Exhibit 10.1

 
 
 
 
 
 
 
 

 

 
dELiA*s, INC.
Employment Agreement for Michele Donnan Martin
 
 

 

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Table of Contents

dELiA*s, INC.
Employment Agreement for Michele Donnan Martin
 

   
Page 
     
1.
Definitions
1
2.
Term of Employment
2
3.
Position, Duties and Responsibilities
2
4.
Base Salary
2
5.
Annual Incentive Awards
3
6.
Long-Term Stock Incentive Programs
3
7.
Employee Benefit Programs
3
8.
Disability
3
9.
Reimbursement of Business and Other Expenses
4
10.
Termination of Employment
4
11.
Confidentiality; Cooperation with Regard to Litigation
7
12.
Non-competition
8
13.
Non-solicitation
9
14.
Remedies
9
15.
Resolution of Disputes
9
16.
Indemnification
10
17.
Effect of Agreement on Other Benefits
10
18.
Assignability; Binding Nature
11
19.
Representation
11
20.
Entire Agreement
11
21.
Amendment or Waiver
11
22.
Severability
11
23.
Survivorship
11
24.
Beneficiaries/References
12
25.
Governing Law/Jurisdiction
12
26.
Notices
12
27.
Headings
12
28.
Counterparts
12
29.
Tax Matters
 12

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EMPLOYMENT AGREEMENT
 
AGREEMENT, made and entered into as of the 28th day of January, 2008 by and
between dELiA*s, Inc., a Delaware corporation (together with its successors and
assigns permitted under this Agreement, the “Company”), and Michele Donnan
Martin (the “Executive”).
 
W I T N E S S E T H :
 
WHEREAS, the Company desires to employ the Executive pursuant to an agreement
embodying the terms of such employment (this “Agreement”) and the Executive
desires to enter into this Agreement and to accept such employment, subject to
the terms and provisions of this Agreement;
 
NOW, THEREFORE, in consideration of the premises and mutual covenants contained
herein and for other good and valuable consideration, the receipt of which is
mutually acknowledged, the Company and the Executive (individually a “Party” and
together the “Parties”) agree as follows:
 
1.            Definitions.
 
 
(a)
“Amended and Restated 2005 Stock Incentive Plan” shall have the meaning set
forth in Section 6 below.

 
(b)           “Base Salary” shall have the meaning set forth in Section 4 below.
 
(c)           “Board” shall mean the Board of Directors of the Company.
 
(d)           “Cause” shall have the meaning set forth in Section 10(b) below.
 
(e)           “Confidential Information” shall have the meaning set forth in
Section 11 below.
 
 
(f)
“Constructive Termination Without Cause” shall have the meaning set forth in
Section 10(c) below.

 
(g)           “Effective Date” shall have the meaning set forth in Section 2
below.
 
(h)           “MIP” shall have the meaning set forth in Section 5 below.
 
 
(i)
“Original Term of Employment” shall have the meaning set forth in Section 2
below.

 
(j)           “Renewal Term” shall have the meaning set forth in Section 2
below.
 
(k)           “Restriction Period” shall have the meaning set forth in Section
12 below.
 
 
(l)
“Severance Period” shall have the meaning set forth in Section 10(c)(ii) below,
except as provided otherwise in Section 10(e) below.

 
(m)           “Subsidiary” shall have the meaning set forth in Section 11 below.
 
(n)           “Term of Employment” shall have the meaning set forth in Section 2
below.
 
 
(o)
“Termination Without Cause” shall have the meaning set forth in Section 10(c)
below.

 

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2.            Term of Employment.
 
(a)           The term of the Executive's employment under this Agreement shall
commence on January 28, 2008 (the “Effective Date”) and end on the fourth
anniversary of such date, unless Executive’s employment ceases earlier pursuant
to the terms of this Agreement (the “Original Term of Employment”).  The
Original Term of Employment shall be automatically renewed for successive
one-year terms (the “Renewal Terms”) unless at least 180 days prior to the
expiration of the Original Term of Employment or any Renewal Term, either Party
notifies the other Party in writing that Executive is electing to terminate this
Agreement at the expiration of the then current Term of Employment.  “Term of
Employment” shall mean the Original Term of Employment and all Renewal Terms.
 
