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Employment Agreement - CyberShop International Inc. and Francis O'Connor

                              EMPLOYMENT AGREEMENT

         AGREEMENT  ("Agreement")  made as of this  _____ day of  February  (the
"Effective  Date"),  by and between  CyberShop  International,  Inc., a Delaware
corporation   (hereinafter   "Employer"),   and  Francis  O'Connor  (hereinafter

                              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.       Commencing  as  of  the  Effective  Date,   Employer   employs
Executive as Vice President and Chief Information Officer of Employer to perform
the duties  normally  incident to such  positions.  Executive shall at all times
report to the President of Employer.  Executive  agrees that he will relocate to
the New York/New Jersey  metropolitan area on or before September 1, 1998. It is
agreed that pending such relocation  Executive shall be permitted to perform his
services from his home in Iowa provided that  Executive is reasonably  available
(every other week) to perform his services at the principal offices of Employer.
Executive  shall be  reimbursed  for airfare and  lodging  associated  with this
travel  consistent  with the  presentation of  documentation  in accordance with
Company procedures.

         2.       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.       The term of this  Agreement  shall  commence on the  Effective
Date and shall terminate one (1) year  thereafter,  unless sooner  terminated as
hereinafter  provided,   and  shall  be  subject  to  automatic  annual  renewal
thereafter  unless at least sixty (60) days prior to the end of the term of this
Agreement or any annual renewal period  Executive or Employer shall give written
notice to the other that this Agreement shall not be renewed.

         4.       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 Ninety Six  Thousand and 00/100
($96,000)  Dollars per annum.  In the event that an initial  public  offering of
Employer's securities (the "Public Offering") is consummated, Executive's salary
shall  be  increased  to the  rate  One  Hundred

Twenty-Five  Thousand Dollars  ($125,000.00) per annum commencing on the date of
consummation of the Public Offering.  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 such health
benefits as are currently  offered or hereafter  will be offered during the term
such of this Agreement 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 are
hereafter  offered  during the term of this  Agreement  to other  executives  of

         5.       Subject to the adoption of  Employer's  1998 Stock Option Plan
(the "Plan") by the Board,  the approval of the Plan by Employer's  stockholders
and the  approval of the grant of options to  Executive by the Board as provided
herein,  Executive  shall be granted an option (the "Option") to purchase 64,000
shares of  Employer's  common  stock,  $.001 par  value per share  (the  "Common
Stock") from Employer at an exercise price of $5.00 per share,  provided that in
the event that the price per share of Common  Stock sold in the Public  Offering
is less than $5.00,  the Board shall  grant an  additional  number of options to
Executive  so that the  product of the total  number of options  granted and the
exercise price per share of Common Stock sold in the Public Offering is equal to
$320,000  (the  product of the 64,000  options and the $5.00 per share  exercise
price).  In the event that the Public Offering is not consummated on or prior to
May 15, 1998, the options  granted  pursuant to this Section 5 shall be canceled
and new  options  shall be granted to  Executive  to purchase  64,000  shares of
Common  Stock at an exercise  price per share equal to the fair market  value of
the Common Stock on the May 15,  1998,  as  determined  by the Board in its sole
discretion.  The Option shall vest and be exercisable as follows: (i) 1/3 of the
shares of Common  Stock  subject to the Option on the first  anniversary  of the
Effective Date, (ii) 1/3 of the shares of Common Stock subject to the Options on
the second  anniversary  of the Effective  Date,  and (iii) 1/3 of the shares of
Common Stock  subject to the Option on the third  anniversary  of the  Effective
Date,  subject to termination  as provided in the Plan,  and further  subject to
termination  in the event  that (x)  Executive  breaches  any term  hereof,  (y)
Executive's  employment  hereunder  is  terminated  for  Cause  (as  hereinafter
defined) or is terminated without Cause, or (z) Executive voluntarily terminates
Executive's  employment  hereunder.  The Option shall expire five (5) years from
the date of vesting.  The terms of the Option 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.       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  and  provided  that  Executive's   legal
representatives  shall have the right to exercise  Options vested at the time of
death for a period of three (3) months thereafter.

         7.       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 in 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.       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 material duties as may be delegated to Executive  commensurate with
Executive's position, or (vi) breach of any material provision of this Agreement
by Executive.

         9.       If  Executive's  employment is terminated by Employer  without
Cause,  this Agreement  shall terminate  immediately,  provided,  however,  that
Employer shall be obligated to pay Executive the Base Salary through the date of
such  termination.  In addition,  if termination  occurs any time after four (4)
months in  employment  with the  Company the  Executive  shall be paid an amount
equal to six (6) months of Base Salary as severance.

         10.      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 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
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.

         11.      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 two years 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  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 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.

         12.      Executive  acknowledges  that the remedy at law for any breach
or threatened  breach by Executive of the  covenants  contained in paragraphs 10
and 11 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 10 and 11 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 10 and ll 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  10 and 11 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.

         13.      Executive has carefully  read and  considered  the  provisions
hereof, and having done so, agrees that restrictions set forth in paragraphs 10,
11, and 12 (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.

         14.      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.

         15.      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.


         16.      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:                                  To Employer:

Francis O'Conner                               CyberShop International, Inc.
7511 Hampshire Drive North East                130 Madison Avenue
Cedar Rapids, Iowa  52402                      New York, New York  10016
                                               Attention:  Chairman of the Board

With copies in each case to:

                                                    RubinBaum Levin  Constant
                                                     & Friedman
                                                    30  Rockefeller Plaza
                                                    New York,  New York  10112
                                                    Attention: Walter M. Epstein

         17.      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 here under shall be  assignable,  encumbered  or
pledged by Executive.

         18.      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.

         19.      This  Agreement  shall be construed and enforced in accordance
with the laws of the State of New York.

         20.      This Agreement may be executed in any number of counter parts,
each of which shall be an original,  but all of which together shall  constitute
one and the same agreement.

         21.      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.



                                                   Francis O'Connor



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