CYRK INC, 10-K405/A, 1999-04-29

CYRK INC
10-K405/A, 1999-04-29
APPAREL & OTHER FINISHD PRODS OF FABRICS & SIMILAR MATL

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<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K/A
(Amendment No. 1)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1998
Commission File Number: 0-21878

CYRK, INC.
(Exact name of registrant as specified in charter)

DELAWARE 04-3081657
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)

3 POND ROAD
GLOUCESTER, MASSACHUSETTS 01930
(Address of principal executive offices)

(978) 283-5800
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act:

Title of Class Name of Exchange on which Registered
- -------------- ------------------------------------
COMMON STOCK, PAR VALUE $.01 PER SHARE THE NASDAQ STOCK MARKET

Indicate by check mark whether the 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 the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

At April 2, 1999, the aggregate market value of the voting stock held by
non-affiliates of the Registrant was $80,318,544.

At April 2, 1999, 15,494,204 shares of the registrant's common stock were
outstanding.

<PAGE> 2

This Amendment No. 1 has been filed by the Company for the purpose of amending
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1998 to provide information required by Part III of Form 10-K.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Item 10 is restated in its entirety as follows:

DIRECTORS

The Restated Certificate of Incorporation of the Company provides that the
number of directors shall be determined from time to time by the Board of
Directors (but shall be no less than three and no more than fifteen) and that
the board shall be divided into three classes. There are currently six
directors. The following table lists the names and ages of each director and
each nominee for director at the 1999 Annual Meeting of Stockholders, the class
to which each director is a member, the year in which such director was first
elected a director of the Company and the year his term expires:

Name Age Class Year Term Expires Director Since
---- --- ----- ----------------- --------------
<S> <C> <C> <C> <C>
Ted L. Axelrod (nominee) 43 III 1999 1998

Joseph W. Bartlett 65 I 2000 1993

Patrick D. Brady 43 II 2001 1990

Joseph Anthony Kouba 51 II 2001 1997

Dominic F. Mammola 42 I 2000 1998

Gregory P. Shlopak 52 III 1999 1990
</TABLE>

BUSINESS HISTORY OF DIRECTORS AND NOMINEES

MR. AXELROD joined the Company in 1995 to direct the Company's corporate
strategy and development efforts. He was elected Executive Vice President in
September 1997 and to the Board of Directors in November 1998. From August 1987
to July 1995, Mr. Axelrod held various positions including Managing Director and
Head of Mergers and Acquisitions at BNY Associates, Incorporated, an investment
banking subsidiary of The Bank of New York Company, Inc. (formerly BNE
Associates, Inc., a subsidiary of The Bank of New England, N.A.).

MR. BARTLETT has been a partner in the law firm of Morrison & Foerster LLP since
March 1996. He was a partner in the law firm of Mayer, Brown & Platt from July
1991 until March 1996. From 1969 until November 1990, he was a partner of, and
from November 1990 until June 1991 he was of counsel to, the law firm of Gaston
& Snow. An involuntary petition under chapter 11 of the federal bankruptcy laws
was filed against Gaston & Snow in October 1991. Mr. Bartlett served as
undersecretary of the United States Department of Commerce from 1967 to 1968 and
as law clerk to the Chief Justice of the United States in 1960.

MR. BRADY is a founder of the Company and has served as one of its directors
since its incorporation in 1990. Mr. Brady was the Chief Operating Officer and
Treasurer of the Company from May 1990 until May 1993, and served as Chief
Financial Officer from May 1993 to September 1994. Mr. Brady was elected
President and Chief Operating Officer of the Company in May 1993 and Chief
Executive Officer in December 1998. Mr. Brady is a party to a Shareholders
Agreement dated June 9, 1997, as amended, with the Company, Gregory Shlopak,
Allan Brown and Eric Stanton. Pursuant to the agreement, each of Messrs.
Shlopak, Brown and Stanton agrees that if Mr. Brady has been nominated to be a
director of the Company at a meeting to elect its directors, each of Messrs.
Shlopak, Brown and Stanton shall vote all of his shares to elect Mr. Brady as a
director.

<PAGE> 3

MR. KOUBA was elected to the Board of Directors on April 4, 1997. Since 1980,
Mr. Kouba has served as the President and a director of Highwood Properties,
Inc. (formerly known as Cloverleaf Group, Inc.), a company which is engaged in
the real estate investment business. Additionally, since 1998, Mr. Kouba has
been a principal of Summit Media LLC, a provider of outdoor advertising
services.

MR. MAMMOLA has served as the Company's Chief Financial Officer since 1994. He
was elected an Executive Vice President in September 1997 and to the Board of
Directors in November 1998. From April 1987 to June 1994, Mr. Mammola was the
Chief Financial Officer of Papa Gino's, Inc., a restaurant chain.

MR. SHLOPAK is a founder of the Company and has served as one of its directors
since its incorporation in 1990. From May 1990 to May 1993, Mr. Shlopak served
as the Company's President and Secretary, and was elected Chairman of the Board
and Chief Executive Officer in May 1993. Effective December 31, 1998, Mr.
Shlopak resigned as Chief Executive Officer and Chairman. Mr. Shlopak was also
the founder, President and a director of a company engaged in the manufacture of
custom screen-printed and embroidered apparel and accessories that was
incorporated in 1976 and merged into the Company in July 1993. Mr. Shlopak is a
party to a Shareholders Agreement dated June 9, 1997, as amended, with the
Company, Patrick Brady, Allan Brown and Eric Stanton. Pursuant to the agreement,
each of Messrs. Brady, Brown and Stanton agrees that if Mr. Shlopak has been
nominated to be a director of the Company at a meeting to elect its directors,
each of Messrs. Brady, Brown and Stanton shall vote all of his shares to elect
Mr. Shlopak as a director. Currently, Mr. Shlopak is the Co-Chairman of Equity
Enterprises, Inc., a New York city based firm which holds controlling and other
interests of companies in various industries.

EXECUTIVE OFFICERS

The following are the names, ages, positions with the Company and a brief
description of the business experience during the last five years of the
executive officers of the Company, all of whom serve until they resign or are
removed from such offices by the Board of Directors:

Patrick D. Brady (43): President, Chief Executive Officer and Chief
Operating Officer. Mr. Brady is a founder of the
Company and has served as one of its directors
since its incorporation in 1990. Mr. Brady was the
Chief Operating Officer and Treasurer of the
Company from May 1990 until May 1993 and served as
Chief Financial Officer from May 1993 to September
1994. Mr. Brady was elected President and Chief
Operating Officer in May 1993 and Chief Executive
Officer in December 1998.

Terry B. Angstadt (45): Executive Vice President. Mr. Angstadt has been a
General Manager of the Company since January 1992.
Mr. Angstadt was elected an Executive Vice
President of the Company in May 1993.

Ted L. Axelrod (43): Executive Vice President. Mr. Axelrod joined the
Company in July 1995 to direct the Company's
corporate strategy and development efforts. He was
elected an Executive Vice President of the Company
in September 1997. Mr. Axelrod was elected to the
Board of Directors in November 1998. From August
1987 to July 1995, he held various positions
including Managing Director and Head of Mergers
and Acquisitions of BNY Associates, Incorporated,
an investment banking subsidiary of The Bank of
New York Company, Inc. (formerly BNE Associates,
Inc., a subsidiary of The Bank of New England,
N.A.).

