-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MgxKt56785H9SWV5JlhQof1pish670iQ3FkJCj6T7PZm4pQh58MhOalL+iAEKKl0 rCUSt72Ioqyg0GgvlIDe0w== 0000950123-01-500504.txt : 20010410 0000950123-01-500504.hdr.sgml : 20010410 ACCESSION NUMBER: 0000950123-01-500504 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20010402 GROUP MEMBERS: RESERVOIR CAPITAL ASSOCIATES, GROUP MEMBERS: RESERVOIR CAPITAL GROUP, L.L.C GROUP MEMBERS: RESERVOIR CAPITAL MANAGEMENT LLC GROUP MEMBERS: RESERVOIR CAPITAL MASTER FUND, GROUP MEMBERS: RESERVOIR CAPITAL PARTNERS, L. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: RESTORATION HARDWARE INC CENTRAL INDEX KEY: 0000863821 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-FURNITURE STORES [5712] IRS NUMBER: 680140361 STATE OF INCORPORATION: CA FISCAL YEAR END: 0128 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-54313 FILM NUMBER: 1592465 BUSINESS ADDRESS: STREET 1: 650 MADISON AVE STREET 2: 26TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 MAIL ADDRESS: STREET 1: 650 MADISON AVE STREET 2: 26TH FL. CITY: NEW YORK STATE: NY ZIP: 10022 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: RESERVOIR CAPITAL MANAGEMENT LLC CENTRAL INDEX KEY: 0001091555 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 133978510 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 650 MADISON AVENUE STREET 2: 26TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2126109000 MAIL ADDRESS: STREET 1: 650 MADISON AVENUE, 26TH FLOOR STREET 2: 650 MADISON AVENUE, 26TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 SC 13D 1 y47365sc13d.txt SCHEDULE 13D 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------------- SCHEDULE 13D Under the Securities Exchange Act of 1934 RESTORATION HARDWARE, INC. (Name of Issuer) COMMON STOCK, $.0001 PAR VALUE (Title of Class of Securities) 760981100 (CUSIP Number) CELIA FELSHER RESERVOIR CAPITAL MANAGEMENT, L.L.C. 650 MADISON AVENUE 26TH FLOOR NEW YORK, NEW YORK 10022 (212) 610-9000 (Name, address and telephone number of person authorized to receive notices and communications) March 22, 2001 (Date of event which requires filing of this statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [ ]. NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page. 2 The information required in the remainder of this cover page shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). 3 13D CUSIP No. 760981100 (1) NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Reservoir Capital Management, L.L.C. - -------------------------------------------------------------------------------- (2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP ** (a) [ ] (b) [x] - -------------------------------------------------------------------------------- (3) SEC USE ONLY - -------------------------------------------------------------------------------- (4) SOURCE OF FUNDS ** WC - -------------------------------------------------------------------------------- (5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- (6) CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - ------------------------------------------------------------------------------ (7) SOLE VOTING POWER 716,000 ------------------------------------------------------------ NUMBER OF (8) SHARED VOTING POWER SHARES BENEFICIALLY 0 ------------------------------------------------------------ OWNED BY (9) SOLE DISPOSITIVE POWER EACH REPORTING PERSON WITH 716,000 ------------------------------------------------------------ (10) SHARED DISPOSITIVE POWER 0 ------------------------------------------------------------ (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 716,000 ------------------------------------------------------------------ (12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ] 4 - -------------------------------------------------------------------------------- (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 3.6% - -------------------------------------------------------------------------------- (14) TYPE OF REPORTING PERSON ** OO - -------------------------------------------------------------------------------- ** SEE INSTRUCTIONS BEFORE FILLING OUT! 5 13D CUSIP No. 760981100 (1) NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Reservoir Capital Group, L.L.C. - -------------------------------------------------------------------------------- (2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP ** (a) [ ] (b) [x] - -------------------------------------------------------------------------------- (3) SEC USE ONLY - -------------------------------------------------------------------------------- (4) SOURCE OF FUNDS ** WC - -------------------------------------------------------------------------------- (5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- (6) CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - ------------------------------------------------------------------------------ (7) SOLE VOTING POWER 716,000 ------------------------------------------------------------ NUMBER OF (8) SHARED VOTING POWER SHARES BENEFICIALLY 0 ------------------------------------------------------------ OWNED BY (9) SOLE DISPOSITIVE POWER EACH REPORTING PERSON WITH 716,000 ------------------------------------------------------------ (10) SHARED DISPOSITIVE POWER 0 ------------------------------------------------------------ (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 716,000 ----------------------------------------------------------------- (12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ] 6 - ------------------------------------------------------------------------------ (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 3.6% - ------------------------------------------------------------------------------ (14) TYPE OF REPORTING PERSON ** OO - ------------------------------------------------------------------------------ ** SEE INSTRUCTIONS BEFORE FILLING OUT! 7 13D CUSIP No. 760981100 (1) NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Reservoir Capital Partners, L.P. - -------------------------------------------------------------------------------- (2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP ** (a) [ ] (b) [x] - -------------------------------------------------------------------------------- (3) SEC USE ONLY - -------------------------------------------------------------------------------- (4) SOURCE OF FUNDS ** WC - -------------------------------------------------------------------------------- (5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- (6) CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- (7) SOLE VOTING POWER 611,500 ------------------------------------------------------------ NUMBER OF (8) SHARED VOTING POWER SHARES BENEFICIALLY 0 ------------------------------------------------------------ OWNED BY (9) SOLE DISPOSITIVE POWER EACH REPORTING PERSON WITH 611,500 ------------------------------------------------------------ (10) SHARED DISPOSITIVE POWER 0 ------------------------------------------------------------ (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 611,500 ----------------------------------------------------------------- (12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ] - -------------------------------------------------------------------------------- (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 