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    Sharper   Image    Corporation    (the    "Corporation")    and
_____________________________  ("Optionee")  evidencing  the stock  option  (the
"Option") granted this day to Optionee under the terms of the Corporation's 2000
Stock  Incentive  Plan,  and such  provisions  are  effective  immediately.  All
capitalized terms in this Addendum,  to the extent not otherwise defined herein,
shall have the meanings assigned to them in the Option Agreement.

                        LIMITED STOCK APPRECIATION RIGHT

         1.  Optionee  is  hereby  granted a limited  stock  appreciation  right
exercisable upon the following terms and conditions:

                  (a) Optionee shall have the unconditional  right,  exercisable
         at any time during the thirty (30)-day period  immediately  following a
         Hostile  Take-Over,  to  surrender  the Option to the  Corporation.  In
         return  for the  surrendered  Option,  Optionee  shall  receive  a cash
         distribution  from the  Corporation in an amount equal to the excess of
         (A) the  Take-Over  Price of the shares of Common  Stock  which are the
         time subject to the  surrendered  option  (whether or not the Option is
         otherwise  at the  time  exercisable  for  those  shares)  over (B) the
         aggregate Exercise Price payable for such shares.

                  (b)  To  exercise  this  limited  stock  appreciation   right,
         Optionee must,  during the applicable  thirty (30)-day exercise period,
         provide the Corporation  with written notice of the option surrender in
         which there is  specified  the number of Option  Shares as to which the
         Option is being  surrendered.  Such notice must be  accompanied  by the
         return of Optionee's  copy of the Option  Agreement,  together with any
         written  amendments to such Agreement.  The cash distribution  shall be
         paid to Optionee  within five (5) business days following such delivery
         date.  The  exercise  of  the  limited  stock   appreciation  right  in
         accordance  with the terms of this Addendum is hereby  pre-approved  by
         the Plan  Administrator  in  advance of such  exercise,  and no further
         approval  of the Plan  Administrator  or the Board shall be required at
         the time of the actual  option  surrender and cash  distribution.  Upon
         receipt of such cash  distribution,  the Option shall be cancelled with
         respect to the Option Shares for which the Option has been surrendered,
         and  Optionee  shall cease to have any further  right to acquire  those
         Option Shares under the Option  Agreement.  The Option shall,  however,
         remain  outstanding  for the  balance of the Option  Shares (if any) in
         accordance with the terms of the Option Agreement,  and the Corporation
         shall

<PAGE>

         issue a replacement  stock option agreement  (substantially in the same
         form of the surrendered  Option  Agreement) for those remaining  Option
         Shares.

                  (c) In no event may this limited stock  appreciation  right be
         exercised  when there is not a positive  spread between the Fair Market
         Value of the Option Shares  subject to the  surrendered  option and the
         aggregate  Exercise  Price payable for such shares.  This limited stock
         appreciation right shall in all events terminate upon the expiration or
         sooner  termination  of the  option  term  and may not be  assigned  or
         transferred by Optionee, except to the extent the Option is transferred
         in accordance with the provisions of the Option Agreement.

         2. For purposes of this Addendum, the following definitions shall be in
effect:

                  (a) A Hostile  Take-Over  shall be  deemed  to occur  upon the
         acquisition,  directly or indirectly, by any person or related group of
         persons  (other  than the  Corporation  or a person  that  directly  or
         indirectly controls, is controlled by, or is under common control with,
         the  Corporation) of beneficial  ownership  (within the meaning of Rule
         13d-3 of the Securities Exchange Act of 1934, as amended) of securities
         possessing  more than fifty percent (50%) of the total combined  voting
         power of the Corporation's  outstanding securities pursuant to a tender
         or exchange offer made directly to the Corporation's stockholders which
         the Board does not recommend such stockholders to accept.

                  (b) The Take-Over  Price per share shall be deemed to be equal
         to the  greater of (A) the Fair  Market  Value per Option  Share on the
         option  surrender  date or (B) the highest  reported price per share of
         Common  Stock  paid by the  tender  offeror in  effecting  the  Hostile
         Take-Over.  However,  if the  surrendered  Option is  designated  as an
         Incentive  Option in the Grant Notice,  then the Take-Over  Price shall
         not exceed the clause (A) price per share.

                  IN WITNESS WHEREOF,  Sharper Image Corporation has caused this
Addendum to be executed by its duly authorized officer.

                                       SHARPER IMAGE CORPORATION

                                       By:
                                           -------------------------------------

                                       Title:
                                              ----------------------------------

EFFECTIVE DATE:
                ----------------------------------

                                       2