Dominic F. Mammola (42): Executive Vice President and Chief Financial
Officer. Mr. Mammola was elected an Executive Vice
President of the Company in September 1997 and
elected to the Board of Directors in November
1998. He has served as Vice President and Chief
Financial Officer of the Company since September

<PAGE> 4

1994. From April 1987 to June 1994, he was Chief
Financial Officer of Papa Gino's, Inc., a
restaurant chain.

ITEM 11. EXECUTIVE COMPENSATION

Item 11 is restated in its entirety as follows:

EXECUTIVE COMPENSATION

The following table sets forth the compensation the Company paid or accrued for
services rendered in 1998, 1997 and 1996, respectively, by the Chief Executive
Officer and the other four executive officers of the Company:

SUMMARY COMPENSATION TABLE
<TABLE>

ANNUAL COMPENSATION LONG TERM COMPENSATION AWARD
------------------------------------ -----------------------------------------
OTHER RESTRICTED SECURITIES
NAME AND ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS OPTIONS COMPENSATION
------------------ ---- ------ ----- ------------ ------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>

Gregory P. Shlopak......... 1998 $300,000 -- -- -- -- $2,751,072(2)
Former Chief Executive 1997 $300,000 -- -- -- 230,000 $ 413,962
Officer(1) 1996 $300,000 -- -- -- -- $ 415,407

Patrick D. Brady........... 1998 $300,000 -- -- -- -- $ 252,153(3)
Chief Executive Officer, 1997 $300,000 -- -- -- 230,000 $ 253,647
Chief Operating Officer and 1996 $300,000 -- -- -- -- $ 257,989
President

Terry B. Angstadt.......... 1998 $189,999 $ 48,450 -- -- 15,000 $ 23,124(4)
Executive Vice President 1997 $185,096 $ 50,000 -- -- 55,000 $ 27,129
1996 $175,000 -- -- -- 42,500 $ 26,156

Dominic F. Mammola......... 1998 $206,346 $125,000 -- -- 15,000 $ 22,308(5)
Executive Vice President 1997 $185,096 $ 50,000 -- -- 70,000 $ 25,750
and Chief Financial Officer 1996 $166,635 $ 25,000 -- -- 10,000 $ 22,828

Ted L. Axelrod(6).......... 1998 $200,000 $125,000 -- -- 15,000 $ 15,095(7)
Executive Vice President 1997 $200,000 $155,000 -- -- 27,500 $ 17,652

</TABLE>

- --------------------

(1) Effective December 31, 1998 and pursuant to a Severance Agreement with the
Company, Mr. Shlopak resigned as Chief Executive Officer and Chairman.

(2) Represents (i) $4,800 contributed by the Company to the Company's 401(k)
plan on behalf of Mr. Shlopak, (ii) $42,792 in premiums paid by the
Company with respect to the cash surrender value benefit payable to Mr.
Shlopak's estate under certain reverse split-dollar life insurance
policies, (iii) $370,990, such amount representing the benefit to Mr.
Shlopak of the payment by the Company in 1998 of premiums with respect to
certain split-

4
<PAGE> 5

dollar life insurance policies, calculated as the present value of an
interest-free loan of the premiums to Mr. Shlopak over his present
actuarial life expectancy or, in the case of two of the policies which are
survivorship policies, the actuarial life expectancy of the later to die
of Mr. Shlopak and his wife (See "Insurance Arrangements") and (iv)
$2,332,490, such amount representing the aggregate value of cash and
benefits paid and payable to Mr. Shlopak pursuant to a Severance Agreement
between Mr. Shlopak and the Company dated December 31, 1998 pursuant to
which Mr. Shlopak resigned as Chief Executive Officer and Chairman.

(3) Represents (i) $4,800 contributed by the Company to the Company's 401(k)
plan on behalf of Mr. Brady, (ii) $25,049 in premiums paid by the Company
with respect to the cash surrender value benefit payable to Mr. Brady's
estate under certain reverse split-dollar life insurance policies, and
(iii) 222,304, such amount representing the benefit to Mr. Brady of the
payment by the Company in 1998 of premiums with respect to certain
split-dollar life insurance policies, calculated as the present value of
an interest-free loan of the premiums to Mr. Brady over his present
actuarial life expectancy. See "Insurance Arrangements".

(4) Represents (i) 4,800 contributed by the Company to the Company's 401(k)
plan on behalf of Mr. Angstadt and (ii) $18,324, the benefit to Mr.
Angstadt of the payment by the Company in 1998 with respect to a
split-dollar life insurance policy, calculated as the present value of an
interest-free loan of the premiums to Mr. Angstadt over his present
actuarial life expectancy. See "Insurance Arrangements".

(5) Represents (i) $4,800 contributed by the Company to the Company's 401(k)
plan on behalf of Mr. Mammola and (ii) $17,508, the benefit to Mr. Mammola
of the payment by the Company in 1998 of premiums with respect to a
split-dollar life insurance policy, calculated as the present value of an
interest-free loan of the premium to Mr. Mammola over his present
actuarial life expectancy. See "Insurance Arrangements".

(6) Mr. Axelrod joined the Company in July 1995 and became an executive
officer on September 24, 1997.

(7) Represents (i) $4,800 contributed by the Company to the Company's 401(k)
plan on behalf of Mr. Axelrod and (ii) $10,295, the benefit to Mr. Axelrod
of the payment by the Company in 1998 of premiums with respect to a
split-dollar life insurance policy, calculated as the present value of an
interest-free loan of the premium to Mr. Axelrod over his present
actuarial life expectancy. See "Insurance Arrangements".

<PAGE> 6

OPTION GRANTS IN THE LAST FISCAL YEAR

The following table sets forth certain information with respect to stock options
granted to each of the Company's executive officers during 1998.

Potential Realized Value at
Assumed Annual Rates of
Stock Price Appreciation for
Individual Grants Option Term(4)
------------------------------------------------------------ ----------------------------
Number of Percent of Total
Securities Options Granted
Underlying to Employees in Exercise Expiration
Name Options Granted(1) Fiscal Year(2) Price(3) Date 5% 10%
---- ------------------ -------------- --------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>

Gregory P. Shlopak -- -- -- -- -- --

Patrick D. Brady -- -- -- -- -- --

Terry B. Angstadt 15,000 4.7% $10.438 6/5/08 $98,430 $249,480

Dominic F. Mammola 15,000 4.7% $10.438 6/5/08 $98,430 $249,480

Ted L. Axelrod 15,000 4.7% $10.438 6/5/08 $98,430 $249,480

</TABLE>

- -----------------

(1) These options become exercisable in three equal installments on the first,
second and third anniversaries of the date of grant.

(2) Based on an aggregate of 317,750 shares subject to options granted to
employees of the Company in 1998.

(3) The exercise price per share of each option was equal to the fair market
value of the Common Stock on the date of grant.

(4) The potential realizable value is calculated based on the term of the
option (ten years) at its date of grant. It is calculated by assuming that
the stock price on the date of grant appreciates at the indicated annual
rate compounded annually for the entire term of the option and that the
option is exercised and sold on the last day of its term for the
appreciated stock price. However, the optionee will not actually realize
any benefit from the option unless the market value of the Company's stock
price in fact increases over the option price.

<PAGE> 7

AGGREGATE OPTION EXERCISES IN THE LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES

The following table sets forth for each of the Company's executive officers
certain information regarding exercises of stock options during 1998 and stock
options held at the end of 1998.
<TABLE>
<CAPTION>

NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING IN-THE-MONEY
ACQUIRED UNEXERCISED OPTIONS OPTIONS AT
ON VALUE AT FISCAL YEAR-END FISCAL YEAR-END(1)
NAME EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- -------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>

Gregory P. Shlopak(2) -- -- -- --
Patrick D. Brady -- -- 76,667 / 153,333 --
Terry B. Angstadt(3) 27,285 $200,000 33,549 / 51,666 --
Dominic F. Mammola(4) 27,688 $199,998 5,646 / 61,666 --
Ted L. Axelrod(5) 30,214 $199,999 18,953 / 40,833 --
</TABLE>

- ------------------

(1) This "value" is the difference between the market price of the Common
Stock subject to the options on December 31, 1998 ($7.50 per share) and
the option exercise (purchase) price, assuming the options were exercised
and the shares sold on that date.

(2) Pursuant to a Severance Agreement between Mr. Shlopak and the Company
dated December 31, 1998, Mr. Shlopak resigned as Chief Executive Officer
and Chairman, and all of his options were cancelled.

(3) On May 6, 1998, the Company purchased from Mr. Angstadt at fair market
value stock options held by him exercisable for 27,285 shares.

(4) On May 6, 1998, the Company purchased from Mr. Axelrod at fair market
value stock options held by him exercisable for 30,214 shares.

(5) On May 6, 1998, the Company purchased from Mr. Mammola at fair market
value stock options held by him exercisable for 27,688 shares.

