-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GzWlYmB7S02uU9m/yJjLwZ7B/VU2wkDgvBelTNVgxsrf5Zsl/mEifbymBUmB6hqN t0NDOA3OZjKoYMm1VsGA5w== 0000914760-06-000053.txt : 20060309 0000914760-06-000053.hdr.sgml : 20060309 20060308212803 ACCESSION NUMBER: 0000914760-06-000053 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20060309 DATE AS OF CHANGE: 20060308 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SHARPER IMAGE CORP CENTRAL INDEX KEY: 0000811696 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-MISCELLANEOUS SHOPPING GOODS STORES [5940] IRS NUMBER: 942493558 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-39304 FILM NUMBER: 06674592 BUSINESS ADDRESS: STREET 1: 350 THE EMBARCADERO STREET 2: 6TH FLOOR CITY: SAN FRANCISCO STATE: CA ZIP: 94105 BUSINESS PHONE: 4154456000 MAIL ADDRESS: STREET 1: 350 THE EMBARCADERO STREET 2: 6TH FLOOR CITY: SAN FRANCISCO STATE: CA ZIP: 94105 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Knightspoint Partners II, L.P. CENTRAL INDEX KEY: 0001351122 IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 787 SEVENTH AVENUE, 9TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 212-786-6050 MAIL ADDRESS: STREET 1: 787 SEVENTH AVENUE, 9TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10019 SC 13D 1 s70262_13d.txt FEBRUARY 27, 2006 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES AND EXCHANGE ACT OF 1934 SHARPER IMAGE CORPORATION - -------------------------------------------------------------------------------- (Name of Issuer) COMMON STOCK, PAR VALUE $0.01 PER SHARE - -------------------------------------------------------------------------------- (Title of Class of Securities) 820013100 - -------------------------------------------------------------------------------- (CUSIP Number) with a copy to: David Meyer Stanley H. Meadows, P.C. c/o Knightspoint Partners LLC McDermott Will & Emery LLP 787 Seventh Avenue, 9th Floor 227 West Monroe Street New York, New York 10019 Chicago, Illinois 60606 (212) 786-6050 (312) 372-2000 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Persons Authorized to Receive Notices and Communications) FEBRUARY 27, 2006 - -------------------------------------------------------------------------------- (Date of Event Which Requires Filing of this Statement) If the person filing has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. |_| NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page. The information required in the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). SCHEDULE 13D CUSIP No. 820013100 Page 2 of 39 - -------------------------------------------------------------------------------- (1) Names of Reporting Persons. S.S. or Identification Nos. of above persons (entities only). Knightspoint Partners II, L.P. - -------------------------------------------------------------------------------- (2) Check the Appropriate Box if a Member (a) /x/ of a Group (See Instructions) (b) / / - -------------------------------------------------------------------------------- (3) Sec Use Only - -------------------------------------------------------------------------------- (4) Source of Funds (see instructions) WC - -------------------------------------------------------------------------------- (5) Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e). - -------------------------------------------------------------------------------- (6) Citizenship or Place of Organization Delaware - -------------------------------------------------------------------------------- Number of Shares (7) Sole Voting Power Beneficially Owned by Each Reporting 57,000 Person with: --------------------------------------------------------- (8) Shared Voting Power 0 --------------------------------------------------------- (9) Sole Dispositive Power 57,000 --------------------------------------------------------- (10) Shared Dispositive Power 0 - -------------------------------------------------------------------------------- (11) Aggregate Amount Beneficially Owned by Each Reporting Person 57,000 - -------------------------------------------------------------------------------- (12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) / / - -------------------------------------------------------------------------------- (13) Percent of Class Represented by Amount in Row (11) Less than 1% - -------------------------------------------------------------------------------- (14) Type of Reporting Person (See Instructions) PN - -------------------------------------------------------------------------------- SCHEDULE 13D CUSIP No. 820013100 Page 3 of 39 - -------------------------------------------------------------------------------- (1) Names of Reporting Persons. S.S. or Identification Nos. of above persons (entities only). Knightspoint Capital Management II LLC - -------------------------------------------------------------------------------- (2) Check the Appropriate Box if a Member (a) /x/ of a Group (See Instructions) (b) / / - -------------------------------------------------------------------------------- (3) Sec Use Only - -------------------------------------------------------------------------------- (4) Source of Funds (see instructions) N/A - -------------------------------------------------------------------------------- (5) Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e). - -------------------------------------------------------------------------------- (6) Citizenship or Place of Organization Delaware - -------------------------------------------------------------------------------- Number of Shares (7) Sole Voting Power Beneficially Owned by Each Reporting 57,000 Person with: --------------------------------------------------------- (8) Shared Voting Power 0 --------------------------------------------------------- (9) Sole Dispositive Power 57,000 --------------------------------------------------------- (10) Shared Dispositive Power 0 - -------------------------------------------------------------------------------- (11) Aggregate Amount Beneficially Owned by Each Reporting Person 57,000 - -------------------------------------------------------------------------------- (12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) / / - -------------------------------------------------------------------------------- (13) Percent of Class Represented by Amount in Row (11) Less than 1% - -------------------------------------------------------------------------------- (14) Type of Reporting Person (See Instructions) OO - -------------------------------------------------------------------------------- SCHEDULE 13D CUSIP No. 820013100 Page 4 of 39 - -------------------------------------------------------------------------------- (1) Names of Reporting Persons. S.S. or Identification Nos. of above persons (entities only). Knightspoint Partners LLC 81-0604786 - -------------------------------------------------------------------------------- (2) Check the Appropriate Box if a Member (a) /x/ of a Group (See Instructions) (b) / / - -------------------------------------------------------------------------------- (3) Sec Use Only - -------------------------------------------------------------------------------- (4) Source of Funds (see instructions) N/A - -------------------------------------------------------------------------------- (5) Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e). - -------------------------------------------------------------------------------- (6) Citizenship or Place of Organization Delaware - -------------------------------------------------------------------------------- Number of Shares (7) Sole Voting Power Beneficially Owned by Each Reporting 57,000 Person with: --------------------------------------------------------- (8) Shared Voting Power 0 --------------------------------------------------------- (9) Sole Dispositive Power 57,000 --------------------------------------------------------- (10) Shared Dispositive Power 0 - ------------------------------------------------------------------------------- (11) Aggregate Amount Beneficially Owned by Each Reporting Person 57,000 - -------------------------------------------------------------------------------- (12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) / / - -------------------------------------------------------------------------------- (13) Percent of Class Represented by Amount in Row (11) Less than 1% - -------------------------------------------------------------------------------- (14) Type of Reporting Person (See Instructions) OO - -------------------------------------------------------------------------------- SCHEDULE 13D CUSIP No. 820013100 Page 5 of 39 - -------------------------------------------------------------------------------- (1) Names of Reporting Persons. S.S. or Identification Nos. of above persons (entities only). Michael Koeneke - -------------------------------------------------------------------------------- (2) Check the Appropriate Box if a Member (a) /x/ of a Group (See Instructions) (b) / / - -------------------------------------------------------------------------------- (3) Sec Use Only - -------------------------------------------------------------------------------- (4) Source of Funds (see instructions) PF - -------------------------------------------------------------------------------- (5) Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e). - -------------------------------------------------------------------------------- (6) Citizenship or Place of Organization USA - -------------------------------------------------------------------------------- Number of Shares (7) Sole Voting Power Beneficially Owned by Each Reporting 0 Person with: --------------------------------------------------------- (8) Shared Voting Power 57,000 --------------------------------------------------------- (9) Sole Dispositive Power 0 --------------------------------------------------------- (10) Shared Dispositive Power 57,000 - -------------------------------------------------------------------------------- (11) Aggregate Amount Beneficially Owned by Each Reporting Person 57,000 - -------------------------------------------------------------------------------- (12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) / / - -------------------------------------------------------------------------------- (13) Percent of Class Represented by Amount in Row (11) Less than 1% - -------------------------------------------------------------------------------- (14) Type of Reporting Person (See Instructions) IN - -------------------------------------------------------------------------------- SCHEDULE 13D CUSIP No. 820013100 Page 6 of 39 - -------------------------------------------------------------------------------- (1) Names of Reporting Persons. S.S. or Identification Nos. of above persons (entities only). David Meyer - -------------------------------------------------------------------------------- (2) Check the Appropriate Box if a Member (a) /x/ of a Group (See Instructions) (b) / / - -------------------------------------------------------------------------------- (3) Sec Use Only - -------------------------------------------------------------------------------- (4) Source of Funds (see instructions) PF - -------------------------------------------------------------------------------- (5) Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e). - -------------------------------------------------------------------------------- (6) Citizenship or Place of Organization USA - -------------------------------------------------------------------------------- Number of Shares (7) Sole Voting Power Beneficially Owned by Each Reporting 0 Person with: --------------------------------------------------------- (8) Shared Voting Power 57,000 --------------------------------------------------------- (9) Sole Dispositive Power 0 --------------------------------------------------------- (10) Shared Dispositive Power 57,000 - -------------------------------------------------------------------------------- (11) Aggregate Amount Beneficially Owned by Each Reporting Person 57,000 - -------------------------------------------------------------------------------- (12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) / / - -------------------------------------------------------------------------------- (13) Percent of Class Represented by Amount in Row (11) Less than 1% - -------------------------------------------------------------------------------- (14) Type of Reporting Person (See Instructions) IN - -------------------------------------------------------------------------------- SCHEDULE 13D CUSIP No. 820013100 Page 7 of 39 - -------------------------------------------------------------------------------- (1) Names of Reporting Persons. S.S. or Identification Nos. of above persons (entities only). Starboard Value and Opportunity Master Fund Ltd. - -------------------------------------------------------------------------------- (2) Check the Appropriate Box if a Member (a) /x/ of a Group (See Instructions) (b) / / - -------------------------------------------------------------------------------- (3) Sec Use Only - -------------------------------------------------------------------------------- (4) Source of Funds (see instructions) WC - -------------------------------------------------------------------------------- (5) Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e). - -------------------------------------------------------------------------------- (6) Citizenship or Place of Organization Cayman Islands - -------------------------------------------------------------------------------- Number of Shares (7) Sole Voting Power Beneficially Owned by Each Reporting 1,538,890 Person with: --------------------------------------------------------- (8) Shared Voting Power 0 --------------------------------------------------------- (9) Sole Dispositive Power 1,538,890 --------------------------------------------------------- (10) Shared Dispositive Power 0 - -------------------------------------------------------------------------------- (11) Aggregate Amount Beneficially Owned by Each Reporting Person 1,538,890 - -------------------------------------------------------------------------------- (12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) / / - -------------------------------------------------------------------------------- (13) Percent of Class Represented by Amount in Row (11) 10.3% - -------------------------------------------------------------------------------- (14) Type of Reporting