8 3.1% - -------------------------------------------------------------------------------- (14) TYPE OF REPORTING PERSON ** PN - -------------------------------------------------------------------------------- ** SEE INSTRUCTIONS BEFORE FILLING OUT! 9 13D CUSIP No. 760981100 (1) NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Reservoir Capital Associates, L.P. - -------------------------------------------------------------------------------- (2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP ** (a) [ ] (b) [x] - -------------------------------------------------------------------------------- (3) SEC USE ONLY - -------------------------------------------------------------------------------- (4) SOURCE OF FUNDS ** WC - -------------------------------------------------------------------------------- (5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- (6) CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- (7) SOLE VOTING POWER 1,500 ------------------------------------------------------------ NUMBER OF (8) SHARED VOTING POWER SHARES BENEFICIALLY 0 ------------------------------------------------------------ OWNED BY (9) SOLE DISPOSITIVE POWER EACH REPORTING PERSON WITH 1,500 ------------------------------------------------------------ (10) SHARED DISPOSITIVE POWER 0 ------------------------------------------------------------ (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,500 ----------------------------------------------------------------- (12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ] 10 - -------------------------------------------------------------------------------- (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) -- - -------------------------------------------------------------------------------- (14) TYPE OF REPORTING PERSON ** PN - -------------------------------------------------------------------------------- ** SEE INSTRUCTIONS BEFORE FILLING OUT! 11 3D CUSIP No. 760981100 (1) NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Reservoir Capital Master Fund, L.P. - -------------------------------------------------------------------------------- (2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP ** (a) [ ] (b) [x] - -------------------------------------------------------------------------------- (3) SEC USE ONLY - -------------------------------------------------------------------------------- (4) SOURCE OF FUNDS ** WC - -------------------------------------------------------------------------------- (5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- (6) CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- (7) SOLE VOTING POWER 103,000 ----------------------------------------------------------------- NUMBER OF (8) SHARED VOTING POWER SHARES BENEFICIALLY 0 ----------------------------------------------------------------- OWNED BY (9) SOLE DISPOSITIVE POWER EACH REPORTING PERSON WITH 103,000 ----------------------------------------------------------------- (10) SHARED DISPOSITIVE POWER 0 ----------------------------------------------------------------- (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 103,000 ----------------------------------------------------------------- (12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ] - -------------------------------------------------------------------------------- (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 12 .5% - -------------------------------------------------------------------------------- (14) TYPE OF REPORTING PERSON ** PN - -------------------------------------------------------------------------------- ** SEE INSTRUCTIONS BEFORE FILLING OUT! 13 INTRODUCTION This statement on Schedule 13D (the "Statement") constitutes the initial filing by Reservoir Capital Management, L.L.C., a Delaware limited liability company ("RCM"), Reservoir Capital Group, L.L.C., a Delaware limited liability company ("RCG"), Reservoir Capital Partners, L.P., a Delaware limited partnership ("RCP"), Reservoir Capital Associates, L.P., a Delaware limited partnership ("RCA"), and Reservoir Capital Master Fund, L.P., a limited partnership organized under the laws of the Cayman Islands ("RCMF"), with respect to the beneficial ownership of shares of common stock, par value $.0001 per share (the "Common Stock"), of Restoration Hardware, Inc., a Delaware corporation. In this Statement, each of RCM, RCG, RCP, RCA and RCMF may be referred to as a "Reporting Person," and collectively as the "Reporting Persons". RCP, RCA and RCMF, collectively, may be referred to as the "Reservoir Entities". ITEM 1. SECURITY AND ISSUER The title of the class of equity securities to which this statement relates is the common stock, par value $.0001 per share (the "Common Stock"), of Restoration Hardware, Inc., a Delaware corporation (the "Company"). The address of the Company's principal executive office is 15 Koch Road, Suite J, Corte Madera, CA 94925. ITEM 2. IDENTITY AND BACKGROUND This Statement is being filed by RCM, RCG, RCP, RCA and RCMF. RCM, an investment management firm, is a Delaware limited liability company and the managing member of RCG. The address of RCM's principal business and principal office is 650 Madison Avenue, 26th Floor, New York, New York 10022. RCG, a subsidiary of RCM, is a Delaware limited liability company. RCG is an investment management firm and serves as the general partner in RCP, RCA and RCMF. The address of RCG's principal business and principal office is 650 Madison Avenue, 26th Floor, New York, New York 10022. RCP is a Delaware private investment partnership whose general partner is RCG. The address of RCP's principal business and principal office is 650 Madison Avenue, 26th Floor, New York, New York 10022. RCA is a Delaware private investment partnership whose general partner is RCG. The address of RCA's principal business and principal office is 650 Madison Avenue, 26th Floor, New York, New York 10022. RCMF is a private investment partnership organized under the laws of the Cayman Islands. RCMF's general partner is RCG. The address of RCMF's principal business and principal office is 650 Madison Avenue, 26th Floor, New York, New York 10022. Information regarding the control persons and executive officers of the Reporting Persons is set forth on Schedule I attached hereto, which Schedule is hereby incorporated by reference. Except as set forth on Schedule I, all such persons are citizens of the United States. 