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                                                                   EXHIBIT 10.35

                           RESTORATION HARDWARE, INC.

                              NOTE SECURED BY STOCK

$2,050,000.00                                                   __________, 2001
                                                        Corte Madera, California

              FOR VALUE RECEIVED, Gary G. Friedman ("Maker") promises to pay to
the order of Restoration Hardware, Inc., a Delaware corporation (the
"Corporation"), at its corporate offices at 15 Koch Road, Suite J, Corte Madera,
California 94925 (or at such other address as the Corporation may direct in
writing), the principal sum of Two Million Fifty Thousand and no/100's Dollars
($2,050,000.00), together with all accrued interest thereon, upon the terms and
conditions specified below.

              1. PURCHASE MONEY INDEBTEDNESS. The proceeds of this Note shall be
applied solely and exclusively to the payment of the purchase price of certain
shares of the Corporation's common stock previously acquired by Maker as more
specifically set forth in Exhibit A attached hereto, and those shares and
certain other shares of Common Stock and Preferred Stock of the Corporation
acquired by Maker, as more specifically set forth in Exhibit A (in the
aggregate, the "Purchased Shares") shall be held in pledge by the Corporation as
collateral for the payment of this Note.

              2. INTEREST. Interest shall accrue on the unpaid principal balance
outstanding from time to time under this Note at a rate per annum of 8.5% (based
on a 365-day year for actual days elapsed), with interest on this Note to be
compounded annually. Accrued and unpaid interest shall become due and payable
annually on the first, second and third anniversaries of the date of this Note.

              3. DUE DATES. All principal owing under this Note (together with
any accrued and unpaid interest and any other sums owing hereunder) shall be due
and payable on the third anniversary of the date of this Note (and, if undated,
on March 31, 2004).

              4. PAYMENT. Payment shall be made in lawful tender of the United
States and shall be applied first to the payment of all accrued and unpaid
interest and then to the payment of principal. Prepayment of the principal
balance of this Note, together with all accrued and unpaid interest on the
portion of principal so prepaid, may be made in whole or in part at any time
without penalty.

              5. EVENTS OF ACCELERATION. The entire unpaid principal balance of
this Note, together with all accrued and unpaid interest, shall become
immediately due and payable prior to the specified due date of this Note upon
the occurrence of one or more of the following events:

                     A. the failure of the Maker to make any payment under this
       Note as and when due and the continuation of such default for more than
       thirty (30) days after notice of default having been given to Maker; or

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                     B. the expiration of the six (6) month period following the
       date the Maker's employment with the Corporation is terminated by the
       Corporation for Cause (as defined in the Maker's Compensation and
       Severance Agreement with the Corporation); or

                     C. the insolvency of the Maker, the death or incapacity of
       Maker, the commission of any act of bankruptcy by the Maker, the
       execution by the Maker of a general assignment for the benefit of
       creditors, the filing by or against the Maker of any petition in
       bankruptcy or any petition for relief under the provisions of title 11 of
       the United States Code, as the same may be amended or supplemented from
       time to time (the "Bankruptcy Code") or any other state or Federal law
       for the relief of debtors and the continuation of such petition without
       dismissal for a period of sixty (60) days or more; or

                     D. ninety (90) days after the closing of an acquisition of
       the Company (whether by merger, sale of all or substantially all of the
       Company's assets or sale of more than fifty percent (50%) of the
       Company's outstanding voting securities) for consideration payable in
       cash or freely-tradable securities; provided, however, that if the
       Pooling of Interest Method, as described in Accounting Principles Board
       Opinion No. 16, is used to account for the acquisition for financial
       accounting purposes, then acceleration of this Note shall not occur until
       the end of the ninety (90)-day period immediately following the close of
       the applicable transfer restriction period required under Accounting
       Series Release Numbers 130 and 135; or

                     E. the occurrence of any event of default under the Stock
       Pledge Agreement securing this Note and the continuation of such default
       for more than thirty (30) days after notice of default having been given
       to Maker.

              6. SPECIAL ACCELERATION EVENT. In the event the Maker sells or
otherwise transfers for value one or more shares of the Corporation's capital
stock that is pledged as collateral for the payment of this Note, then any
unpaid portion of the principal balance of this Note attributable to the
purchase price of those shares shall become immediately due and payable,
together with all accrued and unpaid interest on that principal portion.

              7. EMPLOYMENT. The Maker shall be deemed to continue in employment
with the Corporation for so long as he or she renders services as an employee of
the Corporation or one or more of the Corporation's fifty percent (50%) or more
owned (directly or indirectly) subsidiaries.

              8. SECURITY. Payment of this Note is secured by a pledge of and a
grant of a security interest in the Purchased Shares pursuant to the terms of a
Stock Pledge Agreement executed on or about the date hereof by the Maker. The
Maker, however, shall remain personally liable for payment of this Note and this
Note shall be a full recourse Note. Prior to the Corporation obtaining a
judgment against Maker for amounts due and owing under this Note, the
Corporation waives any rights of offset or recourse against payments owed by the

                                       2.
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Corporation to the Maker in connection with the Corporation's obligations to
Maker under any other wages, salary, benefits, compensation, indemnification or
other rights that Maker may have against Corporation of the Company except the
collateral securing this Note.

              9. COLLECTION. If action is instituted to collect this Note, the
Maker promises to pay all costs and expenses (including reasonable attorneys'
fees) incurred in connection with such action.

              10. WAIVER. A waiver of any term of this Note, the Stock Pledge
Agreement or of any of the obligations secured thereby must be made in writing
and signed by a duly-authorized officer of the Corporation and any such waiver
shall be limited to its express terms.

