Restoration Hardware Inc – ‘PRES14A’ for 10/10/01

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Preliminary Proxy Solicitation Material — Special Meeting   —   Schedule 14A
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Document/Exhibit                   Description                      Pages   Size 

 1: PRES14A     Preliminary Notice & Proxy - Meeting Date 10/10/01    17     81K 

Document Table of Contents

PRES14A
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SCHEDULE 14A
(RULE 14a-101)

 INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

 PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934

Filed by the Registrant [X]                                                     

Filed by a Party other than the Registrant [ ]                                  

Check the appropriate box:                                                      

--------------------------------------------------------------------------------
[X]  Preliminary Proxy Statement           [ ]  Confidential, For Use of the    
                                             Commission Only (as permitted
                                    by Rule 14a-6(e)(2))
--------------------------------------------------------------------------------

[ ]  Definitive Proxy Statement                                                 

[ ]  Definitive Additional Materials                                            

[ ]  Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12              

RESTORATION HARDWARE, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):                              

[X] No fee required.                                            

      [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.                                                   

   (1) Title of each class of securities to which transaction applies:

 N/A
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(2) Aggregate number of securities to which transaction applies:

 N/A
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    (3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):                                 

 N/A
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(4) Proposed maximum aggregate value of transaction:            

 N/A
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(5) Total fee paid:                                             

 N/A
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[ ] Fee paid previously with preliminary materials:             

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      [ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was    
paid previously. Identify the previous filing by registration statement number, 
or the form or schedule and the date of its filing.                             

(1) Amount previously paid:                                     

 N/A
--------------------------------------------------------------------------------

(2) Form, Schedule or Registration Statement no.:               

 N/A
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(3) Filing Party:                                               

 N/A
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(4) Date Filed:                                                 

 N/A
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[Restoration Hardware, Inc. logo] 

August [  ], 2001 

TO THE STOCKHOLDERS OF RESTORATION HARDWARE, INC.:                              

     You are cordially invited to attend the special meeting of the stockholders
of Restoration Hardware, Inc. on October 10, 2001, at 1:00 p.m. (local time) at 
our principal executive offices located at 15 Koch Road, Suite J, Corte Madera, 
California 94925.                                                               

At the special meeting, you will be asked to do the following:        

   1. Approve an amendment to our Second Amended and Restated Certificate of
       Incorporation to increase the authorized number of shares of our common
    stock from 40,000,000 shares to 60,000,000 shares, so that the total
       authorized number of shares of our capital stock will be increased from
       45,000,000 shares to 65,000,000 shares, of which 60,000,000 shares will
 be common stock and 5,000,000 shares will be preferred stock; and

 2. Transact such other business as may properly come before the special
meeting or any adjournments or postponements thereof.           

   You do not need to attend the special meeting. Whether or not you attend,
after reading the proxy statement, please mark, date, sign and return the       
enclosed proxy card in the accompanying reply envelope. If you decide to attend 
the special meeting, please notify the inspector of elections at the meeting if 
you wish to vote in person and your proxy will not be voted.                    

                    Sincerely yours,

                    Gary G. Friedman
                           Chief Executive Officer

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RESTORATION HARDWARE, INC.

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS 
TO BE HELD ON OCTOBER 10, 2001

TO THE STOCKHOLDERS OF RESTORATION HARDWARE, INC.:                              

NOTICE IS HEREBY GIVEN that the special meeting of the stockholders of
Restoration Hardware, Inc., a Delaware corporation, will be held on October 10, 
2001, at 1:00 p.m. (local time) at our principal executive offices located at 15
Koch Road, Suite J, Corte Madera, California 94925, for the following purposes, 
as more fully described in the proxy statement accompanying this notice:        

   1. To approve an amendment to our Second Amended and Restated Certificate
   of Incorporation to increase the authorized number of shares of our
     common stock from 40,000,000 shares to 60,000,000 shares, so that the
        total authorized number of shares of our capital stock will be increased
       from 45,000,000 shares to 65,000,000 shares, of which 60,000,000 shares
       will be common stock and 5,000,0000 shares will be preferred stock; and

    2. To transact such other business as may properly come before the special
meeting or any adjournments or postponements thereof.           

  Only stockholders of record at the close of business on August 17, 2001,
are entitled to notice of and to vote at the special meeting and any            
adjournments or postponements thereof. The stock transfer books of the company  
will remain open between the record date and the date of the meeting. A list of 
stockholders entitled to vote at the special meeting will be available for      
inspection at our principal executive offices.                                  

 All stockholders are cordially invited to attend the special meeting in
person. Whether or not you plan to attend, please read the accompanying proxy   
statement carefully and in its entirety, and then complete, sign and return the 
enclosed proxy card as promptly as possible in the envelope enclosed for your   
convenience. Should you receive more than one proxy card because your shares are
registered in different names and addresses, each proxy card should be          
completed, signed and returned to ensure that all your shares will be voted. If 
you submit your proxy and then decide to attend the special meeting to vote your
shares in person, you may still do so. Your proxy is revocable in accordance    
with the procedures set forth in the attached proxy statement.                  

