Exhibit 10.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of this 6th
day of November, 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
shall be $3.90 per Share.
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 60,000,000 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.
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(b) Issued and Outstanding. As of October 31, 2001, of the
authorized shares of Common Stock, 23,867,698 shares of Common Stock were issued
and outstanding. Of the authorized shares of Preferred Stock, 15,000 shares of
Series A 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
14,018,500 shares of its Common Stock for possible issuance upon the conversion
of the issued and outstanding shares of Series A Preferred Stock. Except for (a)
the conversion privileges of the Series A Preferred Stock and (b) as of October
31, 2001, outstanding options to purchase or commitments to issue 3,540,970,
shares of Common Stock, warrants for 550,000 shares of Common Stock pursuant to
existing credit agreements and an additional 1,742,445 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
charter documents or bylaws 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 Securities Act of 1933, as amended (the "Securities Act"),
or the Exchange Act, as applicable, 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 documents 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 The Nasdaq Stock
Market ("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 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 entering into 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,
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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 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, within fifteen days after the Closing Date, to (but in no event later
than thirty (30) days after the Closing Date) (i) prepare and file with the SEC
a registration statement on Form S-3 (or successor form) under the Securities
Act, or (ii) include such Shares then held by each Investor in an existing
registration statement on Form S-3 on file with the SEC (the registration
statement described in items (i) and (ii), 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 by the Investors participating 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, or amend, as applicable, 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 or amended, as applicable, 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
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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 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 any 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 or
amend the Registration Statement under Section 4.1 hereof, if the Company shall
furnish to the Investors a certificate signed by the President or Chief
Executive Officer of the Company stating that, in the
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good faith judgment of the Company, it would be detrimental to the Company and
its stockholders for the Registration Statement to be filed or amended at such
time and it is therefore essential to defer the filing or amendment of the
Registration Statement, the Company shall have the right to defer such filing or
amendment 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 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 or
amending 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
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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, 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 person will not relieve it from any liability which it may
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have to any indemnified person under this Section 4.4 (except to the extent that
such omission materially and adversely affects the indemnifying person'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 person promptly after receiving the
aforesaid notice from such indemnified person, 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 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 persons. 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 person 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 person shall contribute to the amount paid or payable by
such indemnified person 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 person as a result
of the losses,
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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 person 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.
(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.
11
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
aggregate, to the net proceeds received by such Investor as a result of the sale
of its Shares under the Registration Statement.
(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.
12
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 designate 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.
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 fifth business day following the day such
mailing is made.
SECTION 6.2 Entire Agreement. This Agreement, including schedules and
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 fifty
percent (50%) of the Shares then
13
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 fifty percent (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 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 parties hereunder shall be construed in accordance with and governed by
the internal laws of the State of California (as permitted by Section 1646.5 of
the California Civil Code, or any similar successor provision) without giving
effect to any choice of law rule that would cause the application of the laws of
any jurisdiction other than the internal laws of the State of California to the
rights and duties of the parties.
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
14
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.
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]
15
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 X. Xxxxxxxx
---------------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
[INVESTOR]
By:
---------------------------------------------
Name:
Title:
16
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: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
Reservoir Capital Partners, L.P.
By: Reservoir Capital Group, L.L.C, GP
By: /s/ Xxxxx Xxxxxxx
---------------------------------------------
Name: Xxxxx Xxxxxxx
Title: Managing Director
Reservoir Capital Master Fund, L.P.
By: Reservoir Capital Group, L.L.C, GP
By: /s/ Xxxxx Xxxxxxx
---------------------------------------------
Name: Xxxxx Xxxxxxx
Title: Managing Director
Reservoir Capital Associates, L.P.