(b)           Notwithstanding anything in this Agreement to the contrary, at
least one year prior to the expiration of the Original Term of Employment, the
Parties shall meet to discuss this Agreement and attempt to negotiate a mutually
acceptable new employment agreement or amendment to this Agreement, governing
the period subsequent to the Original Term of Employment.  Nothing in this
subparagraph 2(b) shall obligate Company or Executive to enter into a new
employment agreement or an amendment of this Agreement.
 
3.            Position, Duties and Responsibilities.
 
(a)           Generally.  Executive shall serve initially as President of the
Company’s dELiA*s Brand (Retail and Direct) reporting to the Company’s Chief
Executive Officer.  Initially, Executive shall be responsible for merchandising,
art and visual design, fashion and styling  direction and trend and color
direction on all dELiA*s Brand merchandise whether in the catalog, on dELiA*s
website or in the stores.  Within a reasonable period of time as determined by
Company, Executive’s responsibilities are expected to expand to include all
creative and design elements as they pertain to the design and creative
direction of the dELiA*s catalog, as well as visual merchandising of the
stores.   Executive shall have and perform such duties, responsibilities, and
authorities as shall be reasonably assigned by the Company from time to time and
as are consistent with the above-mentioned position, which may be modified as
the Company deems necessary in its reasonable discretion.  Executive shall
devote substantially all of Executive’s business time and attention (except for
periods of vacation or absence due to illness), and Executive’s best efforts,
abilities, experience, and talent to Executive’s position and the businesses of
the Company in accordance with all Company policies.
 
(b)           Other Activities.  Anything herein to the contrary
notwithstanding, nothing in this Agreement shall preclude the Executive from (i)
engaging in reasonable charitable activities and community affairs and (ii)
managing Executive’s personal investments and affairs, provided that such
activities do not materially interfere with the proper performance of
Executive’s duties and responsibilities under this Agreement and not otherwise
detrimental to the interests of the Company.  Unless approved in writing by the
Board of the Company, the Executive may not serve on the board of directors of
any corporation or the board of any association and/or charitable organization.
 
 
4.
Base Salary.

 
The Executive shall be paid an annualized salary, payable in accordance with the
regular payroll practices (including bi-weekly pay periods) of the Company, of
not less than $500,000, less applicable withholdings, subject to annual review
thereafter at the start of each fiscal year for increase at the discretion of
the Compensation Committee of the Board (“Base Salary”).  Executive’s first
annual review is expected to occur on or about March, 2009.
 

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5.            Annual Incentive Awards.
 
(a)           Subject to the terms and conditions of the plan that shall govern
eligibility and participation, Executive shall participate in the Company’s
Management Incentive Plan each year during the Term of Employment (the “MIP”)
with a target annual incentive award opportunity of no less than 60% of Base
Salary or in a successor plan to the MIP that provides the Executive with a
substantially equivalent opportunity.  Payment of annual incentive awards shall
be made at the same time that other participants in the MIP receive their
incentive awards.
 
(b)           Additionally, the minimum amount of the annual incentive award
payable to Executive under the 2008 MIP for the Company’s fiscal year ending
January 31, 2009 shall be ($300,000), subject to the terms and conditions of the
plan that shall govern eligibility and participation.  Such amount shall be
payable as follows: 40% of the minimum bonus ($120,000) will be paid in August,
2008 and the remaining 60% of the minimum bonus amount ($180,000) will be paid
on or about March,  2009.  Such minimum amount shall be pro-rated for the amount
of time Executive is employed by the Company for fiscal year 2008 if Executive
is not employed by the Company for the entire 2008 fiscal year.
 
6.            Long-Term Stock Incentive Programs.
 
(a)           General/Options.  Subject to the terms and conditions of the
Amended and Restated 2005 Stock Incentive Plan governing eligibility and
participation, Executive shall be eligible to participate in and to receive
stock incentive awards under the Amended and Restated 2005 Stock Incentive Plan
and any successor plan.  Executive shall also receive an initial stock option
grant of 275,000 stock options at an exercise price equal to the closing price
of dELiA*s stock on NASDAQ on the day prior to the Effective Date.  Such stock
options shall vest in four equal installments of 68,750 on each of the 1st, 2nd,
3rd and 4th anniversaries of the Effective Date.
 
(b)           Restricted Stock.  On Effective Date, the Company shall grant
Executive a restricted stock grant of 25,000 shares of the Company’s common
stock, which restrictions shall lapse in four (4) equal installments of 6,250
shares on each of the 1st, 2nd, 3rd and 4th anniversaries of the Effective Date.
 
