-----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, TzR26AbsPDp/JPigP3gaA7OzaNSQbitIovfvA+4YFdiunxMoKwqnJR7buGGvRqp0 fF93ZqNa7KcUN/RBvCvcTA== 0001005477-99-002450.txt : 19990518 0001005477-99-002450.hdr.sgml : 19990518 ACCESSION NUMBER: 0001005477-99-002450 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CYBERSHOP INTERNATIONAL INC CENTRAL INDEX KEY: 0001051591 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 133977922 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-23901 FILM NUMBER: 99627402 BUSINESS ADDRESS: STREET 1: 130 MADISON AVENUE CITY: NEW YORK STATE: NY ZIP: 10016 BUSINESS PHONE: 2125323553 MAIL ADDRESS: STREET 1: 130 MADISON AVENUE CITY: NEW YORK STATE: NY ZIP: 10016 10-Q 1 FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1999 OR |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________ Commission File Number 0-23901 CYBERSHOP INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) Delaware 13-3979226 - ------------------------------- ---------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 116 Newark Avenue, Jersey City, NJ 07302 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (201) 234-5000 Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_| The number of shares of the Registrant's common stock, par value $.001 per share, outstanding on May 7, 1999 was 7,612,062 shares. CYBERSHOP INTERNATIONAL, INC. AND SUBSIDIARIES INDEX TO FORM 10-Q Page PART I. FINANCIAL INFORMATION Number ------ Item 1. Financial Statements: Consolidated Balance Sheets as of March 31, 1999 (unaudited) and December 31, 1998 2 Consolidated Statements of Operations for the Three Months ended March 31, 1999 and 1998 (unaudited) 3 Consolidated Statements of Cash Flows for the Three Months ended March 31, 1999 and 1998 (unaudited) 4 Notes to Consolidated Financial Statements 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 6 PART II. OTHER INFORMATION Item 2. Changes in Securities and Use of Proceeds 10 Item 6. Exhibits and Reports on Form 8-K 11 SIGNATURES 12 PART I. FINANCIAL INFORMATION Item 1. - Financial Statements CYBERSHOP INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
March 31, December 31, 1999 1998 ------------ ------------ (Unaudited) ASSETS Current Assets: Cash and cash equivalents $ 10,674,000 $ 12,285,000 Accounts receivable, net of allowance for doubtful accounts of $45,000 and $5,000, as of March 31, 1999 and December 31, 1998, respectively 99,000 176,000 Inventories 655,000 526,000 Prepaid expenses and other 536,000 375,000 ------------ ------------ Total current assets 11,964,000 13,362,000 Property and equipment, net 1,934,000 1,944,000 Other assets 97,000 160,000 ------------ ------------ Total assets $ 13,995,000 $ 15,466,000 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 3,305,000 $ 2,403,000 Accrued liabilities 1,285,000 1,953,000 Deferred revenues 56,000 72,000 ------------ ------------ Total current liabilities 4,646,000 4,428,000 Deferred Rent 78,000 49,000 ------------ ------------ Total liabilities 4,724,000 4,477,000 ------------ ------------ Stockholders' equity: Common stock, $.001 par value; 25,000,000 shares authorized; 7,539,322 and 7,493,350 shares issued and outstanding as of March 31, 1999 and December 31, 1998, respectively 8,000 7,000 Additional paid-in capital 18,437,000 18,318,000 Accumulated deficit (9,174,000) (7,336,000) ------------ ------------ Total stockholders' equity 9,271,000 10,989,000 ------------ ------------ Total liabilities and stockholders' equity $ 13,995,000 $ 15,466,000 ============ ============
The accompanying notes to the unaudited consolidated financial statements are an integral part of these consolidated statements. 2 CYBERSHOP INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended March 31, --------------------------- 1999 1998 ----------- ----------- Revenues: Product sales $ 1,052,000 $ 407,000 Advertising & set up fees 23,000 32,000 ----------- ----------- Total revenues 1,075,000 439,000 Cost of revenues 920,000 301,000 ----------- ----------- Gross profit 155,000 138,000 Operating expenses 2,247,000 929,000 ----------- ----------- Loss from operations (2,092,000) (791,000) Interest income, net 122,000 7,000 Minority interest 132,000 -- ----------- ----------- Net loss $(1,838,000) $ (784,000) =========== =========== Net loss per share, basic and diluted $ (0.25) $ (0.18) Weighted average common shares outstanding, basic and diluted 7,493,000 4,287,000
The accompanying notes to the unaudited consolidated financial statements are an integral part of these consolidated statements. 3 CYBERSHOP INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended March 31, ---------------------------- 1999 1998 ------------ ------------ Cash flows from operating activities: Net Loss $ (1,838,000) $ (784,000) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 162,000 32,000 Non-cash compensation expense 12,000 -- Minority interest (132,000) -- Increase (decrease) in cash from changes in: Accounts receivable, net 77,000 39,000 Inventories (129,000) (6,000) Prepaid expenses and other (29,000) (64,000) Other assets 63,000 182,000 Accounts payable 902,000 (54,000) Accrued liabilities (668,000) (165,000) Deferred revenues (16,000) (55,000) Deferred rent 29,000 2,000 ------------ ------------ Net cash used in operating activities (1,567,000) (873,000) ------------ ------------ Cash flows from investing activities: Purchases of property and equipment (152,000) (90,000) ------------ ------------ Cash flows from financing activities: Net proceeds from sale of common stock -- 18,893,000 Proceeds from exercise of stock options 108,000 -- Proceeds of short-term loan -- 500,000 Repayment of short-term loan -- (500,000) Payments of capital lease obligations -- (28,000) ------------ ------------ Net cash provided by financing activities 108,000 18,865,000 ------------ ------------ Net increase (decrease) in cash (1,611,000) 17,902,000 Cash and cash equivalents, beginning of period 12,285,000 787,000 ------------ ------------ Cash and cash equivalents, end of period $ 10,674,000 $ 18,689,000 ============ ============ Supplemental cash flow information: Cash paid for interest $ 3,000 $ 3,000
The accompanying notes to the unaudited consolidated financial statements are an integral part of these consolidated statements. 4 CYBERSHOP INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. Description of the Business and Basis of Presentation CyberShop International, Inc. and subsidiaries (the "Company") is an online retailer that offers brand name products to customers on the Company's websites on the World Wide Web at cybershop.com, electronics.net and from its store that resides on America Online ("AOL"). The information presented as of March 31, 1999 and 1998, and for the three-month periods then ended, is unaudited, but, in the opinion of management of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) which the Company considers necessary for the fair presentation of the Company's financial position as of March 31, 1999, the results of its operations for the three-month periods ended March 31, 1999 and 1998 and its cash flows for the three-month periods ended March 31, 1999 and 1998. The consolidated financial statements included herein have been prepared in accordance with generally accepted accounting principles and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and accompanying notes for the year ended December 31, 1998, included in the Company's annual report on Form 10-K as filed with the Securities and Exchange Commission. Certain prior period amounts have been reclassified to conform to the current period presentation. Results for the interim period are not necessarily indicative of results that may be expected for the entire year. 2. Business Combination On March 24, 1999 the Company issued 250,000 shares of common stock in exchange for all of the outstanding common stock of Dealaday, Inc ("Dealaday"). Dealaday, an internet retailer targeting off-price branded women's and children's apparel and accessory products, began operations in February, 1998. The transaction was accounted for as a pooling of interests and, as a result, the Company's financial statements have been restated for all periods presented. Net sales and net losses for Dealaday were $90,000 and $42,000 for the three-month period ending March 31, 1999, and $17,000, and $9,000 for the three-month period ending March 31, 1998. 3. Commitments and Contingencies Marketing Agreements The Company has entered into certain marketing agreements, which include fixed fees through the year 2000. The expenses associated with these agreements are recognized on a systematic basis over the term of the related agreements as services are received. Future minimum commitments under the terms of these agreements are $873,000 during the remainder of 1999 and $125,000 during 2000. 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Safe Harbor for Forward-Looking Statements From time to time, the Company may publish statements which are not historical fact, but are forward-looking statements relating to matters such as anticipated financial performance, business prospects, technological developments, new products, research and development activities and similar matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical and anticipated results or other expectations expressed in the Company's forward looking statements. Such forward-looking statements may be identified by the use of certain forward-looking terminology, such as "may," "will," "expect," "anticipate," "intend," "estimate," "believe," "goal," or "continue," or comparable terminology that involves risks or uncertainties. Actual future results and trends may differ materially from historical results or those anticipated depending on a variety of factors, including, but not limited to those set forth under "Overview" and "Liquidity and Capital Resources" included in this Management's Discussion and Analysis of Financial Condition and Results of Operations. Except as required by law, the Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise. Readers, however, should carefully review the factors set forth in other reports or documents that the Company has filed or files from time to time with the Securities and Exchange Commission. Overview The Company sells brand name merchandise through it's online stores located on the World Wide Web at cybershop.com and electronics.net, and in the Department Store Area of the America Online ("AOL") Shopping Channel. The Company has been selling merchandise at cybershop.com since September 1995, on AOL since November 1996, and on electronics.net since June 1998. Accordingly, the Company has a limited operating history. electronics.net is the result of a joint venture formed with Tops Appliance City ("TOPS"), a leading consumer electronics, appliance and computer retailer. The Company owns 51% of the joint venture with TOPS owning the remaining 49%. The new site offers a wide selection of consumer electronics, appliances and computers. 6 The Company has pursued strategic alliances that are intended to generate additional referral traffic to each online store. Aside from the joint venture with TOPS, the Company has established marketing agreements with premier internet companies such as AOL, Excite, MSN and E*TRADE. Additionally, during the first quarter, the Company signed new strategic marketing agreements with Yahoo! for a term expiring on December 31, 1999 and infoseek for a term expiring on June 15, 1999. The Company also announced, during the first quarter, its intention to shift its merchandising strategy, targeting off-price branded merchandise found in outlets and traditional discount retailers. The Company initiated a significant overhaul of its infrastructure, migrating its web-based order processing onto a new platform, redesigning the web site and integrating it with a new order fulfillment system. In addition, the Company launched its new online auction, CyberShop Auctions http://auctions.cybershop.com. With this initiative, the Company introduced the excitement of the online auction experience to all its customers, complementing its existing product offerings. The initiative also offers the Company a new way to attract customers, learn more about their shopping preferences and provide an outlet for excess inventory. Recognizing the importance of customer satisfaction, beginning in the first quarter of 1999 the Company began its transition to an inventory-based model, developing a new distribution and fulfillment center in the first quarter. This facility enables orders to be shipped within 24 hours. It is anticipated that during the remainder of 1999 the Company will continue to increase the amount of inventory maintained for immediate shipment to customers. It is also anticipated that significant emphasis will be placed on the offering of a more limited range of brand name first quality merchandise at substantial discounts. The Company intends to increase its operating expenses to continue to fund increased marketing and advertising, to enhance existing stores and to establish strategic relationships important to the success of the Company. The Company expects that it will continue to incur net losses and generate negative cash flow from operations for the foreseeable future as it continues to develop its business and no assurance can be given as to when, if at all, the Company will achieve profitability. Results of Operations Three Months Ended March 31, 1999 compared to Three Months Ended March 31, 1998. Revenues: Revenue is comprised of sales of products offered in the Company's on-line stores and vendor set-up fees. The Company recognizes product revenues when goods are shipped to the customer. Typically, the Company receives payment from the customer's credit card through a financial institution within two to four business days. The amount received by the Company is net of any credit card transaction fees deducted by the financial institution. Total revenues increased by 145%, or $636,000, from $439,000 in the first quarter of 1998 to $1,075,000 in the first quarter of 1999. Product sales increased by 159%, or $645,000, from $407,000 in the first quarter of 1998 to $1,052,000 in the first quarter of 1999. This increase was primarily attributable to increased marketing efforts, an expanded customer base, repeat purchases from existing customers and strong sales of one product, which represented approximately 21% of total revenues in the three months ended March 31, 1999. Advertising and set-up fees decreased by 28%, or $9,000, from $32,000 in the first quarter of 1998 to $23,000 in the first quarter of 1999, as a result of a decrease in emphasis on charging set-up fees and an increase in emphasis on product sales. 