14 During the last five years, none of the Reporting Persons or, to the best knowledge of the Reporting Persons, any person named in Schedule I has been (a) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (b) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION The Reservoir Entities purchased 1,432 shares of the Company's Series A Preferred Stock, par value $.0001 (the "Series A Preferred Stock"), and the 1,718 shares of the Company's Series B Preferred Stock, par value $.0001 (the "Series B Preferred Stock"; and together with the Series A Preferred Stock, the "Preferred Stock"), for a purchase price of $3,150,000. The Preferred Stock was purchased on March 22, 2001 pursuant to an Amended and Restated Series A and Series B Preferred Stock Purchase Agreement, dated as of March 21, 2001, by and among the Company, Palladin Capital IX, LLC ("Palladin"), RCP, RCA, RCMF, Mr. Gary Friedman and the other investors listed on Schedule A attached thereto (collectively, the "Investors") (the "Stock Purchase Agreement"). The Reservoir Entities purchased the Preferred Stock with working capital. ITEM 4. PURPOSE OF TRANSACTION. The Reservoir Entities purchased the Preferred Stock for general investment purposes and retain the right to change their investment intent. Subject to market conditions and other factors, the Reservoir Entities may acquire or dispose of securities of the Company from time to time in future open-market, privately negotiated or other transactions. Pursuant to the Stock Purchase Agreement, the Company sold a total of 6,820 shares of Series A Preferred Stock and 8,180 shares of Series B Preferred Stock to the Investors, including the Reservoir Entities, for a total consideration of $15,000,000. Pursuant to the Preferred Stock Purchase Agreement, the Company issued and sold the Preferred Stock to the Reservoir Entities as follows: (i) RCP purchased 1,223 shares of Series A Preferred Stock and 1,468 shares of Series B Preferred Stock for a total purchase price of $2,691,000, (ii) RCA purchased 3 shares of Series A Preferred Stock and 3 shares of Series B Preferred Stock for a total purchase price of $6,000 and (iii) RCMF purchased 206 shares of Series A Preferred Stock and 247 shares of Series B Preferred Stock for a total purchase price of $453,000. Each share of Series A Preferred Stock is convertible into 500 shares of Common Stock, subject to customary antidilusion adjustments, and each share of Series B Preferred Stock will automatically convert into a share of Series A Preferred Stock upon receipt of stockholder approval. The Company agreed in the Stock Purchase Agreement to seek stockholder approval as promptly as practicable. The holders of Series A Preferred Stock vote together with the holders of Common Stock on all matters on an as converted basis. In addition the holders of Series A Preferred Stock vote separately as a class in certain circumstances. 15 The Investors entered into voting agreements (the "Voting Agreements") with holders of approximately 42% of the outstanding Common Stock, including the directors and executive officers of the Company, JP Morgan LLC, Brown Capital Management, Capital Group International, Inc. and the Desai Funds, to approve and ratify a charter amendment relating to the issuance and conversion features of the Series B Preferred Stock, as set forth in the Certificate of Designations of Series A and Series B Preferred Stock (the "Certificate"). The Voting Agreements give proxies to vote the shares of Common Stock held by such stockholders to approve the issuance of the Series B Preferred Stock, including the conversion features thereof. Pursuant to the Stock Purchase Agreement, the Reporting Persons have the right to nominate designees (the "Series A Directors") to the Company's Board of Directors (the "Board") as follows. As long as the Investors and their affiliates hold, in the aggregate, (a) more than 50% of their total Series A Preferred Stock or shares of Common Stock received upon conversion of their Series A Preferred Stock, they are entitled to have two designees nominated to the Board and be represented by the Investors' designees on all Board committees and (b) more than 25% of their total Series A Preferred Stock or shares of Common Stock received upon conversion of their Series A Preferred Stock, they are entitled to have one designee nominated to the Board and be represented by an Investors' designee on all Board committees. Notwithstanding the foregoing, (i) as long as Palladin continues to hold at least 50% of the shares of Series A Preferred Stock originally issued to Palladin or such equivalent number of shares of Common Stock upon any conversion of such Series A Preferred Stock, the Company will cause a Palladin designee to be nominated as a Series A Director, and use its best efforts to cause the election of a Palladin designee to the Board of Directors and (ii) as long as the Reservoir Entities and Glenhill Capital LP ("Glenhill"; and together with the Reservoir Entities, "Reservoir-Glenhill") continue to hold at least 50% of the shares of Series A Preferred Stock originally issued to Reservoir-Glenhill or such equivalent number of shares of Common Stock upon any conversion of such Series A Preferred Stock, the Company will cause a Reservoir-Glenhill designee to be nominated as a Series A Director, and the Company will use its best efforts to cause the election of a Reservoir-Glenhill designee to the Board of Directors. In no event will the total number of directors which the holders of the Series A Preferred Stock and the Investors (including Palladin and Reservoir-Glenhill) are entitled to (i) elect by a class vote of the Series A Preferred or (ii) to have nominated for election by the Company, and have the Company exercise its best efforts to secure the election of, be greater than two members of the Board. The Certificate also provides for the election of Investor designees to the Board under the same circumstances under which the Investors would have the right to nominate Investor designees to the Board as described in the paragraph above, with an additional provision that if more than 50% of the shares of the Series A Preferred Stock or such equivalent number of shares of Common Stock issued upon conversion are transferred to a Competitor (as defined in the Certificate), such holders will not be entitled to elect a Series A Director. The Stock Purchase Agreement also provides for certain director approvals relating to major decisions of the Company. Approval of a majority of the entire Board is required for: (i) the issuance of securities (whether equity or debt securities) and (ii) acquisitions or dispositions of material assets, joint venture arrangements and material or extraordinary licensing arrangements. The following actions require approval of a majority of the Board and, so long as the Investors and their affiliates hold, in the aggregate, more than 30% of the shares of Series A 16 Preferred Stock originally issued to such Investors and their affiliates, or more than 50% of shares of Common Stock received upon conversion of their Series A Preferred Stock (including any Series A Preferred Stock on an as-if converted basis), at least one Investors' designee to the Board: (x) the incurrence of debt over $10,000,000, other than debt incurred for the purpose of redeeming in full the Preferred Stock or refinancing existing debt on terms not materially less favorable to the Company than the debt refinanced, (y) the approval of, and any amendment or changes to, the corporate budget and (z) the hiring, dismissal, election or removal of the Chairman, Chief Executive Officer, President, Chief Financial Officer or Chief Operating Officer as well as any equivalent members of senior management and any material changes to the terms and conditions of such officers' employment. In addition, the Stock Purchase Agreement contains a standstill agreement, pursuant to which for a period of three years from March 22, 2001, each Investor agrees not to (i) agree to acquire