Person (See Instructions) CO - -------------------------------------------------------------------------------- SCHEDULE 13D CUSIP No. 820013100 Page 8 of 39 - -------------------------------------------------------------------------------- (1) Names of Reporting Persons. S.S. or Identification Nos. of above persons (entities only). Ramius Capital Group, L.L.C. 13-3937658 - -------------------------------------------------------------------------------- (2) Check the Appropriate Box if a Member (a) /x/ of a Group (See Instructions) (b) / / - -------------------------------------------------------------------------------- (3) Sec Use Only - -------------------------------------------------------------------------------- (4) Source of Funds (see instructions) OO - -------------------------------------------------------------------------------- (5) Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e). - -------------------------------------------------------------------------------- (6) Citizenship or Place of Organization Delaware - -------------------------------------------------------------------------------- Number of Shares (7) Sole Voting Power Beneficially Owned by Each Reporting 1,832,012 Person with: --------------------------------------------------------- (8) Shared Voting Power 0 --------------------------------------------------------- (9) Sole Dispositive Power 1,832,012 --------------------------------------------------------- (10) Shared Dispositive Power 0 - -------------------------------------------------------------------------------- (11) Aggregate Amount Beneficially Owned by Each Reporting Person 1,832,012 - -------------------------------------------------------------------------------- (12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) / / - -------------------------------------------------------------------------------- (13) Percent of Class Represented by Amount in Row (11) 12.3% - -------------------------------------------------------------------------------- (14) Type of Reporting Person (See Instructions) IA, OO - -------------------------------------------------------------------------------- SCHEDULE 13D CUSIP No. 820013100 Page 9 of 39 - -------------------------------------------------------------------------------- (1) Names of Reporting Persons. S.S. or Identification Nos. of above persons (entities only). C4S & Co., L.L.C. 13-3946794 - -------------------------------------------------------------------------------- (2) Check the Appropriate Box if a Member (a) /x/ of a Group (See Instructions) (b) / / - -------------------------------------------------------------------------------- (3) Sec Use Only - -------------------------------------------------------------------------------- (4) Source of Funds (see instructions) OO - -------------------------------------------------------------------------------- (5) Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e). - -------------------------------------------------------------------------------- (6) Citizenship or Place of Organization Delaware - -------------------------------------------------------------------------------- Number of Shares (7) Sole Voting Power Beneficially Owned by Each Reporting 1,832,012 Person with: --------------------------------------------------------- (8) Shared Voting Power 0 --------------------------------------------------------- (9) Sole Dispositive Power 1,832,012 --------------------------------------------------------- (10) Shared Dispositive Power 0 - -------------------------------------------------------------------------------- (11) Aggregate Amount Beneficially Owned by Each Reporting Person 1,832,012 - -------------------------------------------------------------------------------- (12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) / / - -------------------------------------------------------------------------------- (13) Percent of Class Represented by Amount in Row (11) 12.3% - -------------------------------------------------------------------------------- (14) Type of Reporting Person (See Instructions) OO - -------------------------------------------------------------------------------- SCHEDULE 13D CUSIP No. 820013100 Page 10 of 39 - -------------------------------------------------------------------------------- (1) Names of Reporting Persons. S.S. or Identification Nos. of above persons (entities only). Parche, LLC 20-0870632 - -------------------------------------------------------------------------------- (2) Check the Appropriate Box if a Member (a) /x/ of a Group (See Instructions) (b) / / - -------------------------------------------------------------------------------- (3) Sec Use Only - -------------------------------------------------------------------------------- (4) Source of Funds (see instructions) WC - -------------------------------------------------------------------------------- (5) Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e). - -------------------------------------------------------------------------------- (6) Citizenship or Place of Organization Delaware - -------------------------------------------------------------------------------- Number of Shares (7) Sole Voting Power Beneficially Owned by Each Reporting 293,122 Person with: --------------------------------------------------------- (8) Shared Voting Power 0 --------------------------------------------------------- (9) Sole Dispositive Power 293,122 --------------------------------------------------------- (10) Shared Dispositive Power 0 - -------------------------------------------------------------------------------- (11) Aggregate Amount Beneficially Owned by Each Reporting Person 293,122 - -------------------------------------------------------------------------------- (12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) / / - -------------------------------------------------------------------------------- (13) Percent of Class Represented by Amount in Row (11) 2.0% - -------------------------------------------------------------------------------- (14) Type of Reporting Person (See Instructions) OO - -------------------------------------------------------------------------------- SCHEDULE 13D CUSIP No. 820013100 Page 11 of 39 - -------------------------------------------------------------------------------- (1) Names of Reporting Persons. S.S. or Identification Nos. of above persons (entities only). Admiral Advisors, LLC 37-1484525 - -------------------------------------------------------------------------------- (2) Check the Appropriate Box if a Member (a) /x/ of a Group (See Instructions) (b) / / - -------------------------------------------------------------------------------- (3) Sec Use Only - -------------------------------------------------------------------------------- (4) Source of Funds (see instructions) OO - -------------------------------------------------------------------------------- (5) Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e). - -------------------------------------------------------------------------------- (6) Citizenship or Place of Organization Delaware - -------------------------------------------------------------------------------- Number of Shares (7) Sole Voting Power Beneficially Owned by Each Reporting 1,832,012 Person with: --------------------------------------------------------- (8) Shared Voting Power 0 --------------------------------------------------------- (9) Sole Dispositive Power 1,832,012 --------------------------------------------------------- (10) Shared Dispositive Power 0 - -------------------------------------------------------------------------------- (11) Aggregate Amount Beneficially Owned by Each Reporting Person 1,832,012 - -------------------------------------------------------------------------------- (12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) / / - -------------------------------------------------------------------------------- (13) Percent of Class Represented by Amount in Row (11) 12.3% - -------------------------------------------------------------------------------- (14) Type of Reporting Person (See Instructions) OO - -------------------------------------------------------------------------------- SCHEDULE 13D CUSIP No. 820013100 Page 12 of 39 - -------------------------------------------------------------------------------- (1) Names of Reporting Persons. S.S. or Identification Nos. of above persons (entities only). Peter A. Cohen - -------------------------------------------------------------------------------- (2) Check the Appropriate Box if a Member (a) /x/ of a Group (See Instructions) (b) / / - -------------------------------------------------------------------------------- (3) Sec Use Only - -------------------------------------------------------------------------------- (4) Source of Funds (see instructions) OO - -------------------------------------------------------------------------------- (5) Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e). - -------------------------------------------------------------------------------- (6) Citizenship or Place of Organization USA - -------------------------------------------------------------------------------- Number of Shares (7) Sole Voting Power Beneficially Owned by Each Reporting 0 Person with: --------------------------------------------------------- (8) Shared Voting Power 1,832,012 --------------------------------------------------------- (9) Sole Dispositive Power 0 --------------------------------------------------------- (10) Shared Dispositive Power 1,832,012 - -------------------------------------------------------------------------------- (11) Aggregate Amount Beneficially Owned by Each Reporting Person 1,832,012 - -------------------------------------------------------------------------------- (12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) / / - -------------------------------------------------------------------------------- (13) Percent of Class Represented by Amount in Row (11) 12.3% - -------------------------------------------------------------------------------- (14) Type of Reporting Person (See Instructions) IN - -------------------------------------------------------------------------------- SCHEDULE 13D CUSIP No. 820013100 Page 13 of 39 - -------------------------------------------------------------------------------- (1) Names of Reporting Persons. S.S. or Identification Nos. of above persons (entities only). Jeffrey M. Solomon - -------------------------------------------------------------------------------- (2) Check the Appropriate Box if a Member (a) /x/ of a Group (See Instructions) (b) / / - -------------------------------------------------------------------------------- (3) Sec Use Only - -------------------------------------------------------------------------------- (4) Source of Funds (see instructions) OO - -------------------------------------------------------------------------------- (5) Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e). - -------------------------------------------------------------------------------- (6) Citizenship or Place of Organization USA - -------------------------------------------------------------------------------- Number of Shares (7) Sole Voting Power Beneficially Owned by Each Reporting 0 Person with: --------------------------------------------------------- (8) Shared Voting Power 1,832,012 --------------------------------------------------------- (9) Sole Dispositive Power 0 --------------------------------------------------------- (10) Shared Dispositive Power 1,832,012 - -------------------------------------------------------------------------------- (11) Aggregate Amount Beneficially Owned by Each Reporting Person 1,832,012 - -------------------------------------------------------------------------------- (12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) / / - -------------------------------------------------------------------------------- (13) Percent of Class Represented by Amount in Row (11) 12.3% - -------------------------------------------------------------------------------- (14) Type of Reporting Person (See Instructions) IN - -------------------------------------------------------------------------------- SCHEDULE 13D CUSIP No. 820013100 Page 14 of 39 - -------------------------------------------------------------------------------- (1) Names of Reporting Persons. S.S. or Identification Nos. of above persons (entities only). Morgan B. Stark - -------------------------------------------------------------------------------- (2) Check the Appropriate Box if a Member (a) /x/ of a Group (See Instructions) (b) / / - -------------------------------------------------------------------------------- (3) Sec Use Only - -------------------------------------------------------------------------------- (4) Source of Funds (see instructions) OO - -------------------------------------------------------------------------------- (5) Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e). - -------------------------------------------------------------------------------- (6) Citizenship or Place of Organization USA - -------------------------------------------------------------------------------- Number of Shares (7) Sole Voting Power Beneficially Owned by Each Reporting 0 Person with: --------------------------------------------------------- (8) Shared Voting Power 1,832,012 --------------------------------------------------------- (9) Sole Dispositive Power 0 --------------------------------------------------------- (10) Shared Dispositive Power 1,832,012 - -------------------------------------------------------------------------------- (11) Aggregate Amount Beneficially Owned by Each Reporting Person 1,832,012 - -------------------------------------------------------------------------------- (12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) / / - -------------------------------------------------------------------------------- (13) Percent of Class Represented by Amount in Row (11) 12.3% - -------------------------------------------------------------------------------- (14) Type of Reporting Person (See Instructions) IN - -------------------------------------------------------------------------------- SCHEDULE 13D CUSIP No. 820013100 Page 15 of 39 - -------------------------------------------------------------------------------- (1) Names of Reporting Persons. S.S. or Identification Nos. of above persons (entities only). Thomas W. Strauss - -------------------------------------------------------------------------------- (2) Check