              Sincerely,

                    Gary G. Friedman
                           Chief Executive Officer

Corte Madera, California                                                        

August [  ], 2001                                                               

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TABLE OF CONTENTS 

                                                                [Download Table]

                                                              PAGE
                                                              ----
                                                                  
PROXY STATEMENT FOR THE SPECIAL MEETING OF STOCKHOLDERS TO        
  BE HELD ON OCTOBER 10, 2001...............................    1 
  General...................................................    1 
  Purpose of the Special Meeting............................    1 
  Record Date...............................................    1 
  Revocability of Proxies...................................    1 
  Interest of Certain Persons in Matters to be Acted Upon...    1 
  Voting Rights of Stockholders.............................    2 
  Security Ownership of Certain Beneficial Owners and             
     Management.............................................    2 
  Required Vote for Approval................................    5 
  Quorum, Abstentions, Broker "Non-Votes"...................    5 
  Cost of Solicitation......................................    6 
  Deadline for Receipt of Stockholder Proposals.............    6 
MATTERS TO BE CONSIDERED AT SPECIAL MEETING: PROPOSAL TO          
  APPROVE AN AMENDMENT TO SECOND AMENDED AND RESTATED             
  CERTIFICATE OF INCORPORATION..............................    7 
  General...................................................    7 
  Purposes and Effects of the Increase in the Authorized          
     Number of Shares of Capital Stock......................    7 
  Provisions with Potential Anti-Takeover Effect............    8 
  Vote Required.............................................    9 
  Recommendation of the Board of Directors..................    9 
FINANCIAL AND OTHER INFORMATION.............................    9 
OTHER MATTERS...............................................    9 

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PROXY STATEMENT 
FOR THE SPECIAL MEETING OF STOCKHOLDERS 
TO BE HELD ON OCTOBER 10, 2001

GENERAL                                                                         

     This proxy statement and the enclosed proxy card are being delivered to you
on or about [August   ,] 2001 in connection with the solicitation by the board  
of directors of Restoration Hardware, Inc., a Delaware corporation, of proxies  
for the special meeting of the stockholders to be held on October 10, 2001 at   
1:00 p.m. (local time). The special meeting will be held at our principal       
executive offices located at 15 Koch Road, Corte Madera, California 94925. Our  
telephone number at that address is (415) 924-1005.                             

   All materials filed by us with the Securities and Exchange Commission can
be obtained at the Commission's Public Reference Room at 450 Fifth Street, N.W. 
Washington, D.C. 20549 or through the SEC's website at www.sec.gov. You may     
obtain information on the operation of the Public Reference Room by calling     
1-800-SEC-0330.                                                                 

PURPOSE OF THE SPECIAL MEETING                                                  

The specific proposal to be considered and acted upon at the special  
meeting is summarized in the preceding notice of special meeting of             
stockholders. This proposal is described in more detail in a subsequent section 
of this proxy statement.                                                        

RECORD DATE                                                                     

    The close of business on August 17, 2001 has been fixed as the record date
for determining the holders of shares of our common stock and Series A preferred
stock entitled to notice of and to vote at the special meeting and any          
adjournments or postponements thereof.                                          

REVOCABILITY OF PROXIES                                                         

 Your proxy may be revoked by you at any time before it is voted by: (1)
sending written notice of revocation to our Assistant Secretary at the address  
of our principal executive offices; (2) executing and delivering a proxy card   
bearing a later date to our Assistant Secretary; or (3) attending the special   
meeting and voting in person. If your shares are held in "street name," you     
should follow the directions provided by your broker regarding how to revoke the
proxy. Attendance at the special meeting will not in and of itself constitute a 
revocation of the proxy if you have previously executed and delivered a valid   
proxy.                                                                          

INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON                         

     On March 22, 2001, we sold to several investors, including Palladin Capital
IX, LLC, Reservoir Capital Partners, L.P., several of Reservoir's affiliates,   
Glenhill Capital LP and Gary G. Friedman, an aggregate of 6,820 shares of Series
A preferred stock and 8,180 shares of Series B preferred stock, each at $1,000  
per share. In connection with this preferred stock financing, we agreed with    
these preferred stock investors to reserve 14,018,500 shares of our common stock
for the future issuance of our common stock upon the conversion of the Series A 
preferred stock into our common stock. At the annual meeting of our stockholders
on July 11, 2001, our stockholders approved the weighted average anti-dilution  
feature of our Series A preferred stock and the conversion feature of our Series
B preferred stock and, as a result, our Series B preferred stock automatically  
converted into our Series A preferred stock on a 1:1 basis.                     

 On May 17, 2001, we sold to several different investors an aggregate of
4,515,762 shares of common stock, each at $5.43 per share. In connection with   
the common stock financing, we separately entered into a Consent and Waiver     
Regarding Additional Financing (previously filed with the SEC as Exhibit 10.2 to
our Form 8-K on May 23, 2001) pursuant to which the investors in the Series A   
and Series B preferred stock financing consented to our decrease in the number  
of shares of common stock reserved for future issuances upon conversion of our  
Series A preferred stock into our common stock from 14,018,500 shares of common 
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stock to 8,000,000 shares of common stock. This reduction in reserves was       
required so that we had a sufficient number of shares of common stock available 
for issuance in connection with the common stock financing. In the Consent and  
Waiver Regarding Additional Financing, we agreed for the benefit of all of the  
preferred stock investors to accelerate the date by which we will effect a      
registration on Form S-3 (or its equivalent) to the later of (i) such time as   
Form S-3 (or its equivalent) becomes available for use in a registered offering 
by us and (ii) October 1, 2001. Finally, we agreed for the benefit of all of the
preferred stock investors to cause (i) an increase in the total number of shares
of common stock authorized under our Second Amended and Restated Certificate of 
Incorporation from 40,000,000 shares of common stock to 50,000,000 shares of    
common stock as soon as practicable, but in any event by November 13, 2001, and 
(ii) the reestablishment of a reserve of shares of our common stock to          
14,018,500 shares as soon as practicable, but in any event by November 18, 2001.

