EXECUTION COPY
STOCKHOLDER VOTING AGREEMENT
THIS STOCKHOLDER VOTING AGREEMENT (this "Agreement") is made and entered
into as of November 8, 2007, by and between Restoration Hardware, Inc., a
Delaware corporation (the "Company") and the undersigned stockholder (the
"Stockholder").
RECITALS
WHEREAS, concurrent with the execution and delivery hereof, Company, Home
Holdings, LLC, a Delaware limited liability company (the "Parent"), and Home
Merger Sub, Inc., a Delaware corporation ("Merger Sub"), are entering into a
Merger Agreement of even date herewith (as it may be amended from time to time
pursuant to the terms thereof other than an amendment that reduces the Merger
Consideration or imposes additional material conditions to the Parent's
obligation to consummate the Merger, the "Merger Agreement") (capitalized and
other defined terms used but not expressly defined herein have the respective
meanings assigned thereto in the Merger Agreement);
WHEREAS, as of the date hereof, the Stockholder has voting control over
shares of Company Common Stock as is indicated on Exhibit A to this Agreement in
an aggregate amount of not less than 3,449,055 shares (the "Minimum Share
Number"), and is also a "beneficial owner" of such shares within the meaning of
Rule 13d-3 under the Exchange Act; and
WHEREAS, in consideration of the execution and delivery of the Merger
Agreement by the Company and so as to facilitate the consummation of the Merger
and the transactions contemplated by the Merger Agreement, the Stockholder
desires to agree to vote all Shares (as defined below) over which it has voting
control at the time of the votes referred to herein on the terms and subject to
the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein, and intending to be legally bound, the parties hereto
hereby agree as follows:
1. Certain Definitions.
(a) Capitalized terms used herein without definition are used as defined in
the Merger Agreement, and, in addition:
"Constructive Sale" means, with respect to any security, a short sale or
entering into or acquiring an offsetting derivative contract with respect to
such security, entering into or acquiring a futures or forward contract to
deliver such security or entering into any other hedging or other derivative
transaction that has the effect of materially changing the economic benefits and
risks of ownership of such security.
"Shares" means (i) all outstanding shares of Company Common Stock and other
voting securities of Company owned, beneficially or of record, by the
Stockholder as of the date hereof, (ii) all additional outstanding shares of
Company Common Stock and other voting securities of Company acquired by the
Stockholder, beneficially or of record, during the period commencing with the
execution and delivery of this Agreement and expiring on the date on which this
Agreement terminates or is terminated pursuant to Section 6 hereof, and (iii)
such other outstanding shares of Company Common Stock and other voting
securities of Company over which the Stockholder has or will have voting power
during the period commencing with the execution and delivery of this Agreement
and expiring on the date on which this Agreement terminates or is terminated
pursuant to Section 6 hereof.
"Transfer" means, with respect to any security, the direct or indirect (i)
assignment, sale, transfer, tender, pledge, hypothecation, placement in voting
trust, Constructive Sale or other disposition of such security (excluding
transfers by testamentary or intestate succession), of any right, title or
interest in such security (including, without limitation, any right or power to
vote to which the holder thereof may be entitled, whether such right or power is
granted by proxy or otherwise) or of the record or beneficial ownership of such
security, or (ii) offer to make any such sale, transfer, tender, pledge,
hypothecation, placement in voting trust, Constructive Sale or other
disposition, and each agreement, arrangement or understanding, whether or not in
writing, to effect any of the foregoing, in each case, excluding any (1)
transfer, assignment, sale, pledge, hypothecation, encumbrance or similar
disposition pursuant to a court order, and (2) such actions pursuant to which
the Stockholder maintains all voting rights with respect to such security.
(b) Any singular term in this Agreement shall be deemed to include the
plural, and any plural term the singular. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation."
