EXHIBIT 99.5
ADDENDUM
TO
STOCK OPTION AGREEMENT
The following provisions are hereby incorporated into, and are hereby
made a part of, that certain Stock Option Agreement (the "Option Agreement") by
and between Restoration Hardware, Inc. (the "Corporation") and
____________________ ("Optionee") evidencing the stock option (the "Option")
granted on this date to Optionee under the terms of the Corporation's 1998 Stock
Incentive Plan, and such provisions shall be effective immediately with such
grant date. All capitalized terms in this Addendum, to the extent not otherwise
defined herein, shall have the meanings assigned to them in the Option
Agreement.
INVOLUNTARY TERMINATION FOLLOWING
CHANGE IN CONTROL
1. To the extent the Option is, in connection with a Change in
Control transaction, to be assumed or otherwise continued in full force or
effect in accordance with Paragraph 6 of the Option Agreement, the Option shall
not accelerate upon the occurrence of that Change in Control, and the Option
shall accordingly continue, over Optionee's period of Service after the Change
in Control, to become exercisable for the Option Shares in one or more
installments in accordance with the provisions of the Option Agreement.
However, immediately upon an Involuntary Termination of Optionee's Service
within eighteen (18) months following such Change in Control, the Option, to the
extent outstanding at the time but not otherwise fully exercisable, shall
automatically accelerate so that the Option shall become immediately exercisable
for all the Option Shares at the time subject to the Option and may be exercised
for any or all of those Option Shares as fully vested shares.
2. The Option as accelerated under Paragraph 1 shall remain so
exercisable until the earlier of (i) the Expiration Date or (ii) the expiration
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of the one (1)-year period measured from the date of the Optionee's Involuntary
Termination.
3. For purposes of this Addendum the following definition shall be in
effect:
(i) An INVOLUNTARY TERMINATION shall mean the termination of
Optionee's Service by reason of:
(A) Optionee's involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or
(B) Optionee's voluntary resignation following (A) a change in
Optionee's position with the Corporation (or Parent or Subsidiary
employing Optionee) which materially reduces Optionee's duties and
responsibilities or the level of management to which Optionee reports,
(B) a reduction in Optionee's level of compensation (including base
salary, fringe benefits and target bonus under any corporate
performance based bonus or incentive programs) by more than fifteen
percent (15%) or (C) a relocation of Optionee's place of employment by
more than fifty (50) miles, provided and only if such change,
reduction or relocation is effected by the Corporation without
Optionee's consent.
4. The provisions of Paragraph 1 of this Addendum shall govern the
period for which the Option is to remain exercisable following the Involuntary
Termination of Optionee's Service within eighteen (18) months after the Change
in Control and shall supersede any provisions to the contrary in Paragraph 5 of
the Option Agreement.
IN WITNESS WHEREOF, Restoration Hardware, Inc. has caused this
Addendum to be executed by its duly-authorized officer as of the Effective Date
specified below.
RESTORATION HARDWARE, INC.
By: _________________________________________
Title: ______________________________________
EFFECTIVE DATE: _________________, 199__