any voting securities or rights to acquire any voting securities of the Company or its affiliates, or any assets of the Company or its affiliates other than the purchase in open market transactions of shares of Common Stock of the Company representing in the aggregate for Palladin and the Reservoir Entities not more than 5% of the total number of outstanding Common Stock of the Company, (ii) other than with respect to the election of the Series A Directors or the approval of the issuance of the Series B Preferred Stock, in any way participate in any solicitation of proxies to vote or seek to advise or influence any person or entity with respect to the voting of any voting securities of the Company, (iii) make any public announcement with respect to, or submit a proposal for any extraordinary transaction involving the Company or any of its securities or assets, (iv) form, join or in any way participate in a group as defined in the Exchange Act in connection with any of the foregoing; or (v) take any action that could reasonably be expected to require the Company to make a public announcement regarding the possibility of any of the events described above; provided, however, the foregoing provisions and restrictions shall not apply to the Chief Executive Officer of the Company (which, at the current time, is Mr. Friedman) acting in his sole capacity as an officer of the Company. During the restricted period, each Investor must advise the Company of any inquiry or proposal made to it with respect to the above. These restrictions will terminate on the occurrence of specified events relating to the acquisition of the Company by third parties or if the equity interest of an Investor and its affiliates in the Company is less than 8% of the outstanding Common Stock. The Company and each of Palladin, the Reservoir Entities and Glenhill have agreed that in certain circumstances if the Series B Preferred Stock is converted into Series A Preferred Stock on or prior to August 31, 2001 and the Company is required to pay cash or in kind dividends with respect to such shares of Series B Preferred Stock, the parties shall negotiate to preserve the originally intended terms of the Series B Preferred Stock. The Stock Purchase Agreement also includes a lock-up agreement of the shares held by Gary Friedman, whereby Mr. Friedman agrees that (except for the pledge of stock to secure loans made to Mr. Friedman by the Company) for a period of two years from the date thereof, he will not transfer any Series A Preferred Stock, Common Stock or other securities of the Company held by him if as a result of any such transfer, Mr. Friedman will have transferred more than 20% of the Common Stock, including any securities convertible into Common Stock on an as-if converted basis, acquired by Mr. Friedman upon execution of the Stock Purchase Agreement and consummation of the transactions contemplated therein. This restriction does not 17 apply to certain transfers, including transfers to family or transfers of Common Stock acquired on the open market. In addition to the right to make transfers as describe above, Mr. Friedman will also be entitled to make transfers of such additional percentage of securities of the Company, including Common Stock and any securities convertible into Common Stock, on an as-if converted basis, held by Mr. Friedman upon consummation of the transactions contemplated by the Stock Purchase Agreement as is equal to the aggregate cumulative percent of transfers of securities of the Company, including Common Stock and any securities convertible into Common Stock, on an as-if converted basis, made from time to time by Palladin, the Reservoir Entities and Glenhill of their original investment in the Preferred Stock of the Company since the acquisition of such Preferred Stock. The Stock Purchase Agreement, the form of Voting Agreement and the Certificate are incorporated by reference herein and are filed as Exhibits 1, 2, and 3 respectively, hereto. In relation to the transactions contemplated by the Stock Purchase Agreement, Palladin, the Reservoir Entities, Glenhill and certain other Investors (together, the "Executing Investors") also entered into an amended and restated letter agreement, dated as of March 21, 2001 (the "Letter Agreement"), regarding short sales of the Common Stock of the Company and a voting agreement with respect to the Common Stock. If the Executing Investors collectively engage in short sales transactions, or in derivative transactions with the economic effect of short sales that substantially relieve such Executing Investors of the economic risks and benefits of ownership of equity in the Company in an aggregate amount totaling, (i) on or before June 24, 2002, no more than fifty percent (50%) of the number of shares of Common Stock which the then current number of Series A Preferred Stock held by all the Investors are convertible into, either directly or through affiliates, at any time while holding any of the Series A Preferred Stock, or (ii) after June 24, 2002, no more than the greater of (A) the aggregate outstanding amount of short sales of such Investors as of June 24, 2002 and (B) twenty-five percent (25%) of the number of shares of Common Stock which the then current number of Series A Preferred Stock held by the Investors are convertible into, either directly or through affiliates, at any time while holding any of the Series A Preferred Stock. Each of Palladin, the Reservoir Entities, Glenhill, Mr. Friedman and certain other investors have agreed further that each of them may engage in short sales transactions with respect to no more than their pro rata number of shares based on the total number of shares of Common Stock into which the aggregate Series A Preferred Stock held by each of them on the date of the agreement is convertible. The Letter Agreement also provides an agreement between the Executing Investors relating to voting for director designees of the Company. For as long as holders of Series A Preferred Stock are entitled to elect two directors of the Company, Reservoir-Glenhill and Palladin each agree to vote all shares of Series A Preferred Stock and any Common Stock issuable upon conversion thereof (hereinafter referred to as the "Voting Shares") to appoint and elect the designee of the other as directors of the Company. At a time when Palladin and Reservoir-Glenhill are entitled to elect only one director, then each of Palladin and Reservoir-Glenhill agrees to vote all of the Voting Shares then held by each of them to appoint and elect the designee of the holder that holds the greater number of Voting Shares. The Letter Agreement is incorporated by reference herein and is filed as Exhibit 4 hereto. 