January 24, 2008
Exhibit
99.12
January
24, 2008
To:
Home Holdings, LLC
Re:
Equity Rollover
Ladies
and Gentlemen,
Reference
is made to (i) the Agreement
and Plan of Merger, dated November 8, 2007 (the “Merger Agreement”),
between Home Holdings, LLC (“Parent”), Home
Merger
Sub, Inc., a Delaware corporation, and Restoration Hardware, Inc., a Delaware
corporation (the “Company”) and (ii)
the letter agreement (the “Letter Agreement”),
dated November 8, 2007, between Parent and the
undersigned. Capitalized terms used herein but not defined herein
shall have the meanings set forth in the Merger Agreement, as amended by
the
Amendment.
The
undersigned hereby (i) consents and
agrees to the amendment to the Merger Agreement (the “Amendment”), in the
form attached as Exhibit A hereto;
(ii) agrees and acknowledges that its obligations under the Letter Agreement
shall remain in full force and effect following execution of the Amendment
by
the parties thereto; (iii) agrees and acknowledges that the capitalized terms
used but not defined in the Letter Agreement (including the term “Merger
Consideration”) shall have the meanings set forth in the Merger Agreement, as
amended by the Amendment; (iv) acknowledges that in connection with the
execution of the Amendment an affiliate of Parent will lend to the Company
$25
million in exchange for a Junior PIK Promissory Note in the form attached
as
Exhibit B (the
“Note”),
which
Note may be exchanged for equity of the Company upon completion of the Merger;
and (v) waives any right under the Letter Agreement that the undersigned
may
have to co-invest in connection with the Company’s issuance of the Note or the
equity issued upon exchange of the Note for equity of the Company upon
completion of the Merger.
[Remainder
of page intentionally left blank.]
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Very
truly yours,
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PALO
ALTO SMALL CAP MASTER FUND, L.P.
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By:
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Its
General Partner
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By:
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Palo
Alto Investors,
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Its
Manager
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By:
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/s/
Xxxx Xxxxxx
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Name: Xxxx
Xxxxxx
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Title: Chief
Operating Officer
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Agreed
and Acknowledged by:
Home
Holdings, LLC
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By:
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/s/
J. Xxxxxxx
Xxx
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Name: J.
Xxxxxxx Xxx
Title: President
Consented
to by (solely for purposes of providing
its
consent to the amendment of the Letter Agreement):
Restoration
Hardware, Inc.
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By:
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/s/
Xxxxx
Xxxxxx
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Name: Xxxxx
Xxxxxx
Title: Chief
Financial Officer