By: Reservoir Capital Group, L.L.C, GP
By: /s/ Xxxxx Xxxxxxx
---------------------------------------------
Name: Xxxxx Xxxxxxx
Title: Managing Director
16
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: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
AMERICAN FUNDS INSURANCE SERIES, GLOBAL SMALL
CAPITALIZATION FUND, BY CAPITAL RESEARCH AND
MANAGEMENT COMPANY, ITS INVESTMENT ADVISER
By: /s/ Xxxxxxx Xxxxxx
---------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President and Secretary
16
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: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
BARON SMALL CAP FUND, A SERIES OF BARON ASSET FUND
By BAMCO, Inc. as Investment Advisor
By: /s/ Xxxxx X. Xxxxxxxxx
----------------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Vice President and General Counsel
16
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: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
[INVESTOR]
By: /s/ Xxxxx Xxxxxxxxx
--------------------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Managing Principal, Jewel Investments
authorized signature for Xxxxxx Asset
Management
For: Xxxxxx Partners, XX
Xxxxxx-GEPT, LP
The Jewel Fund, L.P.
The Jewel QP Fund, L.P.
16
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: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
[INVESTOR] WHITTIER VENTURES, LLC
By: /s/ Xxxxx X. Xxxx
____________________________________________
Name: Xxxxx X. Xxxx
Title: Vice President
16
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: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
[INVESTOR]
Xxxxxxx X. Xxxxx & Xxxx X. Xxxxx,
TTEES of The Colen Trust
By: /s/ Xxxxxxx X. Xxxxx
____________________________________________
Name: Xxxxxxx X. Xxxxx
Title: Trustee
16
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: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
[INVESTOR]
Xxxxx X. Xxxxxxx & Xxxxxx X. Xxxxxxx,
TTEES for The Xxxxxxx Revocable Trust
By: /s/ Xxxxxxx X. Xxxxx
____________________________________________
Name: Xxxxxxx X. Xxxxx
Title: Manager, Apex Capital, LLC
Authorized Investment Advisor
16
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: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
[INVESTOR] Pollat, Xxxxx & Co. Inc.
By: /s/ Xxxxxxx X. Xxxxx
____________________________________________
Name: Xxxxxxx X. Xxxxx
Title: Manager, Apex Capital, LLC
Authorized Investment Advisor
16
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: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
[INVESTOR] Zaxis Equity Neutral, L.P.
By: /s/ Xxxxxxx X. Xxxxx
____________________________________________
Name: Xxxxxxx X. Xxxxx
Title: Manager, Apex Capital, LLC
General Partner
16
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: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
[INVESTOR] Zaxis Offshore Limited
By: /s/ Xxxxxxx X. Xxxxx
____________________________________________
Name: Xxxxxxx X. Xxxxx
Title: Manager, Apex Capital, LLC
Authorized Investment Advisor
16
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: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
[INVESTOR] Zaxis Partners, L.P.
By: /s/ Xxxxxxx X. Xxxxx
____________________________________________
Name: Xxxxxxx X. Xxxxx
Title: Manager, Apex Capital, LLC
General Partner
16
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: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
[INVESTOR] Permal U.S. Opportunities
By: /s/ Xxxxxxx X. Xxxxx
____________________________________________
Name: Xxxxxxx X. Xxxxx
Title: Manager, Apex Capital, LLC
Authorized Investment Advisor
16
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: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
[INVESTOR] Alfanar U.S. Capital Value
By: /s/ Xxxxxxx X. Xxxxx
____________________________________________
Name: Xxxxxxx X. Xxxxx
Title: Manager, Apex Capital, LLC
Authorized Investment Advisor
16
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: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
[INVESTOR]
Willow Creek Offshore
By: /s/ Xxxxx Xxxxx
____________________________________________
Name: Xxxxx Xxxxx, Managing Member
Title: Trading Advisor - WC Capital
Management, LLC
16
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: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
[INVESTOR]
Willow Creek Capital Partners, L.P.
