Employment Agreement - Natural Wonders Inc. and Michael Sontag


                             NATURAL WONDERS, INC.
                             EMPLOYMENT AGREEMENT
This Employment Agreement is made and entered into by and between Natural
Wonders, Inc. (the "Company") and Michael Sontag as of September 23, 1996.
1.  POSITION AND DUTIES: Michael Sontag shall be employed by the Company as its
Sr. VP, GMM reporting to Kathie Chatfield, President, CEO , effective on October
14, 1996 (the "Commencement Date").
As Sr. VP, GMM, Michael Sontag agrees to devote his full business time, energy
and skill to his duties at the Company.  These duties shall include, but not be
limited to, any duties consistent with his position which may be assigned to
Michael Sontag from time to time by the President, CEO.
2.  TERM OF EMPLOYMENT: Michael Sontag's employment with the Company pursuant to
this Agreement is for no specified term, and may be terminated by Michael
Sontag, or the Company at any time with or without cause, upon the termination
of Mr. Michael Sontag employment, neither he nor the Company shall have any
further obligation or liability to the other, except as set forth in paragraphs
4, 5, 6 and 7 below.
3.  COMPENSATION: Michael Sontag shall be compensated by the company for his
services as follows:
     (a)  SALARY: Michael Sontag shall be paid a monthly salary of $20,833.33
($250,000 on an annualized basis), subject to applicable withholding, in
accordance with the Company's normal payroll procedures.  Such salary shall be
reviewed annually and may be increased as determined appropriate by the
President, CEO and Board of Directors.  The first annual review shall occur on
February 2, 1997, and Michael Sontag will then be paid a monthly salary of
$22,916.67 ($275,000. on an annnualized basis).  
     (b)  BENEFITS: Michael Sontag shall have the right, on the same basis as
other members of management of the Company, to participate in and to receive
benefits under any of the Company's employee benefits plans as offered from time
to time, including the medical, dental, and disability group insurance plans.
Michael Sontag shall also be entitled to participate in the 401(k) Plan
maintained by the Company in accordance with its terms.  In addition, Michael
Sontag shall be entitled to the benefits afforded to other members of management
under the Company's vacation, holiday and business expense reimbursement
policies.
     (c)  CAR ALLOWANCE: Michael Sontag will receive a monthly car allowance of 
$600.00, payable the first paycheck of every fiscal month, in accordance with
current company practice.
     (d)  STOCK OPTIONS: Subject to the Board of Directors' approval, Michael
Sontag will be granted 75,000 shares of restricted stock options subject to the
terms and conditions of the Employee Stock Option Program and agreement,
including a 5 year vesting period.  75,000 shares of options have been reserved
by the Board in anticipation of Mr. Sontag's hire and will be approved at the
next Board meeting scheduled October 30, 1996. Price will be the average of high
and low market transactions on the date he commences employment.
     (e)  PERFORMANCE BONUS: Michael Sontag will be able to participate in the
Natural Wonders 1996 Executive Bonus Program (the "Program"), payment timing in
accordance with the terms and conditions of the Program for a PRO RATA
GUARANTEED (1996 only) Performance Bonus of $30,000 (thirty thousand dollars).
Target award for the VP, GMM for Fiscal 1996 was 50% of base.  Target award for
the VP, GMM for Fiscal 1997 will be between 55-60% of base.  In the event that
other executive bonus plans are