Mr. Friedman holds 1,000 shares of our Series A preferred stock and   
1,771,429 shares of our common stock. As a holder of Series A preferred stock,  
Mr. Friedman benefits from the approval being sought by this proxy statement. As
a holder of common stock and Series A preferred stock, Mr. Friedman will be     
entitled to vote on all of the proposals included in this proxy statement.      

 Mark Schwartz, a member of our board of directors, is the President and
Chief Executive Officer of Palladin Capital Group, Inc., which is an affiliate  
of Palladin Capital IX, LLC, a holder of our Series A preferred stock. As a     
holder of Series A preferred stock, Palladin Capital IX, LLC benefits from the  
approval being sought by this proxy statement and is entitled to vote on all of 
the proposals included in this proxy statement. Mr. Schwartz disclaims          
beneficial ownership of the securities held by Palladin, except to the extent of
his pecuniary interest in Palladin.                                             

    Glenn Krevlin, a member of our board of directors, is a General Partner of
Glenhill Capital LP, which is a holder of our Series A preferred stock. As a    
holder of Series A preferred stock, Glenhill Capital LP benefits from the       
approval being sought by this proxy statement and is entitled to vote on all of 
the proposals included in this proxy statement. Mr. Krevlin disclaims beneficial
ownership of the securities held by Glenhill, except to the extent of his       
pecuniary interest in Glenhill.                                                 

VOTING RIGHTS OF STOCKHOLDERS                                                   

    As of the close of business on the record date, [23,801,535] shares of our
common stock, held by [134] record holders, and 15,000 shares of our Series A   
preferred stock, held by [16] record holders, were outstanding and entitled to  
vote on all proposals presented at the special meeting and no shares of our     
Series B preferred stock were outstanding. A majority of the shares issued and  
outstanding and entitled to vote, present in person or represented by proxy,    
shall constitute a quorum at the special meeting.                               

   Each share of our common stock outstanding on the record date is entitled
to one vote on all matters to come before the special meeting. Each share of our
Series A preferred stock outstanding on the record date is entitled to 500 votes
on all matters to come before the special meeting. An automated system          
administered by our transfer agent, Corporate Investor Communications, will     
tabulate the votes cast by proxy. Cindy Love, our Vice President of Finance,    
will act as the inspector of elections for the special meeting and will tabulate
the votes cast in person at the meeting.                                        

 If you are unable to attend the special meeting, you may vote by proxy.
When your proxy card is returned properly completed, it will be voted as        
directed by you on the proxy card. You are urged to properly complete, sign and 
return the enclosed proxy card. If a proxy card is signed and returned but does 
not contain voting instructions, in the absence of contrary instructions, the   
shares represented by the proxy will be voted "FOR" the proposals to be         
presented at the special meeting, including the approval and adoption of the    
amendment to our certificate of incorporation and any proposal to postpone or   
adjourn the meeting proposed by us at the meeting.                              

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                  
The following table sets forth information known to us with respect to the      
beneficial ownership of each class of                                           

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our voting securities as of July 16, 2001, by (i) all persons who are beneficial
owners of 5% or more of that class, (ii) each director, (iii) our chief         
executive officer and each of our three most highly compensated executive       
officers (other than our chief executive officer) as of the last date of our    
last fiscal year, February 3, 2001, (iv) our new chief executive officer and our
new chief operating officer, and (v) all current directors and executive        
officers as a group. Unless otherwise indicated, each of the stockholders has   
sole voting and investment power with respect to the shares beneficially owned, 
subject to community property laws, where applicable. Unless otherwise          
indicated, the principal address of each of the stockholders listed below is c/o
Restoration Hardware, Inc., 15 Koch Road, Suite J, Corte Madera, California     
94925.                                                                          

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                                                                                   PERCENTAGE OF    
                                                          SHARES BENEFICIALLY     CLASS OF SHARES   
                    BENEFICIAL OWNER                             OWNED         BENEFICIALLY OWNED(1)
                    ----------------                      -------------------  ---------------------
                                                                                                    
                SERIES A PREFERRED STOCK                                                            
Palladin Capital IX, LLC.................................          6,150               41.0%        
  1 Rockefeller Plaza, 10th Floor                                                                   
  New York, NY 10020                                                                                
Glenhill Capital LP......................................          3,000               20.0%        
  650 Madison Avenue                                                                                
  New York, NY 10022                                                                                
Reservoir Capital Partners, L.P. and affiliates(2).......          3,000               20.0%        
  650 Madison Avenue                                                                                
  New York, NY 10022                                                                                
Mark J. Schwartz(3)......................................          6,150               41.0%        
Glenn J. Krevlin(4)......................................          3,000               20.0%        
Gary G. Friedman(5)......................................          1,250                8.3%        
All directors and executive officers as a group (12                                                 
  persons)(6)............................................         10,400               69.3%        