2. Transfer of Voting Rights. At all times during the period commencing with the
execution and delivery of this Agreement and expiring on the date on which this
Section 2 terminates or is terminated pursuant to Section 6 hereof, except for
the execution, delivery and performance by Stockholder of the Investment
Agreement the Stockholder has entered into with Parent on the date hereof, and
any transfer, assignment or similar disposition to one or more affiliated funds
or affiliated entities of the Stockholder that agree to be bound by the terms of
this Agreement, or as approved by the Company, the Stockholder shall not
Transfer (or permit the Transfer of), grant any proxy, or enter into any voting
agreement or similar agreement in contravention of the obligations of the
Stockholder under this Agreement with respect to any of the Shares that would
cause the Stockholder to have voting control over fewer than the Minimum Share
Number for purposes of counting the number of votes that Stockholder can cause
to be voted at the time of any vote for which Stockholder is required to vote or
cause the voting of its Shares pursuant to Section 3 hereof.
3. Agreement to Vote Shares. The Stockholder hereby agrees that the Stockholder
shall, with respect to all of the Shares that Stockholder is entitled to vote
(any limitations upon Stockholder's right to vote any Shares is set forth in
Exhibit A) at the time:
(a) until this Agreement terminates or is terminated pursuant to Section 6
hereof, subject to Section 3(d) hereof, at any meeting of the holders of Shares,
however called, and at every adjournment or postponement thereof, appear at such
meeting or otherwise cause the Shares to be counted as present thereat for
purposes of establishing a quorum;
(b) until this Agreement terminates or is terminated pursuant to Section 6
hereof, subject to Section 3(d) hereof, at any meeting of the holders of Shares
for the purpose of voting on the Merger Agreement and the transactions
contemplated thereby, however called, and at every adjournment or postponement
thereof, vote the Shares or cause the Shares to be voted in favor of the
adoption by the Company's stockholders of the Merger Agreement and the approval
of the transactions contemplated thereby, including any action reasonably
necessary to waive any dissenters' or appraisal rights it may have in respect of
such transaction and any action required in furtherance thereof;
(c) until this Agreement terminates or is terminated pursuant to Section 6
hereof, subject to Section 3(d) hereof, at any meeting of the holders of Shares,
however called, and at every adjournment or postponement thereof, vote, or cause
the Shares to be voted, against any amendment of the Company's Certificate of
Incorporation or By-laws or other proposal, action or transaction involving the
Company or any of its Subsidiaries or any of its stockholders, which amendment
or other proposal, action or transaction would reasonably be expected to prevent
or materially impede or delay the consummation of the Merger or the other
transactions contemplated by the Merger Agreement or the consummation of the
transactions contemplated by this Agreement; and
(d) notwithstanding the foregoing provisions of this Section 3, and until
this Section 3(d) terminates or is terminated pursuant to Section 6 hereof, so
long as (i) each of Parent, Merger Sub and the Company complies in all material
respects with its obligations under the Merger Agreement, (ii) the Company
elects to terminate the Merger Agreement pursuant to and in compliance with
Section 7.1(d)(ii) thereof in connection with a Superior Proposal, (iii) the
Alternative Acquisition Agreement providing for the Superior Proposal is (x)
entered into with any Person after the date hereof and prior to the Solicitation
Period End-Date or entered into thereafter with an Excluded Party prior to the
receipt of the Company Stockholder Approvals, and (y) provides for the payment
to all holders of Common Stock either all cash consideration or a combination of
cash and non-cash consideration where holders of the Company's Common Stock may
elect to receive all cash consideration without any cutback or proration based
upon the number of other holders so electing (the occurrence of clauses (i),
(ii) and (iii) collectively, a "Superior Proposal Event"), and (iv) the Board of
Directors' recommendation in favor of the adoption of such Alternative
Acquisition Agreement remains in effect and has not been adversely modified or
withdrawn, then if the Board of Directors or the Independent Committee of the
Company request in writing, at any meeting of the holders of Common Stock for
the purpose of voting on the Alternative Acquisition Agreement and the
transactions contemplated thereby, however called, and at every adjournment or
postponement thereof, vote the Shares or cause the Shares to be voted in favor
of the adoption by the Company's stockholders of the Alternative Acquisition
Agreement and the approval of the transactions contemplated thereby, including
any action reasonably necessary to waive any dissenters' or appraisal rights it
may have in respect of such transaction and any action required in furtherance
thereof.