INSURANCE ARRANGEMENTS

The Company provides split-dollar life insurance benefits to Messrs. Shlopak and
Brady. The Company has agreed to pay the premiums for (i) two whole life
policies on the lives of each of Messrs. Shlopak and Brady and (ii) two
survivorship policies on the lives of Mr. Shlopak and his wife. The Company is
obligated to pay these premiums whether or not either executive remains employed
by the Company. The Company has certain rights to borrow against these policies
and the right to receive an amount equal to all premiums paid by it not later
than upon the death of the insured executive (or, in the case of the
survivorship policies, upon the death of the later to die of Mr. Shlopak or his
wife). The irrevocable trusts established by Messrs. Shlopak and Brady which own
the foregoing policies are entitled to borrow against the policies, subject to
certain limitations, while the Company has an interest in the policies. Such
trusts are also entitled to receive the death benefits under the policies net of
the cumulative premiums paid by the Company. The aggregate annual premium amount
payable by the Company in respect of the split-dollar policies insuring the
lives of Messrs. Shlopak and Brady is $435,261 and $257,462, respectively.

<PAGE> 8

The Company also provides split-dollar life insurance benefits to its three
other executive officers, Messrs. Angstadt, Axelrod and Mammola. The Company has
agreed to pay the premiums for a whole life policy on the lives of each of
Messrs. Angstadt, Axelrod and Mammola. However, the Company can terminate its
obligation in accordance with severance or change of control agreements between
the Company and Messrs. Axelrod, Angstadt and Mammola, respectively. See
"Severance and Change of Control Agreements". The Company has certain rights to
borrow against these policies and the right to receive upon the death of the
insured executive an amount equal to the lesser of (i) the cash surrender value
of the policy and (ii) the aggregate amount of premiums paid by the Company at
such date. The aggregate annual premium amount payable by the Company for the
split-dollar policies insuring the lives of Messrs. Angstadt, Axelrod and
Mammola is $27,937, $14,954 and $25,442, respectively.

In addition, the Company provides Messrs. Shlopak and Brady with reverse
split-dollar life insurance pursuant to which the Company pays the premiums on
universal life insurance policies on the lives of Messrs. Shlopak and Brady.
Upon the death of either, assuming the policies are still in force, the Company
is entitled to receive the death benefit ($4,250,000 on the life of each) and
the deceased executive's estate is entitled to receive the cash surrender value
of the policy.

DIRECTORS' COMPENSATION

Directors who are employees of the Company receive no compensation for their
services on the Board. Directors who are not employees of the Company receive
$1,000 for each Board meeting they attend and are also reimbursed for reasonable
out-of-pocket expenses incurred in attending such meetings. In addition, on
March 31 of each year, non-employee directors of the Company are granted a stock
option covering 5,000 shares of Common Stock that vests in two equal
installments on each of the first and second anniversaries of the date of grant.
Grants to non-employee directors are made out of the Company's 1993 Omnibus
Stock Option Plan. The Company may also provide additional compensation to its
non-employee directors for special assignments performed from time to time. In
February 1999, the Company granted stock options for 30,000 and 20,000 shares,
respectively, to Joseph W. Bartlett and Joseph Anthony Kouba for special
assignments performed by them in 1998. The options vest in two equal
installments on each of the first and second anniversaries of the date of grant.

SEVERANCE AND CHANGE OF CONTROL AGREEMENTS

The Company entered into severance agreements with Messrs. Axelrod and Mammola.
Pursuant to these agreements, upon termination of their employment with the
Company (other than for cause or disability or by them without "good reason"),
Messrs. Axelrod and Mammola will each be entitled to receive a lump sum payment
equal to three times their annual compensation (including without limitation,
salary, bonus, and 401(k) matching contributions), certain insurance coverages
would continue to be maintained for them by the Company until the second
anniversary of termination of employment, and all of their stock options would
become immediately exercisable. Mr. Angstadt has entered into a change of
control agreement with the Company that has substantially the same terms and
conditions as Messrs. Axelrod's and Mammola's severance agreements, except that
the termination of Mr. Angstadt's employment with the Company must occur within
two years of a change of control of the Company.

REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION

This report has been prepared by the Compensation Committee of the Board of
Directors of the Company and addresses the Company's compensation policies with
respect to the Chief Executive Officer and executive officers of the Company in
general. Each member of the Committee is a non-employee director.

The Company's overall policy for compensating executive officers is to establish
aggregate compensation levels sufficient to retain and attract executive
officers capable of leading the Company to achieve its business objectives. The
principal components of executive compensation are salary, bonus and stock
option grants. The Company also provides supplemental life insurance benefits to
its executive officers. In addition, executives are eligible to participate, on
a nondiscriminatory basis, in benefit programs provided to employees generally,
including group medical and life insurance programs and the Company's 401(k)
plan. From time to time, the Company retains independent consultants to
benchmark the Company's compensation practices for its executives and key
employees.

<PAGE> 9

The Company's compensation policy with respect to its Chief Executive Officer is
the same as its policy for executives generally. While the Committee considers
various factors in determining the amount of each component of compensation,
such determinations are ultimately based on the Committee's subjective judgment
as to what is reasonable and appropriate and not on established criteria or
formulas.

Salary: The 1993 salaries of Messrs. Shlopak and Brady were established by
agreement among the Company's stockholders. Immediately prior to the initial
public offering, these salaries were increased to $300,000 per year to reflect
the anticipated increase in their responsibilities as executive officers of a
publicly traded company and because of the Company's anticipated discontinuance
of the payment of cash dividends after the offering. These salaries were
subsequently ratified by the Compensation Committee each year and have not
changed materially since 1993. The salaries of the Company's other three
executive officers were based on the compensation paid to them during the prior
year and the Committee's qualitative assessment of their contributions to the
Company.

Bonus: In 1998, the Company paid a $125,000 bonus to each of Mr. Mammola and Mr.
Axelrod, and the Company paid a $48,450 bonus to Mr. Angstadt. The decision to
pay these bonuses was made by the Committee in its discretion based on its
qualitative assessment of their contributions to the Company in 1998.

Stock Options: The Committee believes that stock ownership by executive officers
is important in aligning management's and stockholders' interests in the
enhancement of stockholder value over the long term. The exercise price of stock
options is equal to the market price of the Common Stock on the date of grant.
The stock options granted to the executive officers in 1998 were based on the
Committee's qualitative assessment of their contributions to the Company.

Insurance: The split-dollar life insurance program for Messrs. Shlopak and Brady
was implemented by the Committee in 1994 in recognition of the substantial
contributions made by these two key officers in 1994 and in prior years. In
1995, the Committee implemented split-dollar life insurance programs for its
other executive officers. Messrs. Angstadt, Mammola and Axelrod participate in
this program. The Committee's decision to make this insurance available was
based on the Committee's evaluation of competitive compensation programs
required to attract and retain executive officers in its industry.

Compliance with Internal Revenue Code Section 162 (m). Section 162 (in) of the
Internal Revenue Code enacted in 1993, generally disallows a tax deduction to
public companies for compensation over $1 million paid to its chief executive
officer and its four other most highly compensated executives. Qualifying,
performance-based compensation will not be subject to the deduction limit if
certain requirements are met. The Committee currently intends to structure stock
option grants to executive officers in a manner that complies with the
performance-based requirements of the statute. However, the Committee otherwise
anticipates that the statute will not alter the Company's policy of establishing
executive compensation at levels sufficient to retain and attract executive
officers, regardless of deductibility.

The Compensation Committee: Joseph W. Bartlett Joseph Anthony Kouba

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

General. Decisions concerning executive compensation are made by the
Compensation Committee of the Board of Directors, which during 1998 consisted of
Mr. Bartlett and Mr. Kouba, neither of whom is or was an officer or employee of
the Company or any of its subsidiaries. In 1998, none of the executive officers
of the Company served as an executive officer or on the board of directors of
any entity of which Mr. Bartlett or Mr. Kouba also served as an executive
officer or member of the board of directors.

The Performance Graph and the Report of the Compensation Committee on Executive
Compensation in this Amendment No. 1 to Form 10-K Statement are not and shall
not be deemed incorporated by reference into any filings of the Company with the
Securities and Exchange Commission by implication or by any reference in any
such filings to this Amendment No. 1 to Form 10-K.

<PAGE> 10

PERFORMANCE GRAPH

The following graph assumes an investment of $100 on December 31, 1993 and
compares changes thereafter (through December 31, 1998) in the market price of
the Common Stock with (i) the Nasdaq Market Index (a broad market index) and
(ii) the Advertising Agency (a published industry index).