                      COMMON STOCK                                                                  
Palladin Capital IX, LLC(7)..............................      3,075,000               11.4%        
  1 Rockefeller Plaza, 10th Floor                                                                   
  New York, NY 10020                                                                                
Mark J. Schwartz(8)......................................      3,075,000               11.4%        
Stephen J. Gordon(9).....................................      3,053,208               12.8%        
Brown Capital Management, Inc............................      2,542,700               10.7%        
  1201 N. Calvert Street                                                                            
  Baltimore, MD 21201                                                                               
FMR Corp.(10)............................................      2,424,300               10.1%        
  82 Devonshire Street                                                                              
  Boston, MA 02109                                                                                  
Fidelity Capital Trust: Fidelity Small Cap Selector......      2,024,200                8.5%        
  82 Devonshire Street                                                                              
  Boston, MA 02109                                                                                  
Gary G. Friedman(11).....................................      2,396,429                9.8%        
Weston Presidio Capital II LP............................      1,577,681                6.6%        
  One Federal Street, 21st Floor                                                                    
  Boston, MA 02181-2204                                                                             
Glenhill Capital LP(12)..................................      1,500,000                5.9%        
  650 Madison Avenue                                                                                
  New York, NY 10022                                                                                
Glenn J. Krevlin(13).....................................      1,500,000                5.9%        
Reservoir Capital Partners, L.P. and affiliates(14)......      1,500,000                5.9%        
  650 Madison Avenue                                                                                
  New York, NY 10022                                                                                
J.P. Morgan Partners SAIC LLC............................      1,430,030                6.0%        
Thomas Christopher(15)...................................        669,051                2.8%        
Marshall B. Payne(16)....................................        573,286                2.4%        

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                                                        [Enlarge/Download Table]

                                                                                   PERCENTAGE OF    
                                                          SHARES BENEFICIALLY     CLASS OF SHARES   
                    BENEFICIAL OWNER                             OWNED         BENEFICIALLY OWNED(1)
                    ----------------                      -------------------  ---------------------
                                                                                                    
Raymond C. Hemmig(17)....................................        235,147                1.0%        
Robert E. Camp(18).......................................         85,296                  *         
Damon H. Ball(19)........................................         47,611                  *         
Walter Parks(20).........................................         40,495                  *         
Cornelia S. Hunter.......................................          3,500                  *         
Tom Bazzone(21)..........................................          1,650                  *         
                                                              ----------               ----         
All directors and executive officers as a group (12                                                 
  persons)(22)...........................................     11,680,673               39.8%        

---------------                                                                 
*  Less than one percent of our outstanding securities.                     

(1) The percentage of class beneficially owned, with respect to our Series A  
preferred stock, is based on a total of 15,000 shares of our Series A 
   preferred stock outstanding as of July 16, 2001, and, with respect to our
    common stock, is based on a total of 23,801,535 shares of our common stock
outstanding as of July 16, 2001. Shares of our common stock subject to
  stock options which are currently exercisable or will become exercisable
  within 60 days of July 16, 2001 are deemed outstanding for computing the
    percentage of the person or group holding such options, but are not deemed
outstanding for computing the percentage of any other person or group.
     Shares of our Series A preferred stock which are convertible into shares of
our common stock on a 500-to-1 basis at any time at the option of the 
     holder are deemed outstanding for computing the percentage of the person or
     group holding such securities, but are not deemed outstanding for computing
the percentage of any other person or group.                          

(2) Represents 2,563 shares of Series A preferred stock held by Reservoir     
Capital Partners, L.P., six shares of Series A preferred stock held by
 Reservoir Capital Associates, L.P. and 431 shares of Series A preferred
stock held by Reservoir Capital Master Fund, L.P. Reservoir Capital   
  Partners, L.P., Reservoir Capital Associates, L.P. and Reservoir Capital
    Master Fund, L.P. are affiliated because each has Reservoir Capital Group,
LLC as its general partner.                                           

(3) Represents 6,150 shares of Series A preferred stock held in the name of   
     Palladin Capital IX, LLC. Mr. Schwartz is the President and Chief Executive
   Officer of Palladin Capital Group, Inc., an affiliate of Palladin Capital
  IX, LLC, and he disclaims beneficial ownership of the securities held by
Palladin, except to the extent of his pecuniary interest in Palladin. 

(4) Represents 3,000 shares of Series A preferred stock held in the name of   
   Glenhill Capital LP. Mr. Krevlin is a General Partner of Glenhill Capital
LP and he disclaims beneficial ownership of the securities held by    
Glenhill, except to the extent of his pecuniary interest in Glenhill. 

 (5) Includes 250 shares of Series A preferred stock held by Kendal A. Friedman,
the spouse of Mr. Friedman, of which Mr. Friedman disclaims beneficial
ownership.                                                            

(6) Includes shares held in the name of or represented by Mark J. Schwartz,   
Glenn J. Krevlin and Gary G. Friedman. Stephen J. Gordon, Thomas      
     Christopher, Marshall B. Payne, Raymond C. Hemmig, Robert E. Camp, Damon H.
    Ball, Walter Parks, Cornelia S. Hunter and Tom Bazzone do not beneficially
own any shares of Series A preferred stock.                           

(7) Represents 6,150 shares of Series A preferred stock which are convertible 
    on a 500-to-1 basis at any time at the option of the holder into 3,075,000
shares of common stock.                                               

(8) Represents 6,150 shares of Series A preferred stock held in the name of   
   Palladin Capital IX, LLC which are convertible on a 500-to-1 basis at any
     time at the option of the holder into 3,075,000 shares of common stock. Mr.
     Schwartz disclaims beneficial ownership of the securities held by Palladin,
except to the extent of his pecuniary interest in Palladin.           