4. Covenants of the Stockholder. The Stockholder covenants and agrees with the
Company that, during the period commencing on the date hereof and ending on the
date this Agreement is terminated pursuant to Section 6 hereof:
(a) Except for the execution, delivery and performance by the Stockholder
of the Investment Agreement the Stockholder has entered into with Parent on the
date hereof, and any transfer, assignment or similar disposition to one or more
affiliated funds or affiliated entities of the Stockholder that agree to be
bound by the terms of this Agreement, the Stockholder shall not, directly or
indirectly, sell, transfer, pledge, hypothecate, encumber, assign or dispose of
any Shares (or the beneficial ownership thereof) or offer to make such a sale,
transfer or other disposition to any person, in each case, in a manner that
would materially impair the ability of the Stockholder to satisfy its
obligations under Section 3 hereof.
(b) The Stockholder shall execute and deliver such other documents and
instruments and take such further actions as are reasonably necessary in order
to ensure that the Company receives the benefit of this Agreement.
5. Representations and Warranties of the Stockholder. The Stockholder hereby
represents and warrants to the Company as follows:
(i) The Stockholder has the requisite power and authority to execute,
deliver and perform this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by the Stockholder and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary action on the part of the
Stockholder. This Agreement has been duly executed and delivered by or on behalf
of the Stockholder and constitutes a valid and legally binding obligation of the
Stockholder, enforceable against the Stockholder in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar Laws of general applicability relating to or affecting
creditors' rights and to general equitable principles.
(ii) As of the date hereof, all of the Shares of which the Stockholder
owns or has voting control over are set forth on Exhibit A hereto, such Shares
are free and clear of any liens, claims, encumbrances, mortgages, security
interests and charges of any nature whatsoever (collectively, "Encumbrances"),
other than Encumbrances created by this Agreement or the Investment Agreement,
as applicable, and such Shares are not subject to any preemptive right of any
stockholder of the Company.
(iii) The execution and delivery of this Agreement by the Stockholder
does not, and the performance of this Agreement by the Stockholder will not, (A)
require any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Entity or any other person by the Stockholder,
except (x) as provided in the Merger Agreement, (y) filings with the SEC of such
reports or other furnished or filed materials under the Exchange Act as may be
required in connection with the execution and delivery of this Agreement and the
transactions contemplated hereby, or (z) that would be required by virtue of the
businesses of the Company or Parent or their affiliates (as defined in the
Merger Agreement); (B) conflict with, or result in any violation of, or default
(with or without notice or lapse of time or both) under any provision of, the
certificate of incorporation, by-laws or analogous documents of the Stockholder
or any other agreement to which the Stockholder is a party, including any voting
agreement, stockholder agreement, voting trust, trust agreement, pledge
agreement, loan or credit agreement, note, bond, mortgage, indenture, lease or
other agreement, instrument, permit, concession, franchise or license; or (C)
conflict with or violate any judgment, order, notice, decree, statute, law,
ordinance, rule or regulation applicable to the Stockholder or to any of the
Stockholder's property or assets, except in the cases of (B) and (C) above where
such conflicts or violations would not reasonably be expected to prevent or
materially impede or delay the consummation of the Merger or the other
transactions contemplated by the Merger Agreement or the consummation of the
transactions contemplated by this Agreement.
6. Termination. Subject to the immediately following sentence, this Agreement
shall terminate and be of no further force or effect as of the earliest to occur
of (i) the day after the receipt of the Company Stockholder Approvals, (ii) the
expiration or termination of the Merger Agreement in accordance with its terms,
(iii) June 30, 2008, and (iv) at the election of the Stockholder, upon an
Adverse Recommendation Change made by the Board of Directors (or Independent
Committee). Notwithstanding the immediately preceding sentence, if a Superior
Proposal Event has occurred, the provisions of Section 2, Section 3(d), this
Section 6 and Section 7 of this Agreement shall continue in full force and
effect until the earliest to occur of (i) the day after the receipt of all
Company stockholder approvals required to approve the Alternative Acquisition
Agreement providing for the Superior Proposal, (ii) the expiration or
termination of such Alternative Acquisition Agreement for the Superior Proposal
in accordance with its terms, and (iii) June 30, 2008.