The Nasdaq Market Index includes both U.S. and foreign companies listed on The
Nasdaq Stock Market and The Nasdaq SmallCap Market. The Advertising Agency Group
(MG Industry Group 091) consists of all companies listed on the New York and
American stock exchanges, and The Nasdaq Stock and SmallCap Markets that derive
a majority of their revenues (as shown in their annual reports) from
advertising. UPON THE REQUEST OF ANY STOCKHOLDER, THE COMPANY WILL FURNISH A
LIST OF THE COMPANIES COMPRISING THE ADVERTISING AGENCY GROUP.

The performance of the indices is shown on a total return (dividend
reinvestment) basis; however, the Company paid no dividends during the period
shown. The graph lines merely connect the beginning and end of the measuring
periods and do not reflect fluctuations between those dates.

<PAGE> 11

Comparison of Annual Cumulative Return
Cyrk, Inc., The Advertising Agency Group & The Nasdaq Market Index

[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
----------------------------------FISCAL YEAR ENDING---------------------------------
COMPANY INDEX/MARKET 12/31/1993 12/30/1994 12/29/1995 12/31/1996 12/31/1997 12/31/1998
<S> <C> <C> <C> <C> <C> <C>
Cyrk Inc 100.00 179.89 42.39 56.52 42.12 32.61

Consumer Non-Durables 100.00 104.75 126.80 159.75 187.80 197.79

NASDAQ Market Index 100.00 104.99 136.18 169.23 207.00 291.96
</TABLE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Item 12 is restated in its entirety as follows:

The following tables set forth certain information regarding beneficial
ownership of the Company's Common Stock at April 2, 1999. Except as otherwise
indicated in the footnotes, the Company believes that the beneficial owners of
the Common Stock listed below, based on information furnished by such owners,
have sole investment and voting power with respect to the shares of Common Stock
shown as beneficially owned by them.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table sets forth each person known by the Company (other than
directors and executive officers) to own beneficially 5% or more of the
outstanding Common Stock.

NAME AND ADDRESS NUMBER OF SHARES PERCENTAGE
OF BENEFICIAL OWNER OF COMMON STOCK OF CLASS
------------------- ---------------- ----------
<S> <C> <C>
The Equitable Companies Incorporated(1) 1,937,100 12.5%
1290 Avenue of the Americas
New York, NY 10104

Franklin Resources, Inc.(2) 1,187,400 7.7%
777 Mariners Island Boulevard, 6th
Floor
San Mateo, CA 94404

</TABLE>

11
<PAGE> 12

<TABLE>

<S> <C> <C>
Allan I. Brown(3) 1,148,023 7.4%
c/o Simon Marketing, Inc.
1900 Avenue of the Stars, 4th Floor
Los Angeles, CA 90067-4301

Eric Stanton(4) 1,148,023 7.4%
c/o Simon Marketing, Inc.
Evergo House
38 Gloucester Road
Wanchai
Hong Kong

H. Ty Warner(5) 1,075,610 6.9%
P.O. Box 5377
Oak Brook, IL 60522

Heartland Advisors, Inc.(6) 1,050,700 6.8%
790 North Milwaukee Street
Milwaukee, WI 53202

Dimensional Fund Advisors Inc.(7) 845,500 5.5%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
</TABLE>

- ----------------------

(1) The information concerning this holder is based solely on information
contained in filings it has made with the Securities and Exchange
Commission pursuant to Sections 13(d) or 13(g) of the Securities Exchange
Act of 1934. The Equitable Companies Incorporated (the "Equitable
Companies") is the parent holding company of Alliance Capital Management
L.P., a registered investment advisor ("Alliance"), which is deemed to
have sole voting power as to 1,144,100 of these shares and sole
dispositive power as to 1,908,600 of these shares. Alliance indicates that
it acquired the shares solely for investment purposes on behalf of client
discretionary investment advisory accounts. A majority interest in the
Equitable Companies is owned beneficially by AXA (9 Place Vendome, 75001,
Paris, France), and a group of four French mutual funds located in Paris,
France beneficially owns a majority interest in AXA.

(2) The information concerning this holder is based solely on information
contained in filings it has made with the Securities and Exchange
Commission pursuant to Sections 13 (d) and 13 (g) of the Securities
Exchange Act of 1934. The shares are beneficially owned by one or more
investment companies or other managed accounts which are advised by
investment advisor subsidiaries of Franklin Resources, Inc. ("FRI") and
grant the FRI subsidiaries sole voting power and sole dispositive power as
to all of the shares. Charles B. Johnson and Rupert H. Johnson, Jr. each
own in excess of 10% of the outstanding common stock of FRI and are the
principal shareholders of FRI.

(3) Allan Brown has the sole power to vote, or to direct the vote of, and the
sole power to dispose, or to direct the disposition of, 1,148,023 shares.
Mr. Brown is party to a Shareholders Agreement dated June 9, 1997, as
amended, with the Company, Eric Stanton, Gregory Shlopak and Patrick
Brady, pursuant to which he may be deemed to have shared voting power over
5,012,380 shares for the purpose of electing certain directors and may be
deemed to be a member of a "group" for the purposes of Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended. Mr. Brown expressly
disclaims beneficial ownership of any shares except for the 1,148,023
shares as to which he possesses sole voting and dispositive power.

(4) Eric Stanton has the sole power to vote, or to direct the vote of, and the
sole power to dispose, or to direct the disposition of, 1,148,023 shares.
Mr. Stanton is party to a Shareholders Agreement dated June 9, 1997, as
amended, with the Company, Allan Brown, Gregory Shlopak and Patrick Brady,
pursuant to which he may be

<PAGE> 13

deemed to have shared voting power over 5,012,380 shares for the purpose
of electing certain directors and may be deemed to be a member of a
"group" for the purposes of Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended. Mr. Stanton expressly disclaims beneficial
ownership of any shares except for the 1,148,023 shares as to which he
possesses sole voting and dispositive power.

(5) Includes 100,000 shares issuable pursuant to a warrant which is currently
exercisable.

(6) The information concerning this holder is based solely on information
contained in filings it has made with the Securities and Exchange
Commission pursuant to Sections 13 (d) and 13 (g) of the Securities
Exchange Act of 1934. Heartland Advisors, Inc. is a registered investment
advisor, and has indicated that it has the sole power to dispose, or to
direct the disposition of, all of the shares.

(7) The information concerning this holder is based solely on information
contained in filings it has made with the Securities and Exchange
Commission pursuant to Sections 13 (d) and 13 (g) of the Securities
Exchange Act of 1934. Dimensional Fund Advisors Inc. ("Dimensional") is a
registered investment advisor for four investment companies and also
serves as investment manager to certain other investment vehicles. In its
roles as investment advisor and investment manager, Dimensional has the
sole power to vote, or to direct the vote of, and the sole power to
dispose, or direct the disposition of, all of the shares. Dimensional
disclaims beneficial ownership of all of the shares.

SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth information at April 2, 1999 regarding the
beneficial ownership of the Company's Common Stock (including Common Stock
issuable upon the exercise of stock options exercisable within 60 days of April
2, 1999) by each director, each executive officer named in the Summary
Compensation Table, and by all directors and executive officers of the Company
as a group.

Name and Address Number of Shares Percentage of
of Beneficial Owner(1) of Common Stock Class
---------------------- ---------------- -------------
<S> <C> <C>

Patrick D. Brady(2) 1,448,934 9.4%

Gregory P. Shlopak(3) 1,267,400 8.2%

Terry B. Angstadt(4) 55,705 *

Ted L. Axelrod(5) 35,620 *

Dominic F. Mammola(6) 29,732 *

Joseph W. Bartlett(7) 27,500 *

Joseph Anthony Kouba(8) 2,500 *

All directors and executive 2,867,391 18.5%
officers as a group (seven persons)(9)

</TABLE>
- ----------------

* Represents less than 1%.

(1) The address of each of the directors and executive officers is c/o Cyrk,
Inc., 21 Pond Road, Gloucester, Massachusetts 01930.