(9) Includes 95,900 shares of common stock subject to options exercisable     
   within 60 days of July 16, 2001 held by Stephen J. Gordon, 103,541 shares
of common stock held by the Christine B. Gordon 1998 Qualified Grantor
     Retained Annuity Trust, of which Christine B. Gordon, the spouse of Stephen
J. Gordon, is the sole trustee, 30,505 shares held by the Christine B.
Gordon Trust, of which Christine B.                                   

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Gordon is the sole trustee, 103,541 shares held by the Stephen J. Gordon 1998   
Qualified Grantor Retained Annuity Trust, of which Stephen J. Gordon is the sole
trustee.                                                                        

(10) Includes 2,424,300 shares of common stock of which Fidelity Management &   
   Research Company, a wholly-owned subsidiary of FMR Corp and an investment
adviser registered under Section 203 of the Investment Advisers Act of
   1940, is the beneficial owner as a result of acting as investment adviser
to various investment companies registered under Section 8 of the     
Investment Company Act of 1940, including Fidelity Small Cap Selector.

(11) Includes 1,250 shares of Series A preferred stock which are convertible on 
a 500-to-1 basis at any time at the option of the holder into 625,000 
shares of common stock.                                               

(12) Represents 3,000 shares of Series A preferred stock which are convertible  
    on a 500-to-1 basis at any time at the option of the holder into 1,500,000
shares of common stock.                                               

(13) Represents 3,000 shares of Series A preferred stock held by Glenhill       
 Capital LP which are convertible on a 500-to-1 basis at any time at the
 option of the holder into 1,500,000 shares of common stock. Mr. Krevlin
   disclaims beneficial ownership of the securities held by Glenhill, except
to the extent of his pecuniary interest in Glenhill.                  

(14) Represents 3,000 shares of Series A preferred stock which are convertible  
    on a 500-to-1 basis at any time at the option of the holder into 1,500,000
shares of common stock.                                               

(15) Includes 470,048 shares of common stock held by Thomas A. Christopher and  
     Barbara Christopher, the spouse of Mr. Christopher, 98,189 shares of common
stock held by the Barbara Christopher 1997 Qualified Grantor Retained 
    Annuity Trust, of which Mrs. Christopher is the sole trustee, 2,625 shares
     held directly by Mrs. Christopher and 98,189 shares of common stock held by
  the Thomas A. Christopher 1997 Qualified Grantor Annuity Trust, of which
Mr. Christopher is the sole trustee.                                  

(16) Includes 56,111 shares of common stock subject to options exercisable      
within 60 days of July 16, 2001 held by Mr. Payne.                    

(17) Includes 56,437 shares of common stock subject to options exercisable      
within 60 days of July 16, 2001 held by Mr. Hemmig.                   

(18) Includes 56,437 shares of common stock subject to options exercisable      
within 60 days of July 16, 2001 held by Mr. Camp.                     

(19) Includes 44,611 shares of common stock subject to options exercisable      
    within 60 days of July 16, 2001 held by Mr. Ball. Pursuant to an agreement
  between Mr. Ball and Desai Funds, Desai Funds is the beneficial owner of
 21,000 shares of these 44,611 shares of common stock subject to options
exercisable within 60 days of July 16, 2001 and Mr. Ball disclaims    
beneficial ownership of such 21,000 shares.                           

(20) Includes 39,995 shares of common stock subject to options exercisable      
within 60 days of July 16, 2001 held by Mr. Parks.                    

(21) Includes 500 shares of common stock held by Mr. Bazzone and Jill Bazzone,  
the spouse of Mr. Bazzone, and 450 shares of common stock held by Ms. 
Bazzone.                                                              

(22) Includes shares held in the name of or represented by Mark J. Schwartz,    
    Stephen J. Gordon, Gary G. Friedman, Glenn J. Krevlin, Thomas Christopher,
     Marshall B. Payne, Raymond C. Hemmig, Robert E. Camp, Damon H. Ball, Walter
Parks, Cornelia S. Hunter and Tom Bazzone.                            

REQUIRED VOTE FOR APPROVAL                                                      

  The proposal to approve the amendment of our Second Amended and Restated
Certificate of Incorporation to increase the authorized number of shares of     
capital stock will require the affirmative vote of both a majority of the votes 
attached to our common stock, voting as a separate class, and a majority of the 
votes attached to our common stock and Series A preferred stock, voting         
together, in each case present in person or represented by proxy and entitled to
vote at the special meeting. All of the holders of our common stock and         

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Series A preferred stock are entitled to vote this proposal under the General   
Corporation Law of the State of Delaware.                                       

QUORUM, ABSTENTIONS, BROKER "NON-VOTES"                                         

   Under the General Corporation Law of the State of Delaware, an abstaining
vote and a broker "non-vote" are counted as present and are, therefore, included
for purposes of determining whether a quorum of shares is present at the special
meeting. A broker "non-vote" occurs when a nominee holding shares for a         
beneficial owner does not vote on a particular proposal because the nominee does
not have the discretionary voting power with respect to that item and has not   
received instructions from the beneficial owner. Broker "non-votes" and shares  
as to which proxy authority has been withheld with respect to any matter are not
deemed to be entitled to vote for purposes of determining whether stockholders' 
approval of that matter has been obtained. As a result, with respect to this    
proposal to approve an amendment of our Second Amended and Restated Certificate 
of Incorporation which requires the affirmative vote of both a majority of the  
votes attached to our common stock, voting as a separate class, and a majority  
of the votes attached to our common stock and Series A preferred stock, voting  
together, in each case present in person or represented by proxy and entitled to
vote, broker "non-votes" are not included in the tabulation of the voting       
results on this proposed amendment and have no effect. Because abstentions will 
be included in the tabulations of the shares of our common stock and Series A   
preferred stock entitled to vote for purposes of determining whether a proposal 
has been approved, abstentions have the same effect as votes against this       
proposed amendment.                                                             