the Appropriate Box if a Member (a) /x/ of a Group (See Instructions) (b) / / - -------------------------------------------------------------------------------- (3) Sec Use Only - -------------------------------------------------------------------------------- (4) Source of Funds (see instructions) OO - -------------------------------------------------------------------------------- (5) Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e). - -------------------------------------------------------------------------------- (6) Citizenship or Place of Organization USA - -------------------------------------------------------------------------------- Number of Shares (7) Sole Voting Power Beneficially Owned by Each Reporting 0 Person with: --------------------------------------------------------- (8) Shared Voting Power 1,832,012 --------------------------------------------------------- (9) Sole Dispositive Power 0 --------------------------------------------------------- (10) Shared Dispositive Power 1,832,012 - -------------------------------------------------------------------------------- (11) Aggregate Amount Beneficially Owned by Each Reporting Person 1,832,012 - -------------------------------------------------------------------------------- (12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) / / - -------------------------------------------------------------------------------- (13) Percent of Class Represented by Amount in Row (11) 12.3% - -------------------------------------------------------------------------------- (14) Type of Reporting Person (See Instructions) IN - -------------------------------------------------------------------------------- SCHEDULE 13D CUSIP No. 820013100 Page 16 of 39 - -------------------------------------------------------------------------------- (1) Names of Reporting Persons. S.S. or Identification Nos. of above persons (entities only). David R. Glew - -------------------------------------------------------------------------------- (2) Check the Appropriate Box if a Member (a) / / of a Group (See Instructions) (b) /x/ - -------------------------------------------------------------------------------- (3) Sec Use Only - -------------------------------------------------------------------------------- (4) Source of Funds (see instructions) N/A - -------------------------------------------------------------------------------- (5) Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e). - -------------------------------------------------------------------------------- (6) Citizenship or Place of Organization USA - -------------------------------------------------------------------------------- Number of Shares (7) Sole Voting Power Beneficially Owned by Each Reporting 0 Person with: --------------------------------------------------------- (8) Shared Voting Power 0 --------------------------------------------------------- (9) Sole Dispositive Power 0 --------------------------------------------------------- (10) Shared Dispositive Power 0 - -------------------------------------------------------------------------------- (11) Aggregate Amount Beneficially Owned by Each Reporting Person 0 - -------------------------------------------------------------------------------- (12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) / / - -------------------------------------------------------------------------------- (13) Percent of Class Represented by Amount in Row (11) NA - -------------------------------------------------------------------------------- (14) Type of Reporting Person (See Instructions) IN - -------------------------------------------------------------------------------- SCHEDULE 13D CUSIP No. 820013100 Page 17 of 39 - -------------------------------------------------------------------------------- (1) Names of Reporting Persons. S.S. or Identification Nos. of above persons (entities only). Michael Glazer - -------------------------------------------------------------------------------- (2) Check the Appropriate Box if a Member (a) / / of a Group (See Instructions) (b) /x/ - -------------------------------------------------------------------------------- (3) Sec Use Only - -------------------------------------------------------------------------------- (4) Source of Funds (see instructions) PF - -------------------------------------------------------------------------------- (5) Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e). - -------------------------------------------------------------------------------- (6) Citizenship or Place of Organization USA - -------------------------------------------------------------------------------- Number of Shares (7) Sole Voting Power Beneficially Owned by Each Reporting 3,000 Person with: --------------------------------------------------------- (8) Shared Voting Power 0 --------------------------------------------------------- (9) Sole Dispositive Power 3,000 --------------------------------------------------------- (10) Shared Dispositive Power 0 - -------------------------------------------------------------------------------- (11) Aggregate Amount Beneficially Owned by Each Reporting Person 3,000 - -------------------------------------------------------------------------------- (12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) / / - -------------------------------------------------------------------------------- (13) Percent of Class Represented by Amount in Row (11) Less than 1% - -------------------------------------------------------------------------------- (14) Type of Reporting Person (See Instructions) IN - -------------------------------------------------------------------------------- SCHEDULE 13D CUSIP No. 820013100 Page 18 of 39 - -------------------------------------------------------------------------------- (1) Names of Reporting Persons. S.S. or Identification Nos. of above persons (entities only). Jerry W. Levin - -------------------------------------------------------------------------------- (2) Check the Appropriate Box if a Member (a) / / of a Group (See Instructions) (b) /x/ - -------------------------------------------------------------------------------- (3) Sec Use Only - -------------------------------------------------------------------------------- (4) Source of Funds (see instructions) PF - -------------------------------------------------------------------------------- (5) Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e). - -------------------------------------------------------------------------------- (6) Citizenship or Place of Organization USA - -------------------------------------------------------------------------------- Number of Shares (7) Sole Voting Power Beneficially Owned by Each Reporting 20,000 Person with: --------------------------------------------------------- (8) Shared Voting Power 0 --------------------------------------------------------- (9) Sole Dispositive Power 20,000 --------------------------------------------------------- (10) Shared Dispositive Power 0 - -------------------------------------------------------------------------------- (11) Aggregate Amount Beneficially Owned by Each Reporting Person 20,000 - -------------------------------------------------------------------------------- (12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) / / - -------------------------------------------------------------------------------- (13) Percent of Class Represented by Amount in Row (11) Less than 1% - -------------------------------------------------------------------------------- (14) Type of Reporting Person (See Instructions) IN - -------------------------------------------------------------------------------- SCHEDULE 13D CUSIP No. 820013100 Page 19 of 39 - -------------------------------------------------------------------------------- (1) Names of Reporting Persons. S.S. or Identification Nos. of above persons (entities only). Peter M. Weil - -------------------------------------------------------------------------------- (2) Check the Appropriate Box if a Member (a) / / of a Group (See Instructions) (b) /x/ - -------------------------------------------------------------------------------- (3) Sec Use Only - -------------------------------------------------------------------------------- (4) Source of Funds (see instructions) N/A - -------------------------------------------------------------------------------- (5) Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e). - -------------------------------------------------------------------------------- (6) Citizenship or Place of Organization USA - -------------------------------------------------------------------------------- Number of Shares (7) Sole Voting Power Beneficially Owned by Each Reporting 0 Person with: --------------------------------------------------------- (8) Shared Voting Power 0 --------------------------------------------------------- (9) Sole Dispositive Power 0 --------------------------------------------------------- (10) Shared Dispositive Power 0 - -------------------------------------------------------------------------------- (11) Aggregate Amount Beneficially Owned by Each Reporting Person 0 - -------------------------------------------------------------------------------- (12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) / / - -------------------------------------------------------------------------------- (13) Percent of Class Represented by Amount in Row (11) Less than 1% - -------------------------------------------------------------------------------- (14) Type of Reporting Person (See Instructions) IN - -------------------------------------------------------------------------------- SCHEDULE 13D CUSIP No. 820013100 Page 20 of 39 - -------------------------------------------------------------------------------- (1) Names of Reporting Persons. S.S. or Identification Nos. of above persons (entities only). Andrea Weiss - -------------------------------------------------------------------------------- (2) Check the Appropriate Box if a Member (a) / / of a Group (See Instructions) (b) /x/ - -------------------------------------------------------------------------------- (3) Sec Use Only - -------------------------------------------------------------------------------- (4) Source of Funds (see instructions) N/A - -------------------------------------------------------------------------------- (5) Check if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e). - -------------------------------------------------------------------------------- (6) Citizenship or Place of Organization USA - -------------------------------------------------------------------------------- Number of Shares (7) Sole Voting Power Beneficially Owned by Each Reporting 0 Person with: --------------------------------------------------------- (8) Shared Voting Power 0 --------------------------------------------------------- (9) Sole Dispositive Power 0 --------------------------------------------------------- (10) Shared Dispositive Power 0 - -------------------------------------------------------------------------------- (11) Aggregate Amount Beneficially Owned by Each Reporting Person 0 - -------------------------------------------------------------------------------- (12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) / / - -------------------------------------------------------------------------------- (13) Percent of Class Represented by Amount in Row (11) NA - -------------------------------------------------------------------------------- (14) Type of Reporting Person (See Instructions) IN - -------------------------------------------------------------------------------- SCHEDULE 13D CUSIP No. 820013100 Page 21 of 39 ITEM 1. SECURITY AND ISSUER. This statement relates to the shares of common stock, par value $0.01 per share ("Common Stock"), of Sharper Image Corporation, a Delaware corporation (the "Company"). The principal executive offices of the Company are located at 650 Davis Street, San Francisco, CA 94111. ITEM 2. IDENTITY AND BACKGROUND. (a) - (c),(f) This Schedule 13D is being filed jointly by Knightspoint Partners II, L.P., Knightspoint Capital Management II LLC, Knightspoint Partners LLC, Michael Koeneke, David Meyer, Jerry W. Levin, Starboard Value and Opportunity Master Fund Ltd., Ramius Capital Group, LLC, C4S & Co., L.L.C., Ramius Advisors, L.L.C., Peter A. Cohen, Jeffrey M. Solomon, Morgan B. Stark, Thomas W. Strauss, Parche, LLC and Admiral Advisors, LLC (collectively, the "Knightspoint Group"). In addition, although they do not affirm their membership in the group that is composed of, and affirmed by, the Knightspoint Group, each of Michael Glazer, David R. Glew, Peter M. Weil and Andrea Weiss (collectively, the "Other Reporting Persons" and, together with the Knightspoint Group, the "Reporting Persons") are filing this Schedule 13D. Each Other Reporting Person disclaims beneficial ownership of Common Stock held by the Knightspoint Group and, similarly, the Knightspoint Group disclaims beneficial ownership of Common Stock held by the Other Reporting Persons. Knightspoint Partners II, L.P. is a Delaware limited partnership formed to make investments (whether through acquiring, holding or disposing of equity securities or otherwise). The address of the principal business and principal offices of Knightspoint Partners II, L.P. is 787 Seventh Avenue, 9th Floor, New York, New York 10019. The General Partner of Knightspoint Partners II, L.P. is Knightspoint Capital Management II LLC, a Delaware limited liability company formed to be the general partner of Knightspoint Partners II, L.P. The address of the principal business and principal offices of Knightspoint Capital Management II LLC is 787 Seventh Avenue, 9th Floor, New York, New York 10019. The sole Member of Knightspoint Capital Management II LLC is Knightspoint Partners LLC, a Delaware limited liability company that is engaged in the business of acquiring, holding or disposing of investments in various companies. The address of the principal business and principal offices of Knightspoint Partners LLC is 787 Seventh Avenue, 9th Floor, New York, New York 10019. Each of Michael Koeneke and David Meyer is a managing member of Knightspoint Partners LLC. Michael Koeneke is a United States citizen whose business address is 787 Seventh Avenue, 9th Floor, New York, New York 10019. Mr. Koeneke's principal occupation is investing and providing financial advisory services; he also serves as a managing member of Knightspoint Partners