13
<PAGE> 14

(2) Includes (i) 90,408 shares held by a private charitable foundation as to
which Mr. Brady, as trustee, has sole voting and dispositive power and
(ii) 153,333 shares issuable pursuant to stock options exercisable within
60 days of April 2, 1999. Mr. Brady is a party to Shareholders Agreement
dated June 9, 1997, as amended, with the Company, Allan Brown, Eric
Stanton and Gregory Shlopak pursuant to which he may be deemed to have
shared voting power over 5,012,380 shares for the purpose of electing
certain directors and may be deemed to be a member of a "group" for the
purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended. Mr. Brady expressly disclaims beneficial ownership of any shares
except for the 1,448,934 shares as to which he possesses sole dispositive
and voting power.

(3) Includes 74,401 shares held by a private charitable foundation as to which
Mr. Shlopak, as trustee, has sole voting and dispositive power. Mr.
Shlopak is a party to Shareholders Agreement dated June 9, 1997, as
amended, with the Company, Allan Brown, Eric Stanton and Patrick Brady
pursuant to which he may be deemed to have shared voted power over
5,012,380 shares for the purpose of electing certain directors and may be
deemed to be a member of a "group" for the purposes of Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended. Mr. Shlopak expressly
disclaims beneficial ownership of any shares except for the 1,267,400
shares as to which he possesses sole dispositive and voting power.
Pursuant to a Severance Agreement between Mr. Shlopak and the Company
dated December 31, 1998, Mr. Shlopak resigned as Chief Executive Officer
and Chairman, and all of his options were cancelled.

(4) Includes 51,882 shares issuable pursuant to stock options exercisable
within 60 days of April 2, 1999.

(5) The 35,620 shares are issuable pursuant to stock options exercisable
within 60 days of April 2, 1999.

(6) Includes 28,979 shares issuable pursuant to stock options exercisable
within 60 days of April 2, 1999.

(7) The 27,500 shares are issuable pursuant to stock options exercisable
within 60 days of April 2, 1999.

(8) The 2,500 shares are issuable pursuant to stock options exercisable within
60 days of April 2, 1999.

(9) Includes (i) 74,401 shares held by a private charitable foundation as to
which Mr. Shlopak, as trustee, has sole voting and dispositive power, (ii)
90,408 shares held by a private charitable foundation as to which Mr.
Brady, as trustee, has sole voting and dispositive power and (iii) a total
of 299,814 shares issuable pursuant to stock options exercisable within 60
days of April 2, 1999.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Item 13 is restated in its entirety as follows:

The following information sets forth certain transactions, or series of similar
transactions, between the Company and any director, nominee for director,
executive officer, or beneficial owner of more than 5% of the Company's shares.

REAL ESTATE MATTERS. Pursuant to a lease entered into in 1989, the Company
leases its principal executive offices located in Gloucester, Massachusetts from
PG Realty Trust, of which Mr. Shlopak is a trustee and beneficiary. The
aggregate annual rent under the lease is $354,000. Additionally, pursuant to a
lease entered into in January 1997, the Company leases other executive office
and warehouse space in Gloucester, Massachusetts from PG Realty Trust, of which
Mr. Shlopak is a trustee and beneficiary. The aggregate annual rent under the
lease is $171,000. Each lease is triple net and terminates in December 1999. The
Company does not currently intend to renew either lease at the expiration of
their respective terms.

The Company leases a warehouse and distribution facility in Danvers,
Massachusetts under the terms of a fifteen-year operating lease agreement which
expires December 2011 from a limited liability company which is owned by Messrs.
Shlopak and Brady. The lease is triple net and, the aggregate annual rent under
the lease is $462,000.

14
<PAGE> 15

TRANSACTIONS WITH DIRECTORS. Louis Marx, Jr. resigned as a director of the
Company effective December 31, 1998. Mr. Marx is a director of Swiss Army
Brands, Inc. ("Swiss Army Brands") which is a supplier of promotional products
to the Company. The Company purchased $9,027,000 in product from this affiliate
of Mr. Marx in 1998. The Company owns a 2.6% interest in Hudson River Capital
LLC, a venture capital company founded and controlled by Swiss Army Brands.
Messrs. Marx and Shlopak are directors of Hudson River Capital LLC.

TRANSACTIONS WITH CERTAIN SHAREHOLDERS. In December 1997, the Company entered
into a License Agreement with Ty, Inc. ("TY"), the world's largest manufacturer
and marketer of plush toys (sold under the name Beanie Babies(R)), which granted
the Company the exclusive right to develop and market to retailers certain
licensed Beanie Babies products. Ty Warner is the sole shareholder of TY and
beneficially owns more than 5% of the Company's shares. In 1998, net sales of
Beanie Babies related products by the Company were approximately $54,897,000.

INDEBTEDNESS OF MANAGEMENT

During fiscal 1997, Dominic F. Mammola, Executive Vice President and Chief
Financial Officer of the Company, was indebted to the Company in the amount of
$75,000. Mr. Mammola incurred this sum of indebtedness because of an advance
made to him by the Company. His largest aggregate amount of indebtedness
outstanding at any time during fiscal 1998 was $75,000. Mr. Mammola repaid the
indebtedness in full in June 1998.

During fiscal 1997, Ted L. Axelrod, Executive Vice President of the Company, was
indebted to the Company in the amount of $100,000. Mr. Axelrod incurred this sum
of indebtedness because of an advance made to him by the Company. His largest
aggregate amount of indebtedness outstanding at any time during fiscal 1998 was
$100,000. The amount of indebtedness outstanding as of April 2, 1999 was
$100,000. The rate of interest charged on the indebtedness is the federal
statutory rate.

During fiscal 1998, Gregory P. Shlopak, former Chief Executive Officer and
Chairman of the Company, was indebted to the Company in the amount of $256,947.
Mr. Shlopak incurred this sum of indebtedness because of an advance made to him
by the Company. Pursuant to a Severance Agreement dated December 31, 1998
between the Company and Mr. Shlopak, the Company forgave this indebtedness.

During fiscal 1998, Patrick D. Brady, Chief Executive Officer, Chief Operating
Officer and President of the Company, was indebted to the Company in the amount
of $75,715. Mr. Brady incurred this sum of indebtedness because of an advance
made to him by the Company. His largest indebtedness at any time during fiscal
1998 was $75,715. The amount of indebtedness as of April 2, 1999 was $77,388.
The rate of interest charged on the indebtedness is the federal statutory rate.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

Item 14 is amended to include the following documents as exhibits:

- --------------------------------------------------------------------------------
EXHIBIT NO. DESCRIPTION

- --------------------------------------------------------------------------------
10.21 Form of Indemnification Agreement between the Registrant and
its directors, filed herewith.
- --------------------------------------------------------------------------------

15
<PAGE> 16

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

CYRK, INC.

Dated: April 29, 1999 By: /s/ Patrick D. Brady
-------------------------------
Patrick D. Brady
Chief Executive Officer, Chief
Operating Officer and President

<PAGE> 1
EXHIBIT 10.21

INDEMNIFICATION AGREEMENT

INDEMNIFICATION AGREEMENT, dated as of ____ __, 1999, between Cyrk,
Inc., a Delaware corporation (the "Company"), and _______________________ (the
"Director").

WHEREAS, the Director serves as a member of the Company's Board of
Directors (the "Board") [and as an officer of the Company], and the Company
wishes to provide him with the indemnification arrangements set forth herein;
and

WHEREAS, the Director is willing to serve and continue to serve as a
director [and officer] of the Company;

NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto do hereby agree as follows:

1. INDEMNITY. The Company hereby agrees to hold harmless and
indemnify the Director with respect to his service on, and any matter or
transaction considered by, the Board, and with respect to his service as an
officer of the Company, to the full extent authorized or permitted by law, as
such may be amended from time to time, and Article Eighth of the Restated
Certification of Incorporation of the Company, as such may be amended. In
furtherance of the foregoing indemnification, and without limiting the
generality thereof:

(a) PROCEEDINGS OTHER THAN PROCEEDINGS BY OR IN THE RIGHT
OF THE COMPANY. The Director shall be entitled to the rights of indemnification
provided in this Section 1(a) if, by reason of his Corporate Status (as
hereinafter defined), he is, or is threatened to be made, a party to or
participant in any Proceeding (as hereinafter defined) other than a Proceeding
by or in the right of the Company. Pursuant to this Section 1(a), the Director
shall be indemnified against all Expenses (as hereinafter defined), judgments,
penalties, fines and amounts paid in settlement actually and reasonably incurred
by him or on his behalf in connection with such Proceeding or any claim, issue
or matter therein, if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Company and, with
respect to any criminal Proceeding, had no reasonable cause to believe his
conduct was unlawful.