COST OF SOLICITATION                                                            

  We will bear the entire cost of solicitation, including the preparation,
assembly, printing and mailing of this proxy statement, the proxy card and any  
additional solicitation materials furnished to the stockholders. We will furnish
copies of solicitation materials to brokerage houses, fiduciaries and custodians
holding shares in their names that are beneficially owned by others so that they
may forward the proxy solicitation materials to such beneficial owners. In      
addition, we may reimburse such persons for their costs in forwarding the proxy 
solicitation materials to such beneficial owners. We may supplement the original
solicitation of proxies by mail or by solicitation by telephone, telegram or    
other means by our directors, officers or employees. No additional compensation 
will be paid to these individuals for any such services. We have also retained  
the services of Georgeson Shareholder to aid in the solicitation of proxies from
brokers, bank nominees and other institutional owners. We estimate that we will 
pay a fee not to exceed $6,000 for its services and will reimburse them for     
certain out-of-pocket expenses that are usual and proper.                       

DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS                                   

 Requirements for Stockholder Proposals to be Brought Before an Annual Meeting

For stockholder proposals to be considered properly brought before an 
annual meeting, the stockholder must have given timely notice thereof in writing
to our Assistant Secretary. To be timely for the 2002 annual meeting, a         
stockholder's notice must be delivered to or mailed and received by our         
Assistant Secretary at our principal executive offices no later than February   
26, 2002. A stockholder's notice must accompany any stockholder proposal and    
shall set forth as to each matter the stockholder proposes to bring before the  
annual meeting: (i) a brief description of the business desired to be brought   
before the annual meeting and the reasons for conducting such business at the   
annual meeting, (ii) the name and record address of the stockholder proposing   
such business, (iii) the class and number of shares of our voting securities    
which are beneficially owned by the stockholder, and (iv) any material interest 
of the stockholder in such business.                                            

Requirements for Stockholder Proposals to be Considered for Inclusion in Our
Proxy Materials                                                                 

     Stockholder proposals submitted pursuant to Rule 14a-8 under the Securities
Exchange Act of 1934, as amended, and intended to be presented at our 2002      
annual meeting of the stockholders must be received by our Assistant Secretary  
at the address of our principal executive offices no later than February 11,    
2002 in order to be considered for inclusion in our proxy materials for that    
meeting.                                                                        

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Discretionary Authority                                                     

 In addition, the proxy solicited by our board of directors for the 2002
annual meeting will confer discretionary authority to vote on any stockholder   
proposal presented at that meeting, unless we receive notice of such proposals  
no later than April 27, 2002.                                                   

MATTERS TO BE CONSIDERED AT SPECIAL MEETING 

PROPOSAL TO APPROVE AN AMENDMENT TO SECOND AMENDED AND
RESTATED CERTIFICATE OF INCORPORATION 

GENERAL                                                                         

Our stockholders are being asked to act upon a proposal to approve an 
amendment to our Second Amended and Restated Certificate of Incorporation to    
increase the authorized number of shares of our common stock from 40,000,000    
shares to 60,000,000 shares, so that the total number of shares of our capital  
stock which we are authorized to issue will be increased from 45,000,000 shares 
to 65,000,000 shares, of which 60,000,000 shares will be common stock, par value
$0.0001 per share, and 5,000,000 shares will be preferred stock, par value      
$0.0001 per share. On July 11, 2001, the board of directors approved an         
amendment to our Second Amended and Restated Certificate of Incorporation,      
subject to stockholder approval, to increase the authorized number of shares of 
our capital stock from 45,000,000 shares to 65,000,000 shares, of which         
60,000,000 shares will be common stock, and 5,000,000 shares will be preferred  
stock. The board has directed that this proposal to approve an amendment to our 
Second Amended and Restated Certificate of Incorporation be submitted to our    
stockholders for consideration and action.                                      

The text of the proposed amendment to our Second Amended and Restated 
Certificate of Incorporation to increase the authorized number of shares of our 
capital stock as described in this proposal is set forth in Annex A attached to 
this proxy statement and is incorporated by reference herein.                   

If the amendment to our Second Amended and Restated Certificate of    
Incorporation is approved by the stockholders, we will promptly file a          
Certificate of Amendment of our Second Amended and Restated Certificate of      
Incorporation with the Secretary of State of the State of Delaware reflecting   
the increase in authorized shares. The amendment will become effective on the   
date the Certificate of Amendment is accepted for filing by the Delaware        
Secretary of State.                                                             

PURPOSES AND EFFECTS OF THE INCREASE IN THE AUTHORIZED NUMBER OF SHARES OF      
CAPITAL STOCK                                                                   

The amendment to our Second Amended and Restated Certificate of       
Incorporation described in this proposal will increase the number of shares of  
our common stock that we are authorized to issue from 40,000,000 to 60,000,000  
shares. Each additional share of our common stock authorized by the amendment to
our Second Amended and Restated Certificate of Incorporation will have the same 
rights and privileges as each share of common stock currently authorized or     
outstanding. No further action or authorization by the stockholders will be     
necessary prior to the issuance of additional shares unless applicable laws or  
regulations, or our Second Amended and Restated Certificate of Incorporation or 
any certificate of designation, require such action or authorization.           

