STOCK FOR WHICH THIS OPTION FIRST
BECOMES EXERCISABLE IN THE CALENDAR YEAR IN WHICH THE CHANGE IN CONTROL OCCURS
DOES NOT, WHEN ADDED TO THE AGGREGATE VALUE (DETERMINED AS OF THE RESPECTIVE
DATE OR DATES OF GRANT) OF THE COMMON STOCK OR OTHER SECURITIES FOR WHICH THIS
OPTION OR ONE OR MORE OTHER INCENTIVE OPTIONS GRANTED TO OPTIONEE PRIOR TO THE
GRANT DATE (WHETHER UNDER THE PLAN OR ANY OTHER OPTION PLAN OF THE CORPORATION
OR ANY PARENT OR SUBSIDIARY) FIRST BECOME EXERCISABLE DURING THE SAME CALENDAR
YEAR, EXCEED ONE HUNDRED THOUSAND DOLLARS ($100,000) IN THE AGGREGATE.
SHOULD
THE APPLICABLE ONE HUNDRED THOUSAND DOLLAR ($100,000) LIMITATION BE EXCEEDED IN
THE CALENDAR YEAR OF SUCH CHANGE IN CONTROL, THE OPTION MAY NEVERTHELESS BE
EXERCISED FOR THE EXCESS SHARES IN SUCH CALENDAR YEAR AS A NON-STATUTORY OPTION.
6
(D)
SHOULD OPTIONEE HOLD, IN ADDITION TO THIS OPTION, ONE OR MORE OTHER OPTIONS
TO PURCHASE COMMON STOCK WHICH BECOME EXERCISABLE FOR THE FIRST TIME IN THE SAME
CALENDAR YEAR AS THIS OPTION, THEN THE FOREGOING LIMITATIONS ON THE
EXERCISABILITY OF SUCH OPTIONS AS INCENTIVE OPTIONS SHALL BE APPLIED ON THE
BASIS OF THE ORDER IN WHICH SUCH OPTIONS ARE GRANTED.
7
EXHIBIT I
NOTICE OF EXERCISE
I HEREBY NOTIFY RESTORATION HARDWARE, INC. (THE "CORPORATION") THAT I ELECT TO
PURCHASE
SHARES OF THE CORPORATION'S COMMON STOCK
(THE "PURCHASED SHARES") AT THE OPTION EXERCISE PRICE OF
$
PER SHARE (THE "EXERCISE PRICE") PURSUANT TO
THAT CERTAIN OPTION (THE "OPTION") GRANTED TO ME ON OCTOBER 6, 2003 UNDER THE
CORPORATION'S 1998 STOCK INCENTIVE PLAN AMENDED AND RESTATED ON OCTOBER 9, 2002.
CONCURRENTLY WITH THE DELIVERY OF THIS EXERCISE NOTICE TO THE CORPORATION, I
SHALL HEREBY PAY TO THE CORPORATION THE EXERCISE PRICE FOR THE PURCHASED SHARES
IN ACCORDANCE WITH THE PROVISIONS OF MY AGREEMENT WITH THE CORPORATION (OR OTHER
DOCUMENTS) EVIDENCING THE OPTION AND SHALL DELIVER WHATEVER ADDITIONAL DOCUMENTS
MAY BE REQUIRED BY SUCH AGREEMENT AS A CONDITION FOR EXERCISE.
ALTERNATIVELY, I
MAY UTILIZE THE SPECIAL BROKER-DEALER SALE AND REMITTANCE PROCEDURE SPECIFIED IN
MY AGREEMENT TO EFFECT PAYMENT OF THE EXERCISE PRICE.
, 20
Date
Optionee
Address:
Print name in exact manner it is to appear on the stock certificate:
Address to which certificate is to be sent, if different from address
above:
Social Security Number:
Employee Number:
APPENDIX
The following definitions shall be in effect under the Agreement:
A.
AGREEMENT SHALL MEAN THIS STOCK OPTION
AGREEMENT.
B.
APPLICABLE LAWS SHALL MEAN THE LEGAL
REQUIREMENTS RELATING TO THE ADMINISTRATION OF STOCK OPTION PLANS, IF ANY, UNDER
APPLICABLE PROVISIONS OF FEDERAL SECURITIES LAWS, STATE CORPORATE AND SECURITIES
LAWS, THE CODE, THE RULES OF ANY APPLICABLE STOCK EXCHANGE OR NATIONAL MARKET
SYSTEM, AND THE RULES OF ANY FOREIGN JURISDICTION APPLICABLE TO THE GRANTING OF
STOCK OPTIONS AND THE ISSUANCE OF SHARES OF COMMON STOCK TO RESIDENTS THEREIN.
C.
BOARD SHALL MEAN THE CORPORATION'S BOARD
OF DIRECTORS.
D.
CAUSE SHALL MEAN, IN CONNECTION WITH THE
TERMINATION OF THE OPTIONEE'S SERVICE BY THE CORPORATION, (A) THE OPTIONEE