7 Cost of Revenues: Cost of revenues consists primarily of the cost of products sold to customers, including shipping costs. Costs of revenues increased by 206%, or $619,000, from $301,000 in the first quarter of 1998 to $920,000 in the first quarter of 1999, primarily due to increased product sales and a change in merchandise mix. Gross profit margins related to product sales were 12.5% in the first quarter of 1999 compared to 26.0% in the first quarter of 1998. The decrease from 1998 to 1999 is primarily attributed to higher promotional discounts and an unfavorable change in product mix, as the consumer electronics category, which typically yields lower than average gross profit margins, represented a higher percentage of total sales in 1999 than in 1998. Operating Expenses: Operating expenses consist primarily of personnel expenses, on-line, radio and print advertising, public relations and other promotional expenses and general corporate expenses. Operating expenses increased by 142%, or $1,318,000, from $929,000 in the first quarter of 1998 to $2,247,000 in the first quarter of 1999. The increase is primarily attributable to higher advertising and promotional expenses, including a full quarters effect in 1999 of several strategic marketing agreements begun in 1998, including increases in fees such as those to AOL, and also the effect of new agreements entered into during the first quarter of 1999. In addition, personnel and general corporate costs related to the increased infrastructure of the Company increased significantly. Interest Income, net: The increase from 1998 to 1999 is primarily due to the interest income earned on the remaining net proceeds from the Company's initial public offering of common stock in March 1998. Minority Interest: Minority interest of $132,000 in the first quarter of 1999 represents 49% of the net loss attributable to electronics.net, a 51% owned subsidiary. Liquidity and Capital Resources Net cash used in operations was $1,567,000 and $873,000 during the first quarter of 1999 and 1998, respectively. The increase in cash used in the first quarter of 1999 is primarily attributable to the additional net loss as well as a $129,000 increase in inventory levels as the Company began migrating towards an inventory based model and started stocking its new distribution and fulfillment center, offset by a $234,000 increase in accounts payable and accrued liabilities. Capital expenditures, primarily for computer equipment and software to support the Company's expansion and increased infrastructure were $152,000 during the first quarter of 1999. No other material commitments for capital expenditures are currently outstanding or contemplated. On March 26, 1998, the Company completed its initial public offering ("IPO") of 3,220,000 shares of Common Stock at a price of $6.50 per share. Net proceeds from the IPO, net of underwriting discounts and offering costs, were $18,749,000. Prior to the IPO, the Company had financed its operations primarily from capital contributions from private investors. At March 31, 1999, the Company had cash and cash equivalents of $10,674,000, working capital of $7,318,000, stockholders' equity of $9,271,000 and no debt. The Company believes that its existing capital resources will enable it to maintain its operations for at least the next twelve months. 8 Year 2000 The Company believes that its computer systems and software products are fully year 2000 compliant. However, it is possible that certain computer systems or software products of the Company's suppliers or customers may not accept input of, store, manipulate and output dates in the year 2000 or thereafter without error or interruption. The Company is querying its current suppliers as to their progress in identifying and addressing problems that their computer systems will face in correctly processing date information as the year 2000 approaches. However, there can be no assurance that all date-handling problems of its suppliers will be identified by the Company or its suppliers in advance of their occurrence, or that the Company or the suppliers will be able to successfully remedy problems that are discovered. In the event that problems are discovered with its current suppliers which cannot be remedied the Company intends to seek alternative suppliers who are fully year 2000 compatible. The Company believes that most of its current customers who access its website are using software that is fully year 2000 compatible. The Company may, however, be required to make significant expenditures to address or remedy any year 2000 problems of its customers or vendors which are not identified in advance, or to satisfy liabilities to which the Company may become subject as a result of such problems. 9 PART II. OTHER INFORMATION Item 2. Changes in Securities and Use of Proceeds On March 20, 1998 the Company's Registration Statement on Form S-1 (File No. 333-42707) was declared effective by the Securities and Exchange Commission. Pursuant to the Registration Statement the Company registered and sold 3,220,000 shares of Common Stock at a price of $6.50 per share. The managing underwriters were C.E. Unterberg, Towbin and Fahnestock & Co. Inc. The aggregate price of the amount offered and sold was $20,930,000. The net offering proceeds to the Company after deducting underwriting discounts and commissions and other expenses was $18,749,000. From the effective date of the Registration Statement through March 31, 1999 the Company used the following amounts from the net offering proceeds for the purposes set forth below: Construction of plant $ -- Building, facilities and leasehold improvements $ 349,000 Purchase and installation of machinery, equipment and software $1,713,000 Purchase of real estate $ -- Acquisition of other business $ -- Repayment of indebtedness $ 500,000 Working capital $6,235,000 Temporary investments $9,952,000 On March 19, 1998, the Trustees of General Electric Pension Trust loaned the Company $500,000 at an interest rate of 15% per annum. The proceeds of the loan were used by the Company for working capital purposes. Jeffrey S. Tauber pledged 172,500 of his shares of Common Stock as security for the loan. The loan was repaid on March 27, 1998. The use of proceeds set forth above does not represent a material change in the use of proceeds described in the Registration Statement. 10 Item 6. Exhibits and Reports on Form 8-K a. The following is a list of exhibits filed as part of this Form 10-Q: 2. Plan of acquisition, reorganization, arrangement, liquidation or succession: None 3. Articles of Incorporation: 3.1 Certificate of Incorporation, as amended and as currently in effect (Incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-1 (File No. 333-42707). By-Laws: 3.2 By-Laws as currently in effect (Incorporated by reference to Exhibit 3.2 to the Company's Registration Statement on Form S-1 (File No. 333-42707). 10. Material Contracts: 10.1 Stock Purchase Agreement dated March 24, 1999, by and between Edward Mufson and Cybershop International, Inc. 10.2 Employment Agreement dated March 24, 1999, by and between Edward Mufson and Cybershop International, Inc. 10.3 Employment Agreement dated February 7, 1999, by and between Jeffrey Leist and Cybershop International, Inc. 11. Statement re computation of per share earnings: Statement regarding computation of per share earnings is not required because the computation can be readily determined from the material contained in the financial statements included herein. 15. Letter re unaudited financial information: None 16. Letter re change in accounting principles: None 19. Report furnished to security holders: None 22. Published report regarding matters submitted to vote of security holders: None 23. Consents of Experts and Counsel: None 24. Power of Attorney: None 27. Financial Data Schedule, which is submitted electronically to the Securities and Exchange Commission for information only 99. Additional Exhibits: None b. Reports on Form 8-K, 1999. None. 11 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: May 17, 1999 By: /s/ Jeffrey S. Tauber -------------------------------------------- Jeffrey S. Tauber President, Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer) Date: May 17, 1999 By: /s/ Jeffrey Leist -------------------------------------------- Jeffrey Leist Senior Vice President and Chief Operating and Financial Officer (Principal Financial and Accounting Officer) 12 Exhibit Index 27. Financial Data Schedule. 13 EX-10.1 2 STOCK PURCHASE AGREEMENT - -------------------------------------------------------------------------------- STOCK PURCHASE AGREEMENT by and between EDWARD MUFSON and CYBERSHOP INTERNATIONAL, INC. Dated March 24, 1999 - -------------------------------------------------------------------------------- STOCK PURCHASE AGREEMENT STOCK PURCHASE AGREEMENT (the "Agreement") dated March 24, 1999 by and between CYBERSHOP INTERNATIONAL, INC., a Delaware corporation (the "Purchaser") and EDWARD MUFSON (the "Stockholder"). W I T N E S S E T H : WHEREAS, the Stockholder owns all of the issued and outstanding shares of common stock, par value of $.01 per share (the "Shares") of Deal-A-Day, Inc., a Massachusetts corporation (the "Company"); WHEREAS, the Stockholder desires to sell, and the Purchaser desires to purchase, all of the Shares pursuant to the provisions of this Agreement; WHEREAS, for federal income tax purposes it is intended that the purchase of the Shares shall qualify as a reorganization within the meaning of Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the "Code"); and WHEREAS, for accounting purposes it is intended that the transaction meet the requirements to qualify as a "pooling." NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties do hereby agree as follows: ARTICLE I SALE OF THE SHARES Section 1.1 Sale of the Shares. Subject to the terms and conditions herein stated, the Stockholder hereby assigns, transfers and delivers to the Purchaser, and the Purchaser hereby purchases from the Stockholder, 50,000 Shares representing all of the issued and outstanding Shares of the Company. All certificates representing the Shares shall be duly endorsed by the Stockholder transferring the same, with all necessary transfer tax and other revenue stamps, acquired at the Stockholder's expense, affixed and canceled. Section 1.2 Closing. The Closing under this Agreement (the "Closing") is taking place simultaneously with the execution and delivery of this Agreement at 10:00 A.M., on the date hereof, at the offices of Davis & Gilbert LLP, 1740 Broadway, New York, New York 10019. Such date is herein referred to as the "Closing Date". ARTICLE II PURCHASE PRICE Section 2.1 Purchase Price. In full consideration for (i) the purchase by the Purchaser of the Shares and (ii) the agreement of the Stockholder to be bound by the non-competition and non-solicitation provisions set forth in the Employment Agreement attached hereto as Exhibit A, the Purchaser will issue to the Stockholder 250,000 unregistered shares of its common stock, par value $0.001 per share ("CYSP Stock"). 25,000 shares of CYSP Stock shall have registration rights in accordance with the Registration Rights Agreement annexed hereto as Exhibit B. ARTICLE III REPRESENTATIONS OF THE STOCKHOLDER The Stockholder represents, warrants and agrees to and with the Purchaser as follows: Section 3.1 Execution and Validity of Agreement; Restrictive Documents. 3.1.1 Execution and Validity. The Stockholder has the full legal right and capacity to enter into this Agreement and to perform his obligations hereunder. This Agreement has been duly and validly executed and delivered by the Stockholder and, assuming due authorization, execution and delivery by the Purchaser, constitutes a legal, valid and binding obligation of the Stockholder, enforceable against the Stockholder in accordance with its terms. 3.1.2 Stock Ownership. The Stockholder is the true and lawful owner of the Shares and all of such Shares have been duly and validly authorized and issued and are fully paid, nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof, and such ownership is free and clear of all mortgages, liens, security interests, pledges, encumbrances, claims, charges and restrictions of any kind or character (individually, a "Lien" and collectively, "Liens"). 3.1.3 No Options. There are no outstanding subscriptions, options, rights, warrants, calls, commitments or arrangements of any kind to acquire any Shares and there are no agreements or understandings with respect to the sale or transfer of Shares. 3.1.4 No Restrictions. There is no suit, action, claim, or to the best information, 2 knowledge and belief of the Stockholder, investigation or inquiry by any administrative agency or governmental body, and no legal, administrative or arbitration proceeding pending or, to the best knowledge, information and belief of the Stockholder, threatened against the Stockholder or any of his properties or assets, with respect to the execution, delivery and performance of this Agreement or the transactions contemplated hereby or any other agreement entered into by the Stockholder in connection with the transactions contemplated hereby. 3.1.5 Non-Contravention. The execution, delivery and performance by the Stockholder of his obligations hereunder and the consummation of the transactions contemplated hereby, will not (a) result in the violation by the Stockholder of any statute, law, rule, regulation or ordinance (collectively, "Laws"), or any judgment, decree, writ or similar order, whether preliminary or final (collectively, "Orders"), of any court, tribunal, arbitrator, authority, agency, commission, official or other instrumentality of the United States, any foreign country or any domestic or foreign state, county, city or other political subdivision (a "Governmental or Regulatory Authority"), applicable to the Stockholder or any of his assets or properties, or (b) conflict with, result in a violation or breach of, constitute (with or without notice or lapse of time or both) a default under, or require the Stockholder to obtain any consent, approval or action of, make any filing with or give any notice to, or result in or give to any Person (as defined in Section 9.3 below) any right of payment or reimbursement, termination, cancellation, modification or acceleration of, or result in the creation or imposition of any Lien upon any of the assets or properties of the Stockholder, under any of the terms, conditions or provisions of any note, bond, mortgage, security agreement, indenture, license, franchise, permit, concession, contract, lease or other instrument, obligation or agreement of any kind (collectively, "Instruments") to which the Stockholder is a party or by which he or any of his assets or properties are bound. 3.1.6 Approvals and Consents. No consent, approval or action of, filing with or notice to any Governmental or Regulatory Authority or other public or private third party is necessary or required under any of the terms, conditions or provisions of any Law or Order of any Governmental or Regulatory Authority or any Instrument to which the Stockholder is a party or his assets or properties are bound for the execution and delivery of this Agreement by the Stockholder, the performance by the Stockholder of his obligations hereunder or the consummation of the transactions contemplated hereby. 3.1.7 Residence. The Stockholder is a resident of the Commonwealth of Massachusetts. Section 3.2 Existence and Good Standing. The Company is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts, with the full corporate power and authority to own its property and to carry on its business all as and in the places where such properties are now owned or operated or such business is now being conducted. The Company is duly qualified, licensed or admitted to do 3 business and is in good standing in those jurisdictions set forth on Schedule 3.2, which are the only jurisdictions in which the ownership, use or leasing of its assets and properties, or the conduct or nature of its business, makes such qualification, licensing or admission necessary. Section 3.3 Subsidiaries and Investments; Capital Stock. 3.3.1 Subsidiaries and Investments. The Company does not own any capital stock or other equity or ownership or proprietary interest in any corporation, limited liability company, association, trust, joint venture or other entity. 