    As discussed above in the section entitled "Interest of Certain Persons in
Matters to be Acted Upon," we are obligated to (1) increase the total number of 
shares of common stock authorized under our Second Amended and Restated         
Certificate of Incorporation from 40,000,000 to 50,000,000 and (2) increase the 
number of shares of common stock reserved for issuance upon the conversion of   
the Series A preferred stock into common stock by 6,018,500 shares of common    
stock (from 8,000,000 shares of common stock to 14,018,500 shares of common     
stock) by November 18, 2001. Your approval of this proposed amendment will      
enable us to meet these obligations.                                            

After we reestablish the reserve for the conversion of the Series A   
preferred stock into common stock, 13,981,500 additional shares of common stock 
will be authorized and available for possible issuance from time                

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to time in connection with our future transactions. We believe that the         
availability of these additional shares of common stock will provide us with the
flexibility to meet our present and future business needs as they arise, to take
advantage of favorable business opportunities and to respond to a changing      
corporate environment. We could use these additional shares in order to effect a
variety of transactions, including, without limitation, financings, corporate   
mergers or acquisitions, an increase in the number of shares reserved under our 
stock incentive plan, stock dividends, stock splits or other corporate purposes.
At present, we have no specific plans, agreements or understandings to undertake
any of these actions that require the authorization of these additional shares  
of capital stock.                                                               

The availability for issuance of additional shares of our common stock
could, under certain circumstances, also enable the board to render more        
difficult or discourage an attempt to obtain control of our company. For        
example, the issuance of shares in a public or private sale, merger or similar  
transaction would increase the number of outstanding shares, thereby possibly   
diluting the interest of a party attempting to obtain control of us. However, we
are not seeking your approval of the amendment in response to any effort to     
accumulate our company's stock or to obtain control of the company by means of a
merger, tender offer, solicitation in opposition to management or otherwise. As 
of the date of this proxy statement, we are not aware of any pending or         
threatened efforts to obtain control of us. In addition, this proposed amendment
to our Second Amended and Restated Certificate of Incorporation is not part of  
any plan by management to recommend a series of similar amendments to the board 
of directors and the stockholders.                                              

     Stockholders should note that disadvantages may result from the adoption of
this proposed amendment to our Second Amended and Restated Certificate of       
Incorporation. After this proposed amendment is effected, there will be a       
greater number of shares of our common stock available for issuance by us, and  
stockholders could therefore experience a significant reduction in their        
stockholders' interest with respect to earnings per share, voting, liquidation  
value and book and market value per share if the additional authorized shares   
are issued.                                                                     

 If you do not approve this proposed amendment to increase the number of
shares of our common stock, we will fail to meet the November 13, 2001 deadline 
specified in the Consent and Waiver Regarding Additional Financing to           
reestablish the number of reserved shares of common stock to 14,018,500 shares  
of common stock. We expect that we would continue to seek your approval for an  
increase in the number of authorized shares of our common stock by the same or  
any lesser or greater amount in the future. In addition, the holders of the     
Series A preferred stock may choose to take action to enforce the Consent and   
Waiver Regarding Additional Financing. There can be no assurance of the exact   
consequences of our failure to obtain your approval of this proposed amendment  
to increase the number of authorized shares of our common stock or the exact    
consequences of any such enforcement action.                                    

PROVISIONS WITH POTENTIAL ANTI-TAKEOVER EFFECT                                  

Although this proposed amendment is not intended for anti-takeover    
purposes, the rules of the Securities and Exchange Commission require disclosure
of the provisions of our Amended and Restated Bylaws and Second Amended and     
Restated Certificate of Incorporation that could have an anti-takeover effect.  
The laws of the State of Delaware contain additional provisions that also may   
have the effect of delaying, deterring or preventing a change in control of our 
company. These provisions are described below.                                  

  Our Second Amended and Restated Certificate of Incorporation and Amended
and Restated Bylaws contain provisions that may have the effect of delaying,    
deterring or preventing a change in control of our company, including: (i) the  
requirement that special meetings of stockholders may only be called by the     
board of directors; (ii) a prohibition against the use of written consents of   
stockholders in lieu of a meeting; (iii) the requirement of advance notice and  
certain information for stockholder nominations of directors; (iv) the          
requirement for supermajority vote for the stockholders to remove any director  
for cause; (v) staggered terms of office for directors; (vi) the requirement    
that vacancies on the board of directors be filled only by the remaining        
directors; (vii) the requirement for a supermajority vote to approve certain    
amendments to the Second Amended and Restated Certificate of Incorporation;     
(viii) the requirement for a supermajority vote for the stockholders to amend   
the Amended and Restated Bylaws; (ix) the ability of the board of directors     

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under the Second Amended and Restated Certificate of Incorporation to authorize 
the issuance of up to 5,000,000 shares of preferred stock, in one or more       
series, having such preferences, limitations and relative rights as are         
determined by the board of directors; (x) the requirement for a supermajority   
vote for approval and authorization of any Business Combination (as defined in  
Delaware General Corporation Law Section 203); (xi) the requirement for a       
supermajority vote for approval by Series A preferred stockholders of certain   
corporate transactions, including, but not limited to, any proposed merger or   
sale of all or substantially all of our company's assets; and (xii) provisions  
regarding certain corporate transactions, including, but not limited to, any    
proposed merger or sale of all or substantially all of our company's assets,    
constituting liquidations requiring the payment of liquidation payments to our  
stockholders.                                                                   

VOTE REQUIRED                                                                   

     The affirmative vote of both a majority of the votes attached to our common
stock, voting as a separate class, and a majority of the votes attached to our  
common stock and Series A preferred stock, voting together, in each case present
in person or represented by proxy and entitled to vote at the special meeting,  
is required to approve the proposed amendment to the Second Amended and Restated
Certificate of Incorporation described in this proposal.                        