7.            Employee Benefit Programs.
 
During the Term of Employment, the Executive shall be entitled to participate in
such employee pension and welfare benefit plans and programs of the Company as
are made available to the Company’s employees generally, as such plans or
programs may be in effect or modified from time to time, including, without
limitation, health, medical, dental, long-term disability, life insurance,
401(k) with Company match and employee discounts.  Executive will be eligible
for four (4) weeks paid vacation as well as Company observed holidays, five (5)
sick days and three (3) personal days in accordance with Company policy.  The
terms of the Company’s official plan documents shall govern the terms of
Executive’s eligibility and participation in Company’s benefit plans.
 
8.            Disability.
 
(a)           During the Term of Employment, and subject to the terms and
conditions on eligibility and participation as set forth in the Company’s
Long-Term Disability Plan documents, the Executive shall be entitled to
disability coverage as described in this Section 8(a).  In the event the
Executive becomes disabled, as that term is defined under the Company’s
Long-Term Disability Plan, the Executive shall be entitled to receive benefits
pursuant to the Company’s Long-Term Disability Plan in place of Executive’s Base
Salary and any other employee benefits other than for disabled employees in an
amount pursuant to the Company’s Long-Term Disability Plan in effect at the
commencement date of the
 

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disability (“Commencement Date”) for a period beginning on the Commencement Date
and ending with the Executive’s attainment of age 65.  If (i) the Executive
ceases to be disabled  (as determined in accordance with the terms of the
Long-Term Disability Plan) during the Term of Employment, (ii) Executive’s
position or another senior executive position is then vacant and (iii) the
Company requests in writing that Executive resume such position, Executive may
elect to resume such position by written notice to the Company within 15 days
after the Company delivers its request.  If Executive resumes such position,
Executive shall thereafter be entitled to Executive’s Base Salary at the annual
rate in effect at the Commencement Date and, for the year Executive resumes
Executive’s position, a pro rata annual incentive award and to participate in
any other employee benefit programs outlined in Section 6 and 7 of this
Agreement that are then in effect.  If Executive ceases to be disabled and does
not resume Executive’s position in accordance with the preceding sentence,
Executive shall be treated as if Executive voluntarily terminated Executive’s
employment pursuant to Section 10(e) as of the date the Executive ceases to be
disabled.  If the Executive is not offered Executive’s position or another
executive position after Executive ceases to be disabled during the Term of
Employment, Executive shall be treated as if Executive’s employment was
terminated without Cause pursuant to Section 10(c) as of the date the Executive
ceases to be disabled.
 
(b)           Subject to the applicable plan documents,  during the period the
Executive is receiving disability benefits pursuant to Section 8(a) above,
Executive shall continue to be treated as an employee for purposes of all
employee benefits and entitlements in which Executive was participating on the
Commencement Date, including without limitation, the benefits and entitlements
referred to in Sections 6 and 7 above, except that the Executive shall not be
entitled to receive any annual salary increases or any new stock incentive
awards following the Commencement Date.
 
 
9.
Reimbursement of Business and Other Expenses.

 
The Executive is authorized to incur reasonable  expenses in carrying out
Executive’s duties and responsibilities under this Agreement, and the Company
shall promptly reimburse Executive for all business expenses incurred in
connection therewith, subject to documentation in accordance with the Company’s
travel and expense reimbursement policy.
 
             10.             Termination of Employment.
 
(a)           Termination Due to Death.  In the event the Executive’s employment
with the Company is terminated due to Executive’s death, Executive’s estate or
Executive’s beneficiaries, as the case may be, shall be entitled to and their
sole remedies under this Agreement shall be:
 
(i)           Base Salary through the date of death, which shall be paid in a
single lump sum not later than 15 days following the Executive’s death;
 
(ii)           the right to exercise all outstanding stock options that are
vested as of the date of death for a period of one year  following death or for
the remainder of the exercise period, if less;
 
(iii)           the restrictions shall lapse on all shares of restricted stock
awarded where restrictions have not yet lapsed; and
 
(iv)           other or additional benefits then due or earned in accordance
with applicable plans and programs of the Company.
 
(b)           Termination by the Company for Cause.
 