3.3.2 Capital Stock. The Company has an authorized capitalization consisting of 200,000 shares of common stock, $.01 par value of which 50,000 shares are issued and outstanding and no shares are held in the treasury of the Company. All such shares have been duly authorized and validly issued and are fully paid and non-assessable, and have not been issued in violation of any preemptive rights of Stockholder. No other class of capital stock of the Company is authorized or outstanding. There are no outstanding options, warrants, rights, calls, commitments, conversion rights, rights of exchange, plans or other agreements of any character (collectively, "Options") providing for the purchase, issuance or sale of any shares of the capital stock of the Company, or outstanding agreements or commitments to grant, extend or enter into any Option with respect thereto, or outstanding Options providing for settlement in cash. There are no outstanding contractual obligations of the Company to repurchase, redeem or otherwise acquire any shares of capital stock of the Company or any equivalent thereof. Section 3.4 Financial Statements and No Material Changes. Schedule 3.4(a) sets forth the audited balance sheets of the Company as at December 31, 1998 and the related audited statements of income and retained earnings and cash flows for the calendar year then ended (the balance sheet of the Company as at December 31, 1998, is hereinafter referred to as the "Balance Sheet"). Such financial statements, including the footnotes thereto, have been prepared in accordance with generally accepted accounting principles, consistently applied throughout the periods indicated ("GAAP"). The Balance Sheet fairly presents the financial condition of the Company at the date thereof and fairly presents all claims against and all debts and liabilities of the Company, fixed or contingent, as at the date thereof, required to be shown thereon under GAAP, and the related statements of income and retained earnings and cash flows fairly present the results of operations of the Company, retained earnings and the cash flows for the period indicated. Except as reflected in the January 31, 1999 balance sheet or as specifically stated in Schedule 3.23, since December 31, 1998 (the "Balance Sheet Date"), there has been no material adverse change in the assets or liabilities, or in the business or condition, financial or otherwise, or in the results of operations of the Company. Section 3.5 Books and Records. All accounts, books, ledgers and official and other records material to the business of the Company maintained by or on behalf of the Company of whatsoever kind have been properly and accurately kept and completed in all material 4 respects, and there are no material inaccuracies or discrepancies of any kind contained or reflected therein. Except as set forth on Schedule 3.5, the Company does not have any of its records, systems, controls, data or information recorded, stored, maintained, operated or otherwise wholly or partly dependent on or held by any means (including any electronic, mechanical or photographic process, whether computerized or not) which (including all means of access thereto and therefrom) are not under the exclusive ownership and possession of the Company. Section 3.6 Personal Property; Encumbrances. The Company has good and valid title to, or enforceable leasehold interests in or valid rights under contract to use, all the properties and assets owned or used by it (personal, tangible and intangible), including, without limitation (a) all the properties and assets reflected in the Balance Sheet, and (b) all the properties and assets purchased or otherwise contracted for by the Company since the Balance Sheet Date (except for properties and assets reflected in the Balance Sheet or acquired or otherwise contracted for since the Balance Sheet Date that have been sold or otherwise disposed of in the ordinary course of business), in each case free and clear of all Liens, except for Liens set forth on Schedule 3.6. The property, plant and equipment owned or otherwise contracted for by the Company is in a state of good maintenance and repair (ordinary wear and tear excepted) and is adequate and suitable in all material respects for the purposes for which they are presently being used. Section 3.7 Real Property. 3.7.1 Owned Real Property. The Company does not own a freehold interest in any real property or any option or right of first refusal or first offer to acquire real property. 3.7.2 Leased Real Property. Schedule 3.7.2 contains an accurate and complete list of all real property leases to which the Company is a party (as lessee, lessor, sublessee or sublessor), including, without limitation, leases which the Company has subleased or assigned to a third party and as to which the Company remains liable. Each real property lease set forth on Schedule 3.7.2 (or required to be set forth on Schedule 3.7.2) is valid, binding and in full force and effect; all rents and additional rents and other sums, expenses and charges due on each such lease have been paid; and the lessee has been in peaceable possession since the commencement of its original possession under such lease and no waiver, indulgence or postponement of the lessee's obligations thereunder has been granted by or would be required from the lessor. [Except as set forth in Schedule 3.7.2, there exists no default or event of default by the Company or to the best knowledge, information and belief of the Stockholder, by any other party to such real property lease, or occurrence, condition or act (including the purchase of the Shares hereunder) which, with the giving of notice, the lapse of time or the happening of any further event or condition, would become a default or event of default by the Company under such real property lease, and there are no outstanding claims of breach or indemnification or notice of default or termination of any real property lease.] The real property leased by the Company is, in all material respects, in a state of good maintenance and 5 repair and is, in all material respects, adequate and suitable for the purposes for which it is presently being used, and to the best knowledge, information and belief of the Stockholder, there are no material repair or restoration works likely to be required in connection with any of the leased real properties. Except as set forth on Schedule 3.7.2, the Company is in physical possession and actual and exclusive occupation of the whole of their leased properties. No real property lease is subject or subordinate to any superior lease or mortgage except as set forth on Schedule 3.7.2. The Company does not owe any brokerage commission with respect to any such real property leases. Section 3.8 Contracts. Schedule 3.8 hereto contains an accurate and complete list of the following agreements to which the Company is a party: (a) all Plans (as such term is defined in Section 3.19), (b) any personal property lease with a fixed annual rental of $10,000 or more, (c) any contract relating to capital expenditures which involve payments of $10,000 or more in any single or related transaction, (d) any loan or advance to, or investment in, any other Person or any contract relating to the making of any such loan, advance or investment, (e) any guarantee or other contingent liability in respect of any indebtedness or obligation of any other Person (other than the endorsement of negotiable instruments for collection in the ordinary course of business), (f) any management service, employment, consulting or any other similar type of contract, agreement or document relating to services to be provided to the Company which is not cancelable by the Company without penalty or other financial obligation within 30 days, (g) any contract limiting its freedom to engage in any line of business or to compete with any other Person, (h) any contract (not covered by another subsection of this Section 3.8) which involves $10,000 or more over the unexpired term thereof and is not cancelable by the Company without penalty or other financial obligation within 30 days, (i) any collective bargaining agreement, (j) any contract with any of its officers or directors or the Stockholder (including indemnification agreements), (k) any secrecy or confidentiality agreement (other than standard confidentiality agreements in computer software license agreements or agreements with clients entered into in the ordinary course of business), (l) any licensing or franchise agreement (other than license agreements for "off-the-shelf" third party computer software not included within the Company's products or services), (m) any agreement with a client which generates annual revenues of $10,000 or more. Each contract set forth on Schedule 3.8 (or required to be set forth on Schedule 3.8) is in full force and effect, and there exists no default or event of default by the Company or to the best knowledge, information and belief of the Stockholder, by any other party, or occurrence, condition, or act (including the purchase of the Shares hereunder) which, with the giving of notice, the lapse of time or the happening of any other event or condition, would become a default or event of default thereunder by the Company, and there are no outstanding claims of breach or indemnification or notice of default or termination of any such contracts. Section 3.9 Non-Contravention; Approvals and Consents. 3.9.1 Non-Contravention. The execution, delivery and performance by the Stockholder of his obligations hereunder and the consummation of the transactions 6 contemplated hereby, will not (a) violate, conflict with or result in the breach of any provision of the Certificate of Incorporation or By-laws of the Company, or (b) result in the violation by the Company of any Laws or Orders of any Governmental or Regulatory Authority, applicable to the Company or any of its assets or properties, except as would not reasonably be expected to have a "Material Adverse Effect" (as defined below), or (c) conflict with, result in a violation or breach of, constitute (with or without notice or lapse of time or both) a default under, or require the Company to obtain any consent, approval or action of, make any filing with or give any notice to, or result in or give to any Person any right of payment or reimbursement, termination, cancellation, modification or acceleration of, or result in the creation or imposition of any Lien upon any of the assets or properties of the Company, under any of the terms, conditions or provisions of any Instruments to which the Company is a party or by which the Company or any of its assets or properties is bound. For purposes of this Agreement, "Material Adverse Effect" shall mean any material and adverse effect on the financial condition, results of operations, assets, properties or business of the Company or the Purchaser, as applicable. 3.9.2 Approvals and Consents. No consent, approval or action of, filing with or notice to any Governmental or Regulatory Authority or other public or private third party is necessary or required under any of the terms, conditions or provisions of any Law or Order of any Governmental or Regulatory Authority or any Instrument to which the Company is a party or by which its assets or properties are bound for the execution and delivery of this Agreement by the Stockholder, the performance by the Stockholder of his obligations hereunder or the consummation of the transactions contemplated hereby. Section 3.10 Litigation. There is no action, suit, proceeding at law or in equity by any Person, or any arbitration or any administrative or other proceeding by or before (or to the best knowledge, information and belief of the Stockholder, any investigation by) any governmental or other instrumentality or agency, pending or, to the best knowledge, information and belief of the Stockholder, threatened, against the Company with respect to this Agreement or the transactions contemplated hereby, or against or affecting the Company or its properties or rights; and no acts, facts, circumstances, events or conditions occurred or exist which are a basis for any such action, proceeding or investigation. The Company is not subject to any judgment, order or decree entered in any lawsuit or proceeding. Section 3.11 Taxes. The Company has timely filed, or caused to be filed, taking into account any valid extensions of due dates, completely and accurately in all material respects, all federal, state, local and foreign tax or information returns (including estimated tax returns) required under the statutes, rules or regulations of such jurisdictions to be filed by the Company with respect to income, franchise, capital stock, employees' income withholding, back-up withholding, withholding on payments to foreign Persons, social security, unemployment, disability, real property, personal property, sales, use, excise, transfer and other taxes (including interest, penalties or additions to tax in respect of the foregoing) whether disputed or not (all of the foregoing collectively referred to as "Taxes"). All Taxes 7 shown on said returns to be due and all additional assessments received prior to the Balance Sheet Date have been paid or are being contested in good faith, in which case, such contested assessments are set forth on Schedule 3.11. All sales taxes due and owing prior to the Closing Date have been paid. The amount set up as an accrual for Taxes on the Balance Sheet is sufficient for the payment of all unpaid Taxes of the Company, whether or not disputed, for all periods ended on and prior to the date thereof. Since the Balance Sheet Date, the Company has not incurred any liabilities for Taxes other than in the ordinary course of business. The Stockholder has delivered to the Purchaser correct and complete copies of all U.S. federal and Massachusetts State income tax returns filed with respect to the Company for all taxable periods since its inception. None of the federal, state or local tax returns of the Company has ever been audited by the Internal Revenue Service ("IRS") or any other Governmental or Regulatory Authority. No examination of any return of the Company is currently in progress, and the Company has not received notice of any proposed audit or examination. No deficiency in the payment of Taxes by the Company for any period has been asserted by any taxing authority and remains unsettled at the date of this Agreement. The Company has not made any agreement, waiver or other arrangement providing for an extension of time with respect to the assessment or collection of any tax against it or filed a consent with the IRS pursuant to Section 341(f)(2) of the Code or with any other governmental agency to any similar effect or made an election under Section 338 of the Code. The Company has not been a member of an affiliated group filing consolidated federal income tax returns nor has it been included in any combined, consolidated or unitary state or local income tax return. The Company is not a party to any tax allocation or tax sharing agreement nor does it have any contractual obligation to indemnify any other Person with respect to Taxes. The Company has not been a United States real property holding corporation within the meaning or Section 897(c)(2) of the Code within the period specified in Section 897(c)(1)(A)(ii) of the Code. The Company will not be required as a result of a change in accounting method for any period ending on or before the