(b) PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. The
Director shall be entitled to the rights of indemnification provided in this
Section 1(b) if, by reason of his Corporate Status, he is, or is threatened to
be made, a party to or participant in any Proceeding brought by or in the right
of the Company to procure a judgment in its favor. Pursuant to this Section
1(b), the Director shall be indemnified against all Expenses actually and
reasonably incurred by him or on his behalf in connection with such Proceeding
if he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company; provided, however, that, if
applicable law so provides, no indemnification against such Expenses shall be
made in respect of any claim, issue or matter in such Proceeding as to which the
Director

<PAGE> 2
shall have been finally adjudged to be liable to the Company unless and to the
extent that the Court of Chancery of the State of Delaware shall determine that
such indemnification may be made.

(c) INDEMNIFICATION FOR EXPENSES OF THE DIRECTOR WHERE HE
IS WHOLLY OR PARTLY SUCCESSFUL. Notwithstanding any other provision of this
Agreement, to the extent that the Director is, by reason of his Corporate
Status, a party to and is successful, on the merits or otherwise, in any
Proceeding, he shall be indemnified to the maximum extent permitted by law
against all Expenses actually and reasonably incurred by him or on his behalf in
connection therewith. If the Director is not wholly successful in such
Proceeding but is successful, on the merits or otherwise, as to one or more but
less than all claims, issues or matters in such Proceeding, the Company shall
indemnify the Director against all Expenses actually and reasonably incurred by
him or on his behalf in connection with each successfully resolved claim, issue
or matter. For purposes of this Section and without limitation, the (termination
of any claim, issue or matter in such a Proceeding by dismissal, with or without
prejudice, shall be deemed to be a successful result as to such claim, issue or
matter.

2. ADDITIONAL INDEMNITY. In addition to, and without regard to
any limitations on, the indemnification provided for in Section 1, the Company
shall and hereby does indemnify and hold harmless the Director against all
Expenses, judgments, penalties, fines and amounts paid in settlement actually
and reasonably incurred by him or on his behalf if, by reason of his Corporate
Status he is, or is threatened to be made, a party to or participant in any
Proceeding (including a Proceeding by or in the light of the Company). The only
limitation that shall exist upon the Company's obligations pursuant to this
Agreement shall be that the Company shall not be obligated to make any payment
to the Director that is finally determined (under the procedures, and subject to
the presumptions, set forth in Sections 6 and 7 hereof) to be unlawful under
Delaware law.

3. CONTRIBUTION IN THE EVENT OF JOINT LIABILITY. (a) Whether or
not the indemnification provided in Sections 1 and 2 hereof is available, in
respect of any threatened, pending or completed action, suit or proceeding in
which Company is jointly liable with the Director (or would be jointly liable if
joined in such action, suit or proceeding), Company shall pay, in the first
instance, the entire amount of any judgment or settlement of such action, suit
or proceeding without requiring the Director to contribute to such payment and
the Company hereby waives and relinquishes any right of contribution it may have
against the Director. The Company shall not enter into any settlement of any
action, suit or proceeding in which the Company is jointly liable with the
Director (or would be jointly liable if joined in such action, suit or
proceeding) unless such settlement provides for a full and final release of all
claims asserted against the Director.

(b) Without diminishing or impairing the obligations of
the Company set forth in the preceding subparagraph, if, for any reason, the
Director shall elect or be required to pay all or any portion of any judgment or
settlement in any threatened, pending or completed

2
<PAGE> 3

action, suit or proceeding in which Company is jointly liable with the Director,
(or would be jointly liable if joined in such action, suit or proceeding), the
Company shall contribute to the amount of Expenses, judgments, fines and amounts
paid in settlement actually and reasonably incurred and paid or payable by the
Director in proportion to the relative benefits received by the Company and all
officers, directors or employees of the Company other than the Director who are
jointly liable with him (or would be jointly liable if joined in such action,
suit or proceeding), on the one hand, and the Director, on the other hand, from
the transaction from which such action, suit or proceeding arose; provided,
however, that the proportion determined on the basis of relative benefit may, to
the extent necessary to conform to law, be further adjusted by reference to the
relative fault of the Company and all officers, directors or employees of the
Company other than the Director who are jointly liable with the Director (or
would be jointly liable if joined in such action, suit or proceeding), on the
one hand, and the Director, on the other hand, in connection with the events
that resulted in such Expenses, judgments, fines or settlement amounts, as well
as any other equitable considerations which the law may require to be
considered. The relative fault of the Company and all officers, directors or
employees of the Company other than the Director who are jointly liable with him
(or would be jointly liable if joined in such action, suit or proceeding), on
the one hand, and the Director, on the other hand, shall be determined by
reference to, among other things, the degree to which their actions were
motivated by intent to gain personal profit or advantage, the degree to which
their liability is primary or secondary, and the degree to which their conduct
is active or passive.

(c) The Company hereby agrees to fully indemnify and hold
the Director harmless from any claims of contribution which may be brought by
officers, directors or employees of the Company who may be jointly liable with
the Director.

4. INDEMNIFICATION FOR EXPENSES OF A WITNESS. Notwithstanding any
other provision of this Agreement, to the extent that the Director is, by reason
of his Corporate Status, a witness in any Proceeding to which the Director is
not a party, he shall be indemnified against all Expenses actually and
reasonable incurred by him or on his behalf in connection therewith.

5. ADVANCEMENT OF EXPENSES. Notwithstanding any other provision
of this Agreement, the Company shall advance all reasonable Expenses incurred by
or on behalf of the Director in connection with any Proceeding by reason of the
Director's Corporate Status within 15 days after the receipt by the Company of a
statement or statements from the Director requesting such advance or advances
from time to time, whether prior to or after final disposition of such
Proceeding. Such statement or statements shall reasonably evidence the Expenses
incurred by the Director and shall include or be preceded or accompanied by an
undertaking by or on behalf of the Director to repay any Expenses advanced if it
shall ultimately be determined that the Director is not entitled to be
indemnified against such Expenses. Any advances and undertakings to repay
pursuant to this Section 5 shall be unsecured and interest free. Notwithstanding
the foregoing, the obligation of the Company to advance Expenses pursuant to
this Section 5 shall be subject to the condition that, if, when and to the
extent that the Company

3
<PAGE> 4
determines that the Director would not be permitted to be indemnified under
applicable law, the Company shall be entitled to be reimbursed, within 30 days
of such determination, by him for all such amounts theretofore paid; provided,
however, that if the Director has commenced or thereafter commences legal
proceedings in a court of competent jurisdiction to secure a determination that
he should be indemnified under applicable law, any determination made by the
Company that the Director would not be permitted to be indemnified under
applicable law shall not be binding and the Director shall not be required to
reimburse the Company for any advance of Expenses until a final judicial
determination is made with respect thereto (as to which all rights of appeal
therefrom have been exhausted or lapsed).

6. PROCEDURES AND PRESUMPTIONS FOR DETERMINATION OF ENTITLEMENT
TO INDEMNIFICATION. It is the intent of this Agreement to secure for the
Director rights of indemnity that are as favorable as may be permitted under the
law and public policy of the State of Delaware. Accordingly, the parties agree
that the following procedures and presumptions shall apply in the event of any
question as to whether the Director is entitled to indemnification under this
Agreement:

(a) To obtain indemnification (including, but not limited
to, the advancement of Expenses and contribution by the Company) under this
Agreement, the Director shall submit to the Company a written request, including
therein or therewith such documentation and information as is reasonably
available to the Director and is reasonably necessary to determine whether and
to what extent the Director is entitled to indemnification. The President, any
Vice President or the General Counsel of the Company shall, promptly upon
receipt of such a request for indemnification, advise the Board in writing that
the Director has requested indemnification.

(b) Upon written request by the Director for
indemnification pursuant to the first sentence of Section 6(a) hereof, a
determination, if required by applicable law, with respect to the Director's
entitlement thereto shall be made in the specific case by one of the following
three methods, which shall be at the election of the Director: (1) by a majority
vote of the disinterested directors, even though less than a quorum, or (2) by
independent legal counsel in a written opinion, or (3) by the stockholders.

