EXHIBIT 10.1
RESTORATION HARDWARE, INC.
00 XXXX XXXX, XXXXX X
XXXXX XXXXXX, XX 00000
DATED AS OF AUGUST 2, 2002
To: Those investors listed on the signature pages of this Letter Agreement
(the "Agreement")
Re: Waiver of Dividend Participation Right and Covenant Not to
Declare Dividends
Ladies and Gentlemen:
We understand that each of the investors listed on the signature pages
hereto (each an "Executing Investor" and collectively, the "Executing
Investors") recognizes that it is the best interests of both Restoration
Hardware, Inc., a Delaware corporation (the "Company"), and the holders of
Series A Preferred Stock of the Company (the "Series A Preferred Stock") and the
holders of common stock of the Company that holders of Series A Preferred Stock
waive their dividend participation right with respect to any dividends that may
be declared upon the common stock of the Company in consideration of the
Company's covenant not to declare dividends payable to holders of the Company's
common stock in certain circumstances as hereinafter provided.
NOW, THEREFORE, in consideration of the promises and mutual covenants
contained in this Agreement, the parties agree as follows:
1. WAIVER OF RIGHT FOR SERIES A PREFERRED STOCK TO RECEIVE COMMON STOCK
Dividends. Notwithstanding the express terms of the last sentence of Section
3(C)1(b) of the Certificate of Designation of Series A and Series B Preferred
Stock of the Company (the "Certificate of Designation"), each Executing Investor
hereby fully, unconditionally, irrevocably and without reserve waives his, her
or its right to receive any dividends, whether payable in cash or as a non-cash
distribution, as a holder of issued and outstanding Series A Preferred Stock
pursuant to the last sentence of Section 3(C)1(b) of the Certificate of
Designation, which provides as follows:
"Upon full payment of the dividends to the Series A Preferred holders
pursuant to Section 1(a) above, any further dividends, whether payable in cash
or non-cash distribution, shall be payable pro rata to the holders of Series A
Preferred and Common Stock on an as-converted basis."
2. AGREEMENT TO RETURN DIVIDENDS. Notwithstanding the terms of Section 1
above, should the Company declare and pay any dividends to holders of common
stock of the Company at any time during which any shares of the Series A
Preferred Stock are outstanding, and should, as a result of such payment, any
Executing Investor receive payment of any such dividends pursuant to his, her or
its right under the last sentence of Section 3(C)1(b) of the Certificate of
Designation, such Executing Investor hereby agrees and covenants to return
immediately to the Company any such dividends.
3. LIMITATION ON DIVIDENDS ON COMMON STOCK. The Company agrees for the
benefit of the holders of the Series A Preferred Stock that the Company shall
not now or in the future declare any dividends payable to the holders of common
stock of the Company so long as any shares of Series A Preferred Stock are
outstanding, unless the Company first obtains the approval (by vote or written
consent, as provided by law) of the holders of at least seventy percent (70%) of
the then outstanding shares of Series A Preferred Stock, such restriction to be
effective from and after the date that all holders of issued and outstanding
Series A Preferred Stock execute this Agreement.
4. ADEQUATE REMEDY; SPECIFIC ENFORCEMENT. It is agreed and understood
that monetary damages would not adequately compensate an injured party for the
breach of this Agreement by any other party, that this Agreement shall be
specifically enforceable, and that any breach or threatened breach of this
Agreement shall be the proper subject of a temporary or permanent injunction or
restraining order. Further, each party hereto waives any claim or defense that
there is an adequate remedy at law for such breach or threatened breach.
5. MISCELLANEOUS.
(a) This Agreement is to be construed in accordance with and governed by
the internal laws of the State of New York 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 New York to the rights and duties
of the parties.
(b) The provisions of this Agreement shall inure to the benefit of, and
shall be binding upon, the successors and assigns of the Company and the
Executing Investors; provided, however, that each of the Executing Investors
covenants and agrees that, as a condition to any transfer of shares of Series A
Preferred Stock, any transferee of shares of Series A Preferred Stock shall
agree in writing to assume all of the rights and obligations of the Executing
Investor under this Agreement with respect to such transferred shares of Series
A Preferred Stock and such transferee shall agree to be bound by the terms of
this Agreement, all in accordance with and pursuant to a duly executed written
instrument in form substantially similar to Exhibit A attached hereto or such
other form reasonably satisfactory to the Company.
(c) This Agreement constitutes and contains the entire agreement and
understanding of the parties with respect to the subject matter hereof and
supersedes any and all prior negotiations, correspondence, agreements,
understandings, duties or obligations between the parties respecting the subject
matter hereof.
(d) Except as may be otherwise provided herein, all notices, requests,
waivers and other communications made pursuant to this Agreement shall be in
writing and shall be conclusively deemed to have been duly given as follows: (i)
when hand delivered to the other party; (ii) when received when sent by
facsimile at the address and number set forth below; (iii) when received after
deposit in the U.S. mail with first class or certified mail receipt requested
postage prepaid and addressed to the other party as set forth below; or (iv)
when received after deposit with a national overnight delivery service, postage
prepaid, addressed to the parties as set forth below with next-business-day
delivery guaranteed, provided that the sending party receives a confirmation of
delivery from the delivery service provider.
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To the Company:
Restoration Hardware, Inc.
00 Xxxx Xxxx, Xxxxx X
Xxxxx Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
Fax Number: (000) 000-0000
With a copy to:
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx, Esq.