Closing Date to include any adjustment under Section 481 of the Code (or any similar provision of state, local or foreign income tax law) in income for any period ending after the Closing Date. Section 3.12 Liabilities. Except as set forth in the Balance Sheet or referred to in the footnotes thereto, the Company does not have any outstanding claims, liabilities or indebtedness of any nature whatsoever (collectively in this Section 3.12, "Liabilities"), whether accrued, absolute or contingent, determined or undetermined, asserted or unasserted, and whether due or to become due, other than (i) Liabilities specifically disclosed in any Schedule hereto; (ii) Liabilities under contracts, purchase orders and other agreements, arrangements and commitments of the type required to be disclosed by the Stockholder on any Schedule and so disclosed or which because of the dollar amount or other qualifications are not required to be listed on such Schedule; (iii) Liabilities incurred in the ordinary course of business and consistent with past practice since the Balance Sheet Date not involving borrowings by the Company and (iv) liabilities which are fully covered by insurance maintained by the Company. Schedule 3.8 sets forth a list of all current arrangements of the Company for borrowed money and all outstanding balances with respect thereto. The 8 Company is not in default in respect of the terms or conditions of any borrowings. Section 3.13 Insurance. Schedule 3.13 is a schedule of all insurance policies (including life insurance) or binders maintained by the Company. All such policies are in full force and effect and all premiums that have become due have been currently paid. The Company has not received any notice of cancellation or non-renewal of any such policy or binder. The Company has not filed for any claims exceeding $5,000 against any of its insurance policies. Section 3.14 Intellectual Property; Customer Lists. (a) Schedule 3.14 hereto contains an accurate and complete list of all Intellectual Property (as defined below) owned by the Company and all agreements under which any Person has granted a license for any Intellectual Property to the Company (other than license agreements for "off the shelf" third party computer software not included within the Company's products or services). The Company has all right, title and interest in, a valid and binding license to use, or has the requisite permission and authority to use all Intellectual Property used in the conduct of its business. Except as set forth on Schedule 3.14, no claim of infringement or misappropriation of Intellectual Property is or has been pending or, to the best knowledge, information and belief of the Stockholder, threatened against the Company and/or Stockholder and, to the best knowledge, information and belief of the Stockholder, the Company and/or the Stockholder are not infringing or misappropriating any Intellectual Property of any Person. The Company has not granted any license, franchise or permit in effect on the date hereof to any Person to use any of the trade names or any of the trademarks owned by it. The term "Intellectual Property" means patents and patent rights, trademarks and trademark rights, tradenames and tradename rights, service marks and service mark rights, service names and service name rights, copyright and copyright rights, trade secrets and trade secret rights, rights of privacy and publicity, and other proprietary intellectual property and personal rights, including without limitation "WWW.DEALADAY.COM," and all pending applications for and registrations of any of the foregoing. (b) The customer lists and emails addresses relating to the customer lists being delivered by the Stockholder are complete and represent all of the customer lists and email addresses in the Company's possession relating to the Company's business. 9 Section 3.15 Compliance with Laws; Licenses and Permits. 3.15.1 Compliance. The Company is, and its business has been conducted, in compliance with all applicable Laws and Orders, except in each case where the failure to so comply would not reasonably be expected to have a Material Adverse Effect, including without limitation, (a) all Laws and Orders promulgated by the Federal Trade Commission or any other Governmental or Regulatory Authority; (b) all environmental Laws and Orders; and (c) all Laws and Orders relating to labor, civil rights, and occupational safety and health laws, worker's compensation, employment and wages, hours and vacations, or pay equity. The Company has not been charged with, or, to the best information, knowledge and belief of the Stockholder, threatened with or under any investigation with respect to, any charge concerning any violation of any Laws or Orders. 3.15.2 Licenses. The Company has all licenses, permits and other governmental certificates, authorizations and approvals (collectively, "Licenses") required by a Governmental or Regulatory Authority for the operation of its business and the use of its properties as presently operated or used or contemplated to be operated or used, except where the failure to have such Licenses would not reasonably be expected to have a Material Adverse Effect. All of the Licenses are in full force and effect and no action or claim is pending, nor to the best knowledge, information and belief of the Stockholder is threatened, to revoke or terminate any of such Licenses or declare any such License invalid in any material respect. Section 3.16 Suppliers. Schedule 3.16 sets forth for the Company the ten largest suppliers (measured by volume of product supplied) as at the Balance Sheet Date. No supplier of the Company has advised the Company or the Stockholder in writing that it is terminating its relationship or considering refusing to deal with the Company, and to the best knowledge, information and belief of the Stockholder, no supplier has orally advised the Company of any of the foregoing events. Section 3.17 Accounts Receivable; Inventory; Accounts Payable. Except as set forth on Schedule 3.17, there are no accounts receivable and outstanding unbilled invoices (including, without limitation, unbilled invoices for services and out of pocket expenses) and other debts due all of which, if any, are good and collectible in full in the ordinary course of business. Except as set forth in Schedule 3.17, there has been no change since the Balance Sheet Date in the amount of the inventory, accounts receivable or other debts due to the Company or the reserves with respect thereto, or accounts payable of the Company except, in each category outlined above, for changes in an amount not exceeding $10,000 plus or minus. Section 3.18 Employment Relations. (a) The Company is not engaged in any unfair labor practice; (b) no unfair labor practice complaint against the Company is pending before any Governmental or Regulatory Authority; (c) there is no organized labor strike, dispute, slowdown or stoppage actually pending or to the best knowledge, information and belief of 10 the Stockholder threatened against or involving the Company; (d) there are no labor unions representing or, to the best knowledge, information and belief of the Stockholder, attempting to represent the employees of the Company; (e) no claim or grievance nor any arbitration proceeding arising out of or under any collective bargaining agreement is pending and to the best knowledge, information and belief of the Stockholder, no such claim or grievance has been threatened; (f) no collective bargaining agreement is currently being negotiated by the Company; and (g) the Company has not experienced any work stoppage or similar organized labor dispute during the last three years. There is no legal action, suit, proceeding or claim pending or, to the best knowledge, information and belief of the Stockholder, threatened between the Company and any of its employees, former employees, agents, former agents, job applicants or any association or group of any of their employees. Section 3.19 Employee Benefit Plans 3.19.1 List of Plans. Schedule 3.8 to this Agreement lists all employee benefit plans (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) and all bonus, incentive, deferred compensation, retiree medical or life insurance, supplemental retirement, severance or other benefit plans, programs or arrangements, and all termination, severance or other contracts or agreements, whether or not set forth in writing, whether covering one Person or more than one Person, and whether or not subject to any of the provisions of ERISA, which are maintained, contributed to or sponsored by the Company for the benefit of any employee (each item so listed on Schedule 3.8 being referred to herein individually, as a "Plan" and collectively, as the "Plans"). The Stockholder has delivered to the Purchaser a complete and accurate copy (where applicable) of (i) each written Plan and descriptions of any unwritten Plan (including all amendments thereto whether or not such amendments are currently effective), (ii) each summary plan description and summary of material modifications relating to a Plan, (iii) each trust agreement or other funding arrangement with respect to each Plan, including insurance contracts, (iv) the most recently filed IRS Form 5500 relating to each Plan, (v) the most recently received IRS determination letter for each Plan and (vi) the most recently prepared actuarial reports and the three most recently prepared financial statements, if applicable, in connection with each Plan. Except as set forth on Schedule 3.19.1, neither the Stockholder nor the Company has made any commitment, whether legally enforceable or not (i) to create or cause to exist any other employee benefit plan, program or arrangement or (ii) to modify, change or terminate any Plan. 3.19.2 Severance. Except as set forth on Schedule 3.19.2, none of the Plans, or any employment agreement or other contract to which the Company is a party or bound, provides for the payment of or obligates the Company to pay separation, severance, termination or similar-type benefits to any Person or obligates the Company to pay separation, severance, termination or similar-type benefits solely as a result of any transaction contemplated by this Agreement or as a result of a "change in control," within the meaning of such term under Section 280G of the Code. 11 3.19.3 Multi-Employer Plans. Neither the Company nor any ERISA Affiliate (as herein defined) has maintained, contributed to or participated in a multi-employer plan (within the meaning of Section 3(37) or 4001(a)(3) of ERISA or a multiple employer plan subject to Sections 4063 and 4064 of ERISA) nor has any obligations or liabilities, including withdrawal or successor liabilities, regarding any such plan. As used herein, the term "ERISA Affiliate" means any Person that, together with the Company, is considered a "single employer" pursuant to Section 4001(b) of ERISA. 3.19.4 Welfare Benefit Plans. Schedule 3.8 sets forth a complete and accurate list of each Plan which provides or promises retiree medical, disability or life insurance benefits to any current or former employee, officer or director of the Company. Except as set forth on Schedule 3.19.4, the Company has expressly reserved the right, in all Plan documents relating to welfare benefits provided to employees, former employees, officers, directors and other participants and beneficiaries, to amend, modify or terminate at any time the Plans which provide for welfare benefits. 3.19.5 Administrative Compliance. Each Plan is now and has been operated in all material respects in accordance with the requirements of all applicable law, including, without limitation, ERISA and the Code, and the regulations and authorities published thereunder. Without limitation of the foregoing, each Plan has been administered and maintained in all material respects in compliance with the applicable provisions of Title I of ERISA regarding reporting and disclosure requirements, and all participants and beneficiaries of each Plan have been furnished a summary plan description that complies in all material respects with the requirements of Department of Labor Sections 2520.102-2 and 2520.102-3. The Company has complied in all material respects with the requirements of Sections 601-609 of ERISA. The Company performed all material obligations required to be performed by it under, is not in any respect in default under or in violation of, and the Stockholder has no knowledge of any default or violation by any party to, any Plan. Except as set forth on Schedule 3.19.5, no legal action, suit, audit, investigation or claim is pending or to the best knowledge, information and belief of the Stockholder threatened, with respect to any Plan (other than claims for benefits in the ordinary course) and, to the best knowledge, information and belief of the Stockholder, and except as set forth on Schedule 3.19.5, no fact, event or condition exists that would be reasonably likely to provide a legal basis for any such action, suit, audit, investigation or claim. All reports, disclosures, notices and filings with respect to such Plans required to be made to employees, participants, beneficiaries, alternate payees and government agencies have been timely made or an extension has been timely obtained. 3.19.6 Tax-Qualification. Except as set forth on Schedule 3.19.6, each Plan which is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the IRS that it is so qualified and each trust established in connection with any Plan which is intended to be exempt from federal income taxation under Section 501(a) of the Code has received a determination letter from the IRS that it is so 12 exempt, and to the best knowledge, information and belief of the Stockholder, no fact or event has occurred or condition exists since the date of such determination letter from the IRS which would be reasonably likely to adversely affect the qualified status of any such Plan or the exempt status of any such trust. 3.19.7 Funding; Excise Taxes. There has been no prohibited transaction (within the meaning of Section 406 of ERISA or Section 4975 of the Code) with respect to any Plan subject to ERISA. The Company has not incurred any liability for any excise tax arising under Sections 4971, 4972, 4975, 4976, 4977, 4978, 4978B, 4979, 4980 or 4980B of the Code or any civil penalty arising under Sections 502(i) or 502(l) of ERISA, and, to the best knowledge, information and belief of the Stockholder, no fact, event or condition exists which could give rise to any such liability. Neither the Company nor any ERISA Affiliate has incurred any liability under, arising out of or by operation of Title IV of ERISA (other than liability for premiums to the Pension Benefit Guaranty Corporation ("PBGC"), or contributions to a Plan, in either case arising in the ordinary course), including, without limitation, any liability in connection with the termination of any employee benefit plan subject to Title IV of ERISA (a "Title IV Plan"); and, to the best knowledge, information and belief of the Stockholder, no fact, event or condition exists which could give rise to any such liability. None of the assets of the Company or any ERISA Affiliate is the subject of any Lien arising under Section 302(f) of ERISA or Section 412(n) of the Code; neither the Company nor any ERISA Affiliate has been required to post any security under Section 307 of ERISA or Section 401(a) (29) of the Code; and to the best knowledge, information and belief of the Stockholder, no fact or event exists which could give rise to any such Lien or requirement to post any such security. 