By: /s/ Xxxxx Xxxxx
____________________________________________
Name: Xxxxx Xxxxx
Title: General Partner
16
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: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
[INVESTOR]
By: /s/ Xxxxxxx X. Xxxxxxx
____________________________________________
Name: Xxxxxxx X. Xxxxxxx
Title: President, Palo Alto Investors
For and on behalf of:
1. Xxxxxxx X. Xxxxxx, III RT
2. Xxxx X. Xxxxxxx
3. Micro Cap Partners, LP
4. Micro-Mousse Partners, LP
5. Xxxx X. Xxxxxxx
6. UBTI Free, LP
7. Xxxxxxx X. Xxxxxxx RT
16
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: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
[INVESTOR]
By: /s/ Xxxxxxx Xxxxxxxx, Sr. Mang. Dir.
____________________________________________
Name: Xxxxxxx Xxxxxxxx
Title: Senior Managing Director
Signing on Behalf of Crestwood Capital
Partners, Crestwood Capital Partners II and
Bridgewood Capital Partners.
____________________________________________
# shs $ Amount
CRESTWOOD CAPITAL PARTNERS 135,000 $ 526,500
CRESTWOOD CAPITAL PARTNERS II 15,000 58,500
BRIDGEWOOD CAPITAL PARTNERS 17,500 68,250
CRESTWOOD CAPITAL INTERNATIONAL, LTD. 82,500 321,750
-------- ---------
250,000 $ 975,000
/s/ Xxxxxx X. Xxxxxx
____________________________________________
Director
Signing on behalf of Crestwood Capital
International, LTD.
Xxxxxx X. Xxxxxx
16
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: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
[INVESTOR] Hocky Capital Q.P. L.P.
By: /s/ Xxxxxxx Xxxxx
____________________________________________
Name:
Title: General Partner
16
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: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
[INVESTOR] Hocky Capital L.P.
By: /s/ Xxxxxxx Xxxxx
____________________________________________
Name:
Title: General Partner
16
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: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
[INVESTOR] Cragswood LTD.
By: /s/ Xxxxxxx Xxxxx
____________________________________________
Name:
Title: General Partner
16
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: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
[INVESTOR] CATALYST PARTNERS, L.P.
By: /s/ Xxxxxxx Xxxxx
____________________________________________
Name: Xxxxxxx Xxxxx
Title: Managing Member
Xxxxxx Capital Advisors LLC
(sole G.P.of Catalyst Partners, L.P.)
16
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: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
[INVESTOR] CATALYST INTERNATIONAL, Ltd.
By: /s/ Xxxxxxx Xxxxx
____________________________________________
Name: Xxxxxxx Xxxxx
Title: Managing Member
XXX Capital Advisors LLC
(Investment Advisor to
Catalyst International, Ltd.)
16
LIST OF SCHEDULES AND EXHIBITS
Schedule I: List of Investors
Exhibit A: Opinion of Xxxxxxxx & Xxxxxxxx LLP
Exhibit B: Schedule of Exceptions
SCHEDULE I
Investors
Name and Address of Investors Aggregate Number of Shares Aggregate Purchase Price
----------------------------- -------------------------- ------------------------
RESERVOIR CAPITAL PARTNERS, L.P. 219,052 $854,302.80
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
RESERVOIR CAPITAL MASTER FUND, L.P. 36,820 $143,598.00
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
RESERVOIR CAPITAL ASSOCIATES, L.P. 538 $2,098.20
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
AMERICAN FUNDS INSURANCE SERIES, 282,051 $1,099,998.90
GLOBAL SMALL CAPITALIZATION FUND
c/o Capital Research and Management Company
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
BARON SMALL CAP FUND 700,000 $2,730,000.00