LLC. SCHEDULE 13D CUSIP No. 820013100 Page 22 of 39 David Meyer is a United States citizen whose business address is 787 Seventh Avenue, 9th Floor, New York, New York 10019. Mr. Meyer's principal occupation is investing and providing financial advisory services; he also serves as a managing member of Knightspoint Partners LLC. Starboard Value and Opportunity Master Fund Ltd. is an exempted company organized under the laws of the Cayman Islands formed to be a private investment fund. The address of the principal business and principal office of Starboard Value and Opportunity Master Fund Ltd. is c/o Citco Fund Services (Cayman Islands) Limited, Corporate Center, West Bay Road, Grand Cayman, Cayman Islands, British West Indies. Parche, LLC is a Delaware limited liability company. Schedule I sets forth the officers and directors of Starboard Value and Opportunity Master Fund Ltd. The address of the principal business and principal office of Parche, LLC is 666 Third Avenue, 26th Floor, New York, New York 10017. Each of Starboard Value and Opportunity Master Fund Ltd. and Parche, LLC have been formed for the purpose of making equity investments and, on occasion, taking an active role in the management of portfolio companies in order to enhance shareholder value. The managing member of Parche, LLC is Admiral Advisors, LLC, a Delaware limited liability company formed to be the managing member of Parche, LLC. Admiral Advisors, LLC also serves as the investment manager for Starboard Value and Opportunity Master Fund Ltd. The address of the principal business and principal office of Admiral Advisors, LLC is 666 Third Avenue, 26th Floor, New York, New York 10017. The sole member of Admiral Advisors, LLC is Ramius Capital Group, L.L.C. Ramius Capital Group, L.L.C. is a Delaware limited liability company that is engaged in money management and investment advisory services for third parties and proprietary accounts. The address of the principal business and principal office of Ramius Capital Group, L.L.C. is 666 Third Avenue, 26th Floor, New York, New York 10017. The managing member of Ramius Capital Group, L.L.C. is C4S & Co., L.L.C., a Delaware limited liability company formed to be the managing member of Ramius Capital Group, L.L.C. The address of the principal business and principal office of C4S & Co., L.L.C. is 666 Third Avenue, 26th Floor, New York, New York 10017. Each of Peter A. Cohen, Morgan B. Stark, Jeffrey M. Solomon and Thomas W. Strauss is a United States citizen and each is a managing member of C4S & Co., L.L.C. The business address of each of Messrs. Cohen, Stark, Solomon and Strauss is 666 Third Avenue, 26th Floor, New York, New York 10017. Michael Glazer is a United States citizen whose business address is 5 Gleneagles Drive, Lenox, Massachusetts 01240. Mr. Glazer is President of Team Neu, which is his principal occupation. David R. Glew is a United States citizen whose address is 8530 E. Shadowside Place, Tucson, AZ 85750. SCHEDULE 13D CUSIP No. 820013100 Page 23 of 39 Jerry W. Levin is a United States citizen whose business address is c/o JW Levin Partners LLC, 9 West 57th Street, 26th Floor, New York, NY 10019. Mr. Levin is the Chairman and Chief Executive Officer of JW Levin Partners LLC, a management and investment firm. Peter M. Weil is a United States citizen whose business address is 53 Bonad Road, West Newton, Massachusetts 02465. Mr. Weil is a partner of Lighthouse Retail Group LLC, which is his principal occupation. Andrea Weiss is a United States citizen whose business address is c/o 27400 Sr. 44-E, Eustis, Florida 32736. Ms. Weiss is the President and CEO of Retail Consulting, LLC, a retail consulting firm, which is her principal occupation. (d) and (e) During the last five years, no Reporting Person or any other person identified in response to this Item 2 has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors), or was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. The purchases of 20,000 shares of Common Stock by Knightspoint Partners II, L.P. were made in the open market and were funded by working capital resulting from the proceeds of a capital contribution by the limited partners of Knightspoint Partners II, L.P. The amount of the funds expended by Knightspoint Partners II, L.P. for such purchases (excluding brokerage commissions) was $231,300. The remaining 37,000 shares of Common Stock held by Knightspoint Partners II, L.P. were contributed to Knightspoint Partners II, L.P. by Michael Koeneke and David Meyer in exchange for limited partnership interests in Knightspoint Partners II, L.P. The purchases of Common Stock so contributed to Knightspoint Partners II, L.P. were made by Messrs. Koeneke and Meyer in the open market with personal funds, which may, at any given time, include margin loans made by brokerage firms in the ordinary course of business. The amount of the funds expended by such persons for such purchases (excluding brokerage commissions) was $122,642 by Mr. Koeneke and $270,760 by Mr. Meyer. All purchases of Common Stock by the Starboard Value and Opportunity Master Fund Ltd. and Parche, LLC were made in open market transactions except to the extent set forth below. The transactions effected in the past 60 days are described in Item 5 below. All such purchases of Common Stock were funded by working capital, which may, at any given time, include margin loans made by brokerage firms in the ordinary course of business. The amount of funds expended for such purchases was approximately $15,993,168 by Starboard Value and SCHEDULE 13D CUSIP No. 820013100 Page 24 of 39 Opportunity Master Fund Ltd. and $3,164,988 by Parche, LLC, including broker commissions. Certain shares reported in the Schedule 13D as owned by Parche, LLC were acquired in private transactions with various transferors for which Ramius Capital Group, L.L.C. or an affiliate serves as the investment manager, the managing member or the managing member of the investment manager. Ramius Capital Group, L.L.C. is the sole member of Admiral Advisors, LLC, which is the managing member of Parche, LLC. Parche, LLC acquired from such transferors an aggregate of 103,471 shares of Common Stock on February 27, 2006 at a per share price of $11.04, equal to the last reported sales price on the Nasdaq National Market on the date the transaction was completed, or an aggregate of $1,142,320. The total of 103,471 shares transferred to Parche, LLC were initially acquired by the transferors for an aggregate of $1,142,320 (excluding commissions and other execution related costs). Such transferors had, within the 60 days prior to the filing of this Schedule 13D, effected the following transactions in the Common Stock: 12/29/05 purchased 3,056 shares at a price per share of $9.2648; 12/30/05 purchased 1,600 shares at a price per share of $9.2800; 1/05/06 purchased 4,640 shares at a price per share of $9.5694; 1/05/06 purchased 2,144 shares at a price per share of $9.4968; 1/05/06 purchased 3,200 shares at a price per share of $9.5438; 1/06/06 purchased 6,448 shares at a price per share of $9.6000; 1/06/06 purchased 3,200 shares at a price per share of $9.5996; 1/09/06 purchased 6,400 shares at a price per share of $9.5000; 1/10/06 purchased 5,454 shares at a price per share of $9.3880; 1/11/06 purchased 5,345 shares at a price per share of $9.2469; 1/13/06 sold 8,800 shares at a price per share of $9.3865; 1/17/06 sold 6,746 shares at a price per share of $9.2359; 1/18/06 sold 4,800 shares at a price per share of $9.1550; 1/19/06 sold 21,500 shares at a price per share of $8.9516; 1/20/06 sold 12,000 shares at a price per share of $8.9525; 2/02/06 purchased 4,704 shares at a price per share of $9.4764; 2/03/06 purchased 4,800 shares at a price per share of $9.4828; 2/06/06 purchased 9,600 shares at a price per share of $9.7883; 2/07/06 purchased an aggregate of 10,800 shares at a price per share of $10.0497; 2/10/06 purchased 19,200 shares at a price per share of $10.1703; 02/13/06 purchased 4,800 shares at a price per share of $10.0300; 2/13/06 purchased 744 shares at a price per share of $10.1147; 2/14/06 purchased 8,000 shares at a price per share of $10.7870; 2/14/06 purchased 2,400 shares at a price per share of $10.8500; 2/27/06 sold 103,471 shares at a price per share of $11.0400. All purchases of Common Stock referenced above were funded by working capital, which may, at any given time, include margin loans made by brokerage firms in the ordinary course of business. The Reporting Person do not believe that the information contained in this paragraph is called for by the Items of Schedule 13D and are disclosing it for supplemental informational purposes only. The purchases of 20,000 shares of Common Stock by Jerry Levin were made in the open market with personal funds, which may, at any given time, include margin loans made by brokerage firms in the ordinary course of business. The amount of the funds expended for such purchases (excluding brokerage commissions) was $192,036. SCHEDULE 13D CUSIP No. 820013100 Page 25 of 39 The purchases of 3,000 shares of Common Stock by Michael Glazer were made in the open market with personal funds, which may, at any given time, include margin loans made by brokerage firms in the ordinary course of business. The amount of the funds expended for such purchases (excluding brokerage commissions) was $28,400. ITEM 4. PURPOSE OF TRANSACTION. The Reporting Persons acquired beneficial ownership of the shares of Common Stock to which this Schedule 13D relates for investment purposes. In addition, as described below, the Knightspoint Group acquired beneficial ownership of the shares of Common Stock to which this Schedule 13D relates for the purpose of exerting influence over the direction of the Company. On March 6, 2006, Knightspoint Partners II, L.P. delivered a written notice to the Company pursuant to the Company's By-laws indicating its intent, among other things, to introduce proposals at the Company's 2006 annual meeting of stockholders to nominate seven persons to the board of directors of the Company and amend the Company's By-laws to fix the number of directors at seven and to permit stockholders of the Company to fill vacant directorships and newly created directorships. The Knightspoint nominees to the board of directors of the Company include (collectively, the "Director Nominees"): Michael Glazer Mr. Glazer has been President of Team Neu since August 2005. He was President and Chief Executive Officer of KB Toys from 1996 to 2005. He was previously president of the Bombay Company. He is also a Director of Stage Stores, Inc. and previously served as a Director of Brookstone and Big Lots (formerly named Consolidated Stores). Mr. Glazer is 57 years old. David Glew Mr. Glew is currently a consultant to Sony Music-- Epic Records. Mr. Glew was the President and Chairman of Epic Records--Sony Music from 1988 to 2003. Mr. Glew is 66 years old. Michael S. Koeneke Mr. Koeneke is a Managing Member of Knightspoint Partners LLC, an investment firm he co-founded in 2003. From 1997 through 2002, Mr. Koeneke was the co-head and then the Chairman of Global Mergers and Acquisitions at Merrill Lynch & Co., Inc. Mr. Koeneke is a director of CPI Corp. Mr. Koeneke is 59 years old. Jerry W. Levin Mr. Levin is Chairman and Chief Executive Officer of JW Levin Partners LLC, a management and investment firm. From 1998 to 2005, he was Chairman and Chief SCHEDULE 13D CUSIP No. 820013100 Page 26 of 39 Executive Officer of American Household, Inc. (formerly named Sunbeam Corporation). He was previously Chairman and CEO of Revlon, Inc. and held senior executive positions with The Pillsbury Company. While at Pillsbury, he led several operating units, including Haagen-Dazs, and the firm's restaurant group composed of Burger King, Steak & Ale, Bennigan's, Chart House, and Godfather's Pizza. Mr. Levin currently serves on the Board of Directors of U.S. Bancorp, Ecolab, Inc. and Wendy's International, Inc. Mr. Levin is 61 years old. David M. Meyer Mr. Meyer is a Managing Member of Knightspoint Partners LLC, an investment firm he co-founded in 2003. Since 2004, Mr. Meyer has served as Chairman of the Board of Directors of CPI Corp. and served, from 2004 to 2005, as a member of the interim Office of the Chief Executive. From 1995 to 2002, Mr. Meyer served in various capacities at Credit Suisse First Boston including as a director in the Mergers and Acquisitions and Global Industrial and Services Groups in the firm's London office. Mr. Meyer is 37 years old. Peter M. Weil Mr. Weil is Partner of Lighthouse Retail Group LLC, a consulting firm specializing in improving operating and positioning strategies for retailers. From 1996 to 2004, Mr. Weil served as Senior Vice President/Director of Retail Forward (formerly, PriceWaterhouseCoopers' retail consulting group). Mr. Weil previously held Senior Vice President positions with Macy's, Marshalls and J Baker/Morse Shoe in merchandising and supply chain management. Mr. Weil is 54 years old. Andrea Weiss Ms. Weiss has been the President and CEO of Retail Consulting, LLC, a retail consulting firm, since 2002. From 2001 to 2002, she was President of dELiA*s Corp., a multi-channel retailer focused on teenage girls and young women. From 1998 to 2001, she was Executive Vice President and Chief Stores Officer of Limited Brands, Inc. (formerly Limited, Inc. and Intimate Brands, Inc.), the parent company of Victoria's Secret, Limited, Express, and Bath & Body Works. She is also a Director of CBRL Group, Inc., eDiets.com, Inc and Tabi International and previously served as a Director of Brookstone, Inc. and dELiA*s Corp. Ms. Weiss is 50 years old. In addition, Mr. Levin has indicated his willingness to assume one or more of the positions of lead outside director, Chairman and/or interim Chief Executive Officer of the Company depending on the outcome of Knightspoint's proposals and other circumstances and the negotiation of a mutually acceptable compensation agreement with the Company. However, there is no agreement as to the terms of any such future arrangement. Any future compensation arrangement between Mr. Levin and the Company would be negotiated solely on an arms length basis between Mr. Levin and the Company. A copy of Knightspoint Partners II, L.P.'s notice to the Company is attached to this Schedule 13D as Exhibit 4 and incorporated herein by reference. The Company' operating performance over the past two years has been dismal with diluted EPS declining from $1.51 for the year ended January 31, 2004 to a loss of $0.44 in the twelve months to October 