RECOMMENDATION OF THE BOARD OF DIRECTORS                                        

   OUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE PROPOSED AMENDMENT TO
OUR SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE    
AUTHORIZED NUMBER OF SHARES OF OUR CAPITAL STOCK AND UNANIMOUSLY RECOMMENDS THAT
OUR STOCKHOLDERS VOTE FOR APPROVAL OF THE PROPOSAL TO SO AMEND OUR SECOND       
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED    
NUMBER OF SHARES OF OUR CAPITAL STOCK.                                          

FINANCIAL AND OTHER INFORMATION 

   We filed an annual report on Form 10-K for the fiscal year ended February
3, 2001 with the Securities and Exchange Commission on May 4, 2001 and a        
quarterly report on Form 10-Q for the fiscal quarter ended May 5, 2001 with the 
Securities and Exchange Commission on June 19, 2001. Stockholders may obtain    
copies of the annual report on Form 10-K and the quarterly report on Form 10-Q, 
without charge, by writing to our Assistant Secretary at our principal executive
offices located at 15 Koch Road, Suite J, Corte Madera, California 94925.       

     All other materials filed by us with the Securities and Exchange Commission
can be obtained at the Commission's Public Reference Room at 450 Fifth Street,  
N.W. Washington, D.C. 20549 or through the SEC's website at www.sec.gov. You may
obtain information on the operation of the Public Reference Room by calling     
1-800-SEC-0330.                                                                 

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OTHER MATTERS 

     We know of no other matters that will be presented for consideration at the
special meeting. If any other matters properly come before the special meeting, 
it is the intention of the proxyholders to vote the shares they represent as our
board of directors may recommend. Discretionary authority with respect to such  
other matters is granted by the execution of the enclosed proxy card. It is     
important that you return your proxy card promptly and that your shares be      
represented. You are urged to mark, date, sign and return the enclosed proxy    
card in the accompanying reply envelope.                                        

                             THE BOARD OF DIRECTORS OF
                              RESTORATION HARDWARE, INC.

Dated: August [  ], 2001                                                        

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RESTORATION HARDWARE, INC.
 PROXY

 Special Meeting of Stockholders, October 10, 2001

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
RESTORATION HARDWARE, INC.

     The undersigned revokes all previous proxies, acknowledges receipt of
the notice of the special meeting of stockholders to be held on October 10,     
2001, the proxy statement and all other proxy materials and appoints Stephen J. 
Gordon and Gary G. Friedman, and each of them, the proxy of the undersigned,    
with full power of substitution, to vote all shares of common stock and Series A
preferred stock (on an as converted to common stock basis) of Restoration       
Hardware which the undersigned is entitled to vote, either on his or her own    
behalf or on behalf of any entity or entities, at the special meeting of the    
stockholders of the company to be held on October 10, 2001, at 1:00 p.m. (local 
time) at our principal executive offices located at 15 Koch Road, Suite J, Corte
Madera, California 94925, and at any adjournments or postponements thereof, with
the same force and effect as the undersigned might or could do if personally    
present thereat. The shares represented by this proxy shall be voted in the     
manner set forth on the reverse side.                                           

     Our board of directors recommends a vote "FOR" each of the proposals.
This proxy, when properly executed, will be voted as specified below. IF NO     
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS LISTED
BELOW.                                                                          

1.      Amendment to our Second Amended and Restated Certificate of             
       Incorporation to increase the authorized number of shares of our common
    stock from 40,000,000 shares to 60,000,000 shares, so that the total
       authorized number of shares of our capital stock will be increased from
       45,000,000 shares to 65,000,000 shares, of which 60,000,000 shares will
be common stock, and 5,000,000 shares will be preferred stock;  

      _____   FOR               _____   AGAINST            _____   ABSTAIN

2.      Transact such other business as may properly come before the special    
meeting or any adjournment or postponement thereof:             

      _____   FOR               _____   AGAINST            _____   ABSTAIN

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 Signature

        Sign exactly as your name(s) appear on your stock certificate(s). If the
shares are held jointly, each holder should sign. When signing as attorney,     
executor, administrator, trustee or guardian, please give full title as such.   

----------------------------                --------------------------------    
Signature                                   Signature                           

----------------------------                --------------------------------    
Title (if applicable)                       Title (if applicable)               

----------------------------                --------------------------------    
Print Name                                  Print Name                          

----------------------------                --------------------------------    
Date                                        Date                                

11

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘PRES14A’ Filing		Date		First		Last			Other Filings
		4/27/02		12
		2/26/02		11
		2/11/02		11					8-K,  SC 13G,  SC 13G/A
		11/18/01		7		12
		11/13/01		7		13
For Period End:		10/10/01		3		16			8-K,  DEFS14A
		10/1/01		7					S-3
		8/17/01		4		6
Filed on:		8/15/01
		7/16/01		8		10
		7/11/01		6		12			DEF 14A,  PRE 14A
		6/19/01		14					10-Q
		5/23/01		6					8-K
		5/17/01		6					8-K
		5/5/01		14					10-Q,  10-Q/A
		5/4/01		14					10-K
		3/22/01		6					3
		2/3/01		8		14			10-K,  10-K/A
									List all Filings