3.19.8 Tax Deductions. All contributions, premiums or payments required to be made, paid or accrued with respect to any Plan have been made, paid or accrued on or before their due dates, including extensions thereof. All such contributions have been fully deducted for income tax purposes and no such deduction has been challenged or disallowed by any government entity and to the best knowledge, information and belief of the Stockholder, no fact or event exists which could give rise to any such challenge or disallowance. Section 3.20 Interests in Customers, Suppliers. Neither the Stockholder nor any entity controlled by the Stockholder nor any officer, director or employee of the Company, any parent, brother, sister, child or spouse of any such officer, director or employee or of the Stockholder (collectively, the "Related Group"), or any entity controlled by anyone in the Related Group: (i) owns, directly or indirectly, any interest in (excepting less than 1% stock holdings for investment purposes in securities of publicly held and traded companies), or received payments from, or is an officer, director, employee or consultant of, any Person which is, or is engaged in business as, a competitor, lessor, lessee, supplier, distributor, sales agent, customer or client of the Company; 13 (ii) owns, directly or indirectly (other than through the ownership of stock or other securities of the Company), in whole or in part, any tangible or intangible property (including, but not limited to Intellectual Property), that the Company uses in the conduct of business other than immaterial personal items owned and used by employees at their work stations; or (iii) has any cause of action or other claim whatsoever against, or owes any amount to, the Company, except for claims in the ordinary course of business such as for accrued vacation pay, accrued benefits under employee benefit plans, and similar matters and agreements existing on the date hereof. Section 3.21 Bank Accounts and Powers of Attorney. Set forth in Schedule 3.21 is an accurate and complete list showing (a) the name of each bank in which the Company has an account, credit line or safe deposit box and the names of all Persons authorized to draw thereon or to have access thereto, and (b) the names of all Persons, if any, holding powers of attorney from the Company and a summary statement of the terms thereof. Section 3.22 Compensation of Employees. Schedule 3.22 is an accurate and complete list showing (a) the names and positions of all employees and consultants, together with a statement of the current annual salary, the bonus compensation paid or payable with respect to calendar year 1998 and 1999, and the material fringe benefits of such employees and exclusive consultants not generally available to all employees of the Company, (b) all bonus compensation paid or payable (whether by agreement, custom or understanding) to any employee of the Company not listed in clause (a) above for services rendered during calendar year 1998 and 1999, and (c) the names of all retired employees, if any, of the Company who are receiving or entitled to receive any healthcare or life insurance benefits or any payments from the Company not covered by any pension plan to which the Company is a party, their ages and current unfunded pension rate, if any. The Company has not, because of past practices or previous commitments with respect to its employees, established any rights on the part of any of its employees to additional compensation with respect to any period after the Closing Date (other than wage increases in the ordinary course of business). The current severance and vacation policy of the Company is set forth on Schedule 3.22. Section 3.23 No Changes Since the Balance Sheet Date. Since the Balance Sheet Date except as specifically stated on Schedule 3.23 or the January 31, 1999 balance sheet, the Company has not (i) incurred any liability or obligation of any nature (whether accrued, absolute, contingent or otherwise), except in the ordinary course of business, (ii) permitted any of its assets to be subjected to any Lien, (iii) sold, transferred or otherwise disposed of any assets except in the ordinary course of business, (iv) made any capital expenditure or commitment therefor which individually or in the aggregate exceeded $10,000, (v) declared or paid any dividends or made any distributions on any shares of its capital stock or 14 equivalent thereof, or redeemed, purchased or otherwise acquired any shares of its capital stock or equivalent thereof or granted any option, warrant or other right to purchase or acquire any such shares or equivalent, (vi) made any bonus or profit sharing distribution, (vii) created or incurred any indebtedness for borrowed money; (viii) increased or prepaid its indebtedness for borrowed money, except current borrowings under credit lines listed on Schedule 3.8 from banks in the ordinary course of business or made any loan to any Person, (ix) written down the value of any work-in-process, or written off as uncollectible any notes or accounts receivable, except write-downs and writeoffs in the ordinary course of business, none of which individually or in the aggregate, is material to the Company, (x) granted any increase in the rate of wages, salaries, bonuses or other remuneration of any employee, (xi) canceled or waived any claims or rights of material value, (xii) made any change in any method of accounting procedures, (xiii) otherwise conducted its business or entered into any transaction, except in the usual and ordinary manner and in the ordinary course of its business and consistent with past practice, (xiv) amended or terminated any agreement which is material to its business, (xv) renewed, extended or modified any lease of real property, or except in the ordinary course of business, any lease of personal property, (xvi) adopted, amended or terminated any Plan or (xvii) agreed, whether or not in writing, to do any of the foregoing. Section 3.24 Corporate Controls. Neither the Company nor the Stockholder, or, to the best knowledge, information and belief of the Stockholder, any officer, authorized agent, employee or any other Person (who is not a Stockholder) while acting on behalf of the Company, has, directly or indirectly: used any corporate fund for unlawful contributions, gifts, or other unlawful expenses relating to political activity; made any unlawful payment to foreign or domestic government officials or employees or to foreign or domestic political parties or campaigns from corporate funds; established or maintained any unlawful or unrecorded fund of corporate monies or other assets; made any false or fictitious entry on its books or records; made any bribe, rebate, payoff, influence payment, kickback, or other unlawful payment, or other payment of a similar or comparable nature, to any Person, whether in money, property, or services, to obtain favorable treatment in securing business or to obtain special concessions, or to pay for favorable treatment for business secured or for special concessions already obtained, and the Company has not participated in any illegal boycott or other similar illegal practices affecting any of its actual or potential customers. Section 3.25 Brokers. No broker, finder, agent or similar intermediary has acted on behalf of the Stockholder or the Company in connection with this Agreement or the transactions contemplated hereby, and no brokerage commissions, finder's fees or similar fees or commissions are payable by the Company or the Stockholder in connection therewith based on any agreement, arrangement or understanding with any of them. Section 3.26 Copies of Documents. The Company has caused to be made available for inspection and copying by the Purchaser and its advisers, true, complete and correct copies of all documents referred to in this Article III or in any Schedule. Summaries of all material oral contracts contained in Schedule 3.8 are complete and accurate in all material respects. 15 ARTICLE IV REPRESENTATIONS OF THE PURCHASER The Purchaser, represents, warrants and agrees to and with the Stockholder as follows: Section 4.1 Existence and Good Standing. The Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, with full corporate power and authority to own its property and to carry on its business all as and in the places where such properties are now owned or operated or such business is now being conducted. Section 4.2 Execution and Validity of Agreements; Restrictive Documents. 4.2.1 Execution and Validity. The Purchaser has the full corporate power and authority to enter into this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement by the Purchaser and the consummation of the transactions contemplated hereby have been duly authorized by all required corporate action on behalf of the Purchaser. This Agreement has been duly and validly executed and delivered by the Purchaser and assuming due authorization, execution and delivery by the Stockholder, constitutes a legal, valid and binding obligation of the Purchaser, enforceable against it in accordance with its terms. 4.2.2 Restrictive Documents. There is no suit, action, claim, investigation or inquiry by any administrative agency or governmental body, and no legal, administrative or arbitration proceeding pending or, to the Purchaser's best knowledge, information and belief, threatened against the Purchaser or any of the Purchaser's properties or assets, with respect to the execution, delivery and performance of this Agreement or the transactions contemplated hereby or any other agreement entered into by the Purchaser in connection with the transactions contemplated hereby. Section 4.3 Non-Contravention; Approvals and Consents. 4.3.1 Non-Contravention. The execution, delivery and performance by the Purchaser of its obligations hereunder and the consummation of the transactions contemplated hereby, will not (a) violate, conflict with or result in the breach of any provision of the Certificate of Incorporation or By-laws of the Purchaser, or (b) result in the violation by the Purchaser of any Laws or Orders of any Governmental or Regulatory Authority, applicable to the Purchaser or any of its assets or properties, except as would not reasonably be expected to have a Material Adverse Effect, or (c) conflict with, result in a violation or breach of, constitute (with or without notice or lapse of time or both) a default under, or require the Purchaser to obtain any consent, approval or action of, make any filing with or give any notice to, or result in or 16 give to any Person any right of payment or reimbursement, termination, cancellation, modification or acceleration of, or result in the creation or imposition of any Lien upon any of the assets or properties of the Purchaser, under any of the terms, conditions or provisions of any Instruments to which the Purchaser is a party or by which the Purchaser or any of its assets or properties are bound. 4.3.2 Approvals and Consents. No consent, approval or action of, filing with or notice to any Governmental or Regulatory Authority or other public or private third party is necessary or required under any of the terms, conditions or provisions of any Law or Order of any Governmental or Regulatory Authority or any Instrument to which the Purchaser is a party or by which the Purchaser or any of its assets or properties is bound for the execution and delivery of this Agreement by the Purchaser, the performance by the Purchaser of its obligations hereunder or the consummation of the transactions contemplated hereby. Section 4.4 CYSP Stock The shares of CYSP Stock to be delivered to the Stockholder pursuant to this Agreement, when delivered as provided herein, will be validly issued and outstanding shares of voting common stock of the Purchaser, fully paid and non-assessable, and will not be subject to preemptive rights of any Person. Section 4.5 Brokers. No broker, finder, agent or similar intermediary has acted on behalf of the Purchaser or its affiliates in connection with this Agreement or the transactions contemplated hereby, and no brokerage commissions, finders' fees or similar fees or commissions are payable by the Purchaser or its affiliates in connection therewith based on any agreement, arrangement or understanding with any of them. Section 4.6 Copies of Documents; Schedules. The Purchaser has caused to be made available for inspection and copying by the Stockholder and their advisers, true, complete and correct copies of all documents referred to in this Article IV or in any Schedule. ARTICLE V ACTIONS AT CLOSING BY THE STOCKHOLDER Simultaneously herewith: Section 5.1 Good Standing Certificates. The Stockholder delivered to the Purchaser: (a) a copy of the Company's Certificate of Incorporation, including all amendments, certified by the Secretary of State of the Commonwealth of Massachusetts; and (b) a certificate from the Secretary of State of the Commonwealth of Massachusetts to the effect that the Company is in good standing in Massachusetts. 17 Section 5.2 Surrender of Certificates. The Stockholder delivered to the Purchaser certificates, representing all of the Shares, together with such other documents and instruments, necessary to permit the Purchaser to acquire the Shares free and clear of any and all Liens, options, trusts, commitments and voting or other restrictions of any kind whatsoever adverse to the Purchaser. Section 5.3 Employment Agreement. The Stockholder executed and delivered to the Purchaser an Employment Agreement substantially in the form and to the effect of Exhibit A. Section 5.4 Letter of Investment Intent. The Stockholder executed and delivered a Letter of Investment Intent substantially in the form and to the effect of Exhibit C hereto. Section 5.5 Proceedings. All proceedings to be taken in connection with the transactions contemplated by this Agreement and all documents incident thereto were reasonably satisfactory in form and substance to the Purchaser and its counsel, and the Purchaser received copies of all such documents and other evidences as it or its counsel reasonably requested in order to establish the consummation of such transactions and the taking of all proceedings in connection therewith. ARTICLE VI ACTIONS AT CLOSING BY THE PURCHASER Simultaneously herewith: Section 6.1 Certified Resolutions. The Purchaser delivered to the Stockholder a copy of the resolutions of the Board of Directors of the Purchaser authorizing the execution, delivery and performance of this Agreement and the transactions and other agreements contemplated hereby, certified to by the Secretary of the Purchaser. Section 6.2 Registration Rights Agreement. The Purchaser executed and delivered to the Stockholder the Registration Rights Agreement substantially in the form and to the effect of Exhibit B hereto. Section 6.3 Proceedings. All proceedings to be taken in connection with the transactions contemplated by this Agreement, and all documents incident thereto were reasonably satisfactory in form and substance to the Stockholder and their counsel and the Stockholder received copies of all such documents and other evidences as they or their counsel reasonably requested in order to establish the consummation of such transaction and the taking of all proceedings in connection therewith. 