Fax Number: 000-000-0000
To the Executing Investors:
Palladin Capital IX, LLC
0 Xxxxxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx
Fax Number: (000) 000-0000
With a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
Fax Number: (000) 000-0000
Reservoir Capital Partners, L.P.
Reservoir Capital Associates, L.P.
Reservoir Capital Master Fund, L.P.
c/o Reservoir Capital Group, Inc.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx and Xxxxxx X. Xxxxx
Fax Number: (000) 000-0000
With a copy to:
Milbank, Tweed, Xxxxxx & XxXxxx LLP
0 Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Fax Number: (000) 000-0000
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Glenhill Capital LP
Xxxxx X. Xxxxxxx
c/o GJK Capital Management, LLC
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Fax Number: (000) 000-0000
Xxxx X. Xxxxxxxx
Xxxxxx Xxxxx Xxxxxxxx
000 Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Fax Number: (000) 000-0000
MoFo 2001, LP
c/o Morrison & Xxxxxxxx LLP
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxx, Esq.
Fax Number: 000-000-0000
Each person making a communication hereunder by facsimile shall promptly
confirm by telephone to the person to whom such communication was addressed each
communication made by it by facsimile pursuant hereto but the absence of such
confirmation shall not affect the validity of any such communication. A party
may change or supplement the addresses given above, or designate additional
addresses, for purposes of this Section 5(d), by giving the other parties
written notice of the new address in the manner set forth above.
(e) This Agreement may be amended only with the written consent of the
Company and each of the Executing Investors.
(f) If one or more provisions of this Agreement are held to be
unenforceable under applicable law, then such provision(s) shall be excluded
from this Agreement and the balance of this Agreement shall be interpreted as if
such provision(s) were so excluded and shall be enforceable in accordance with
its terms.
(g) This Agreement may be executed in any number of counterparts, each
of which shall be an original, but all of which together shall constitute one
instrument.
(h) Each of the parties hereto agrees (i) to execute and deliver to each
other such other documents and (ii) to do such other acts, all as the other
parties hereto may reasonably request for the purpose of carrying out this
Agreement.
(i) The captions to sections of this Agreement have been inserted for
identification and reference purposes only and shall not be used to construe or
interpret this Agreement.
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If the foregoing is acceptable, please acknowledge your acceptance by
countersigning below.
RESTORATION HARDWARE, INC., a Delaware
corporation
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------------
Title: VP/CFO
-----------------------------------
AGREED AND ACCEPTED:
PALLADIN CAPITAL IX, LLC
By: Palladin Investments, LLC, Manager
By: /s/ Xxxx Xxxxxxxx
-------------------------------------------
Name: Xxxx Xxxxxxxx
Title: Managing Member
RESERVOIR CAPITAL PARTNERS, L.P.
By: Reservoir Capital Group, L.L.C., its general partner
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chairman
RESERVOIR CAPITAL ASSOCIATES, L.P.
By: Reservoir Capital Group, L.L.C., its general partner
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chairman
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RESERVOIR CAPITAL MASTER FUND, L.P.
By: Reservoir Capital Group, L.L.C., its general partner
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chairman
GLENHILL CAPITAL LP
By: GJK Capital Management, LLC, its general partner
By: Krevlin Advisors, LLC, its managing member
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Managing Member
/s/ Xxxxx X. Xxxxxxx
------------------------------------
XXXXX X. XXXXXXX
/s/ Xxxx X. Xxxxxxxx
------------------------------------
XXXX X. XXXXXXXX
/s/ X. Xxxxx Xxxxxxxx
------------------------------------
XXXXXX XXXXX XXXXXXXX
MOFO 2001, LP
By: MoFo Investments, LLC, its general partner
By: /s/ Xxxxxx X. Xxxx
-------------------------------------
Name: Xxxxxx X. Xxxx
-------------------------
Title: Co Managing Partner for Operations
----------------------------------
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EXHIBIT A
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement ("Agreement") is entered into
as of ______, 20__, by and between_________ (the "Assignor") and ________ (the
"Assignee").
WHEREAS, the Assignor holds _____ shares of Series A Preferred Stock,
$0.0001 par value per share (the "Securities"), of Restoration Hardware, Inc.
(the "Company"); and
WHEREAS, the Assignor desires to transfer, and the Assignee desires to
acquire, the Securities (the "Transfer"); and
WHEREAS, in recognition of the terms of that certain Letter Agreement,
dated as of August 2, 2002, by and among the Company and the other parties named
therein (the "Letter Agreement"), the Assignee is willing, as a condition to the
Transfer, to assume all rights and obligations of the Assignor under the Letter
Agreement with respect to the Securities.
NOW, THEREFORE, in accordance with, and furtherance of, the premises
above, the Assignor and the Assignee agree as follows:
1. The Assignor does hereby transfer, assign and deliver to the
Assignee, and the Assignee does hereby accept and assume, all rights and
obligations of the Assignor under the Letter Agreement with respect to the
Securities, effective upon the consummation of the Transfer.
2. The Assignee expressly acknowledges and agrees that the Assignee
shall be bound by the terms of the Letter Agreement, effective upon the
consummation of the Transfer.
3. This Agreement is to be construed in accordance with and governed by
the internal laws of the State of New York 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 New York to the rights and duties
of the parties.
4. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first written above.
ASSIGNOR: ASSIGNEE:
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By: By:
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Title: Title:
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