31, 2005 with far larger losses likely to be reported for the year ended January 31, 2006 on the basis of large sales and same-store sales declines experienced in the recently completed fourth quarter. This unacceptable performance has accelerated during February SCHEDULE 13D CUSIP No. 820013100 Page 27 of 39 2006 with total sales and same store sales plummeting 33% and 31%, respectively, versus the same period last year. The Knightspoint Group believes the Company suffers today from a legacy of poor Board oversight that has made the Company slow to respond to changing market dynamics, resulted in inefficient allocations of corporate resources and led to an undue reliance on a couple of key product categories. In particular, the Knightspoint Group believes the Company's operating performance has been hurt by: o excessive and misdirected advertising spending that, based on market observations, appears to be inadequately supported either by rigorous analysis or the sophisticated segmentation techniques employed by the most successful marketers; o the lack of a systematic product development and merchandising effort which, by making product placement in the stores and catalogs more susceptible to blind intuition or personal bias, has led, in our view, to an uninspired and less productive overall product portfolio as shown by the rapid sales declines; o overly centralized control and inefficiently structured field-level incentives that we believe have inhibited corporate-wide decision-making and restrained store-level, productivity; and o lack of financial discipline that has resulted in an unduly high corporate cost structure and significant inventory management issues. The Knightspoint Group believes the Company has potential for restored profitability and growth based on its strong brand, attractive store locations, multi-channel selling capability, and extensive database of past and present customers. The Knightspoint Group nominees intend to set a new course for the Company and develop structures to support effective execution of new strategies in marketing, product development/customer research, merchandise sourcing, planning and allocation, store operations, and inventory management. We believe the following specific actions should be implemented promptly: o Reduce corporate overhead, tightly manage product costs, and improve store level productivity. We believe that significant decreases in headquarters and administrative headcount can be accomplished without jeopardizing Company operations. A study of gross margins should be undertaken quickly to determine whether significant improvement is possible through tighter vendor management and a streamlined distribution system. Store level productivity and efficiency can be enhanced by, for example, realigning the merchandising mix to emphasize solutions to consumer needs, implementing better store operating systems, and closing marginally productive locations. We also believe that replacing primarily commission compensation for store level employees with a more balanced compensation system that aligns the objectives of the employees with those of the Company as well as implementing aggressive benchmarking and best practice SCHEDULE 13D CUSIP No. 820013100 Page 28 of 39 sharing programs will help drive substantial gains in labor efficiency, management of controllable expenses, merchandise display, customer outreach, customer service and average transaction size. o Reduce and redirect marketing spending to drive substantial improvement in advertising productivity. We believe that the Company should dramatically reduce infomercial advertising, reduce and improve the efficiency of catalog spending, and redirect advertising funds to a mix of new products and imagery that promotes Sharper Image as a high quality, innovative and fun place to shop. In particular, the Company's customer database should be mined and leveraged to result in fewer, smaller and more targeted mailings with a much higher success rate. In addition, we believe the Company could generate an outsized return from reallocating a modest amount of additional resources to internet and email advertising and public relations programs. o Formulate new merchandising and marketing strategies directed at addressing the dramatic sales volume declines occurring since last year. We believe the store level merchandise mix must be adjusted to emphasize solutions to consumer needs rather than clusters of gadgets. Store layout and merchandising should be simplified and organized thematically to enhance the customer shopping experience and facilitate cross-selling. o Create a consumer-focused product development process emphasizing products that meet the specific needs of the various lifestyle and demographic groups within the Company's customer base. Extensive analysis of the Company's existing consumer research, including leveraging the database of catalog customer preferences, along with new targeted studies will be necessary to uncover meaningful consumer insights. A fiscally responsible and time sensitive commercialization process will be implemented. The result should be a more consistent stream of successful new product introductions. o Implement new executive compensation policies that align the interests of the Company's stockholders with those of the board of directors, executive management and employees. We believe that a significant portion of the compensation paid to management and the board of directors should consist of restricted stock and that bonuses for management should be tied to the achievement of specific, measurable financial milestones. o Enhance internal communication and broaden decision-making authority throughout the Company. We believe strengthening management resources of the company both functionally and by business, improving the flow of information within and between all employee levels, and holding employees accountable for results will speed and improve decision-making. o Eliminate what we believe are significant quantities of slow moving and obsolete inventory. Rapid elimination of this inventory, even at diminished prices, will save warehousing costs, administrative costs and interest expense while enabling the Company to more quickly implement new and exciting SCHEDULE 13D CUSIP No. 820013100 Page 29 of 39 merchandising strategies. We believe this can be accomplished through the Company's own outlet stores and shipment to non-disruptive markets. o Rein in capital spending and defer store expansion pending changes in marketing and merchandise mix but evaluate the potential of alternative channels of distribution that may be pursued without diluting the brand. We believe the focus for the near term needs to be on cash flow preservation and an overhaul of the Company's merchandising and marketing programs. In addition to the foregoing, the members of the Knightspoint Group routinely monitor the performance of their investments in the Company. In this connection, the members of the Knightspoint Group intend to continuously evaluate the Company's business, financial condition, operating results, capital structure, management, stock market performance, competitive outlook and other relevant factors. As part of such evaluations, the members of the Knightspoint Group have and may in the future seek the views of, hold active discussions with and respond to inquiries from members of the board of directors, officers or representatives of the Company, stockholders of the Company, and other persons regarding the Company's affairs and strategic alternatives. Depending on such evaluations, the members of the Knightspoint Group may, at any time and from time to time, purchase additional shares of Common Stock or may dispose of any and all shares of Common Stock held by them. The members of the Knightspoint Group may from time to time develop plans, or have discussion with third parties, respecting, or propose changes in, the management, composition of the board of directors, policies, operations, capital structure or business of the Company, including a possible recapitalization or sale of the Company. In connection with these and other plans or proposals that the Knightspoint Group may develop, the members of the Knightspoint Group may conduct investigations and, if warranted by such review, make and negotiate proposals to and with the Company concerning the matters addressed in the preceding sentence, and may enter into agreements with the Company in connection with those negotiations and proposals, including confidentiality and/or other arrangements. Except as set forth herein, the Knightspoint Group does not have any present plans or proposals that relate to or would result in any of the actions specified in clauses (a) through (j) of the instructions to Item 4 of Schedule 13D. In addition to the plans or proposals described above to the extent any Other Reporting Person is deemed to be a member of the Knightspoint Group, and except as set forth herein, the Other Reporting Persons do not have any present plans or proposals that relate to or would result in any of the actions specified in clauses (a) through (j) of the instructions to Item 4 of Schedule 13D. The Knightspoint Group and the Other Reporting Persons reserve the right to formulate plans or make proposals, and take such action with respect to their investment in the Company, including any or all of the items set forth in paragraphs (a) through (j) of Item 4 of Schedule 13D and any other actions, as they may determine. SCHEDULE 13D CUSIP No. 820013100 Page 30 of 39 ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a) and (b) As of the date hereof, the Reporting Persons own an aggregate of 1,912,012 shares of Common Stock, representing approximately 12.8% of the outstanding shares of Common Stock based upon 14,943,230 shares reported by the Company to be outstanding as of December 8, 2005 in its Quarterly Report on Form 10-Q for the period ended October 31, 2005. As of the date hereof, the Knightspoint Group owns an aggregate of 1,909,012 shares of Common Stock, representing approximately 12.8% of the outstanding shares of Common Stock. As of the date hereof, the Other Reporting Persons own an aggregate of 3,000 shares of Common Stock, representing less than 1% of the outstanding shares of Common Stock. Each Reporting Person disclaims beneficial ownership of, and has excluded from the aggregate number of shares shown as beneficially owned by it, shares of Common Stock deemed to be beneficially owned by the group solely as a result of Rule 13d-5(b)(1) under the Securities Exchange Act of 1934, as amended. As of the date hereof, Knightspoint Partners II, L.P. beneficially owns an aggregate of 57,000 shares of Common Stock, representing less than 1% of the outstanding shares of Common Stock. Knightspoint Partners II, L.P. has sole voting and dispositive power over the shares of Common Stock beneficially owned by it. By virtue of the relationships described under Item 2 of this Schedule 13D, Knightspoint Partners LLC and Knightspoint Capital Management II LLC may both be deemed to have indirect beneficial ownership of the 57,000 shares of Common Stock held by Knightspoint Partners II, L.P. Knightspoint Partners LLC and Knightspoint Capital Management II LLC each have sole voting and dispositive power over the shares of Common Stock beneficially owned by it. In addition, by virtue of the relationships described under Item 2 of this Schedule 13D, Michael Koeneke and David Meyer may both be deemed to have indirect beneficial ownership of the shares of Common Stock held by Knightspoint Partners II, L.P. Messrs. Koeneke and Meyer share voting and dispositive power over the shares of Common Stock held by Knightspoint Partners II, L.P. As of the date hereof, each of Starboard Value and Opportunity Master Fund Ltd. and Parche, LLC beneficially own 1,538,890 and 293,122 shares of Common Stock, respectively, constituting approximately 10.3% and 2.0%, respectively, of the outstanding Common Stock of the Company. As the investment manager of Starboard Value and Opportunity Master Fund Ltd. and the managing member of Parche, LLC, Admiral Advisors, LLC may be deemed to beneficially own the shares of Common Stock owned by Starboard Value and Opportunity Master Fund Ltd. and Parche, LLC, representing an aggregate of 1,832,012 shares, constituting approximately 12.3% of the issued and outstanding shares of the Company. As the sole member of Admiral Advisors, LLC, Ramius Capital Group, L.L.C. may be deemed to beneficially own the shares of Common Stock owned by Starboard Value and Opportunity Master Fund Ltd. and Parche, LLC, representing an aggregate of 1,832,012 shares, constituting approximately 12.3% of the outstanding Common Stock of the Company. As the managing member of Ramius Capital Group, L.L.C., C4S & Co., L.L.C. may be deemed to beneficially own the shares of Common Stock owned by Starboard Value and Opportunity Master Fund Ltd. SCHEDULE 13D CUSIP No. 820013100 Page 31 of 39 and Parche, LLC, representing an aggregate of 1,832,012 shares, constituting approximately 12.3% of the outstanding Common Stock of the Company. As the managing members of C4S & Co., L.L.C., each of Peter A. Cohen, Morgan B. Stark, Jeffrey M. Solomon and Thomas W. Strauss may be deemed to beneficially own the shares of Common Stock owned by Starboard Value and Opportunity Master Fund Ltd. and Parche, LLC, representing an aggregate of 1,832,012 shares, constituting approximately 12.3% of the outstanding Common Stock of the Company. Each of Messrs. Cohen, Stark, Solomon and Strauss share voting and dispositive power with respect to the shares of Common Stock owned by Starboard Value and Opportunity Master Fund Ltd. and Parche, LLC, by virtue of their shared authority to vote and dispose of such shares. Messrs. Cohen, Stark, Solomon & Strauss disclaim beneficial ownership of such shares. As of the date hereof, Michael Glazer beneficially owns an aggregate of 3,000 shares of Common Stock, representing less than 1% of the outstanding shares of Common Stock. Mr. Glazer has sole voting and dispositive power over the shares of Common Stock beneficially owned by him. As of the date hereof, Jerry Levin beneficially owns an aggregate of 20,000 shares of Common Stock, representing less than 1% of the outstanding shares of Common Stock. Mr. Levin has sole voting and dispositive power over the shares of Common Stock beneficially owned by him. (c) Effective March 3, 2006, Michael Koeneke contributed 12,000 shares of Common Stock to Knightspoint Partners