18 The Investors and the Company also entered into an amended and restated investor rights agreement, dated as of March 21, 2001 (the "Investor Rights Agreement"), pursuant to which the Company agreed to provide information and inspections rights to the parties as follows. For so long as an Investor holds at least the lesser of (a) 10% of the shares of Preferred Stock (or underlying Common Stock) held by such party upon the consummation of the transactions contemplated by the Stock Purchase Agreement and (b) Preferred Stock (or underlying Common Stock) having an original purchase price of $500,000, the Company will deliver to the Investor: (i) its audited annual financial statements within 90 days after the end of each fiscal year, (ii) its unaudited quarterly financial statements within 45 days after the end of each fiscal quarter, (iii) unless such party requests otherwise, its monthly financial statements within 30 days after the end of each month, (iv) unless such party requests otherwise, all additional information provided to the Company's lenders and other equity holders and (v) upon the written request, such other information as such party shall reasonably request. The Investor Rights Agreement also provides the Investors with the right to require the Company to register the shares of Common Stock issuable upon conversion of the Series A Preferred Stock. At any time beginning 180 days after the date of the Investor Rights Agreement, the Company will be required to file a registration statement upon demand, provided that the aggregate offering price of the securities to be registered would not be less than $2,000,000. The Company will not be required to file more than four such demand registrations, one of which may be initiated exclusively by Palladin and one of which may be initiated exclusively by the Reservoir Entities. The demand registrations are subject to underwriters' cutbacks. Pursuant to the terms of the Investor Rights Agreement, the holders of registrable securities have unlimited piggyback registration rights, subject to underwriters' cutbacks. Furthermore, the Investor Rights Agreement requires the Company to effect registrations on Form S-3 or its equivalent with respect to all registrable securities owned by holders of Series A Preferred Stock as would permit or facilitate the sale and distribution of all such registrable securities on a delayed and continuous basis, upon the later of (i) such time as Form S-3 becomes available for use by the Company and (ii) 30 days following the filing with the SEC of the Company's Form 10-K for 2001. The Investor Rights Agreement further provides that, to the extent and solely to the extent that parties to the Company's Restated Investors Rights Agreement, dated as of May 16, 1997 (the "1997 Agreement"), continue to possess registration rights granted by the Company pursuant to the terms of Section 6 of that agreement, then the Investors under the Investor Rights Agreement agree: (a) they shall not exercise, or participate in any exercise of, any rights granted to them under the Investor Rights Agreement to make, cause or otherwise participate in a demand registration which could result in the registration statement being declared effective within one hundred eighty (180) days of the effective date of any registration effected pursuant to Section 6.2 of the 1997 Agreement; (b) to the extent that the Investors have any right or opportunity to participate in any registration statement of the Company, but only to the extent required by the 1997 Agreement, they shall only include their registrable securities in the registration statement to the extent that inclusion of the securities will not reduce or otherwise cause or give rise to a reduction in the amount of securities of the parties to the 1997 Agreement who retain registration rights under that agreement and who have included their securities in the registration statement; and (c) in the event of any conflict between the terms of the 1997 Agreement and the Investor Rights 19 Agreement, the 1997 Agreement and the Investor Rights Agreement shall be interpreted in all cases in favor of the parties to the 1997 Agreement who still retain registration rights under that agreement and, to the extent that any terms in the two agreements contradict in whole or in part, the 1997 Agreement shall control. The Investor Rights Agreement is incorporated by reference herein and is filed as Exhibit 5 hereto. The Company, the Reservoir Entities, Palladin, Glenhill and certain other Investors also entered into an amended and restated letter agreement, dated as of March 22, 2001 (the "Side Letter"), relating to notices. Pursuant to the Side Letter, the Company also agreed to notify certain of the Investors, including Palladin, the Reservoir Entities and Glenhill of any conversions of Series A Preferred Stock into shares of Common Stock. Any Investor holding information rights pursuant to the Investor Rights Agreement has also agreed to notify the Company in writing if it no longer is entitled to such rights. The form of the Side Letter is incorporated by reference herein and filed as Exhibit 6 hereto. The description of the Stock Purchase Agreement, the form of Voting Agreement, the Certificate, the Letter Agreement, the Investor Rights Agreement, the form of Side Letter and other related documents and the transactions contemplated thereby are not intended to be complete, and are qualified throughout by reference to such documents. Except as set forth above, the Reporting Persons have no plan or proposal which relates to or would result in any of the transactions described in subparagraphs (a) through (j) of Item 4 of Schedule 13D. 20 ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.(1) (a) Each of RCM and RCG beneficially own 716,000 shares of the Common Stock of the Company (3.6%, assuming conversion of the Series A Preferred Stock held by the Reservoir Entities). RCP beneficially owns 611,500 shares (3.1%) of the Common Stock of the Company. RCA beneficially owns 1,500 shares (--%) of the Common Stock of the Company. RCMF beneficially owns 103,000 shares (.5%) of the Common Stock of the Company. These numbers exclude shares issuable on conversion of the Series A Preferred Stock issuable on conversion of Series B Preferred Stock held by the Reservoir Entities. (b) RCM and RCG each have the sole power to vote, direct the voting of, dispose of and direct the disposition of 716,000 shares of Common Stock of the Company. RCP has the sole power to vote, direct the voting of, dispose of and direct the disposition of 611,500 shares of the Common Stock of the Company. RCA has the sole power to vote, direct the voting of, dispose of and direct the disposition of 1,500 shares of the Common Stock of the Company. RCMF has the sole power to vote, direct the voting of, dispose of and direct the disposition of 103,000 shares of the Common Stock of the Company (c) Except as described in paragraph (a) above, neither the Reporting Persons nor, to the best knowledge of the Reporting Persons, any of the persons referred to in Schedule I attached hereto has effected any transactions in the Common Stock during the past 60 days. (d) The Reporting Persons have the sole right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Common Stock owned by them. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. Reference is made to Item 4 of this Schedule, which is incorporated by reference herein, for the description of the contracts, arrangements, understandings or relationships among the persons named in Item 2 of this Schedule and between such persons and any person with respect to any securities of the Company. - ---------- (1) In addition to the shares of Preferred Stock beneficially owned by the Reporting Persons, the Reporting Persons may be deemed to have shared power to vote or direct the vote of the shares held by Palladin and Glenhill pursuant to the Letter Agreement, each as described in Item 4. The Reporting Persons may also be deemed to have shared power to vote or direct the vote of the shares held by the Company's stockholders party to the Voting Agreements (the "Company Stockholders"), pursuant to the Voting Agreements as described in Item 4. As a result of the Letter Agreement, the Reservoir Entities, Palladin and Glenhill may be deemed to constitute a "group" within the meaning of Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Neither the present filing nor anything contained herein shall be construed as an admission that the Reporting Persons and Palladin or Glenhill constitute a "person" or "group" under Section 13(d) of the Exchange Act. The Reporting Persons disclaim beneficial ownership of any shares beneficially owned by Palladin, Glenhill and the Company Stockholders, and neither the present filing nor anything contained herein shall be construed as an admission otherwise. 21 ITEM 7. MATERIAL TO BE FILED AS EXHIBITS 1. Amended and Restated Stock Purchase Agreement, dated as of March 21, 2001 (incorporated by reference to Exhibit 10.19 of the Company's Current Report on Form 8-K, filed with the Commission on April 2, 2001). 2. Form of Voting Agreement. 3. Series A and Series B Certificate of Designations (incorporated by reference to Exhibit 4.6 of the Company's Current Report on Form 8-K, filed with the Commission on April 2, 2001). 4. Amended and Restated Letter Agreement, dated as of March 21, 2001. 5. Amended and Restated Investor Rights Agreement, dated as of March 21, 2001 (incorporated by reference to Exhibit 10.18 of the Company's Current Report on Form 8-K, filed with the Commission on April 2, 2001. 6. Form of Amended and Restated Side Letter, dated as of March 22, 2001. 22 SIGNATURES After reasonable inquiry and to the best knowledge and belief of each of the Reporting Persons, each such person or entity certifies that the information set forth in this Schedule 13D is true, complete and correct and agrees that this statement is filed on behalf of each of them. Dated: April 2, 2001 RESERVOIR CAPITAL MANAGEMENT, L.L.C. By: /s/ Daniel H. Stern ------------------------------- Name: Daniel H. Stern Title: President RESERVOIR CAPITAL GROUP, L.L.C. By: /s/ Daniel H. Stern ------------------------------- Name: Daniel H. Stern Title: President RESERVOIR CAPITAL PARTNERS, L.P. By: Reservoir Capital Group, L.L.C., General Partner By: /s/ Daniel H. Stern ------------------------------- Name: Daniel H. Stern Title: President 23 RESERVOIR CAPITAL ASSOCIATES L.P. By: Reservoir Capital Group, L.L.C., General Partner By: /s/ Daniel H. Stern ------------------------------- Name: Daniel H. Stern Title: President RESERVOIR CAPITAL MASTER FUND, L.P. By: Reservoir Capital Group, L.L.C., General Partner By: /s/ Daniel H. Stern ------------------------------- Name: Daniel H. Stern Title: President 24 SCHEDULE I CONTROL PERSONS AND EXECUTIVE OFFICERS OF THE REPORTING PERSONS The names, present principal occupations and business addresses of the control persons and executive officers of RCM and RCG are set forth below. The control person's or executive officer's business address is that of the Reporting Person. Unless otherwise indicated, each occupation set forth opposite an individual's name refers to the Reporting Person. Each of the named individuals is a citizen of the United States of America. RCG is the general partner and control person of RCP, RCA and RCMF. - -------------------------------------------------------------------------------- RESERVOIR CAPITAL MANAGEMENT, L.L.C. - ------------------------------------ Daniel H. Stern President and Chief Executive Officer and Senior Managing Member; President and Chief Executive Officer of Reservoir Capital Group, L.L.C. Craig A. Huff Managing Member and Managing Director; Managing Director of Reservoir Capital Group, L.L.C. Gregg M. Zeitlin Managing Member and Managing Director; Managing Director of Reservoir Capital Group, L.L.C. Aaron Goldberg Chief Financial Officer and Treasurer; Chief Financial Officer and Treasurer of Reservoir Capital Group, L.L.C. RESERVOIR CAPITAL GROUP, L.L.C. - ------------------------------- Daniel H. Stern President and Chief Executive Officer; see information under Reservoir Capital Management, L.L.C. Craig A. Huff Managing Director; see information under Reservoir Capital Management, L.L.C. Gregg M. Zeitlin Managing Director; see information under Reservoir Capital Management, L.L.C. Aaron Goldberg Chief Financial Officer and Treasurer; see information under Reservoir Capital Management, L.L.C. EX-99.2 2 y47365ex99-2.txt FORM OF VOTING AGREEMENT 1 Exhibit 2 March 19, 2001 To the Investors party to the Series A and B Preferred Stock Purchase Agreement referred to below Ladies and Gentlemen: Reference is made to the Series A and B Preferred Stock Purchase Agreement by and among Restoration Hardware, Inc. ("Company") and certain Investors dated March 19, 2001 (the "Agreement"), which provides for the issuance of two series of preferred stock by the Company to the Investors. The undersigned is the beneficial owner of and has power to vote __________________ common shares (the "Shares") of Company and has supported and encouraged the decision by Company to execute the Agreement and to consummate the transactions it contemplates. In that connection, and as an inducement to, and in further consideration of the Investors' entering into the Agreement, the undersigned hereby grants the irrevocable proxy (such proxy being coupled with an interest) and waiver provided in paragraph (i) and further covenants and agrees to the matters set forth in paragraphs (ii) and (iii) below: (i) In consideration of the Investors' entering into the Agreement, the undersigned hereby irrevocably appoints and constitutes Mark Schwartz and Dan Stern as proxies for the undersigned, with full power of substitution, and authorizes and directs such proxies to vote such Shares, and any other Shares which the undersigned has voting control over (other than shares resulting from the exercise of options after the date hereof by Stephen Gordon) at the time by the undersigned, at any regular or special meeting of the stockholders of the Company (and in any solicitation of written consents in lieu of such a meeting) at which resolutions approving (i) the anti-dilution features of the Series A Preferred Shares; and (ii) the issuance of the Series B Preferred Shares as well as the conversion features thereof, are to be voted upon, in favor of adoption of such resolutions (and in favor of any other resolution presented at such meeting or in such solicitation necessary to achieve the purposes of such resolutions) and against any inconsistent 2 resolution. At the request of either Mr. Schwartz or Mr. Stern the undersigned will itself cause the shares to be present at any such meeting and to be so voted. The undersigned hereby further waives Section 6.14(a) of that certain Restated Investors Rights Agreement dated May 16, 1997 to the extent it conflicts with or prohibits the Company from entering into the Agreement, the investor rights