18 ARTICLE VII. OTHER AGREEMENTS. Section 7.1 Issuance of CYSP Stock. The CYSP Stock issued to the Stockholder on the date hereof has not been registered under the Securities Act based upon the "private offering exemption" under the Securities Act, in reliance on the Letter of Investment Intent delivered by the Stockholder. Section 7.2 Pooling of Interests. The parties hereto agree that it shall be a condition of closing that the transaction contemplated by this Agreement shall meet the requirements to qualify as a pooling for accounting purposes. Section 7.3 Sales Tax. All sales taxes arising out of sales made prior to the Closing and not paid prior to the date hereof shall be the responsibility of and shall be paid by the Stockholder. ARTICLE VIII SURVIVAL; INDEMNITY Section 8.1 Survival. Subject to the limitations set forth below and in Section 8.4 hereof, the respective representations, warranties, covenants and agreements of the Stockholder and the Purchaser contained in this Agreement or in any Schedule, or in any certificate delivered at the Closing, shall survive the Closing. Notwithstanding any right of any party hereto fully to investigate the affairs of any other party, and notwithstanding any knowledge of facts determined or determinable pursuant to such investigation or right of investigation, each party hereto shall have the right to rely fully upon the representations, warranties, covenants and agreements of any other party contained in this Agreement or in any Schedule furnished by another party or in any certificate delivered at the Closing by any other party. Section 8.2 Obligation to Indemnify. Subject to the limitations set forth below and in Section 8.4 hereof, the Stockholder agrees to indemnify the Purchaser and its affiliates (including the Company) and their directors, officers and employees (collectively the "Indemnified Parties") against, and to protect, save and keep harmless the Indemnified Parties from, and to assume liability for, payment of all liabilities (including liabilities for Taxes), obligations, losses, damages, penalties, claims, actions, suits, judgments, settlements, out-of-pocket costs, expenses and disbursements (including reasonable costs of investigation, and reasonable attorneys', accountants' and expert witnesses' fees) of whatever kind and nature, to the extent not covered by insurance maintained for the benefit of the applicable 19 Indemnified Parties (collectively, "Losses"), that may be imposed on or incurred by the Indemnified Parties as a consequence of or in connection with (i) any inaccuracy or breach of any representation or warranty or covenant of the Stockholder contained in each Section of Article III of this Agreement, or (ii) the breach of or failure by the Stockholder to perform or discharge any of his obligations under this Agreement. The term "Losses" as used herein is not limited to matters asserted by third parties against an Indemnified Party but includes Losses incurred or sustained by an Indemnified Party in the absence of third party claims. Section 8.3 Indemnification Procedures. 8.3.1 Notice of Asserted Liability. The Purchaser shall promptly give notice (the "Claims Notice") to the Stockholder, of any demand, claim or circumstances which gives rise, or with the lapse of time would or might give rise to a claim or the commencement (or threatened commencement) of any action, proceeding or investigation that may result in any Losses (an "Asserted Liability") without regard to the limitations on indemnification set forth in Section 8.4 below. The Claims Notice shall describe the Asserted Liability in reasonable detail, shall indicate the amount (estimated, if necessary, and to the extent feasible) of the Losses that have been or may be suffered by an Indemnified Party. 8.3.2 Defense of Asserted Liability. The Stockholder may elect to compromise, settle or defend, at his own expense and by his own counsel (such counsel to be reasonably satisfactory to the Purchaser), any Asserted Liability. If the Stockholder elects to compromise, settle or defend such Asserted Liability, it shall within 30 days (or sooner, if the nature of the Asserted Liability so requires) of the Claims Notice notify the Purchaser in writing of his intent to do so and the Purchaser shall cooperate, at the request and expense of the Stockholder, in the settlement or compromise of, or defense against, such Asserted Liability. If the Stockholder elects not to compromise, settle or defend the Asserted Liability, or fails to notify the Purchaser of their election as herein provided, the Purchaser may pay, compromise, settle or defend such Asserted Liability at the expense of the Stockholder and the Stockholder shall be bound by the results obtained by the Purchaser with respect to such third party claim. In no event shall the Stockholder settle or compromise any claim without the prior written consent of the Purchaser, which consent shall not be unreasonably withheld. The Purchaser shall have the right to employ its own counsel in any case with respect to an Asserted Liability (which counsel shall assist counsel selected by the Stockholder if one shall have been selected to defend the claim), but the fees and expenses of such counsel shall be at the expense of the Purchaser unless (a) the employment of such counsel shall have been authorized in writing by the Stockholder in connection with the defense of such action, (b) the Stockholder shall not have, as provided above, promptly employed counsel reasonably satisfactory to such Indemnified Party to take charge of the defense of such action, or (c) the Purchaser shall have reasonably concluded that there may be one or more legal defenses available to it which are different from or additional to those available to the Stockholder, in any of which events such reasonable fees and expenses shall be borne by the Stockholder and the Stockholder shall not have the right to direct the defense of such action on behalf of the Purchaser in respect of such different or additional defenses. If the Stockholder chooses to defend any claim, the 20 Purchaser shall make available to him any books, records or other documents within its control that are necessary or appropriate for such defense. 8.3.3 Control by Purchaser. All decisions and determinations to be made by the Purchaser and/or a Indemnified Party under Article VIII shall be made by Purchaser in the name of and on behalf of the Purchaser or such other Indemnified Party and all such decisions and determinations shall be binding upon the parties hereto and such Indemnified Party. Section 8.4 Limitations on Indemnification. 8.4.1 Indemnity Basket. The Stockholder shall have no obligation to indemnify any Indemnified Party with respect to Losses arising out of any matters referred to in Section 8.2 until such time as the amount of such Losses shall exceed $25,000 in the aggregate (in which case the Stockholder shall be liable for all Losses not just those in excess of $25,000). 8.4.2 Termination of Indemnification Obligations. The obligation of the Stockholder to indemnify shall terminate and be of no further force and effect on the "Termination Date," which shall occur one year from the Closing Date; provided, however, that claims for Losses arising under Section 8.2 asserted in writing on or prior to the Termination Date shall survive until such claim is finally resolved and any obligations with respect thereto are fully satisfied. No claim for Losses arising under Section 8.2 may be asserted after the Termination Date. No claims by Purchaser or any Indemnified Party may be asserted with respect to any representations, warranties and covenants after three years from the Closing Date. 8.4.3 Treatment. Any payments to an Indemnified Party under this Article VIII shall be treated by the parties as an adjustment to purchase price. 21 ARTICLE IX MISCELLANEOUS Section 9.1 Expenses. The parties hereto shall pay all of their own expenses relating to the transactions contemplated by this Agreement, including, without limitation, the fees and expenses of their respective counsel and financial advisers. Section 9.2 Governing Law. The interpretation and construction of this Agreement, and all matters relating hereto, shall be governed by the laws of the State of New Jersey without reference to its conflict of laws provisions. Section 9.3 "Person" Defined. "Person" shall mean and include an individual, a Company, a joint venture, a corporation, a trust, an unincorporated organization and a government or other department or agency thereof. Section 9.4 "Knowledge" Defined. Where any representation and warranty contained in this Agreement is expressly qualified by reference to the best knowledge, information and belief of the Stockholder, such term shall be limited to the actual knowledge of the Stockholder and unless otherwise stated such knowledge that would have been discovered by the Stockholder after reasonable inquiry. Where any representation and warranty contained in this Agreement is expressly specified by reference to the best knowledge, information and belief of the Purchaser, such term shall be limited to the actual knowledge of the executive officers of the Purchaser, and unless otherwise stated, such knowledge that would have been discovered by all such Persons after reasonable inquiry. Section 9.5 "Affiliate" Defined. As used in this Agreement, an "affiliate" of any Person, shall mean any Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with such Person. Section 9.6 Captions. The Article and Section captions used herein are for reference purposes only, and shall not in any way affect the meaning or interpretation of this Agreement. Section 9.7 Publicity. Subject to the provisions of the next sentence, no party to this Agreement shall, and the Stockholder shall insure that no representative of the Company shall, issue any press release or other public document or make any public statement relating to this Agreement or the matters contained herein without obtaining the prior approval of the Purchaser and the Stockholder. Notwithstanding the foregoing, the foregoing provision shall not apply to the extent that the Purchaser is required to make any announcement relating to or arising out of this Agreement by virtue of the federal securities laws of the United States or the rules and regulations promulgated thereunder or other rules of the Nasdaq National Market, or any announcement by any party or the Company pursuant to applicable law or 22 regulations. Section 9.8 Notices. Unless otherwise provided herein, any notice, request, instruction or other document to be given hereunder by any party to any other party shall be in writing and shall be deemed to have been given (a) upon personal delivery, if delivered by hand, (b) three days after the date of deposit in the mails, postage prepaid, if mailed by certified or registered mail, or (c) the next business day if sent by facsimile transmission (if receipt is electronically confirmed) or by a prepaid overnight courier service, and in each case at the respective addresses or numbers set forth below or such other address or number as such party may have fixed by notice: If to the Purchaser, addressed to: Cybershop International, Inc. 116 Newark Avenue Jersey City, NJ 07302 Attention: Jeffrey S. Tauber, Chairman Fax: (201) 234-5052 with a copy to: Davis & Gilbert LLP 1740 Broadway New York, New York 10019 Attention: Walter M. Epstein, Esq. Fax: (212) 468-4888 If to the Stockholder: Mr. Edward Mufson 375 R. Vanderbilt Avenue Norwood, MA 02062 Fax: _______________ with a copy to: Proskauer Rose LLP 1581 Broadway New York, New York 10038 Attention: Arnold Levine, Esq. Fax: (212) 969-2900 Section 9.9 Parties in Interest. This Agreement may not be transferred, assigned, 23 pledged or hypothecated by any party hereto, other than by operation of law. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors and assigns. Section 9.10 Severability. In the event any provision of this Agreement is found to be void and unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall nevertheless be binding upon the parties with the same effect as though the void or unenforceable part had been severed and deleted. Section 9.11 Counterparts. This Agreement may be executed in two or more counterparts, all of which taken together shall constitute one instrument. Section 9.12 Entire Agreement. This Agreement, including the other documents referred to herein and the Exhibits and Schedules hereto which form a part hereof, contains the entire understanding of the parties hereto with respect to the subject matter contained herein and therein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. Section 9.13 Amendments. This Agreement may not be amended, supplemented or modified orally, but only by an agreement in writing signed by the Purchaser and the Stockholder. Section 9.14 Third Party Beneficiaries. Each party hereto intends that this Agreement shall not benefit or create any right or cause of action in or on behalf of any Person other than the parties hereto and their respective successors and assigns as permitted under Section 9.9. Section 9.15 Gender. All words used in this Agreement in the masculine gender shall extend to and shall include the feminine and neuter genders. Section 9.16 Jurisdiction. Any judicial proceeding brought against any of the parties to this Agreement on any dispute arising out of this Agreement or any matter related hereto shall be brought in the courts of the State of New Jersey or in the United States District Court for New Jersey, and, by execution and delivery of this Agreement, each of the parties to this Agreement accepts for itself or himself the process in any action or proceeding by the mailing of copies of such process to such party at its address as set forth in Section 9.8, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement. Each party hereto irrevocably waives to the fullest extent permitted by law any objection that it or he may now or hereafter have to the laying of the venue of any judicial proceeding brought in such courts and any claim that any such judicial proceeding has been brought in an inconvenient forum. The foregoing consent to jurisdiction shall not constitute general consent to service of process in the State of New Jersey for any purpose except as provided above and shall not be deemed to confer rights on 24 any Person other than the respective parties to this Agreement. EACH PARTY HERETO WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING UNDER THIS AGREEMENT. 25 IN WITNESS WHEREOF, the parties hereto have executed this Agreement, on the day and year first above written. CYBERSHOP INTERNATIONAL, INC. By: /s/ Jeffrey S. Tauber ---------------------------------------- Jeffrey S. Tauber Chairman of the Board, Chief Executive Officer and President THE STOCKHOLDER: /s/ Edward Mufson -------------------------------------------- EDWARD MUFSON 26 EX-10.2 3 EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT AGREEMENT ("Agreement") made as of this 24th day of March 1999 (the "Effective Date"), by and between Cybershop International, Inc., a Delaware corporation (hereinafter "Employer") and Edward Mufson (hereinafter "Executive"). W I T N E S S E T H: WHEREAS, Employer wishes Executive to serve as an officer and executive of Employer; and WHEREAS, Executive wishes to be so employed; NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties hereto agree as follows: 1. Effective Date and Duties. Commencing as of the Effective Date, Employer employs Executive as a Vice President and General Merchandise Manager of Employer to perform the duties normally incident to such positions. Without limiting the foregoing Executive's functions shall include supervision and responsibility for operations and activities of cybershop.com and dealaday.com. Executive shall report directly to the Chief Executive Officer of Employer. 