              No delay by the Corporation in acting with respect to the terms of
this Note or the Stock Pledge Agreement shall constitute a waiver of any breach,
default, or failure of a condition under this Note, the Stock Pledge Agreement
or the obligations secured thereby.

              Except as otherwise provided in this Note, the Stock Pledge
Agreement or any other agreement between Maker and the Corporation, the Maker
waives presentment, demand, notice of dishonor, notice of default or
delinquency, notice of acceleration, notice of protest and nonpayment, notice of
costs, expenses or losses and interest thereon, notice of interest on interest
and diligence in taking any action to collect any sums owing under this Note or
in proceeding against any of the rights or interests in or to properties
securing payment of this Note.

              11. CONFLICTING AGREEMENTS. In the event of any inconsistencies
between the terms of this Note and the terms of any other document related to
the loan evidenced by the Note, the terms of this Note shall prevail.
Capitalized terms not otherwise defined in this Note shall have the meanings as
defined in the Compensation and Severance Agreement between Maker and the
Corporation.

              12. GOVERNING LAW. This Note shall be governed by and construed in
accordance with the laws of the State of California without resort to that
State's conflict-of-laws rules.

                                        MAKER:

                                        /s/ Gary Friedman
                                        ----------------------------------------
                                        [Type Name]:

                                       3.
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                                    EXHIBIT A

                                PURCHASED SHARES

              1. 1,200,000 shares of Common Stock of Restoration Hardware, Inc.
purchased by Maker pursuant to that certain Common Stock Early Exercise Stock
Purchase Agreement executed by Maker on or about March 18, 2001.

              2. 571,429 Shares of Common Stock of Restoration Hardware, Inc.
purchased by Maker pursuant to that certain Common Stock Purchase Agreement
executed by Maker on or about March 18, 2001.

              3. 455 Shares of Series A Preferred Stock Restoration Hardware,
Inc. purchased by Maker pursuant to that certain Stock Purchase Agreement
executed by Maker on or about the date hereof.

              4. 545 Shares of Series B Preferred Stock Restoration Hardware,
Inc. purchased by Maker pursuant to that certain Stock Purchase Agreement
executed by Maker on or about the date hereof.

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                                                                   EXHIBIT 10.36

                           RESTORATION HARDWARE, INC.
                        NOTICE OF GRANT OF STOCK OPTION

              Notice is hereby given of the following option grant (the
"Option") to purchase shares of the Common Stock of Restoration Hardware, Inc.
(the "Corporation"):

              Optionee: Gary G. Friedman

              Grant Date: March 18, 2001

              Vesting Commencement Date: March 18, 2001 (Date employment
commences)

              Exercise Price: $ 1.75 per share (payable as set forth in the
Stock Purchase Agreement or, if applicable, Early Exercise Stock Purchase
Agreement)

              Number of Option Shares: 1,200,000 shares

              Expiration Date: March 17, 2011

              Type of Option: Non-Statutory Stock Option

              Date Exercisable: Immediately Exercisable

              Vesting Schedule: The Option Shares shall initially be unvested
              and subject to repurchase by the Corporation at the Exercise Price
              paid per share. Subject to the terms of the Stock Option Agreement
              attached as Exhibit A, Optionee shall acquire a vested interest
              in, and the Corporation's repurchase right shall accordingly lapse
              with respect to thirty-three and one-third percent (33 1/3%) of
              the Option Shares upon Optionee's completion of each of the three
              (3) years of Service measured from and after the Vesting
              Commencement Date, with the first such installment to become
              exercisable on the first anniversary of the Vesting Commencement
              Date. In no event shall the Option vest for any additional Option
              Shares after Optionee's cessation of Service.

              Optionee agrees to be bound by the terms of the Option as set
forth in the Stock Option Agreement attached hereto as Exhibit A, the Stock
Purchase Agreement attached hereto as Exhibit B or, if applicable, the Early
Exercise Stock Purchase Agreement attached hereto as Exhibit C.

              No Employment or Service Contract. Nothing in this Notice or in
the attached Stock Option Agreement shall confer upon Optionee any right to
continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent or
Subsidiary employing or retaining Optionee) or of Optionee, which rights are
hereby expressly reserved by each, to terminate Optionee's Service at any time
for any reason, with or without cause. This shall not, however, diminish the
Corporation's obligations under Optionee's Compensation and Severance Agreement,
as defined in the Option Agreement attached as Exhibit A, after such agreement
becomes effective.

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              REPURCHASE RIGHTS. OPTIONEE HEREBY AGREES THAT ALL OPTION SHARES
ACQUIRED UPON THE EXERCISE OF THE OPTION SHALL BE SUBJECT TO CERTAIN REPURCHASE
RIGHTS EXERCISABLE BY THE CORPORATION AND ITS ASSIGNS. THE TERMS OF SUCH RIGHTS
ARE SPECIFIED IN THE ATTACHED STOCK PURCHASE AGREEMENT AND EARLY EXERCISE STOCK
PURCHASE AGREEMENT.

              Definitions. All capitalized terms in this Notice shall have the
meaning assigned to them in this Notice or in the attached Stock Option
Agreement.

                                        RESTORATION HARDWARE, INC.

                                        By: /s/ Walter Parks
                                           -------------------------------------

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

                                               /s/ Gary Friedman
                                        ----------------------------------------
                                        OPTIONEE

                                        Address:
                                                --------------------------------

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ATTACHMENT
EXHIBIT A -- STOCK OPTION AGREEMENT
EXHIBIT B -- STOCK PURCHASE AGREEMENT
EXHIBIT C -- EARLY EXERCISE STOCK PURCHASE AGREEMENT

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