Contact: Michael McGraw LaForce & Stevens 212-242-9353

Boston, Ma., October 19, 2000 — SmartBargains, the online shopping destination featuring high-quality, brand name merchandise at discount prices, announced that it has secured $33 million in first round funding. Led by Highland, the financing round also included America Online, Dorset Capital, General Catalyst, Berkshire Partners, and Madison Dearborn and the Gordon Brothers Group. The company plans to use the funds to expand its business development efforts and to improve internal operating efficiency.

SmartBargains is delivering a new consumer retailing model that focuses on low customer acquisition cost, high inventory turnaround, and retail liquidation expertise. The SmartBargains.com Web site represents the company’s first distribution channel, which will subsequently be expanded to include additional complimentary channels.

SmartBargains provides consumers with exceptional values on clothing and accessories, jewelry, consumer electronics, sporting goods, and items for the kitchen and home. The company has recently reached an agreement with America Online to be the anchor tenant of AOL Bargain Basement, a newly launched domain of Shop@AOL.

"We're committed to making e-tailing successful by giving manufacturers and vendors a highly efficient distribution channel for close-out products," said John Kerney, president of SmartBargains. "Our partnership with America Online allows us to have immediate credibility and broad-scale distribution. Our investors recognize that the $50 billion domestic close-out market represents tremendous opportunity for SmartBargains."

"SmartBargains has identified and developed the next generation retailing model. Its innovative approach to inventory liquidation, strength of its management team, and partnerships with the leading online consumer portal, validate the company’s winning business strategy," said Robert Higgins, managing general partner, Highland.

About SmartBargains SmartBargains is the future of bargain shopping, combining the thrill of great deals on brand-name products and the excitement of rapidly changing merchandise with the convenience of home shopping. It provides customers with a fun and easy way to shop for branded and quality merchandise at prices up to 80% off retail, making it the ultimate bargain-shopping destination.

SmartBargains launched in September 2000 and was founded by some of the most seasoned leaders in retailing, technology, and marketing. Michael Frieze, chairman and acting CEO of SmartBargains, is also CEO of Gordon Brothers Group, the leading liquidator of excess consumer products. SmartBargains’ president, John Kerney, is the former COO of Gordon Brothers.

SmartBargains is unique in its ability to bring consumers the best prices on the best products by forming powerful strategic partnerships. These include Gordon Brothers Group and America Online.

About Gordon Brothers Founded in 1903, Gordon Brothers Group–a privately held company based in Boston–provides advisory, real estate, inventory liquidation, and financial services to retailers within the context of mergers, acquisitions, store relocations and strategic turnarounds. It also provides debt and equity financing for retail companies.

During the past year, Gordon Brothers managed more than 2,100 stores and converted over $5 billion worth of inventory and other assets into cash for its clients.

About Highland Capital Partners Founded in 1988, Highland Capital Partners is a leading venture capital firm focused on building companies in the Internet/E-commerce, communications, information technology and medical markets. With over $1 billion under management, Highland has invested in and worked to create such Internet firms as Ask Jeeves, Be Free, CheckFree, ChemConnect, eToys, Evoke Communications, Gamesville.com, LivePerson, Lycos, Mainspring, MapQuest, Medscape, Mercata, NextCard, RoweCom, Staples.com, Telcobuy.com, WebLine Communications and Wit Capital.