2. Responsibilities. Executive agrees to devote all of Executive's business time, efforts, skills and attention to fulfill Executive's duties and responsibilities hereunder faithfully and diligently. 3. Term. The term of this Agreement shall commence on the Effective Date and shall terminate two (2) years thereafter and shall be automatically renewed for additional one year periods unless either party terminates within 60 days prior to the end of applicable period. 4. Compensation. Employer shall pay to Executive as compensation for all services to be rendered by Executive hereunder the following: (a) A salary at the rate of One Hundred Fifty Thousand ($150,000) Dollars per annum which will be paid during normal pay periods. Such salary is hereinafter referred to as the Base Salary. (b) Executive shall be eligible for bonuses, at such time and in such amounts as shall be determined at the discretion of Employer's Board of Directors (the "Board") based on its assessment of Executive's performance of Executive's duties and on the financial performance of Employer. (c) Employer will reimburse Executive for all reasonable travel and business expenses incurred by Executive in connection with Executive's services hereunder in accordance with the usual practices and policies of Employer in effect from time to time, upon presentation of vouchers. (d) Employer will make available to Executive health benefits as currently in effect or as modified during the term of this Agreement consistent with the health benefits offered to other executives of Employer. In addition, Executive will be 2 eligible for and will be offered participation in any and all group insurance, hospital, dental, major medical and disability benefits and stock option plans, 401(k) plan or other fringe benefits which are currently offered or may hereafter be offered to other executives of Employer during the term of this Agreement. Under current policies the family health plan requires a co-pay by Executive of $104 per pay period and the dental plan is optional and requires a co-pay by Executive. 5. Relocation. Executive will move to the New Jersey area within a period of three months following the Effective Date and shall relocate the Deal-A-Day business at the offices of Employer. Employer will reimburse Executive for up to $5,000 of documented relocation expenses. 6. Termination on Death. In the event of Executive's death during the term of this Agreement, this Agreement shall terminate immediately, provided, however, that Executive's legal representatives shall be entitled to receive the Base Salary which would otherwise have been due Executive had he worked through the end of the month in which Executive died. 7. Termination on Disability. If during the term of this Agreement, Executive is unable to perform Executive's duties hereunder on account of illness or other incapacity, and such illness or other incapacity shall continue for a period of more than three (3) consecutive months during any twelve (12) month period Employer shall have the right, on thirty (30) days' notice to Executive, given after such three (3) month period, to terminate this Agreement. In the event of any such termination Employer shall be obligated to pay to 3 Executive the Base Salary which would otherwise be due Executive until the expiration of the month of employment during which the termination occurred plus three (3) additional months of the Base Salary for the year in which Executive was terminated. If, prior to the date specified on such notice, Executive's illness or incapacity shall have terminated and Executive shall have taken up the performance of Executive's duties thereunder, Executive shall be entitled to resume Executive's employment hereunder as though such notice had not been given. The Board shall determine in good faith, upon consideration of medical evidence satisfactory to it, whether Executive by reason of physical or mental disability shall be unable to perform the services required of Executive hereunder. 8. Termination for Cause. If Employer shall terminate Executive's employment hereunder for Cause, or if Executive shall voluntarily leave Executive's employment hereunder, this Agreement shall terminate immediately and Employer shall pay to Executive an amount equal to the Base Salary hereunder through the date of such termination. Cause shall mean (i) any conviction of any crime (whether or not involving Employer) constituting a felony in the jurisdiction involved, (ii) engaging in any substantiated act involving moral turpitude, (iii) engaging in any act which, in each case, subjects, or if generally known would subject, Employer to public ridicule or embarrassment, (iv) gross misconduct in the performance of Executive's duties hereunder, (v) willful failure or refusal to perform such duties as may be delegated by the Chief Executive Officer to Executive commensurate with Executive's position, or (vi) material breach of any provision of this Agreement by Executive. 4 9. Confidentiality. Executive covenants and agrees with Employer that Executive will not, during the term of this Agreement and thereafter directly or indirectly use, communicate, disclose or disseminate to anyone (except to the extent reasonably necessary for Executive to perform Executive's duties hereunder, except as required by law or except if generally available to the public otherwise than through use, communication, disclosure or dissemination by Executive) any Confidential Information (as hereinafter defined) concerning the businesses or affairs of Employer or of any of its affiliates or subsidiaries which Executive may have acquired in the course of or as incident to Executive's employment or prior dealings with Employer or with any of its affiliates or subsidiaries. "Confidential Information" shall mean (a) all knowledge, information and material concerning Employer or its business or the business of any of its affiliates or subsidiaries that shall become known to Executive as a consequence of Executive's relationship with Employer, (b) all information that has been disclosed to Employer by any third party under an agreement or circumstances requiring such information to be kept confidential, and (c) all knowledge, information or material concerning Inventions (as hereinafter defined) that are, under this Agreement, owned by Employer or assigned by Executive to Employer; provided, that Confidential Information shall not include knowledge, information or material that is or becomes generally known or available to others in businesses engaged in by Employer or to the public (other than through unauthorized disclosure). Confidential Information shall include without limitation (a) information of a technical nature, such as information regarding past, present and future research, financial 5 data, product information, marketing plans, computer programs (whether in source or object code form or other form and whether contained on program listings, magnetic tape, magnetic disks, CD ROMs or other media), logic, flow charts, specifications, documentation and ideas relating to the activities of Employer, (b) information of a business nature, such as information regarding past, present and future client development, strategies, procurement specifications, cost and financial data, contracts, quotations and names of actual and prospective clients or customers, and (c) all documents, drawings, reports, customer lists (including, without limitation, those relating to the "Deal-A-Day" business), and other physical embodiments of all such information. "Inventions" shall mean each of the following, but only to the extent they relate to the business of commerce conducted over the Internet: all inventions, discoveries, developments, ideas, works, improvements, enhancements, works of authorship, products and computer software, whether or not patentable, and anything else that is subject to or potentially subject to the patent, copyright or trade secret laws of any jurisdiction. 10. Non-Competition. Executive acknowledges that Executive's services and responsibilities are of particular significance to Employer and that Executive's position with Employer has given and will give Executive close knowledge of its policies and trade secrets. Since Employer is in a creative and competitive business, Executive's continued and exclusive service to Employer under this Agreement is of a high degree of importance. 6 Executive covenants and agrees with Employer that Executive will not, during the term of this Agreement and for a period of twenty-four months after the termination of Executive's employment hereunder, in any manner, directly or indirectly, (i) induce or attempt to influence any present or future officer, employee, lessor, lessee, licensor or licensee of Employer or its subsidiaries or its affiliates to leave its respective employment or solicit or divert or service any of the customers or clients that Employer or its subsidiaries or its affiliates has or had in the one (1) year previous to the date of termination of this Agreement, (ii) engage, in North America or any other territory in which Employer does business, in any businesses presently engaged in or to be engaged in by Employer or its subsidiaries or affiliates during the term of this Agreement, and (iii) except for ownership of no more than 1% of the capital stock, be a stockholder of any corporation, or directly or indirectly own, manage, operate, conduct, control or participate in the ownership, management, operation, conduct, control of, accept employment with, or be connected in any other manner with, any business which engages in any direct competitive activity including, without limitation, any internet business which engages in the retail sale over the Internet of merchandise in any of the product categories which the Company currently sells or shall sell at any time during the Term in any such geographic region. 11. Remedies. Executive acknowledges that the remedy at law for any breach or threatened breach by Executive of the covenants contained in paragraphs 9 and 10 would be wholly inadequate, and therefore Employer or its subsidiaries or its affiliates shall be entitled to preliminary and permanent injunctive relief and specific performance thereof. Paragraphs 9 and 10 constitute independent and separable covenants that shall be enforceable 7 notwithstanding rights or remedies that Employer or its subsidiaries or it affiliates may have under any other provision of this Agreement, or otherwise. If any or all of the foregoing provisions of paragraphs 9 and 10 are held to be unenforceable for any reason whatsoever, it shall not in any way invalidate or affect the remainder or this Agreement which shall remain in full force and effect. If the period of time or geographical areas specified in paragraphs 9 and 10 are determined to be unreasonable in any judicial proceeding, the period of time or areas of restriction shall be reduced so that this Agreement may be enforced in such areas and during such period of time as shall be determined to be reasonable. 12. Full Review. Executive has carefully read and considered the provisions hereof, and having done so, agrees that restrictions and remedies set forth in paragraphs 9, 10 and 11 (including, but not limited to, the time periods of restrictions) are fair and reasonable and are reasonably required for the protection of the interests of Employer. 13. Representation. Executive represents and warrants to Employer that Executive is not now under any obligation of a contractual or other nature to any person, firm or corporation which is inconsistent or in conflict with this Agreement, or which would prevent, limit or impair in any way the execution of this Agreement or the performance by Executive of Executive's obligations hereunder and Executive will indemnify and hold harmless Employer, its directors, officers and employees against and in respect of all liability, loss, damage, expense or deficiency resulting from any misrepresentation, or breach of any warranty or agreement made by Executive in connection with Executive's employment hereunder. 8 14. Waiver. The waiver by either party of a breach of any provision of this Agreement shall not operate as or be construed as a waiver of any subsequent breach thereof. 15. Notices. Any and all notices referred to herein shall be sufficient if furnished in writing and sent by certified mail, return receipt requested, to the respective parties at the addresses set forth below, or such other address as either party may from time to time designate in writing. To Executive: Edward Mufson 375 R. Vanderbilt Avenue Norwood, MA 02062 With copy to: Proskauer Rose LLP 1581 Broadway New York, New York 10038 Attention: Arnold Levine, Esq. Fax: (212) 969-2900 To Employer: CyberShop International, Inc. 116 Newark Avenue Jersey City, New Jersey 07302 Attention: Jeffrey S. Tauber, Chairman Fax: (201) 234-5052 With copy to: Davis & Gilbert LLP 1740 Broadway New York, New York 10019 Attention: Walter M. Epstein, Esq. Fax: (212) 468-4888 16. Assignability. This Agreement shall be binding upon, and shall inure to the benefit of, Employer and its successors and assigns, and Executive and Executive's legal 9 representatives, heirs, legatees and distributees, but neither this Agreement nor any rights hereunder shall be assignable, encumbered or pledged by Executive. 17. Entire Agreement. This Agreement supersedes any and all prior written or oral agreements between Employer and Executive and constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and no modification, amendment or waiver of any of the provisions of this Agreement shall be effective unless in writing and signed by both parties hereto. 18. Applicable Law. This Agreement shall be construed and enforced in accordance with the laws of the State of New Jersey. 19. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one and the same agreement. 20. Severability. If any provision or part of any provision of this Agreement is held for any reason to be unenforceable, the remainder of this Agreement shall nevertheless remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. CYBERSHOP INTERNATIONAL, INC. By: /s/ Jeffrey S. Tauber --------------------------- Jeffrey S. Tauber Chairman of the Board 10 /s/ Edward Mufson --------------------------- Edward Mufson Date: 11 EX-10.3 4 EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT AGREEMENT ("Agreement") made as of this 7th day of February 1999 (the "Effective Date"), by and between CyberShop International, Inc., a Delaware corporation (hereinafter "Employer"), and Jeffrey Leist (hereinafter "Executive"). W I T N E S S E T H: WHEREAS, Employer wishes Executive to serve as an officer and executive of Employer; and WHEREAS, Executive wishes to be so employed; NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties hereto agree as follows: 1. Effective Date and Duties. Commencing as of the Effective Date, Employer employs Executive as Vice President, Chief Operating Officer and Chief Financial Officer of Employer to perform the duties normally incident to such positions. Without limiting the foregoing Executive's functions shall include supervision and responsibility for areas of operations including management information systems, customer service, logistics, strategic planning and finance. Executive shall at all times report to the Chairman of the Board President and Chief Executive Officer of Employer. 