(c) If the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to Section 6(b)
hereof, the Independent Counsel shall be selected as provided in this Section
6(c). The Independent Counsel shall be selected by the Director (unless the
Director shall request that such selection be made by the Board). The Director
or the Company, as the case may be, may, within 10 days after such written
notice of selection shall have been given, deliver to the Company or to the
Director, as the case may be, a written objection to such selection; provided,
however, that such objection may be asserted only on the ground that the
Independent Counsel so selected does not meet the requirements of "Independent
Counsel" as defined in Section 13(e) of this Agreement, and the objection shall
set forth with particularity the factual basis of such assertion. Absent a
proper and timely objection,

4
<PAGE> 5
the person so selected shall act as Independent counsel. If a written objection
is made and substantiated, the Independent Counsel selected may not serve as
Independent Counsel unless and until such objection is withdrawn or a court has
determined that such objection is without merit. If, within 30 days after
submission by the Director of a written request for indemnification pursuant to
Section 6(a) hereof, no Independent Counsel shall have been selected and not
objected to, either the Company or the Director may petition the Court of
Chancery of the State of Delaware or other court of competent jurisdiction for
resolution of any objection which shall have been made by the Company or the
Director to the other's selection of Independent Counsel and/or for the
appointment as Independent Counsel of a person selected by the court or by such
other person as the court shall designate, and the person with respect to whom
all objections are so resolved or the person so appointed shall act as
Independent Counsel under Section 6(b) hereof. The Company shall pay any and all
reasonable fees and expenses of Independent Counsel incurred by such Independent
Counsel in connection with acting pursuant to Section 6(b) hereof, and the
Company shall pay all reasonable fees and expenses incident to the procedures of
this Section 6(c), regardless of the manner in which such Independent Counsel
was selected or appointed.

(d) In making a determination with respect to entitlement
to indemnification hereunder, the person or persons or entity making such
determination shall presume (unless there is clear and convincing evidence to
the contrary) that the Director is entitled to indemnification under this
Agreement if the Director has submitted a request for indemnification in
accordance with Section 6(a) of this Agreement.

(e) The Director shall be deemed to have acted in good
faith if the Director's action is based on the records or books of account of
the Enterprise, including financial statements, or on information supplied to
the Director by the officers of the Enterprise in the course of their duties, or
on the advice of legal counsel for the Enterprise or on information or records
given or reports made to the Enterprise or the Board by an independent certified
public accountant, by a financial advisor or by an appraiser or other expert
selected with reasonable care by the Enterprise or the Board. In addition, the
knowledge and/or actions, or failure to act, of any director, officer, agent or
employee of the Enterprise shall not be imputed to the Director for purposes of
determining the right to indemnification under this Agreement. Whether or not
the foregoing provisions of this Section 6(e) are satisfied, it shall in any
event by presumed (unless there is clear and convincing evidence to the
contrary) that the Director has at all times acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Company.

(f) The Company acknowledges that a settlement or other
disposition short of final judgment may be successful if it permits a party to
avoid expense, delay, distraction, disruption and uncertainty. In the event that
any action, claim or proceeding to which the Director is a party is resolved in
any manner other than by adverse judgment against the Director (including,
without limitation, settlement of such action, claim or proceeding with or
without payment of money or other consideration) it shall be presumed (unless
there is clear and

5
<PAGE> 6
convincing evidence to the contrary) that the Director has been successful on
the merits or otherwise in such action, suit or proceeding.

(g) If the person, persons, or entity empowered or
selected under Section 6(b) to determine whether the Director is entitled to
indemnification shall not have made a determination within 60 days after receipt
by the Company of the request therefor, the requisite determination of
entitlement to indemnification shall be deemed to have been made and the
Director shall be entitled to such indemnification, absent (i) a misstatement by
the Director of a material fact, or an omission of a material fact necessary to
make the Director's statement not materially misleading, in connection with the
request for indemnification, or (ii) a prohibition of such indemnification under
applicable law; provided, however, that such 60 day period may be extended for a
reasonable time, not to exceed an additional 15 days, if the person, persons or
entity making the determination with respect to entitlement to indemnification
in good faith requires such additional time for the obtaining or evaluating
document and/or information relating thereto; provided, further, that the
foregoing provisions of this Section 6(g) shall not apply if the determination
of entitlement to indemnification is to be made by the stockholders pursuant to
Section 6(b) of this Agreement and if within 15 days after receipt by the
Company of the request for such determination the Board or the Disinterested
Directors, if appropriate, resolve to submit such determination to the
stockholders for their consideration at the next annual meeting thereof and such
determination is made thereat.

(h) The Director shall cooperate with the person, persons
or entity making such determination with respect to the Director's entitlement
to indemnification, including providing to such person, persons or entity upon
reasonable advance request any documentation or information which is not
privileged or otherwise protected from disclosure and which is reasonably
available to the Director and reasonably necessary to such determination. Any
Independent Counsel, member of the Board or Directors, or stockholder of the
Company shall act reasonably and in good faith in making a determination under
the Agreement of the Director's entitlement to indemnification. Any costs or
expenses (including attorneys' fees and disbursements) incurred by the Director
in so cooperating with the person, persons or entity making such determination
shall be borne by the Company (irrespective of the determination as to the
Director's entitlement to indemnification) and the Company hereby indemnifies
and agrees to hold the Director harmless therefrom.

7. REMEDIES.

(a) In the event that (i) a determination is made
pursuant to Section 6 of this Agreement that the Director is not entitled to
indemnification under this Agreement, (ii) advancement of Expenses is not timely
made pursuant to Section 5 of this Agreement, (iii) no determination of
entitlement to indemnification shall have been made pursuant to Section 6(b) of
this Agreement within 90 days after receipt by the Company of the request for
indemnification, (iv) payment of indemnification is not made pursuant to this
Agreement within ten days after receipt by the Company of a written request
therefor, or (v) payment of indemnification is not

6
<PAGE> 7
made within ten days after a determination has been made by the Director is
entitled to indemnification or such determination is deemed to have been made
pursuant to Section 6 of this Agreement and such matter has not been cured, the
Director shall be entitled to an adjudication in an appropriate court of the
State of Delaware, or in any other court of competent jurisdiction, of his
entitlement to such indemnification. The Director shall commence such proceeding
seeking an adjudication within 180 days following the date on which the Director
first has the right to commence such proceeding pursuant to this Section 7(a).
The Company shall not oppose the Director's right to seek any such adjudication.

(b) In the event that a determination shall have been
made pursuant to Section 6(b) of this Agreement that the Director is not
entitled to indemnification, any judicial proceeding commenced pursuant to this
Section 7 shall be conducted in all respects as a de novo trial, on the merits
and the Director shall not be prejudiced by reason of that adverse
determination.

(c) If a determination shall have been made pursuant to
Section 6(b) of this Agreement that the Director is entitled to indemnification,
the Company shall be bound by such determination in any judicial proceeding
commenced pursuant to this Section 7, absent a prohibition of such
indemnification under applicable law.

(d) In the event that the Director, pursuant to this
Section 7, seeks a judicial adjudication of his right under, or to recover
damages for breach of, this Agreement, or to recover under any directors' and
officers' liability insurance policies maintained by the Company, the Company
shall pay on his behalf, in advance, any and all expenses (of the types
described in the definition of Expenses in Section 13 of this Agreement)
actually and reasonably incurred by him in such judicial adjudication,
regardless of whether the Director ultimately is determined to be entitled to
such indemnification, advancement of expenses or insurance recovery.

(e) The Company shall be precluded from asserting in any
judicial proceeding commenced pursuant to this Section 7 that the procedures and
presumptions of this Agreement are not valid, binding and enforceable and shall
stipulate in any such court that the Company is bound by all the provisions of
this Agreement.

