Restoration Hardware 2012 Annual Report Download - page 95

Act, which are restricted securities under the Securities Act. Restricted securities may not be sold in the public
market unless the sale is registered under the Securities Act or an exemption from registration is available.
Moreover, under a registration rights agreement, Home Holdings, Catterton and Tower Three have registration
rights whereby Home Holdings, Catterton or Tower Three can require us to register under the Securities Act any
shares owned by Home Holdings, Catterton or Tower Three as of the date of our initial public offering. If our
existing stockholders sell substantial amounts of our common stock in the public market, or if the public
perceives that such sales could occur, this could have an adverse impact on the market price of our common
stock, even if there is no relationship between such sales and the performance of our business.
We, our executive officers and directors, Home Holdings and certain other stockholders have agreed,
subject to certain exceptions, not to sell or transfer any common stock, or securities convertible into,
exchangeable for, exercisable for or repayable with common stock, for 180 days after the date of our initial
public offering, without first obtaining written consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated
and Goldman, Sachs & Co., representatives of the underwriters of our initial public offering.
All of our shares of common stock outstanding as of the date of our initial public offering may be sold in the
public market by existing stockholders 180 days after the date of our initial public offering, subject to applicable
contractual limitations and limitations imposed under federal securities laws.
In the future, we may also issue our securities in connection with a capital raise or acquisitions. The amount
of shares of our common stock issued in connection with a capital raise or acquisition could constitute a material
portion of our then-outstanding shares of our common stock, which would result in dilution.
Anti-takeover provisions in our charter documents and Delaware law might discourage or delay acquisition
attempts for us that you might consider favorable.
Our certificate of incorporation and bylaws contain provisions that may make the acquisition of our
Company more difficult without the approval of our board of directors. These provisions:
• establish a classified board of directors so that not all members of our board of directors are elected at
one time;
• authorize the issuance of undesignated preferred stock, the terms of which may be established and the
shares of which may be issued without stockholder approval, and which may include super voting,
special approval, dividend or other rights or preferences superior to the rights of the holders of
common stock;
• after the date on which Home Holdings no longer holds a majority of the voting power of our
outstanding common stock, prohibit stockholder action by written consent, which requires all
stockholder actions to be taken at a meeting of our stockholders;
• provide that our board of directors is expressly authorized to make, alter or repeal our bylaws; and
• establish advance notice requirements for nominations for elections to our board of directors or for
proposing matters that can be acted upon by stockholders at stockholder meetings.
Our certificate of incorporation also contains a provision that provides us with protections similar to
Section 203 of the Delaware General Corporation Law (“DGCL”), and prevents us from engaging in a business
combination with a person who acquires at least 15% of our common stock for a period of three years from the
date such person acquired such common stock unless board or stockholder approval is obtained prior to the
acquisition, except that Catterton, Tower Three and Glenhill and any persons to whom Catterton, Tower Three
and Glenhill sell their common stock will be deemed to have been approved by our board of directors, and
thereby not subject to these restrictions. These anti-takeover provisions and other provisions under Delaware law
could discourage, delay or prevent a transaction involving a change in control of our Company, even if doing so
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Form 10-K