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
THE JEWEL FUND, L.P. 114,000 $444,600.00
c/o Jewel Investments, LLC
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
THE JEWEL QP FUND, L.P. 78,210 $305,019.00
c/o Jewel Investments, LLC
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
I-1
XXXXXX PARTNERS L.P. 47,600 $185,640.00
x/x Xxxxxx Xxxxx Management
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
XXXXXX-XXXXXXX, X.X. 1,900 $7,410.00
x/x Xxxxxx Xxxxx Management
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
XXXXXX-GEPT, L.P. 14,700 $57,330.00
x/x Xxxxxx Xxxxx Management
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
WHITTIER VENTURES, LLC 128,205 $499,999.50
0000 Xxxxxxxxxx Xxxxx
Xxxxx Xxxxxxxx, XX 00000
PERMAL U.S. OPPORTUNITIES 190,000 $741,000.00
c/o Apex Capital, LLC
0 Xxxxxx Xxx, Xxxxx 000X
Xxxxxx, XX 00000
ZAXIS OFFSHORE LIMITED 358,500 $1,398,150.00
c/o Apex Capital, LLC
0 Xxxxxx Xxx, Xxxxx 000X
Xxxxxx, XX 00000
ALFANAR U.S. CAPITAL VALUE 55,000 $214,500.00
c/o Apex Capital, LLC
0 Xxxxxx Xxx, Xxxxx 000X
Xxxxxx, XX 00000
ZAXIS PARTNERS, L.P. 42,000 $163,800.00
c/o Apex Capital, LLC
0 Xxxxxx Xxx, Xxxxx 000X
Xxxxxx, XX 00000
ZAXIS EQUITY NEUTRAL, L.P. 30,500 $118,950.00
c/o Apex Capital, LLC
0 Xxxxxx Xxx, Xxxxx 000X
Xxxxxx, XX 00000
I-2
XXXXXXX X. XXXXX & XXXX X. XXXXX, TTEES OF THE 16,000 $62,400.00
COLEN TRUST
c/o Apex Capital, LLC
0 Xxxxxx Xxx, Xxxxx 000X
Xxxxxx, XX 00000
POLLAT, XXXXX & CO. INC 4,000 $15,600.00
c/o Apex Capital, LLC
0 Xxxxxx Xxx, Xxxxx 000X
Xxxxxx, XX 00000
XXXXX X. XXXXXXX & XXXXXX X. XXXXXXX, TTEES 4,000 $15,600.00
FOR THE XXXXXXX REVOCABLE TRUST
c/o Apex Capital, LLC
0 Xxxxxx Xxx, Xxxxx 000X
Xxxxxx, XX 00000
WILLOW CREEK OFFSHORE 350,000 $1,365,000.00
00 Xxxx Xxx Xxxxxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
WILLOW CREEK CAPITAL PARTNERS, L.P. 150,000 $585,000.00
00 Xxxx Xxx Xxxxxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
XXXXXXX X. XXXXXX, III RT 18,600 $72,540.00
c/o Palo Alto Investors
000 Xxxxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
XXXX X. XXXXXXX 35,000 $136,500.00
c/o Palo Alto Investors
000 Xxxxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
MICRO CAP PARTNERS, LP 599,502 $2,338,057.80
c/o Palo Alto Investors
000 Xxxxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
I-3
MICRO-MOUSSE PARTNERS, LP 64,500 $251,550.00
c/o Palo Alto Investors
000 Xxxxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
XXXX X. XXXXXXX 27,300 $106,470.00
c/o Palo Alto Investors
000 Xxxxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
UBTI FREE, LP 60,000 $234,000.00
c/o Palo Alto Investors
000 Xxxxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
XXXXXXX X. XXXXXXX RT 109,200 $425,880.00
c/o Palo Alto Investors
000 Xxxxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
CRESTWOOD CAPITAL PARTNERS 135,000 $526,500.00
c/o ING Xxxxxx Xxxx Asset Management LLC
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
CRESTWOOD CAPITAL PARTNERS II 15,000 $58,500.00
c/o ING Xxxxxx Xxxx Asset Management LLC
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
BRIDGEWOOD CAPITAL PARTNERS 17,500 $68,250.00
c/o ING Xxxxxx Xxxx Asset Management LLC
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
CRESTWOOD CAPITAL INTERNATIONAL, LTD 82,500 $321,750.00
c/o ING Xxxxxx Xxxx Asset Management LLC
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
I-4
HOCKEY CAPITAL, L.P. 71,200 $277,680.00
000 Xxxxx Xxxxxxx Xxxx, 0xx Xxxxx
Xx. Xxxxx, XX 00000
HOCKEY CAPITAL QP, L.P. 71,300 $278,070.00
000 Xxxxx Xxxxxxx Xxxx, 0xx Xxxxx
Xx. Xxxxx, XX 00000
CRAGSWOOD LTD. 7,500 $29,250.00
