January 24, 2008
To: Home Holdings, LLC
Re: Equity Investment
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.
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Very truly yours,
VARDON CAPITAL MANAGEMENT, LLC
By:
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Name: Xxxxxxx X. Xxxx, Xx.
Title: Managing Member
Agreed and Acknowledged by:
Home Holdings, LLC
By:
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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.
By:
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Name: Xxxxx Xxxxxx
Title: Chief Financial Officer