agreement dated as of March 21, 2001 by and among the Company and the Investors listed on Schedule A thereto, and the transactions contemplated thereby. (ii) The undersigned agrees, for the term of this agreement, not to (and not to agree to) take any action which would result in the loss of any voting rights with respect to any Shares or enter into any agreement or understanding with any person the effect of which would be violative of the provisions and agreements contained in this agreement. The undersigned retains the right to enter into any and all transactions which reduce the undersigned's economic interest in the Shares provided that such transactions do not affect the undersigned's voting rights in the shares. In case of any transfer by operation of law, this agreement shall be binding on the transferees. (iii) The proxy provided hereby, and the covenants and agreements contained herein, shall terminate on the earlier of the date (a) that the Agreement is terminated; (b) the date of the shareholders meeting approving the conversion of the Series B Preferred; or (c) August 31, 2001. The provisions of this letter may be waived or amended only in writing. The provisions with respect to specific performance, consent to jurisdiction and waiver of jury trial in Section 13.13 of the Agreement are incorporated by reference in this letter, with references to the "Company" being deemed references to the undersigned. Very truly yours, SHAREHOLDER _________________ EX-99.4 3 y47365ex99-4.txt AMENDED AND RESTATED LETTER AGREEMENT 1 EXHIBIT 4 PALLADIN CAPITAL IX, LLC 1 ROCKEFELLER PLAZA 10TH FLOOR NEW YORK, NY 10020 DATED AS OF MARCH 21, 2001 To: Those Investors listed on the signature pages of this Amended and Restated Letter Agreement (the "Agreement") Re: Amended and Restated Series A and B Preferred Stock Purchase Agreement Ladies and Gentlemen: Reference is made to that certain Series A and B Preferred Stock Purchase Agreement (the "Original Purchase Agreement"), dated as of March 21, 2001, by and among Restoration Hardware, Inc., a Delaware corporation (the "Company"), each of the investors listed on the signature pages hereto (each an "Executing Investor" and collectively, the "Executing Investors"), and other investors named therein. Pursuant to Section 13.6 thereof, the parties to the Original Purchase Agreement amended and restated such agreement to read in its entirety as set forth in the Amended and Restated Series A and B Preferred Stock Purchase Agreement, of even date therewith (the "New Purchase Agreement"), such that as of the date thereof the Original Purchase Agreement was entirely superseded by the New Purchase Agreement and the Original Purchase Agreement is of no further force or effect. Capitalized terms not otherwise defined herein shall have the same meanings ascribed to them in the New Purchase Agreement. 1. SHORT SALES. (a) Pursuant to Section 7.2 of the New Purchase Agreement, if the Executing Investors collectively engage in Short Sales in an aggregate amount totaling, (i) on or before June 24, 2002, more than fifty percent (50%) of the number of shares of Common Stock which the then current number of Series A Preferred Stock held by all the Investors are convertible into, either directly or through affiliates, at any time while holding any of the Series A Preferred Stock, or (ii) after June 24, 2002, more than the greater of (A) the aggregate outstanding amount of Short Sales of such Investors as of June 24, 2002 and (B) twenty-five percent (25%) of the number of shares of Common Stock which the then current number of Series A Preferred Stock held by the Investors are convertible into, either directly or through affiliates, at any time while holding any of the Series A Preferred Stock, any such excess shares shall be treated as a sale of the Investors' equity interests as provided in Section 7.2 of the New Purchase Agreement. Each of the Executing Investors hereby agrees that each such Executing Investor, unless such Executing Investor obtains the prior written consent of each other Executing Investor, shall be entitled to engage in Short Sales transactions with respect to no more than their pro rata number of shares based on the total number of shares of Common Stock into which the aggregate Series A Preferred Stock held by each of the Executing Investors on the date hereof are convertible. 2 (b) Any Executing Investor may transfer to any other Executing Investor its right to enter into Short Sales. 2. AGREEMENT TO VOTE. (a) For as long as (i) holders of Series A Preferred Shares are entitled to (A) elect two directors of the Company as pursuant to the Certificate or (B) nominate two directors of the Company pursuant to Section 10.3 of the New Purchase Agreement or (ii) Palladin has the right to elect one director pursuant to the Certificate, each of Reservoir and Glenhill (as defined below) agrees to vote all shares of Series A Preferred Stock and any Common Stock issuable upon conversion thereof (hereinafter referred to as the "Voting Shares"), now or hereafter owned by it, whether beneficially or otherwise, at any regular or special meeting of shareholders of the Company, or, in lieu of any such meeting, to give its written consent, in the election or removal of directors of the Company to appoint and elect the designee of Palladin as a director of the Company. "Glenhill" means Glenhill Capital LP and its affiliates. (b) For as long as (i) holders of Series A Preferred Shares are entitled to (A) elect two directors of the Company pursuant to the Certificate or (B) nominate two directors of the Company pursuant to Section 10.3 of the New Purchase Agreement or (ii) Reservoir has the right to elect one director pursuant to the Certificate, each of Palladin and Glenhill agrees to vote all of the Voting Shares now or hereafter owned by it, whether beneficially or otherwise, at any regular or special meeting of shareholders of the Company, or, in lieu of any such meeting, to give its written consent, in the election or removal of directors of the Company to appoint and elect the designee of Reservoir as a director of the Company. (c) In the event that the holders of Series A Preferred Stock are only entitled to elect one Series A Director (as defined in the Certificate) or nominate only one director of the Company pursuant to Section 10.3 of the New Purchase Agreement and neither Palladin nor Reservoir has the right under the Certificate to elect one director or the right under Section 10.3 of the New Purchase Agreement to nominate one director, then each of Palladin, Reservoir and Glenhill agrees to vote all of the Voting Shares then held by it, whether beneficially or otherwise, at any regular or special meeting of shareholders of the Company, or, in lieu of any such meeting, to give its written consent, in the election or removal of directors of the Company to appoint and elect the designee of the Larger Holder (as defined below) at the time of any such vote. The "Larger Holder" at any time means Reservoir if at such time Reservoir and Glenhill together hold a greater number of Voting Shares than Palladin and Palladin if at such time Palladin holds a greater number of Voting Shares than Reservoir and Glenhill. (d) 