X0202 3 2006-03-06 0 0000811696 SHARPER IMAGE CORP SHRP 0001189430 LEVIN JERRY W C/O JW LEVIN PARTNERS LLC 9 WEST 57TH STREET, 26TH FLOOR NEW YORK NY 10019 0 0 1 0 Common Stock, $.01 par value 20000 D Performance Right Common Stock D Represents shares of Common Stock beneficially owned by Mr. Levin. Mr. Levin is a member of the Knightspoint Group, which consists of Knightspoint Partners II, L.P. ("Knightspoint"), Jerry W. Levin, Michael Koeneke, David Meyer, Knightspoint Partners LLC, Michael Glazer, Peter A.Cohen, Morgan B. Stark, Thomas W. Strauss, Jeffrey M. Solomon, Ramius Capital Group, L.L.C., Knightspoint Capital Management II LLC, Parche, LLC ("Parche"), Admiral Advisors, LLC, Starboard Value and Opporutnity Master Fund Ltd. ("Starboard") and C4S & Co., L.L.C. Reflects the shares of Common Stock beneficially owned by Starboard and Parche. For services provided in connection with their investment in Sharper Image Corporation, Knightspoint Partners LLC receives an amount equal to 11% of the profits realized by Parche and Starboard on their investment in Sharper Image Corporation, which currently consists of 1,832,012 shares of Common Stock of Sharper Image Corporation. "Profits" are defined as pre-tax capital gains (losses) plus dividends less applicable broker fees and allocated Transaction Expenses. "Transaction Expenses" are defined as any direct expenses incurred by the group in connection with the investment including documented legal, travel and other "out of pocket" expenses. (Continued in footnote 3) (Continuation of footnote 2) Knightspoint Partners LLC has orally agreed to pay to Mr. Levin one-third of any performance fees received from Parche, LLC or Starboard Value and Opportunity Master Fund Ltd. in connection with their investment in Sharper Image Corporation (which currently consists of 1,832,012 shares of common stock of Sharper Image Corporation) in the event that Mr. Levin does not ultimately assume a paid role with Sharper Image Corporation (other than customary fees for directors and committee members). However, no arrangement with respect to any such future paid role has been discussed with the exception of identifying the potential positions of lead outside director, Chairman and/or interim Chief Executive Officer. Any future compensation arrangement between Mr. Levin and Sharper Image Corporation would be negotiated solely on an arms length basis between Mr. Levin and Sharper Image Corporation. Mr. Levin disclaims beneficial ownership of any securities beneficially owned by Starboard, Parche or any other member of the Knightspoint Group, and this report shall not be deemed to be an admission that Mr. Levin is the beneficial owner of any such securities for purposes of Section 16 or for any other purpose. /s/ Steve Isko, by Power of Attorney 2006-03-16