8. NON-EXCLUSIVITY; SURVIVAL OF RIGHTS; INSURANCE; SUBROGATION.

(a) The rights of indemnification as provided by this
Agreement shall not be deemed exclusive of any other rights to which the
Director may at any time be entitled under applicable law, the Restated
Certificate of Incorporation of the Company, the Bylaws, any agreement, a vote
of stockholders or a resolution of directors, or otherwise. No amendment,
alteration or repeal of this Agreement or of any provision hereof shall limit or
restrict any right of the Director under this Agreement in respect of any action
taken or omitted by the Director in his Corporate Status prior to such
amendment, alteration or repeal. To the extent that a change in the

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<PAGE> 8
law, whether by statute or judicial decision, permits greater indemnification
than would be afforded currently under the Restated Certificate of Incorporation
and this Agreement, it is the intent of the parties hereto that the Director
shall enjoy by this Agreement the greater benefits so afforded by such change.
No right or remedy herein conferred is intended to be exclusive of any other
right or remedy, and every other right and remedy shall be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other right or remedy.

(b) To the extent that the Company maintains an insurance
policy or policies providing liability insurance for directors, officers,
employees, or agents or fiduciaries of the Company or of any other corporation,
partnership, joint venture, trust employee benefit plan or other enterprise
which such person serves at the request of the Company, the Director shall be
covered by such policy or policies in accordance with its or their terms to the
maximum extent of the coverage available for any such director, officer,
employee or agent under such policy or policies.

(c) In the event of any payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all the rights of
recovery of the Director, who shall execute all papers required and take all
action necessary to secure such rights, including execution of such documents as
are necessary to enable the Company to bring suit to enforce such rights.

(d) The Company shall not be liable under this Agreement
to make any payment of amounts otherwise indemnifiable hereunder if and to the
extent that the Director has otherwise actually received such payment under any
insurance policy, contract, agreement or otherwise.

9. EXCEPTION TO RIGHT OF INDEMNIFICATION. Notwithstanding any
other provision of this Agreement, the Director shall not be entitled to
indemnification under this Agreement with respect to any Proceeding brought by
him, or any claim therein, unless (a) the bringing of such Proceeding or making
of such claim shall have been approved by the Board or (b) such Proceeding is
being brought by the Director to assert his rights under this Agreement.

10. DURATION OF AGREEMENT. All agreements and obligations of the
Company contained herein shall continue during the period the Director is
serving as a member of the Board or as an officer of the Company (or is or was
serving at the request of the Company as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise)
and shall continue thereafter so long as the Director shall be subject to any
Proceeding (or any proceeding commenced under Section 6 hereof) by reason of his
Corporate Status, whether or not he is acting or serving in any such capacity at
the time any liability or expense is incurred for which indemnification can be
provided under this Agreement. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the parties

8
<PAGE> 9
hereto and their respective successors (including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business or assets of the Company), assigns, spouses,
heirs, executors and personal and legal representatives. This Agreement shall
continue in effect regardless of whether the Director continues to serve as a
member of the Board or as an officer of the Company or any other enterprise at
the Company's request.

11. SECURITY. To the extent requested by the Director and approved
by the Board, the Company may at any time and from time to time provide security
to the Director for the Company's obligations hereunder through an irrevocable
bank line of credit, funded trust or other collateral. Any such security, once
provided to the Director, may not be revoked or released without the prior
written consent of the Director.

12. ENFORCEMENT.

(a) The Company expressly confirms and agrees that it has
entered into this Agreement and assumed the obligations imposed on it hereby in
order to induce the Director to continue to serve as a member of the Board, and
the Company acknowledges that the Director is relying upon this Agreement in
continuing his service as a member of the Board.

(b) This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings, oral, written and implied,
between the parties hereto with respect to the subject matter hereof.

13. DEFINITIONS. For purposes of this Agreement:

(a) "Corporate Status" describes the status of a person
who is or was a member of the Board or an officer of the Company.

(b) "Disinterested Director" means a director of the
Company who (i) is not and was not a party to the Proceeding in respect of which
indemnification is sought by the Director and (ii) does not derive a personal or
financial benefit (other than as a shareholder) from the Proceeding in which
indemnification is sought.

(c) "Enterprise" shall mean the Company and any other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise of which the Director is or was serving at the express written
request of the Company as a director, officer, employee, agent or fiduciary.

(d) "Expenses" shall include all reasonable attorneys'
fees, retainers, court costs, transcript costs, fees of experts, witness fees,
travel expenses, duplicating costs, printing and binding costs, telephone
charges, postage, delivery service fees, and all other

9
<PAGE> 10
disbursements or expenses of the types customarily incurred in connection with
prosecuting, defending, preparing to prosecute or defend, investigating,
participating, or being or preparing to be a witness in a Proceeding.

(e) "Independent Counsel" means a law firm, or a member
of a law firm, that is experienced in matters of corporation law and neither
presently is, nor in the past five years has been, retained to represent: (i)
the Company or the Director in any matter material to either such party (other
than with respect to matters concerning the Director under this Agreement), or
(ii) any other party to the Proceeding giving rise to a claim for
indemnification hereunder. Notwithstanding the foregoing, the term "Independent
Counsel" shall not include any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of interest in
representing either the Company or the Director in an action to determine the
Director's rights under this Agreement. The Company agrees to pay the reasonable
fees of the Independent Counsel referred to above and to fully indemnify such
counsel against any and all Expenses, claims, liabilities and damages arising
out of or relating to this Agreement or its engagement pursuant hereto.

(f) "Proceeding" includes any threatened, pending or
completed action, suit, arbitration, alternate dispute resolution mechanism,
investigation, inquiry, administrative hearing or any other actual, threatened
or completed proceeding, whether brought by or in the right of the Company or
otherwise and whether civil, criminal, administrative or investigative, in which
the Director was, is or will be involved as a party or otherwise, by reason of
the fact that the Director is or was a member of the Board or an officer of the
Company, by reason of any action taken by him or of any inaction on his part
while acting as a member of the Board, or by reason of the fact that he is or
was serving at the request of the Company as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise; in each case whether or not he is acting or serving in any such
capacity at the time any liability or expense is incurred for which
indemnification can be provided under this Agreement; and excluding one
initiated by the Director pursuant to Section 6 of this Agreement to enforce his
rights under this Agreement.

14. SEVERABILITY. If any provision or provisions of this Agreement
Shall be held by a court of competent jurisdiction to be invalid, void, illegal
or otherwise unenforceable for any reason whatsoever: (a) the validity, legality
and enforceability of the remaining provisions of this Agreement (including
without limitation, each portion of any section of this Agreement containing any
such provision held to be invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall not in any way be affected or impaired
thereby and shall remain enforceable to the fullest extent permitted by law; and
(b) to the fullest extent possible, the provisions of this Agreement (including,
without limitation, each portion of any section of this Agreement containing any
such provision held to be invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall be construed so as to give effect to
the intent manifested thereby.

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<PAGE> 11
15. MODIFICATION AND WAIVER. No supplement, modification,
termination or amendment of this Agreement shall be binding unless executed in
writing by the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provisions
hereof (whether or not similar) nor shall such waiver constitute a continuing
waiver.

16. NOTICE BY DIRECTORS. The Director agrees promptly to notify
the Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification covered hereunder. The failure
to so notify the Company shall not relieve the Company of any obligation which
it may have to the Director under this Agreement or otherwise.

17. NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by and receipted for by the party to whom said
notice or other communication shall have been directed (ii) sent by nationally
recognized overnight courier or if (iii) mailed by certified or registered mail
with postage prepaid, on the third business day after the date on which it is so
mailed:

(a) If to the Director, to:

_____________________________________

with a copy to:

_____________________________________

(b) If to the Company, to:

Cyrk, Inc.
3 Pond Road
Gloucester, MA 01930
Attn: Corporate Secretary

<PAGE> 12
with a copy to

Cameron Read, Esq.
Choate, Hall & Stewart
Exchange Place
53 State Street
Boston, MA 02109

or to such other address as may have been furnished to the Director by the
Company or to the Company by the Director, as the case may be.

18. IDENTICAL COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same Agreement.
Only one such counterpart signed by the party against whom enforceability is
sought needs to be produced to evidence the existence of this Agreement.

19. HEADINGS. The headings of the paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof.

20. GOVERNING LAW. The parties agree that this Agreement shall be
governed by, and construed and enforced in accordance with, the laws of the
State of Delaware without application of the conflict of laws principles
thereof.

<PAGE> 13

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

CYRK, INC

By
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Name:
Title

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