II, L.P. in exchange for limited partnership units. Such shares of Common Stock were valued for purposes of the exchange at $9.75 per share, which is equal to the reported closing sale price per share of Common Stock on the Nasdaq National Market on March 2, 2006. Effective March 3, 2006, David Meyer contributed 25,000 shares of Common Stock to Knightspoint Partners II, L.P. in exchange for limited partnership units. Such shares of Common Stock were valued for purposes of the exchange at $9.75 per share, which is equal to the reported closing sale price per share of Common Stock on the Nasdaq National Market on March 2, 2006. In addition, the following purchases of Common Stock have occurred within the last sixty days by the specified Reporting Person, all of which transactions were effected in open market purchases on the Nasdaq National Market, except where indicated: JERRY W. LEVIN - -------------- DATE ACTION SHARES PRICE PER SHARE - ---- ------ ------ --------------- January 4, 2006 Purchase 5,000 $9.296 January 17, 2006 Purchase 5,000 $9.22 SCHEDULE 13D CUSIP No. 820013100 Page 32 of 39 MICHAEL KOENEKE - --------------- DATE ACTION SHARES PRICE PER SHARE - ---- ------ ------ --------------- January 12, 2006 Purchase 5,200 $9.288 February 13, 2006 Purchase 4,800 $10.0942 March 3, 2006 Private Sale to Knightspoint 12,000 $9.75 DAVID MEYER - ----------- DATE ACTION SHARES PRICE PER SHARE - ---- ------ ------ --------------- January 5, 2006 Purchase 7,000 $9.55 March 3, 2006 Private Sale to Knightspoint 25,000 $9.75 KNIGHTSPOINT - ------------ DATE ACTION SHARES PRICE PER SHARE - ---- ------ ------ --------------- January 5, 2006 Purchase 10,000 $9.54 SCHEDULE 13D CUSIP No. 820013100 Page 33 of 39 March 3, 2006 Private Purchase from David 25,000 $9.75 Meyer March 3, 2006 Private Purchase from Mike 12,000 $9.75 Koeneke STARBOARD VALUE AND OPPORTUNITY MASTER FUND LTD. - ------------------------------------------------ DATE ACTION SHARES PRICE PER SHARE - ---- ------ ------ --------------- 01/05/06 Purchase 8,400 $9.2800 01/05/06 Purchase 16,800 $9.5438 01/05/06 Purchase 24,360 $9.5694 01/05/06 Purchase 11,256 $9.4968 01/06/06 Purchase 16,800 $9.5996 01/06/06 Purchase 33,852 $9.6000 01/09/06 Purchase 33,600 $9.5000 01/10/06 Purchase 28,633 $9.3880 01/11/06 Purchase 28,060 $9.2469 01/13/06 Sale 46,200 $9.3865 01/17/06 Sale 35,418 $9.2359 01/18/06 Sale 25,200 $9.1550 01/19/06 Sale 113,136 $8.9516 01/20/06 Sale 63,000 $8.9525 02/02/06 Purchase 24,696 $9.4764 02/03/06 Purchase 25,200 $9.4828 02/06/06 Purchase 50,400 $9.7883 02/07/06 Purchase 56,700 $10.0497 SCHEDULE 13D CUSIP No. 820013100 Page 34 of 39 02/10/06 Purchase 100,800 $10.1703 02/13/06 Purchase 3,905 $10.1147 02/13/06 Purchase 25,200 $10.0300 02/14/06 Purchase 42,000 $10.7870 02/14/06 Purchase 12,600 $10.8500 02/27/06 Purchase 181,020 $11.8591 02/28/06 Purchase 4,284 $11.7833 03/01/06 Purchase 69,888 $11.7728 03/02/06 Purchase 8,400 $10.7185 03/02/06 Purchase 294,000 $10.2641 03/02/06 Purchase 21,000 $9.7620 03/03/06 Purchase 53,676 $9.9027 03/06/06 Purchase 363,402 $10.2719 PARCHE, LLC - ----------- PRICE PER DATE ACTION SHARES Share(1) - ---- ------ ------ --------- 02/27/06 Purchase 103,471(1) $11.04 02/27/06 Purchase 34,480 $11.8591 02/28/06 Purchase 816 $11.7833 03/01/06 Purchase 13,312 $11.7728 03/02/06 Purchase 1,600 $10.7185 03/02/06 Purchase 56,000 $10.2641 03/02/06 Purchase 4,000 $9.7620 03/03/06 Purchase 10,224 $9.9027 03/06/06 Purchase 69,219 $10.2719 - ------------------------- SCHEDULE 13D CUSIP No. 820013100 Page 35 of 39 (1) 103,471 of the shares reported as owned by Parche, LLC (representing the shares in the table that were acquired prior to February 27, 2006) were acquired in private transactions on February 27, 2006 with various transferors for which Ramius Capital Group, L.L.C. or an affiliate serves as the investment manager, the managing member or the managing member of the investment manager. The price per unit paid by Parche, LLC for these 103,471 shares was $11.0400.
(d) Not applicable. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. Starboard, Parche, and Knightspoint Partners LLC have an oral arrangement pursuant to which Knightspoint Partners LLC provides advice and services with respect to the parties' investments in the Common Stock of the Company, among other matters. Under such agreement, the parties agree to coordinate the acquisition and disposition of Common Stock of the Company with Knightspoint Partners LLC and to cooperate with respect to proxy votes and related matters. However, each of the parties to the agreement retains the sole discretion over acquisitions and dispositions of, and voting authority over, the shares of Common Stock that it holds. For such services, Knightspoint Partners LLC receives an amount equal to 11% of the profits realized by Parche and Starboard on their investment in the Company. "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. Starboard Value and Opportunity Master Fund Ltd., Parche, LLC, and Knightspoint Partners II, L.P. have also orally agreed that all expenses incurred in connection with the activities of the Knightspoint Group shall be allocated among each of them pro rata in accordance with the number of shares of Common Stock beneficially owned by each. Starboard Value and Opportunity Master Fund Ltd., Parche, LLC, and Knightspoint Partners LLC have also orally agreed (on behalf of themselves and their affiliates) not to acquire additional shares or other securities of the Company without the consent of the other parties. Knightspoint Partners II, L.P., Starboard Value and Opportunity Master Fund Ltd. and Parche, LLC have entered into written agreements with the Director Nominees pursuant to which, among other things, the Director Nominees will be indemnified against certain potential liabilities that might arise in connection with their being named as directors nominees and related matters as described in Item 2 above. A copy of the indemnification agreement for Mr. Levin is set forth SCHEDULE 13D CUSIP No. 820013100 Page 36 of 39 in Exhibit 5 hereto and a copy of the form of indemnification agreement for the other Director Nominees receiving indemnification besides Mr. Levin is set forth on Exhibit 6 hereto. Depending on the outcome of the Knightspoint proposals and other circumstances and the negotiation of a mutually acceptable compensation agreement with the Company, Mr. Levin has indicated his willingness to assume one or more of the positions of lead outside director, Chairman of the Company or interim Chief Executive Officer. However, there is no agreement as to the terms of any such future arrangement. In addition, 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 the Company in the event that Mr. Levin does not ultimately assume a paid role with the Company (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 the Company would be negotiated solely on an arms length basis between Mr. Levin and the Company. Other than as described herein, there are no contracts, arrangements or understandings among the Reporting Persons, or between any Reporting Person and any other person, with respect to the securities of the Company. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. 99.1 Power of Attorney executed by David Meyer, Michael Koeneke, authorizing Michael Koeneke and David Meyer, or either of them, to sign and file Schedule 13Ds and related documents on behalf of each person who has executed the Power of Attorney. 99.2 Power of Attorney executed by Peter A. Cohen, Morgan B. Stark, Thomas W. Strauss and Jeffrey M. Solomon. 99.3 Joint Filing Agreement, dated March 6, 2006, between and among the Reporting Persons, pursuant to Rule 13d-1(k) of the Securities Exchange Act of 1934, as amended. 99.4 Letter from Knightspoint Partners II, L.P. to the Company, dated March 6, 2006, providing notice of director nominations and other business for the 2006 Annual Meeting of stockholders. 99.5 Indemnification Agreement dated February 24, 2006 by and among Mr. Levin and Knightspoint Partners LLC, Starboard Value and Opportunity Master Fund Ltd. and Parche, LLC. SCHEDULE 13D CUSIP No. 820013100 Page 37 of 39 99.6 Form of Indemnification Agreement entered into by each of the Director Nominees (other than Mr. Levin) with Knightspoint Partners LLC, Starboard Value and Opportunity Master Fund Ltd. and Parche, LLC. SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: March 8, 2006 KNIGHTSPOINT PARTNERS II, L.P. By: Knightspoint Capital Management II LLC Its: General Partner By: Knightspoint Partners LLC Its: Member By: /s/ David Meyer --------------------------------------- Name: David Meyer Title: Managing Member KNIGHTSPOINT CAPITAL MANAGEMENT II LLC By: Knightspoint Partners LLC Its: Member By: /s/ David Meyer ------------------------------------- Name: David Meyer Title: Managing Member KNIGHTSPOINT PARTNERS LLC By: /s/ David Meyer --------------------------------------- Name: David Meyer Title: Managing Member /s/ David Meyer ------------------------------------------ Name: David Meyer Title: Individually and as attorney-in- fact for each of Michael Glazer, David Glew, Michael Koeneke, Jerry W. Levin, Peter Weil and Andrea Weiss SCHEDULE 13D CUSIP No. 820013100 Page 38 of 39 PARCHE, LLC By: Admiral Advisors, LLC, its managing member STARBOARD VALUE AND OPPORTUNITY MASTER FUND LTD. ADMIRAL ADVISORS, LLC By: Ramius Capital Group, L.L.C., its sole member RAMIUS CAPITAL GROUP, L.L.C. By: C4S & Co., L.L.C., its Managing Member C4S & CO., L.L.C. By: /s/ Jeffrey M. Solomon --------------------------------------- Name: Jeffrey M. Solomon Title: Authorized Signatory By: /s/ Jeffrey M. Solomon --------------------------------------- Jeffrey M. Solomon, individually and as attorney-in-fact for Peter A. Cohen, Morgan B. Stark, and Thomas W. Strauss The Powers of Attorney authorizing certain persons to sign and file this Schedule 13D on behalf of certain Reporting Persons are filed as Exhibit 1 and Exhibit 2 to this Schedule 13D SCHEDULE 13D CUSIP No. 820013100 Page 39 of 39 SCHEDULE I Directors and Officers of Starboard Value and Opportunity Master Fund Ltd.
Name and Position Principal Occupation Principal Business Address - ----------------- -------------------- -------------------------- Mark Mitchell Managing Director of Ramius Capital 666 Third Avenue Director Group, L.L.C. 26th Floor New York, New York 10017 Jeffrey M. Solomon Managing Member of C4S & Co., L.L.C., 666 Third Avenue Director which is the Managing Member of Ramius 26th Floor Capital Group, L.L.C. New York, New York 10017 CFS Company Ltd. Nominee Company registered with Cayman c/o Citco Fund Services (Cayman Director Islands Monetary Authority and is Islands) Limited affiliated with Administrator of the Corporate Center Fund West Bay Road Grand Cayman, Cayman Islands British West Indies CFS Corporation Ltd. Affiliate of the Administrator of the c/o Citco Fund Services (Cayman Secretary Fund Islands) Limited Corporate Center West Bay Road Grand Cayman, Cayman Islands British West Indies
EX-99.1 2 s70262_x1.txt POWER OF ATTORNEY EXHIBIT 99.1 POWER OF ATTORNEY The undersigned hereby appoints Michael Koeneke and David Meyer, or either of them, his true and lawful attorney-in-fact and agent to execute and file with the Securities and Exchange Commission any Schedule 13D, any amendments thereto or any related documentation which may be required to be filed in his individual capacity as a result of the undersigned's direct or indirect beneficial ownership of, or participation in a group with respect to, shares of common stock of Sharper Image Corporation, and granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing which he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, may lawfully do or cause to be done by virtue hereof. The authority of Michael Koeneke and David Meyer, or either of them, under this Power of Attorney shall continue with respect to the undersigned until the undersigned is no longer required to file Schedule 13Ds unless revoked earlier in writing. Date: March 8, 2006 /s/ Michael Koeneke ------------------------------------------ Michael Koeneke /s/ David Meyer ------------------------------------------ David Meyer /s/ Michael Glazer ------------------------------------------ Michael Glazer /s/ David R. Glew ------------------------------------------ David R. Glew /s/ Jerry W. Levin ------------------------------------------ Jerry W. Levin /s/ Peter M. Weil ------------------------------------------ Peter M. Weil /s/ Andrea Weiss ------------------------------------------ Andrea Weiss EX-99.2 3 s70262_x2.txt POWER OF ATTORNEY EXHIBIT 99.2 POWER OF ATTORNEY The undersigned hereby appoints Peter A. Cohen, Jeffrey M. Solomon, Morgan B. Stark and Thomas W. Strauss, or any of them, his true and lawful attorney-in-fact and agent to execute and file with the Securities and Exchange Commission any Schedule 13D, any amendments thereto or any related documentation which may be required to be filed in his individual capacity as a result of the undersigned's direct or indirect beneficial ownership of shares of, or participation in a group with respect to, common stock of Sharper Image Corporation, and granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing which he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, may lawfully do or cause to be done by virtue hereof. The authority of Peter A. Cohen, Jeffrey M. Solomon, Morgan B. Stark and Thomas W. Strauss, or any of them, under this Power of Attorney shall continue with respect to the undersigned until the undersigned is no longer required to file Schedule 13Ds unless revoked earlier in writing. Date: March 8, 2006 /s/ Peter A. Cohen ------------------------------------------ Peter A. Cohen /s/ Jeffrey M. Solomon ------------------------------------------ Jeffrey M. Solomon /s/ Morgan B. Stark ------------------------------------------ Morgan B. Stark /s/ Thomas W. Strauss ------------------------------------------ Thomas W. Strauss EX-99.3 4 s70262_x3.txt JOINT FILING AGREEMENT EXHIBIT 99.3 JOINT FILING AGREEMENT In accordance with Rule 13d-1(k) of the Securities Exchange Act of 1934, as amended, the undersigned agree to the joint filing on behalf of each of them of a statement on Schedule 13D with respect to the common stock, par value $0.01 per share, of Sharper Image Corporation, and further agree that this Joint Filing Agreement shall be included as an Exhibit to such joint filing. The undersigned further agree that any amendments to such statement on Schedule 13D shall be filed jointly on behalf of