000 Xxxxx Xxxxxxx Xxxx, 0xx Xxxxx
Xx. Xxxxx, XX 00000
CATALYST PARTNERS, L.P. 340,000 $1,326,000.00
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
(until 11/16/01)
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
(as of 11/19/01)
CATALYST INTERNATIONAL, LTD. 10,000 $39,000.00
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
(until 11/16/01)
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
(as of 11/19/01)
Total: 4,487,178 $17,499,994.20
I-5
EXHIBIT A
LEGAL OPINION
November ___, 2001
To the Investors listed on
Schedule I to the Stock Purchase Agreement,
dated as of November __, 2001
RE: RESTORATION HARDWARE, INC.
Ladies and Gentlemen:
We have acted as counsel for Restoration Hardware, Inc., a Delaware
corporation (the "Company"), in connection with the issuance and sale of up to
4,487,178 shares (the "Shares") of the Company's common stock, $0.0001 par value
per share, pursuant to the Stock Purchase Agreement, dated as of November ___,
2001 (the "Agreement"), by and among the Company and the investors listed on
Schedule I thereto. This opinion is furnished to you pursuant to Section 1.3 of
the Agreement.
We have examined originals or copies of the Agreement and such records,
documents and certificates of public officials and a certificate of Xxxxxxx
Xxxx, Vice President, Finance and Assistant Treasurer of the Company, dated
November __, 2001 (the "Opinion Certificate"), made such inquiries of certain
officers of the Company and considered such questions of law as we have deemed
necessary for the purpose of rendering the opinion set forth herein. In
rendering this opinion, we have relied upon the Opinion Certificate as to
certain factual matters. We have made no independent investigation of the
accuracy or completeness of such matters, but we have no actual knowledge of any
such inaccuracy or incompleteness.
We have assumed the genuineness of all signatures, the authenticity of
all items submitted to us as originals and the conformity to originals of all
items submitted to us as copies. In making our examination of the Agreement, we
have assumed that each party to the Agreement (other than the Company) has
capacity (with respect to any party that is an individual) and the power and
authority (with respect to any party that is not an individual) to enter into
the Agreement and to perform all of its obligations thereunder, and has duly
authorized, executed and delivered such Agreement, and that such Agreement
constitutes the legal, valid and binding obligations of such party, enforceable
against such party in accordance with its terms. In
A-1
rendering our opinion in paragraph 5 below, we note that the sale of the Shares
will cause an adjustment to the Conversion Price pursuant to, and as defined in,
the Certificate of Designation of Series A and Series B Preferred Stock of the
Company.
Our opinion in paragraph 1 below as to the good standing of the Company
is based solely on a certificate of the Secretary of State of the State of
Delaware. We have made no independent investigations as to whether the
certificate is accurate or complete, but we have no actual knowledge of any such
inaccuracy or incompleteness.
We have assumed that no provision of the Agreement violates the public
policy of any jurisdiction other than the State of California having a
substantial relationship to the transaction contemplated by the Agreement or
federal laws of the United States, and that no provision of the law of the State
of California, the corporate law of the State of Delaware or federal law
applicable to the Agreement violates the public policy of any such other
jurisdiction.
