardware, Inc.
May __, 2001
Page 2
Upon the receipt by the Company of executed copies of this letter from the
holders of at least a majority in interest of the Preferred Stock, the Investor
agrees that all holders of Registrable Securities and all permitted successors
and assignees thereof shall have consented to the Transaction and the terms
thereof.
Upon the receipt by the Company of executed copies of this letter from the
holders of at least two-thirds of the Registrable Securities currently
outstanding and entitled to registration rights under the Agreement, the
Investor agrees that, pursuant to the terms of Section 3.2 of the Agreement, all
holders of Registrable Securities and all permitted successors and assignees
thereof shall have waived their rights under the Agreement with regard to the
Resale Shelf Registration.
The Investor hereby consents to the decision of the Board of Directors of the
Company to reduce the number of shares of Common Stock reserved for issuance
upon the conversion of the Series A Preferred Stock from 14,018,500 shares of
Common Stock to 8,000,000 shares of Common Stock, provided, that the Company
shall cause (i) an increase in the total number of shares of Common Stock
authorized under its Second Amended and Restated Certificate of Incorporation
from 40,000,000 shares of Common Stock to 50,000,000 shares of Common Stock as
soon as practicable, but in any event within 180 days of the closing date of the
Transaction, and (ii) the reestablishment of a reserve of shares of Common Stock
at such higher number of shares as soon as practicable, but in any event within
185 days of the closing date of the Transaction. Upon the receipt by the Company
of executed copies of this letter from the holders of at least two-thirds of the
outstanding Preferred Stock, the Investor further agrees that the consent given
in the previous sentence shall be binding upon all Investors and all permitted
successors and assigns.
Upon the receipt by the Company of executed copies of this letter from the
greater of two-thirds of the outstanding Preferred Stock and two-thirds of the
Registrable Securities currently outstanding and entitled to registration rights
under the Agreement, the Company agrees that the rights under Section 2.4(a) of
the Agreement shall be accelerated such that date by which the Company will
effect a registration on Form S-3 (or its equivalent) shall be the later of (i)
such time as Form S-3 (or its equivalent) becomes available for use in a
registered offering by the Company and (ii) October 1, 2001, and the Company
shall take all actions to effect such acceleration. Upon the receipt by the
Company of executed copies of this letter from the holders of at least
two-thirds of the of the Registrable Securities, the Investor further agrees
that the previous sentence shall be binding upon all Investors and all permitted
successors and assigns.
The Investor makes this statement for the benefit and protection of the Company
with the understanding that the Company and its directors, officers, employees,
agents and advisors intend to rely upon the statements contained herein in
connection with the Company's intention to consummate the Transaction and the
Resale Shelf Registration, and that the Company would
3
Restoration Hardware, Inc.
May __, 2001
Page 3
not proceed with consummating the Transaction and the Resale Shelf Registration
if it were unable to rely upon the statements contained in this letter.
4
Restoration Hardware, Inc.
May __, 2001
Page 4
This letter may be executed in any number of counterparts, each of which shall
be an original, but all of which together shall constitute one instrument.
Best regards,
HOLDER
______________________________________
By: __________________________________
Its: _________________________________
Accepted and Agreed:
RESTORATION HARDWARE, INC.
/s/ Xxxxxx X. Xxxxx
-----------------------------------
By: Xxxxxx X. Xxxxx
Its: EVP-CAO
5
SCHEDULE REGARDING OMITTED DOCUMENTS PURSUANT TO ITEM 601(a) OF
REGULATION S-K
Copies of the Consent and Waiver Regarding Additional Financing in the form
above were executed by the following holders in addition to Restoration
Hardware, Inc.:
SIGNATORIES: DATE OF CONSENT AND WAIVER:
------------ ---------------------------
GLENHILL CAPITAL LP May 17, 2001
PALLADIN CAPITAL IX, LLC May 17, 2001
XXXX XXXXXXXX May 17, 2001
RESERVOIR CAPITAL PARTNERS, L.P. May 18, 2001
RESERVOIR CAPITAL ASSOCIATES, L.P. May 18, 2001
RESERVOIR CAPITAL MASTER FUND, L.P. May 18, 2001