each of them without the necessity of entering into additional joint filing agreements. The undersigned further agree that each party hereto is responsible for timely filing of such statement on Schedule 13D and any amendments thereto, and for the completeness and accuracy of the information concerning such party contained therein; provided that no party is responsible for the completeness or accuracy of the information concerning any other party, unless such party knows or has reason to believe that such information is inaccurate. The undersigned shall not be deemed to admit membership in a group by reason of entering into this Joint Filing Agreement. This Joint Filing Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original instrument, but all of such counterparts together shall constitute but one agreement. In evidence thereof the undersigned, being duly authorized, hereby execute this Joint Filing Agreement this 6th day of March, 2006. Dated: March 8, 2006 KNIGHTSPOINT PARTNERS II, L.P. By: Knightspoint Capital Management II LLC Its: General Partner By: Knightspoint Partners LLC Its: Member /s/ David Meyer By: ------------------------------- Name: David Meyer Title: Managing Member KNIGHTSPOINT CAPITAL MANAGEMENT II LLC By: Knightspoint Partners LLC Its: Member By: /s/ David Meyer -------------------------------------- Name: David Meyer Title: Managing Member KNIGHTSPOINT PARTNERS LLC By: /s/ David Meyer -------------------------------------- Name: David Meyer Title: Managing Member Name: David Meyer, Individually and as attorney-in-fact for each of Michael Glazer, David Glew, Michael Koeneke, Jerry W. Levin, Peter Weil and Andrea Weiss Name: Michael Koeneke STARBOARD VALUE AND OPPORTUNITY MASTER FUND LTD. By: /s/ Peter A. Cohen --------------------------------------- Name: Peter A. Cohen Title: Authorized Person RAMIUS CAPITAL GROUP, LLC By: C4S & Co., LLC Its: Managing Member By: /s/ Peter A. Cohen -------------------------------- Name: Peter A. Cohen Title: Managing Member C4S & CO., LLC By: /s/ Peter A. Cohen -------------------------------- Name: Peter A. Cohen Title: Managing Member PARCHE, LLC. By: Admiral Advisors, LLC Its: Managing Member By: Ramius Capital Group, LLC Its: Member By: C4S & Co., LLC Its: Managing Member By: /s/ Peter A. Cohen --------------------------------------- Name: Peter A. Cohen Title: Managing Member /s/ Peter A. Cohen ------------------------------------------ Name: Peter A. Cohen /s/ Jeffrey M. Solomon ------------------------------------------ Name: Jeffrey M. Solomon /s/ Morgan B. Stark ------------------------------------------ Name: Morgan B. Stark /s/ Thomas W. Strauss ------------------------------------------ Name: Thomas W. Strauss RAMIUS ADVISORS, LLC By: Ramius Capital Group, LLC Its: Managing Member By: C4S & Co., LLC Its: Managing Member By: /s/ Peter A. Cohen --------------------------------------- Name: Peter A. Cohen Title: Managing Member ADMIRAL ADVISORS, LLC By: Ramius Capital Group, LLC Its: Managing Member By: C4S & Co., LLC Its: Managing Member By: /s/ Peter A. Cohen --------------------------------------- Name: Peter A. Cohen Title: Managing Member EX-99.4 5 s70262_x4.txt LETTER FROM KNIGHTSPOINT PARTNERS II, L.P. EXHIBIT 99.4 KNIGHTSPOINT PARTNERS II, L.P. 787 SEVENTH AVENUE, 9TH FLOOR NEW YORK, NEW YORK 10019 March 6, 2006 Sharper Image Corporation 350 The Embarcadero, 6th Floor San Francisco, California 94105 Attention: Secretary Re: Notice of Director Nominations and Other Business for the 2006 Annual Meeting of Stockholders ------------------------------------------- Dear Secretary: Knightspoint Partners II, L.P. ("Knightspoint") is a holder of record of 100 shares (the "Shares") of common stock, par value $0.01 per share (the "Common Stock"), of Sharper Image Corporation, a Delaware corporation (the "Company"). In accordance with the relevant provisions of the Amended and Restated Bylaws of the Company (the "Bylaws"), Knightspoint, as record and beneficial holder of the Shares, does hereby provide notice to the Company of the following proposals and other information as required by the Bylaws. Sections 2.11 and 2.12 of Article 2 of the Bylaws provide that for business to be properly brought before any meeting of the stockholders by a stockholder, or for any stockholder to make a nomination for the election of directors, written notice of such stockholder's intent must be received by the Secretary of the Company not later than the close of business on the ninetieth calendar day, nor earlier than the close of business on the one hundred and twentieth calendar day, prior to the first anniversary of the preceding year's annual meeting, provided, however, that if the date of the annual meeting is advanced more than thirty calendar days prior to, or delayed more than sixty calendar days after such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the later of the sixtieth calendar day prior to such annual meeting or the tenth calendar day following the calendar day on which public announcement of the date of such meeting is first made by the Company. In fulfillment of the requirements of Sections 2.11 and 2.12 of Article 2 of the Bylaws, this notice has been given more than ninety (90) days and not more than one hundred twenty (120) days in advance of the first anniversary of the previous annual meeting of the Company's stockholders held on June 6, 2005, which for purposes of this notice is the anticipated date of the 2006 annual meeting of the Company's stockholders. If the Company announces a different annual meeting date, Knightspoint reserves its right to provide an additional notice as provided in the Company's Bylaws. Sharper Image Corporation March 6, 2006 Page 2 of 7 You are hereby notified, in fulfillment of the requirements of Sections 2.11 and 2.12 of Article 2 of the Bylaws, of the following proposals to be presented by Knightspoint to the shareholders of the Company at the 2006 annual meeting of the Company's stockholders, or any other meeting of stockholders held in lieu thereof, and any adjournments, postponements, reschedulings or continuations thereof (the "2006 annual meeting"): 1. Proposal to amend and restate Section 3.12 of Article 3 of the Bylaws as follows: Unless otherwise provided in the certificate of incorporation, vacancies on the Board of Directors resulting from death, resignation, removal or otherwise and newly created directorships resulting from any increase in the number of directors may be filled solely by either (i) the vote of the holders of a majority of the stock having voting power present in person or represented by proxy at a meeting of shareholders where a quorum is present, or (ii) the majority of the directors then in office (although less than a quorum) or by the sole remaining director. Each director so elected shall hold office until the next annual election and until his or her successor is duly elected and qualified, or until such director's earlier death, resignation or removal; provided, however, that any vacancies or newly created directorships that are the result of a stockholder vote may be filled only by the holders of a majority of the stock having voting power present at a meeting in person or represented by proxy. If there are no directors in office, then an election of directors may be held in accordance with Delaware Law. Unless otherwise provided in the certificate of incorporation, when one or more directors shall resign from the Board, effective at a future date, then either (i) the vote of the holders of a majority of the stock having voting power present in person or represented by proxy at a meeting of shareholders where a quorum is present or (ii) a majority of the directors then in office, including those who have so resigned (but prior to such resignations occurring), shall have the power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as provided in the filling of the other vacancies. The purpose of this proposal is to permit stockholders of the Company to fill vacancies on the board and newly created directorships. 2. Proposal to amend and restate Section 3.02 of Article 3 of the Bylaws as follows: The Board of Directors shall consist of seven directors. The Board may from time to time elect one director to serve as the Chairman of the Board, to have the powers specified in these bylaws. Except as otherwise provided in the certificate of incorporation, each director shall hold office until his or her successor is elected and qualified or until such director's earlier death, resignation or removal. Directors need not be stockholders. The purpose of this proposal is to provide certainty as to the size of the board of directors by fixing the number of Sharper Image Corporation March 6, 2006 Page 3 of 7 directors. This proposal is not intended to preclude the Board of Directors of the Company from amending this provision subsequent to the 2006 annual meeting of stockholders to change the size of the Board of Directors. 3. Proposal to repeal any new bylaws or amendments to existing Bylaws adopted by the Board of Directors on or since March 1, 2006 or adopted prior thereto but not publicly disclosed prior to March 1, 2006. The purpose of this proposal is to restrain the Board from adopting new bylaws or amending existing Bylaws to prevent the stockholders from accomplishing the objectives described in this notice and the Schedule 14A to be filed by Knightspoint with the SEC. Knightspoint's interest in the above described proposed business is to prevent the entrenchment of the Board, frustration of the stockholder franchise and, ultimately, destruction of stockholder value. Furthermore, in fulfillment of the requirements of Article 2, Section 2.11 of the Bylaws, Knightspoint hereby notifies the Company that it is nominating the following seven persons for election as directors at the 2006 annual meeting of stockholders of the Company: o Michael Glazer, o David R. Glew, o Michael S. Koeneke, o Jerry W. Levin, o David M. Meyer, o Peter M. Weil; and o Andrea Weiss. In addition, if all such nominees are elected at the 2006 annual meeting, Knightspoint intends, at this time, to propose that Richard Thalheimer and Pamela Joyner be reappointed to an expanded board subsequent to the 2006 annual meeting for the sake of continuity and if they shall agree to serve. Depending on the outcome of the Knightspoint proposals and other circumstances, Mr. Levin has indicated his willingness to assume one or more of the positions of lead outside director, Chairman of the Board of Directors of the Company or interim Chief Executive Officer. However, there is no agreement as to the terms of any such future arrangement. Information for each nominee proposed for election to the Board of Directors is included on Schedule A to this letter. Knightspoint represents that it intends to appear in person or by proxy at the 2006 annual meeting and nominate the above nominees. Mr. Meyer and Mr. Koeneke are Managing Members of Knightspoint Partners LLC, which is an affiliate of Knightspoint. To the extent that the Company might propose to increase the size of the Board and/or the number of directors, Knightspoint reserves the right to nominate additional nominees for election to the Board at the 2006 annual meeting. Shares represented by proxies given to us will be voted for any substitute or additional nominees. Knightspoint reserves the right to nominate substitute persons if the Company makes or announces any changes to its Bylaws or takes or announces any other action that has, or if consummated would have, the effect of Sharper Image Corporation March 6, 2006 Page 4 of 7 disqualifying any of the nominees. Any of the foregoing actions taken by Knightspoint described in this paragraph would be without prejudice to the issue of whether any such action by the Company was valid under the circumstances. In fulfillment of the requirements of Sections 2.11 and 2.12 of Article 2 of the Bylaws, Knightspoint hereby provides the following information: Knightspoint is a holder of record of the Shares. Knightspoint is a beneficial holder of 57,000 shares of Common Stock. The general partner of Knightspoint Partners II, L.P. is Knightspoint Capital Management II LLC, a Delaware limited liability company formed to be the general partner of Knightspoint Partners II, L.P. The sole Member of Knightspoint Capital Management II LLC is Knightspoint Partners LLC, a Delaware limited liability company that is engaged in the business of investing in various companies. Each of Michael Koeneke and David Meyer is a Managing Member of Knightspoint Partners LLC. The address of Knightspoint is Knightspoint Partners II, L.P., 787 Seventh Avenue, 9th Floor, New York, New York 10019. Knightspoint believes that the following stockholders of the Company support the above proposals: Starboard Value and Opportunity Master Fund Ltd., an exempted company organized under the laws of the Cayman Islands ("Starboard"), is the beneficial owner of 1,175,488 shares of Common Stock, as of December 21, 2005, held of record by Cede & Co., as nominee of The Depository Trust Company. The address of Starboard is Starboard Value and Opportunity Master Fund Ltd., c/o Admiral Advisors, LLC, 666 Third Avenue, 26th Floor, New York, NY 10017-3066. Parche, LLC, a Delaware limited liability company ("Parche"), is the beneficial owner of 223,903 shares of Common Stock, as of December 21, 2005, held of record by Cede & Co., as nominee of The Depository Trust Company. The address of Parche is Parche, LLC, c/o Admiral Advisors, LLC, 666 Third Avenue, 26th Floor, New York, NY 10017-3066. Jerry Levin is the beneficial owner of 20,000 shares of Common Stock held of record by Cede & Co., as nominee of The Depository Trust Company. Mr. Levin's address is Jerry Levin, c/o JW Levin Partners LLC, 9 W. 57th Street, 26th Floor, New York, New York, 10019. Michael Glazer is the beneficial owner of 3,000 shares of Common Stock held of record by Cede & Co., as nominee of The Depository Trust Company. Mr. Glazer's address is Michael Glazer, c/o 75 North Street, #350, Pittsfield, Massachusetts 01201. The address of Cede & Co. is Cede & Co., c/o The Depository Trust Company, 55 Water Street, New York, New York, 10041. Sharper Image Corporation March 6, 2006 Page 5 of 7 Knightspoint Partners II, L.P., Knightspoint Capital Management II LLC, Knightspoint Partners LLC, Michael Koeneke, David Meyer, Jerry W. Levin, Starboard Value and Opportunity Master Fund Ltd., Ramius Capital Group, LLC, C4S & Co., L.L.C., Ramius Advisors, L.L.C., Peter A. Cohen, Jeffrey