In rendering our opinion expressed in paragraphs 6 and 7 below, we have
also relied upon (i) the representations and warranties of the Investors
contained in the Agreement, which we have assumed to be true and correct in all
respects as of the date hereof, and (ii) the Opinion Certificate.
Our opinions in paragraphs 3(ii) and 7 are based on a review of those
laws, rules and regulations which, in our experience, are normally applicable to
the transactions of the type contemplated by the Agreement.
We have made no independent investigation as to whether any of the
aforementioned certificates are accurate or complete, but we have no actual
knowledge of any such inaccuracy or incompleteness.
Whenever our opinion herein with respect to the existence or absence of
facts is indicated to be based on our knowledge, it is intended to signify that,
in the course of our representation of the Company in connection with the
transaction referred to in the first paragraph hereof, none of Xxxxx Xxxxxx,
Xxxx Xxxxxxxx, Xxxxx Xxxx, Xxxxx Xxx or Xxxxx Xxxxxxxx has acquired actual
knowledge of the existence or absence of such facts. While the above named
persons are the principal attorneys who have been actively engaged in the
representation of the Company in connection with that matter, other attorneys of
the firm have represented and continue to represent the Company on other
matters. We have not undertaken any independent investigation to determine the
existence or absence of such facts, and no inference as to our knowledge of the
existence or absence of such facts should be drawn from the fact of our
representation of the Company.
The opinions hereinafter expressed are subject to the following further
qualifications and exceptions:
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(i) The effect of bankruptcy, insolvency, reorganization, arrangement,
moratorium or other similar laws relating to or affecting the rights of
creditors, including, without limitation, laws relating to fraudulent transfers
or conveyances, preferences and equitable subordination;
(ii) Limitations imposed by general principles of equity upon the
availability of equitable remedies or the enforcement of provisions of the
Agreement, and the effect of judicial decisions which have held that certain
provisions are unenforceable where their enforcement would violate the implied
covenant of good faith and fair dealing or would be commercially unreasonable,
or where a default under the Agreement is not material;
(iii) Except to the extent encompassed by an opinion set forth below
with respect to the Company, we express no opinion as to the effect on the
opinions expressed herein of (a) the compliance or non-compliance of any party
to the Agreement with any law, regulation or order applicable to it, or (b) the
legal or regulatory status or the nature of the business of any such party.
(iv) The effect of judicial decisions which may permit the introduction
of extrinsic evidence to modify the terms or the interpretation of the
Agreement;
(v) The enforceability of provisions of the Agreement providing for
indemnification or contribution, to the extent such indemnification or
contribution is against public policy, and the effect of California law which
provides that an indemnity provision may not be enforceable in the absence of
negligence on the part of the indemnitor or if a loss was caused by the
indemnitee's negligence;
(vi) The enforceability of provisions of the Agreement which purport to
establish evidentiary standards or to make determinations conclusive or powers
absolute;
(vii) The enforceability of provisions of the Agreement expressly or by
implication waiving broadly or vaguely stated rights, or waiving rights granted
by law where such waivers are against public policy;
(viii) The enforceability of provisions of the Agreement providing that
rights or remedies are not exclusive, that every right or remedy is cumulative,
or that the election of a particular remedy or remedies does not preclude
recourse to one or more other remedies;
(ix) The enforceability of a requirement that provisions of the
Agreement may only be modified in writing to the extent an oral agreement has
been executed modifying provisions of the Agreement;
(x) Our opinion is based upon current statutes, rules, regulations,
cases and official interpretive opinions, and it covers certain items that are
not directly or definitively addressed by such authorities; and
A-3
(xi) We express no opinion as to compliance with applicable antifraud
statutes, rules or regulations of applicable state and federal laws concerning
the issuance or sale of securities.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
2. The Company has the corporate power and authority to execute and
deliver and to perform and observe its obligations under the Agreement. The
Agreement has been duly authorized, executed and delivered by the Company and
constitutes a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms.