adopted in the future, if management is eligible for bonus, Michael Sontag 
shall be eligible to participate in such programs. The creation of any 
subsequent Executive Bonus Programs are entirely within the discretion of the 
Company, and, as such, participation in the 1996 Executive Bonus Program 
shall not be interpreted or construed to imply a commitment or obligation on 
the part of the Company to continue such programs in the future.
4.  RELOCATION EXPENSES:  Relocation expenses will be paid according to
attachment A.
5.  BENEFITS UPON VOLUNTARY TERMINATION:  In the event that Michael Sontag
voluntarily resigns from his employment with the Company, or in the event that
Michael Sontag 's employment terminates as a result of his death or disability,
Michael Sontag shall be entitled to no compensation or benefits from the Company
other than those earned under paragraph 3 above through the date of his
termination.
6.  BENEFITS UPON OTHER TERMINATION: Michael Sontag agrees that his employment
may be terminated by the Company at any time, with or without cause.  In the
event of the termination of Michael Sontag's employment by the Company for the
reasons set forth below, he shall be entitled to the following:
     (a)  TERMINATION FOR CAUSE:  If Michael Sontag's employment is terminated
by the Company for cause as defined below, Michael Sontag shall be entitled to
no compensation or benefits from the Company other than those earned under
paragraph 3 through the date of his termination.
     For purpose of this Agreement, a termination "for cause" occurs if Michael
Sontag is terminated for any of the following reasons involving willful and
intentional conduct:
     (i)  theft, dishonesty, or falsification of any employment or Company
record;
     (ii)  improper disclosure of the Company's confidential or proprietary
information;
     (iii)  any intentional act by Michael Sontag which has a material
detrimental effect on the Company's reputation or business; or
     (iv)  any material breach of this Agreement, which breach is not cured
within thirty (30) days following written notice of such breach from theCompany.
     (b)  TERMINATION FOR OTHER THAN CAUSE:  If Michael Sontag's employment is
terminated by the Company for any other than cause, Michael Sontag shall be
entitled to the following separation benefits:
     (i)  In the event that Michael Sontag is terminated, continuation of
Michael Sontag's salary for one (1) year.
     (ii)  pro rata payment of any Performance Bonus that may become earned and
payable to Michael Sontag, if and only if he has been employed through the last
day of the third fiscal quarter of a year in which bonus is earned.  Payment,
and timing of payment will be according to the terms and conditions of the Bonus
Plan.     (iii) the company will pay Michael Sontag's COBRA for the salary
continuation period described in subsection (i) above.
7.  EMPLOYMENT AGREEMENT REGARDING CONFIDENTIALITY: Michael Sontag agrees to
execute and abide by the terms and conditions of the Company's employee
Employment Agreement Regarding Confidentiality.
8. DISPUTE RESOLUTION:  In the event of any dispute or claim relating to or
arising out of this employment relationship, this Agreement, or the entering
into or termination of this employment relationship (including, but not limited
to, any tort, contract or discrimination claims), all such disputes shall be
fully
and finally resolved by binding arbitration conducted by the American
Arbitration Association in Alameda County, California; provided, however, that
this arbitration provision shall not apply to any disputes or claims relating to
or arising out of the misuse or misappropriation of the Company's trade secrets
or proprietary information.
9.  SUCCESSORS AND ASSIGNS:  This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.  In view of the
personal nature of the services to be performed under this Agreement by Michael
Sontag he shall not have the right to assign or transfer any of his rights,
obligations or benefits under this Agreement, except as otherwise noted herein.
10.  ENTIRE AGREEMENT:  This Agreement constitutes the entire employment
agreement between Michael Sontag and the Company regarding the terms and
conditions of his employment, with the exception of (i) the Employment Agreement
Regarding Confidentiality described in paragraph 7 and (ii) any stock option
agreement between Michael Sontag and the Company.  This Agreement supersedes all
prior negotiations, representations or agreements between Michael Sontag and the
Company, whether written or oral, concerning Michael Sontag's employment by the
Company.
11.  NO REPRESENTATIONS: Michael Sontag acknowledges that he is not relying, and
has not relied, on any promise, representation or statement made by or on behalf
of the Company which is not set forth in this Agreement. 

12.  VALIDITY:  If any one or more of the provisions (or any part thereof) of
this Agreement shall be held invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions (or any
part thereof) shall not in any way be affected or impaired thereby.
13.   MODIFICATION:  This Agreement may only be modified or amended by a
supplemental written agreement signed by Michael Sontag and the Company.
14.  INTERPRETATION:  This Agreement shall be interpreted in accordance with and
governed by the laws of the State of California.
     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year written below.
                                        NATURAL WONDERS, INC.
Date:    9/26/96                        By /s/ Kathleen M. Chatfield
     -----------------------------        --------------------------
                                        Its
                                           -------------------------
Date:    9/26/96                          /s/ Michael Sontag
     -----------------------------      ----------------------------
                                        Michael Sontag

                           NATURAL WONDERS, INC.
                            EMPLOYMENT AGREEMENT
                              Attachment A
Relocation assistance for Michael Sontag is as follows:I.   RELOCATION EXPENSES
A.   Reimbursement for physical relocation of normal household goods and 2 cars.
B.   Payment of ONE TIME non recurring closing costs, including credit report,
     appraisal, notary fees, document charges on a new home up to $5,000.  These
     expenses must be incurred within 12 months of date of hire.     
C.   Reimbursement for real estate commission on existing home up to 6% of
     selling price not to exceed $18,000.  These expenses must be incurred
     within 12 months of date of hire.
D.  Temporary housing not to exceed 6 months, trips to New Hampshire to visit
     with family and to deal with shut down of New Hampshire address, and
     airfare for the family's move to New Hampshire.
E.   In the event that Michael Sontag sells his house in New Hampshire for a
     price less than the price he originally paid for the house, the Company
     shall reimburse Michael Sontag for that difference up to an amount of
     $20,000; provided, that such sale is fully consummated within a period of
     (12) months from the execution of this Agreement.
The Company will gross up your salary to minimize the tax implications on
reimbursement of any of the above expenses which are not deductible.  The gross
up will be paid at the time that applicable tax returns are filed, at the
applicable tax rate, subject to your providing proper accounting documentation
of such expenses as determined by the Company.II.  VOLUNTARY TERMINATION   
If you should voluntarily terminate employment with the Company before 1 year
from date of employment you will be responsible to reimburse the Company for a
pro - rata portion of the total Relocation Expenses as follows:
- -------------------------------------------------------------------------------
LENGTH OF EMPLOYMENT WITH NATURAL WONDERS    PERCENTAGE OF TOTAL RELOCATION
                                                   EXPENSES DUE COMPANY
- -------------------------------------------------------------------------------
Less than 6 months                           100%
6 months or more - Less than 1 year          50%
                                        NATURAL WONDERS, INC.
Date:   9/26/96                         By /s/ Kathleen M. Chatfield
     -----------------------------        --------------------------
                                        Its
                                           -------------------------
I agree to and accept employment with Natural Wonders, Inc. on the terms and
conditions set forth in this Agreement.
Date    9/26/96                           /s/ Michael Sontag
     -----------------------------      ----------------------------
                                        Michael Sontag