2. Responsibilities. Executive agrees to devote all of Executive's business time, efforts, skills and attention to fulfill Executive's duties and responsibilities hereunder faithfully, diligently and competently. 3. Term. The term of this Agreement shall commence on the Effective Date and shall terminate two (2) years thereafter, unless sooner terminated as hereinafter provided. Notwithstanding the foregoing, this Agreement may be terminated by either party on 120 days prior written notice provided that the earliest effective time of termination shall be one year from the Effective Date. 4. Compensation. Employer shall pay to Executive as compensation for all services to be rendered by Executive hereunder the following: (a) A salary at the rate of Two Hundred Fifty Thousand ($250,000) Dollars per annum. Such salary is hereinafter referred to as the Base Salary. (b) Executive shall be eligible for bonuses, at such time and in such amounts as shall be determined at the discretion of Employer's Board of Directors (the "Board) based on its assessment of Executive's performance of Executive's duties and on the financial performance of Employer. (c) Employer will reimburse Executive for all reasonable travel and business expenses incurred by Executive in connection with Executive's services hereunder in accordance with the usual practices and policies of Employer in effect from time to time, upon presentation of vouchers. 2 (d) Employer will reimburse Executive for up to $30,000 of documented relocation expenses. In addition, Employer will provide an apartment for the use of Executive. The amount available for reimbursement shall be reduced dollar for dollar by the cost of the apartment if it continues to be used by Executive more than six months after the Effective Date. (e) Employer will make available to Executive health benefits as currently in effect or as modified during the term of this Agreement consistent with the health benefits offered to other executives of Employer. In addition, Executive will be eligible for and will be offered participation in any and all group insurance, hospital, dental, major medical and disability benefits and stock option plans or other similar fringe benefits which are currently offered or may hereafter be offered to other executives of Employer during the term of this Agreement. Under current policies the family health plan requires a co-pay by Executive of $104 per pay period and the dental plan is optional and requires a co-pay by Executive. 5. Stock Options. Executive shall be granted no later than 90 days after the Effective Date an option (the "Option") to purchase 150,000 shares of Employer's common stock, $.001 par value per share (the "Common stock") at an exercise price equal to the fair market value as determined under the Company's 1998 Stock Option Plan on the date of grant. The Option shall vest and be exercisable as follows: (i) with respect to 75,000 shares of Common Stock subject to the Option on the first anniversary of the Effective Date plus, (ii) the remaining 75,000 shares of Common Stock subject to the Option on the second 3 anniversary of the Effective Date. The Options shall be incentive stock options, shall expire five (5) years from the date of vesting and shall otherwise be governed by the Plan, as well as the applicable option agreement to be entered into pursuant to the terms of the Plan. 6. Termination on Death. In the event of Executive's death during the term of this Agreement, this Agreement shall terminate immediately, provided, however, that Executive's legal representatives shall be entitled to receive the Base Salary which would otherwise have been due Executive had he worked through the end of the month in which Executive died. 7. Termination on Disability. If during the term of this Agreement, Executive is unable to perform Executive's duties hereunder on account of illness or other incapacity, and such illness or other incapacity shall continue for a period of more than three (3) consecutive months during any twelve (12) month period Employer shall have the right, on thirty (30) days' notice to Executive, given after such three (3) month period, to terminate this Agreement. In the event of any such termination Employer shall be obligated to pay to Executive the Base Salary which would otherwise be due Executive until the expiration of the month of employment during which the termination occurred plus three (3) additional months of the Base Salary for the year in which Executive was terminated. If, prior to the date specified on such notice, Executive's illness or incapacity shall have terminated and Executive shall have taken up the performance of Executive's duties thereunder, Executive shall be entitled to resume Executive's employment hereunder as though such notice had not been given. The Board shall determine in good faith, upon consideration of medical evidence 4 satisfactory to it, whether Executive by reason of physical or mental disability shall be unable to perform the services required of Executive hereunder. 8. Termination for Cause. If Employer shall terminate Executive's employment hereunder for Cause, or if Executive shall voluntarily leave Executive's employment hereunder, this Agreement shall terminate immediately and Employer shall pay to Executive an amount equal to the Base Salary hereunder through the date of such termination. Cause shall mean (i) any conviction of any crime (whether or not involving Employer) constituting a felony in the jurisdiction involved, (ii) engaging in any substantiated act involving moral turpitude, (iii) engaging in any act which, in each case, subjects, or if generally known would subject, Employer to public ridicule or embarrassment, (iv) gross misconduct in the performance of Executive's duties hereunder, (v) willful failure or refusal to perform such duties as may be relegated to Executive commensurate with Executive's position, or (vi) material breach of any provision of this Agreement by Executive. 9. Confidentiality. Executive covenants and agrees with Employer that Executive will not, during the term of this Agreement and thereafter directly or indirectly use, communicate, disclose or disseminate to anyone (except to the extent reasonably necessary for Executive to perform Executive's duties hereunder, except as required by law or except if generally available to the public otherwise than through use, communication, disclosure or dissemination by Executive) any Confidential Information (as hereinafter defined) concerning the businesses or affairs of Employer or of any of its affiliates or subsidiaries which Executive 5 may have acquired in the course of or as incident to Executive's employment or prior dealings with Employer or with any of its affiliates or subsidiaries. "Confidential Information" shall mean (a) all knowledge, information and material concerning Employer or its business or the business of any of its affiliates or subsidiaries that shall become known to Executive as a consequence of Executive's relationship with Employer, (b) all information that has been disclosed to Employer by any third party under an agreement or circumstances requiring such information to be kept confidential, and (c) all knowledge, information or material concerning Inventions that are, under this Agreement, owned by Employer or assigned by Executive to Employer; provided, that Confidential Information shall not include knowledge, information or material that is or becomes generally known or available to others in businesses engaged in by Employer or to the public (other than through unauthorized disclosure). Confidential Information shall include without limitation (a) information of a technical nature, such as information regarding past, present and future research, financial data, product information, marketing plans, computer programs (whether in source or object code form or other form and whether contained on program listings, magnetic tape, magnetic disks, CD ROMs or other media), logic, flow charts, specifications, documentation and ideas relating to the activities of Employer, (b) information of a business nature, such as information regarding past, present and future client development, strategies, procurement specifications, cost and financial data, contracts, quotations and names of actual and prospective clients or customers, and (c) all 6 documents, drawings, reports, client lists, and other physical embodiments of all such information. "Inventions" shall mean each of the following, but only to the extent they relate to the business of commerce conducted over the Internet: all inventions, discoveries, developments, ideas, works, improvements, enhancements, works of authorship, products and computer software, whether or not patentable, and anything else that is subject to or potentially subject to the patent, copyright or trade secret laws of any jurisdiction. 10. Non-Competition. Executive acknowledges that Executive's services and responsibilities are of particular significance to Employer and that Executive's position with Employer has given and will give Executive close knowledge of its policies and trade secrets. Since Employer is in a creative and competitive business, Executive's continued and exclusive service to Employer under this Agreement is of a high degree of importance. Executive covenants and agrees with Employer that Executive will not, during the term of this Agreement and for a period of eighteen months after the termination of Executive's employment hereunder, with respect to subparagraph (i) and twelve months with respect to subparagraphs (ii) and (iii) in any manner, directly or indirectly, (i) induce or attempt to influence any present or future officer, employee, lessor, lessee, licensor or licensee of Employer or its subsidiaries or its affiliates to leave its respective employ or solicit or divert or service any of the customers or clients that Employer or its subsidiaries or its affiliates has or had in the one (1) year previous to the date of termination of this Agreement, (ii) engage, in 7 North America or any other territory in which Employer does or contemplates to do business, in any businesses presently engaged in or to be engaged in by Employer or its subsidiaries or affiliates during the term of this Agreement, and (iii) except for ownership of no more than 1% of the capital stock, be a stockholder of any corporation, or directly or indirectly own, manage, operate, conduct, control or participate in the ownership, management, operation, conduct, control of, accept employment with, or be connected in any other manner with, any business which engages in any direct competitive activity including, without limitation, any business which engages in retail commerce conducted over the Internet in any such geographic region. 11. Remedies. Executive acknowledges that the remedy at law for any breach or threatened breach by Executive of the covenants contained in paragraphs 9 and 10 would be wholly inadequate, and therefore Employer or its subsidiaries or its affiliates shall be entitled to preliminary and permanent injunctive relief and specific performance thereof. Paragraphs 9 and 10 constitute independent and separable covenants that shall be enforceable notwithstanding rights or remedies that Employer or its subsidiaries or it affiliates may have under any other provision of this Agreement, or otherwise. If any or all of the foregoing provisions of paragraphs 9 and 10 are held to be unenforceable for any reason whatsoever, it shall not in any way invalidate or affect the remainder or this Agreement which shall remain in full force and effect. If the period of time or geographical areas specified in paragraphs 9 and 10 are determined to be unreasonable in any judicial proceeding, the period of time or 8 areas of restriction shall be reduced so that this Agreement may be enforced in such areas and during such period of time as shall be determined to be reasonable. 12. Full Review. Executive has carefully read and considered the provisions hereof, and having done so, agrees that restrictions and remedies set forth in paragraphs 9, 10 and 11 (including, but not limited to, the time periods of restrictions) are fair and reasonable and are reasonably required for the protection of the interests of Employer. 13. Representation. Executive represents and warrants to Employer that Executive is not now under any obligation of a contractual or other nature to any person, firm or corporation which is inconsistent or in conflict with this Agreement, or which would prevent, limit or impair in any way the execution of this Agreement or the performance by Executive of Executive's obligations hereunder and Executive will indemnify and hold harmless Employer, its directors, officers and employees against and in respect of all liability, loss, damage, expense or deficiency resulting from any misrepresentation, or breach of any warranty or agreement made by Executive in connection with Executive's employment hereunder. 14. Waiver. The waiver by either party of a breach of any provision of this Agreement shall not operate as or be construed as a waiver of any subsequent breach thereof. 15. Notices. Any and all notices referred to herein shall be sufficient if furnished in writing and sent by certified mail, return receipt requested, to the respective parties at the 9 addresses set forth below, or such other address as either party may from time to time designate in writing. To Executive: To Employer: Jeffrey Leist CyberShop International, Inc. 61 Lower Shad Road 116 Newark Avenue Pound Ridge, NY 10576 Jersey City, New Jersey 07302 Attention: Chairman of the Board With copy to: Davis & Gilbert LLP 1740 Broadway New York, New York 10019 Attention: Walter M. Epstein, Esq. 16. Assignability. This Agreement shall be binding upon, and shall inure to the benefit of, Employer and its successors and assigns, and Executive and Executive's legal representatives, heirs, legatees and distributees, but neither this Agreement nor any rights hereunder shall be assignable, encumbered or pledged by Executive. 17. Entire Agreement. This Agreement supersedes any and all prior written or oral agreements between Employer and Executive and constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and no modification, amendment or waiver of any of the provisions of this Agreement shall be effective unless in writing and signed by both parties hereto. 18. Applicable Law. This Agreement shall be construed and enforced in accordance with the laws of the State of New Jersey. 10 19. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one and the same agreement. 20. Severability. If any provision or part of any provision of this Agreement is held for any reason to be unenforceable, the remainder of this Agreement shall nevertheless remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. CYBERSHOP INTERNATIONAL, INC. By: /s/ Jeffrey Tauber ----------------------------- Name: Jeffrey Tauber Title: Chairman of the Board Date: /s/ Jeffrey Leist --------------------------------- Jeffrey Leist Date: 11 EX-27 5 FDS FOR CYBERSHOP INTERNATIONAL, INC.
5 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 10,674,000 0 144,000 (45,000) 655,000 11,964,000 2,489,000 (555,000) 13,995,000 4,646,000 0 0 0 8,000 9,263,000 13,995,000 1,052,000 1,072,000 920,000 920,000 2,247,000 0 0 (1,838,000) 0 (1,838,000) 0 0 0 (1,838,000) (0.25) (0.25)
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