3. The execution, delivery and performance by the Company of the
obligations contained in the Agreement, including the issuance of the Shares as
contemplated therein, (i) do not violate any provision of the Second Amended and
Restated Certificate of Incorporation, as amended, or the Amended and Restated
Bylaws of the Company, and (ii) do not violate any law, rule or regulation
applicable to the Company.
4. The Shares to be received by each Investor pursuant to the Agreement
have been duly authorized and, upon issuance and delivery against payment
therefor in accordance with the terms of the Agreement, will be validly issued,
fully paid and nonassessable.
5. There are no pre-emptive or similar rights contained in the Second
Amended and Restated Certificate of Incorporation, as amended, or the Amended
and Restated Bylaws.
6. Assuming the filing of a Form D in accordance with Regulation D under
the Securities Act of 1933, as amended (the "Securities Act"), the offer and
sale of the Shares pursuant to the terms of the Agreement are exempt from
registration under the Securities Act and qualification under the California
Corporate Securities Law of 1968, as amended (the "California Securities Law").
7. All consents, approvals, orders or authorizations of, and all
qualifications, registrations or filings with, any federal or State of
California governmental authority on the part of the Company required in
connection with the issuance and sale of the Shares contemplated by the
Agreement, except for the filing of a Form D in accordance with Regulation D
under the Securities Act, have been made or obtained.
We express no opinion as to matters governed by any laws other than the
substantive laws of the State of California, the General Corporation Law of the
State of Delaware and the federal laws of the United States of America, in each
case which are in effect on the date hereof. We express no opinion as to whether
the laws of any particular jurisdiction apply, and no opinion to the extent the
laws of any jurisdiction, other than those identified above, are applicable to
the subject matter hereof.
This opinion is solely for your benefit and may not be relied on by, nor
may copies be delivered to, any other person without our prior written consent.
Very truly yours,
A-4
EXHIBIT B
SCHEDULE OF EXCEPTIONS
TO THE
STOCK PURCHASE AGREEMENT,
DATED AS OF NOVEMBER 6, 2001,
BY AND AMONG
RESTORATION HARDWARE, INC.
AND
THE INVESTORS NAMED ON SCHEDULE I THERETO
The following are exceptions to the representations, warranties,
covenants and agreements of Restoration Hardware, Inc. (the "Company") contained
in the Stock Purchase Agreement, dated as of November 6, 2001 (the "Agreement"),
by and among the Company and the Investors named on Schedule I attached thereto
(each an "Investor" and collectively, the "Investors") and should be considered
an integral part of the Agreement. The section numbers in this Schedule of
Exceptions correspond to the section numbers in the Agreement, provided,
however, that any information disclosed herein or under any section number or in
any schedule to the Agreement available to the Investors shall be deemed
disclosed and incorporated into any of the sections to which it is related if a
reasonable person would determine that the disclosure contained therein contains
enough information so as to qualify such other sections. Any terms defined in
the Agreement shall have the same meanings when used in this Schedule of
Exceptions as when used in the Agreement, unless the context otherwise requires.
Notwithstanding any materiality qualifications in any of the Company's
representations, warranties, covenants and agreements in the Agreement, for
administrative ease, certain items have been included herein which are not
considered by the Company to be material to the business or results of
operations of the Company and its subsidiaries. The inclusion of any item
hereunder shall not be deemed to be an admission by the Company that such item
is material to the business, assets or results of operations of the Company, nor
shall it be deemed an admission of any obligation or liability to any third
party.
B-1
6.11 FINANCIAL CONSULTANT ARRANGEMENTS
The Company has agreed to pay Xxxxx Xxxxxxx fees in the amount of $50,000 for
his financial advisory services upon the Closing of the transaction contemplated
by the Agreement.
B-2
