FIRST AMENDMENT TO THE
                     EMPLOYMENT AGREEMENT OF BARRY GILBERT

         THIS FIRST AMENDMENT TO THE EMPLOYMENT  AGREEMENT (this  "Amendment No.
1") has been  entered into  effective  as of November  30, 1998,  by and between
SHARPER IMAGE  CORPORATION,  a Delaware  corporation  (the  "Company") and BARRY
GILBERT ("Executive").

                                    RECITALS

         The Company had entered into an Employment Agreement with Barry Gilbert
on December 2, 1996 (the "Original Agreement").  The Original Agreement provides
that the Agreement shall continue in effect unless  terminated by the Company or
Executive.  Executive  has advised the Company of his desire to actively  seek a
Chief Executive  Officer position at another  company,  and to allow the Company
time to arrange a  management  transition.  The  Company  wishes to  accommodate
Executive's  objectives,  and both parties wish to modify the Original Agreement
to provide for this change in circumstances.

                                   AGREEMENT

         NOW,  THEREFORE,  in  consideration  of  the  mutual  agreement  herein
contained,  intending to be legally  bound,  the Company and Executive  agree as
follows:

         1.  Term  of  Employment.  All  of  Sections  2 and 7 of  the  original
Agreement are deleted and the following is substituted in their place;

             2. Term of  Employment.  Executive's  employment  with the  Company
pursuant to this  Agreement  as amended  shall  continue  through May 31,  1999,
unless such employment is sooner terminated as hereinafter provided.  The period
during which this Agreement continues in effect shall constitute the "Employment
Period." Executive may terminate employment at any time prior to May 31, 1999 by
providing not less than fourteen (14) days prior written  notice to the Company.
Executive's  employment  may not be terminated by the Company  except for cause.
Executive  shall  not  receive  any  severance   benefits  upon  termination  of
employment,  whether such  termination  results from a voluntary  termination by
Executive,  termination for cause by the Company,  or the expiration of the term
of this Agreement.

         2.  Compensation.  All of  Sections  4(d) and  (4)(g)  of the  Original
Agreement  shall remain  unchanged.  Sections  4(a),  (b), (c), (e), and (f) are
deleted and the following are substituted in their place:

             4(a) Salary.  The Company shall pay Executive an annual base salary
("Base  Salary")  payable at periodic  intervals in accordance  with the payroll
practices  of the Company for salaried  employees.  The Base Salary of Executive
shall be Three Hundred  Twenty-Five  Thousand Dollars  ($325,000) for the period
from the  commencement  of the employment of Executive and continuing  until the
last day of Executive's employment.

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             4(b)  Bonuses.  In  addition  to Base  Salary,  Executive  shall be
entitled  to receive a bonus  payment of Fifty  Thousand  Dollars  ($50,000)  on
December 5, 1998 and continuing  until the last day of  Executive's  employment.
Executive shall not be entitled to any further bonus thereafter.

             4(f) Stock  Option  Grants.  In addition  to the other  benefits to
which the Executive  shall be entitled under this  Agreement,  the Executive has
received and exercised  certain option grants,  of which 50,000 shares vested on
February 1, 1997,  and 50,000  shares  vested on  February 1, 1998.  The parties
acknowledge  and agree that  Executive  shall not  receive  any  further  option
grants, and Executive agrees to, and does hereby, release all options previously
granted but not yet  exercised,  including  the option for 50,000  shares  which
would otherwise vest on February 1, 1999.

         3. Whole  Agreement.  The original  Agreement and this  Amendment No. 1
constitute  the  entire  agreement   between  the  Company  and  Executive.   No
agreements,  representations  or  understandings  (whether  oral or written  and
whether  expressed  or  implied)  which  are not  expressly  set  forth  in this
Agreement  have been made or entered  into by either  party with  respect to the
subject matter hereof.

         4. No Claims.  The Company and Executive each  acknowledge to the other
that, except for obligations to be performed in the future under this Agreement,
neither  party is aware of any claim which it has against the other for any past
performance or nonperformance of this Agreement,  or any act or omission arising
out of the employment relationship to date.

         5. Confidentiality.  The parties agree that this is a private agreement
and  that  neither  party  will  disclose  its  terms  to  anyone  except  their
accountants,  attorneys,  governmental  taxing  authorities,  or as  required by
subpoena or other  process of law. In  response  to any inquiry  regarding  this
matter,  the parties  shall state only that this matter has been resolved to the
satisfaction of all parties.

         IN WITNESS  WHEREOF,  the parties have executed this Amendment No. 1 as
of November 30, 1998.

SHARPER IMAGE CORPORATION                         EXECUTIVE

By: /s/ Richard Thalheimer                        By: /s/ Barry Gilbert
   ------------------------------                     --------------------------
        RICHARD THALHEIMER                                BARRY GILBERT
        Chairman of the Board and
        Chief Executive Officer

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