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. (e) The voting of Voting Shares of the Company pursuant to this agreement may be effected in person, by proxy, by written consent, or in any other manner permitted by applicable law. 2 3 3. MISCELLANEOUS. (a) This Agreement shall be governed in all respects by the laws of the state of New York without regard to provisions regarding choice of laws. (b) The provisions of this Agreement shall inure to the benefit of, and shall be binding upon, the successors and permitted assigns of the Executing Investors. (c) This Agreement, together with the New Purchase Agreement and all Schedules and Exhibits hereto and thereto, 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. Except as expressly modified and superseded by this Agreement, the terms and provisions of the New Purchase Agreement and all Exhibits, Schedule and Annexes thereto shall continue in full force and effect, in accordance with their respective terms. (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 (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. To Palladin: Palladin Capital IX, LLC 1 Rockefeller Plaza, 10th Floor New York, NY 10020 Attn: Mark J. Schwartz Fax Number: (212) 218-6802 With copies to: Gibson, Dunn & Crutcher LLP 333 South Grand Avenue Los Angeles, CA 90071 Attn: Kenneth M. Doran, Esq. Fax Number: (213) 229-6537 To Reservoir: Reservoir Capital Group, Inc. 650 Madison Avenue 3 4 New York, NY 10022 Attn: Celia A. Felsher and Daniel H. Stern Fax Number: (212) 610-9020 With copies to: Milbank, Tweed, Hadley & McCloy LLP 1 Chase Manhattan Plaza New York, NY 10005 Attn: Mark L. Weissler, Esq. Fax Number: (212) 530-5219 To Jeffrey Tarrant: C/o Arista Group, Inc. 1 Rockefeller Plaza, 10th Floor New York, NY 10020 Fax Number: (212) 218-6841 To GB Retail Funding, LLC: 40 Broad Street 11th Floor Boston, MA 02109 Attn: Matthew Kahn Fax Number: (617) 210-7141 To other Investors: c/o Morrison & Foerster LLP 425 Market Street San Francisco, CA 94105 Attn: Gavin B. Grover, Esq. Fax Number: 415-268-7522 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 3(d) by giving the other parties written notice of the new address in the manner set forth above. (e) Section 1 of this Agreement may be amended only with the written consent of the Executing Investors who hold at least two thirds of the Series A Preferred Stock purchased pursuant to the New Purchase Agreement; provided, however, that any amendment shall apply 4 5 equally to all Executing Investors. Section 2 of this Agreement may be amended only with the written consent of each of Palladin, Reservoir and Glenhill. (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 agree (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. (j) Pursuant to Section 3(e) of the Letter Agreement, erroneously dated March 22, 2001, between the parties hereto (the "Original Letter Agreement"), the parties hereto hereby amend and restate the Original Letter Agreement to read in its entirety as set forth in this Agreement, such that as of the date hereof the Original Letter Agreement is entirely superseded by this Agreement and the Original Letter Agreement shall be of no further force or effect; provided, however, that, so long as the Executing Investors who hold at least two thirds of the Series A Preferred Stock purchased pursuant to the New Purchase Agreement and Palladin, Reservoir and Glenhill have executed this Agreement, all other parties to the Original Letter Agreement, whether or not they have executed this Agreement, shall be deemed to have executed this Agreement and to have received the benefits and the obligations hereunder. 5 6 If the foregoing is acceptable, please acknowledge your acceptance by countersigning below. PALLADIN CAPITAL IX, LLC, A DELAWARE LIMITED LIABILITY COMPANY By: Palladin Investments, LLC, Manager By /s/ Mark Schwartz ---------------------------------------- Name: Mark Schwartz Title: Managing Member AGREED AND ACCEPTED: RESERVOIR CAPITAL PARTNERS, L.P. By: Reservoir Capital Group, L.L.C., its general partner By: /s/ Daniel H. Stern -------------------------------------------- Name: Daniel H. Stern Title: President RESERVOIR CAPITAL ASSOCIATES, L.P. By: Reservoir Capital Group, L.L.C., its general partner By: /s/ Daniel H. Stern -------------------------------------------- Name: Daniel H. Stern Title: President RESERVOIR CAPITAL MASTER FUND, L.P. By: Reservoir Capital Group, L.L.C., its general partner By: /s/ Daniel H. Stern -------------------------------------------- Name: Daniel H. Stern Title: President 6 7 GLENHILL CAPITAL LP By: GJK Capital Management, LLC, its general partner By: Krevlin Advisors, LLC, its managing member By: /s/ Glenn J. Krevlin -------------------------------------------- Name: Glenn J. Krevlin Title: Managing Member GB RETAIL FUNDING, LLC By: /s/ Matthew R. Kahn -------------------------------------------- Name: Matthew R. Kahn Title: /s/ Jeffrey Tarrant -------------------------------------------- Jeffrey Tarrant 7 EX-99.6 4 y47365ex99-6.txt FORM OF AMENDED AND RESTATED SIDE LETTER 1 Exhibit 6 [LETTERHEAD OF RESTORATION HARDWARE, INC.] March 22, 2001 To the Investors listed on the List of Investors attached as Schedule A to the Amended and Restated Series A and B Preferred Stock Purchase Agreement, dated as of March 21, 2001 (the "Stock Purchase Agreement") Re: Side Letter Regarding Certain Notices Ladies and Gentlemen: Reference is made to the Stock Purchase Agreement, and defined terms used in this letter but not defined herein shall have the meanings ascribed to them in the Stock Purchase Agreement. Restoration Hardware, Inc. (the "Company") agrees that it will promptly notify each of the Principal Investors in writing of any conversions of Series A Preferred Stock into shares of common stock, provided that the Company shall not be required to send such notices more than once in any calendar month, unless one or more Principal Investors reasonably requests additional notice in writing. Each Investor holding information rights under Section 1 of the Amended and Restated Investor Rights Agreement, dated as of March 21, 2001, attached as Exhibit C to the Stock Purchase Agreement further agrees to notify the Company in writing promptly upon its ceasing to be entitled to information rights. The agreements, obligations and undertakings of the Company and the Investors contained in this letter are agreed to be mutual, and this letter will be of no force or effect unless countersigned by each of the Investors. Once countersigned by each of the Investors, the Company and the Investors shall hereby have amended that certain letter, dated March 22, 2001, executed between them (the "Original Letter"), such that as of the date hereof the Original Letter shall be of no further force or effect. If this letter is in accordance with your understanding of 2 To the Principal Investors March 22, 2001 Page 2 the matters contained herein, please countersign where indicated and return to me at the address above. Best regards, ---------------------------- Gary Friedman Chief Executive Officer 3 To the Principal Investors March 22, 2001 Page 3 Side Letter Regarding Certain Notices Agreed and Accepted: - ------------------------ Print Name: Address: -----END PRIVACY-ENHANCED MESSAGE-----