7. Stockholder Capacity. The Stockholder is hereby executing and performing this
Agreement solely in its capacity as the investment advisor with respect to the
Shares as indicated in Exhibit A, and nothing in this Agreement shall limit or
restrict any partner, member, director, officer, employee or affiliate of the
Stockholder who is or becomes during the term hereof a member of the Board of
Directors or an officer of the Company or any of its Subsidiaries from acting,
omitting to act or refraining from taking any action, solely in such person's
capacity as a member of the Board of Directors or as an officer of the Company
(or as an officer or director of any of the Company's Subsidiaries) consistent
with his or her fiduciary duties in such capacity under applicable law.
8. Severability. If any term or other provision of this Agreement is held
invalid, illegal or incapable of being enforced by any court of competent
jurisdiction, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party hereto. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the fullest extent
possible.
9. Binding Effect and Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, provided that except as
otherwise specifically provided herein, neither this Agreement nor any of the
rights, interests or obligations of the parties hereto may be assigned by any of
the parties hereto without prior written consent of the other parties hereto
except as expressly contemplated hereby and except that the Company, without
obtaining the consent of any other party hereto, shall be entitled to assign
this Agreement or all or any of its rights or obligations hereunder to any one
or more affiliates (as defined in the Merger Agreement) of the Company, but no
assignment by the Company under this Section 9 shall relieve the Company of its
obligations under this Agreement. Any assignment in violation of the foregoing
shall be void. Nothing in this Agreement, express or implied, is intended to or
shall confer upon any other person other than the parties hereto any rights or
remedies hereunder or in connection herewith.
10. Amendments and Modification. This Agreement may not be modified, amended,
altered or supplemented except upon the execution and delivery of a written
agreement executed by each of the parties hereto; provided that any provision of
this Agreement may be waived, or the time for its performance may be extended,
by the party or parties entitled to the benefit thereof by a writing signed by
each such party or an authorized representative thereof.
11. Specific Performance; Injunctive Relief. The parties hereto acknowledge that
the Company shall be irreparably harmed and that there shall be no adequate
remedy at law for a violation of any of the covenants or agreements of
Stockholder set forth in this Agreement. Therefore, the Stockholder hereby
agrees that, in addition to any other remedies that may be available to the
Company upon any such violation, the Company shall have the right to enforce
such covenants and agreements by specific performance, injunctive relief or by
any other means available to such party at law or in equity.
12. Notices. All notices and other communications pursuant to this Agreement
shall be in writing and deemed to be sufficient if contained in a written
instrument and shall be deemed given if delivered personally, telecopied, sent
by nationally recognized overnight courier or mailed by registered or certified
mail (return receipt requested), postage prepaid, to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice): if to the Company, to its address provided in the Merger
Agreement, with a copy to the Company's counsel; and if to the Stockholder, to
the Stockholder's address shown on Exhibit A (or such other address as shall be
specified by like notice).
13. Governing Law. This Agreement shall be governed by the laws of the State of
Delaware, without reference to its principles of conflicts of law.
14. Entire Agreement. This Agreement, together with the documents expressly
referred to herein, contain the entire understanding of the parties in respect
of the subject matter hereof, and supersede all prior negotiations and
understandings between the parties with respect to such subject matter.
15. Effect of Headings. The Section headings are for convenience only and shall
not affect the construction or interpretation of this Agreement.
16. Counterparts. This Agreement may be executed in several counterparts, each
of which shall be an original, but all of which together shall constitute one
and the same agreement.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed as of the date first above written.
RESTORATION HARDWARE, INC.
By:
--------------------------
Name: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
VARDON CAPITAL MANAGEMENT, LLC
By:
_____________________________
Name: Xxxxxxx X. Xxxx, Xx.
Title: Managing Member
EXHIBIT A
NUMBER OF SHARES OF COMPANY COMMON STOCK
COMPANY COMMON STOCK
OWNED AND/OR
NAME ADDRESS WITH VOTING CONTROL
---- ------- -------------------
Vardon Capital 000 Xxxx 00xx Xxxxxx 3,449,055 shares of Common Stock
Management, LLC Xxx Xxxx, XX 00000