M. Solomon, Morgan B. Stark, Thomas W. Strauss, Parche, LLC and Admiral Advisors, LLC may be deemed to be members of a group, as such term is defined under Rule 13(d)(3) of the Securities Exchange Act of 1934 (collectively, the "Knightspoint Group"). In addition, although they do not affirm their membership in the group that is composed of, and affirmed by, the Knightspoint Group, each of Michael Glazer, David R. Glew, Peter M. Weil and Andrea Weiss (collectively, the "Other Nominees") may be deeded to be participants with respect to the proposals set forth in this letter. Each of the Other Nominees disclaims beneficial ownership of Common Stock held by the Knightspoint Group and, similarly, the Knightspoint Group disclaims beneficial ownership of Common Stock held by the Other Nominees. Attached as Schedule D is information regarding the Knightspoint Group and the Other Nominees. For certain information regarding the transactions in securities of the Company by Knightspoint, Starboard Value and Opportunity Master Fund Ltd., Parche, LLC and the nominees, see Schedule B attached hereto. In addition, certain information regarding the qualifications of each Nominee responsive to the experience and independence requirements of the rules of the Securities and Exchange Commission and the Nasdaq National Market is set forth in Schedule A attached hereto (without conceding that any such information is required to be disclosed in this Notice). Knightspoint expects that, if elected, each Nominee is prepared to serve the interests of all of the stockholders of the Company and to make himself available to the Board in the fulfillment of his duties as a director. Starboard, Parche, and Knightspoint Partners LLC have an agreement pursuant to which Knightspoint Partners LLC provides advice and services with respect to the parties' investments in the Common Stock of the Company, among other matters. Under such agreement, the parties agree to coordinate the acquisition and disposition of Common Stock of the Company with Knightspoint Partners LLC and to cooperate with respect to proxy votes and related matters (however, each of the parties to the agreement retains the sole discretion over acquisitions and dispositions of, and voting authority over, the shares of Common Stock that it holds). For such services, Knightspoint Partners LLC receives an amount equal to 11% of the profits realized by Parche and Starboard on their investment in the Company. "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. Starboard Value and Opportunity Master Fund Ltd., Parche, LLC, and Knightspoint Partners II, L.P. have also orally agreed that all expenses incurred in connection with the activities of the Knightspoint Group shall be allocated among each of them pro rata in accordance with the number of shares of Common Stock beneficially owned by each. Sharper Image Corporation March 6, 2006 Page 6 of 7 Starboard Value and Opportunity Master Fund Ltd., Parche, LLC, and Knightspoint Partners LLC have also orally agreed (on behalf of themselves and their affiliates) not to acquire additional shares or other securities of the Company without the consent of the other parties. In addition, Knightspoint Partners LLC has orally agreed to pay to Mr. Levin one-third of any performance fees received from Parche or Starboard in connection with their investment in the Company in the event that Mr. Levin does not ultimately assume a paid role with the Company (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 the Company would be negotiated solely on an arms length basis between Mr. Levin and the Company. Knightspoint, Starboard, and Parche have entered into agreements with the nominees pursuant to which, among other things, the nominees will be indemnified against certain potential liabilities that might arise in connection with their being named as director nominees and related matters. Copies of these agreements are set forth on Schedule C hereto. Sharper Image Corporation March 6, 2006 Page 7 of 7 This notice fully complies with the applicable provisions of the Bylaws. Any claim that this notice is in any way defective or deficient, and all further correspondence on this matter, should be addressed to David Meyer, Knightspoint Partners LLC, 787 Seventh Avenue, 9th Floor, Tel: (212) 786-6020, Fax: (212) 786-6040 with a copy to Stanley H. Meadows, P.C., McDermott Will & Emery LLP, 227 West Monroe Street, Suite 4700, Chicago, Illinois 60606, Tel: (312) 984-7570, Fax: (312) 984-7700, so that there is adequate opportunity to address such claim in a timely fashion. KNIGHTSPOINT PARTNERS II, L.P. By: Knightspoint Capital Management II LLC, its general partner By: Knightspoint Partners LLC, its member By: /s/ David Meyer -------------------------------------- Name: David Meyer Title: Managing Member [Schedules omitted] EX-99.5 6 s70262_x5.txt INDEMNIFICATION AGREEMENT EXHIBIT 99.5 February 24, 2006 Mr. Jerry W. Levin c/o JW Levin Partners LLC 9 West 57th Street 26th Floor New York, NY 10019 Re: SHARPER IMAGE CORPORATION Dear Mr. Levin: Thank you for agreeing to serve as a nominee for election to the Board of Directors of Sharper Image Corporation ("Sharper Image") in connection with the proxy and/or consent solicitation that Knightspoint Partners II, L.P., Starboard Value and Opportunity Master Fund Ltd. and Parche, LLC (collectively, the "Knightspoint Group") are considering undertaking to nominate and elect directors at Sharper Image's 2006 annual meeting of stockholders, any other meeting of stockholders held in lieu thereof, and any adjournments, postponements, reschedulings or continuations thereof, or by means of a consent solicitation (the "Knightspoint Group Solicitation"). Your outstanding qualifications, we believe, will prove a valuable asset to Sharper Image and all of its stockholders. This letter will set forth the terms of our agreement. Each member of the Knightspoint Group agrees to severally (pro rata based on their respective ownership of Sharper Image common stock), and not jointly, indemnify and hold you harmless against any and all pending or threatened claims of any nature, whenever brought, arising from the Knightspoint Group Solicitation and any related transactions, irrespective of the outcome; provided, however, that you will not be entitled to indemnification for claims to the extent arising from your gross negligence, willful misconduct or criminal actions; provided further, that upon your election as a director of Sharper Image, this indemnification agreement and all of the Knightspoint Group's obligations hereunder shall not apply to (i) any claim arising from any of your acts or omissions as a director of Sharper Image or (ii) any claim arising from any of your acts or omissions prior to becoming a director of Sharper Image that are covered by Sharper Image's directors and officers insurance policy. This indemnification will include any and all losses, liabilities, damages, demands, claims, suits, actions, judgments, or causes of action, assessments, costs and expenses, including, without limitation, interest, penalties, reasonable attorneys' fees, and any and all reasonable costs and expenses incurred in investigating, preparing or defending against any litigation, commenced or threatened, any civil, criminal, administrative or arbitration action, or any claim whatsoever, and any and all amounts paid in settlement of any claim or litigation asserted against, resulting, imposed upon, or incurred or suffered by you, directly or indirectly, as a result of or arising from the Knightspoint Group Solicitation and any related transactions (each, a "Loss"). In the event of a claim against you pursuant to the prior paragraph or the occurrence of a Loss, you shall give the Knightspoint Group written notice of such claim or Loss. Upon receipt of such written notice, the Knightspoint Group will promptly provide you with counsel to represent you. Such counsel shall be reasonably acceptable to you. In addition, you will be reimbursed promptly for all Losses suffered by you and as incurred as provided herein. If the Knightspoint Group does not promptly provide counsel to represent you that is reasonably acceptable to you, you may engage counsel to represent you, provided such counsel is reasonably acceptable to the Knightspoint Group, and the Knightspoint Group shall be responsible for all reasonable costs and expenses of such counsel. In addition, the Knightspoint Group will reimburse JW Levin Partners LLC for all reasonable documented expenses incurred by it in connection with defending a claim or discovery as a result of or arising from the Knightspoint Group Solicitation and related transactions. The Knightspoint Group may not enter into any settlement of a Loss or claim without your consent unless such settlement includes a release of you from any and all liability in respect of such claim and does not provide for any admissions of liability by you. No member of the the Knightspoint Group may assign its respective obligations under this letter agreement without your consent, which may be withheld in your sole discretion. This letter agreement and its terms may only be amended or waived by a written instrument signed by the Knightspoint Group and you. This letter agreement shall be governed by the laws of the State of New York, without regard to the principles of the conflicts of laws thereof. Jerry Levin February 24, 2006 Page -2- If you agree to the foregoing terms, please sign below to indicate your acceptance. Very truly yours, KNIGHTSPOINT PARTNERS II, L.P. By: -------------------------------- Name: Title: STARBOARD VALUE AND OPPORTUNITY MASTER FUND LTD. By: ------------------------------- Name: Title: Authorized Signatory PARCHE, LLC By: -------------------------------- Name: Title: Authorized Signatory ACCEPTED AND AGREED: - --------------------------- Jerry W. Levin EX-99.6 7 s70262_x6.txt FORM OF INDEMNIFICATION AGREEMENT EXHIBIT 99.6 FORM OF INDEMNIFICATION AGREEMENT Re: SHARPER IMAGE CORPORATION Dear _______________: Thank you for agreeing to serve as a nominee for election to the Board of Directors of Sharper Image Corporation ("Sharper Image") in connection with the proxy and/or consent solicitation that Knightspoint Partners II, L.P., Starboard Value and Opportunity Master Fund Ltd. and Parche, LLC (collectively, the "Knightspoint Group") are considering undertaking to nominate and elect directors at Sharper Image's 2006 annual meeting of stockholders, any other meeting of stockholders held in lieu thereof, and any adjournments, postponements, reschedulings or continuations thereof, or by means of a consent solicitation (the "Knightspoint Group Solicitation"). Your outstanding qualifications, we believe, will prove a valuable asset to Sharper Image and all of its stockholders. This letter will set forth the terms of our agreement. Each member of the Knightspoint Group agrees to severally (pro rata based on their respective ownership of Sharper Image common stock), and not jointly, indemnify and hold you harmless against any and all pending or threatened claims of any nature, whenever brought, arising from the Knightspoint Group Solicitation and any related transactions, irrespective of the outcome; provided, however, that you will not be entitled to indemnification for claims to the extent arising from your gross negligence, willful misconduct or criminal actions; provided further, that upon your election as a director of Sharper Image, this indemnification agreement and all of the Knightspoint Group's obligations hereunder shall not apply to (i) any claim arising from any of your acts or omissions as a director of Sharper Image or (ii) any claim arising from any of your acts or omissions prior to becoming a director of Sharper Image that are covered by Sharper Image's directors and officers insurance policy. This indemnification will include any and all losses, liabilities, damages, demands, claims, suits, actions, judgments, or causes of action, assessments, costs and expenses, including, without limitation, interest, penalties, reasonable attorneys' fees, and any and all reasonable costs and expenses incurred in investigating, preparing or defending against any litigation, commenced or threatened, any civil, criminal, administrative or arbitration action, or any claim whatsoever, and any and all amounts paid in settlement of any claim or litigation asserted against, resulting, imposed upon, or incurred or suffered by you, directly or indirectly, as a result of or arising from the Knightspoint Group Solicitation and any related transactions (each, a "Loss"). In the event of a claim against you pursuant to the prior paragraph or the occurrence of a Loss, you shall give the Knightspoint Group written notice of such claim or Loss. Upon receipt of such written notice, the Knightspoint Group will promptly provide you with counsel to represent you. Such counsel shall be reasonably acceptable to you. In addition, you will be reimbursed promptly for all Losses suffered by you and as incurred as provided herein. If the Knightspoint Group does not promptly provide counsel to represent you that is reasonably acceptable to you, you may engage counsel to represent you, provided such counsel is reasonably acceptable to the Knightspoint Group, and the Knightspoint Group shall be responsible for all reasonable costs and expenses of such counsel. The Knightspoint Group may not enter into any settlement of a Loss or claim without your consent unless such settlement includes a release of you from any and all liability in respect of such claim and does not provide for any admissions of liability by you. No member of the Knightspoint Group may assign its respective obligations under this letter agreement without your consent, which may be withheld in your sole discretion. This letter agreement and its terms may only be amended or waived by a written instrument signed by the Knightspoint Group and you. This letter agreement shall be governed by the laws of the State of New York, without regard to the principles of the conflicts of laws thereof. If you agree to the foregoing terms, please sign below to indicate your acceptance. Very truly yours, KNIGHTSPOINT PARTNERS II, L.P. By: -------------------------------- Name: Title: STARBOARD VALUE AND OPPORTUNITY MASTER FUND LTD. By: -------------------------------- Name: Title: Authorized Signatory PARCHE, LLC By: -------------------------------- Name: Title: Authorized Signatory ACCEPTED AND AGREED: - --------------------------- -----END PRIVACY-ENHANCED MESSAGE-----