(i)            “Cause” shall mean:
 
 
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(A)           Executive’s conviction of, entrance of a plea of guilty or nolo
contendere to, a felony unless the Executive’s conduct is so severe or the
threat to the Company’s reputation requires the Company to terminate the
Executive immediately in its reasonable discretion or business judgement; or
 
(B)           fraudulent conduct by Executive in connection with the business
affairs of the Company; or
 
(C)           theft, embezzlement, or other criminal misappropriation of funds
by Executive from the Company (other than good faith expense account disputes);
or
 
(D)           Executive’s willful misconduct, which has, or would if generally
known, material adversely affect the goodwill, business, or reputation of the
Company; or
 
(E)           Executive’s material breach of this Agreement.
 
For purposes of this Agreement, an act or failure to act on Executive’s part
shall be considered “willful” if it was done or omitted to be done by Executive
not in good faith, and shall not include any act or failure to act resulting
from any incapacity of Executive.
 
(ii)           In the event the Company terminates the Executive’s employment
for Cause, Executive shall be entitled to and Executive‘s sole remedies under
this Agreement shall be:
 
(A)           Base Salary through the date of the termination of Executive’s
employment for Cause, which shall be paid in a single lump sum not later than 15
days following the Executive s termination of employment; and
 
(B)           other or additional benefits, to the extent then due or earned in
accordance with applicable plans or programs of the Company.
 
(c)           Termination Without Cause or Constructive Termination Without
Cause.  In the event the Executive’s employment with the Company is terminated
without Cause (which termination shall be effective as of the date specified by
the Company in a written notice to the Executive), other than due to death, or
in the event there is a Constructive Termination Without Cause (as defined
below), the Executive shall be entitled to and Executive’s sole remedies under
this Agreement shall be:
 
(i)           Base Salary through the date of termination of the Executive’s
employment, which shall be paid in a single lump sum not later than 15 days
following the Executive’s termination of employment;
 
(ii)           Base Salary, at the annualized rate in effect immediately prior
to the date of communication (verbal or otherwise) from Company to Executive of
termination of the Executive’s employment (or in the event a reduction in Base
Salary is the basis for a Constructive Termination Without Cause, then the Base
Salary in effect immediately prior to such reduction), for a period of 12 months
following such termination to be paid, less applicable withholdings, in
accordance with the Company’s standard payroll cycle (the “Severance Period”);
provided further that the salary continuation payment under this Section
10(c)(ii) shall be in lieu of any salary continuation arrangements under any
other severance program of the Company or any other agreement between the
Executive and the Company;
 
(iii)           (A) the tranche of stock options which are scheduled to vest on
the next succeeding anniversary date of the Effective Date after the date of
termination shall vest as of the date of termination and (B) the right to
exercise all outstanding stock options that are vested as of the date of
termination during the 90-day period following termination or for the remainder
of the exercise period, if less;
 
 
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(iv)          (A)           the restrictions on the tranche of shares of
restricted shares which are scheduled to lapse on the next succeeding
anniversary of the Effective Date after the date of termination shall lapse as
of the date of termination and (B) all other shares of restricted stock awarded
where restrictions have not yet lapsed as of the date of termination shall be
cancelled as of the date of termination;
 
(v)           continued participation in all medical, and dental plans at the
same benefit level at which Executive was participating on the date of the
termination of Executive’s employment, subject to the terms and conditions of
the official plan documents, until the earlier of:
 
(A)           the end of the Severance Period; or
 
(vi)           other or additional benefits then due or earned in accordance
with applicable plans and programs of the Company.
 
“Termination Without Cause” shall mean the Executive’s employment is terminated
by the Company for any reason other than Cause (as defined in Section 10 (b)) or
due to death.
 
 “Constructive Termination Without Cause” shall mean a termination of the
Executive’s employment at Executive’s initiative as provided in this Section
10(c) following the occurrence, without the Executive’s written consent, of one
or more of the following events (except as a result of a prior termination):
 
(A)           a material reduction in Executive’s title or a material reduction
of Executive’s duties or responsibilities;
 
(B)           a material decrease in annual Base Salary, or target annual
incentive award opportunity below 60% of Base Salary; or
 
(C)           a failure by the Company to perform any material obligation under,
or breach by the Company of any material provision of, this Agreement that is
not cured within 30 days of receipt of written notice from Executive.
 
 
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(d)           Voluntary Termination.
 
(i)           In the event of a termination of employment by the Executive on
Executive’s own initiative after delivery of 90 days advance written notice,
other than a termination due to death or Constructive Termination Without Cause,
the Executive shall have the same entitlements as provided in Section 10(b)(ii)
above for a termination for Cause.  Notwithstanding any implication to the
contrary, the Executive shall not have the right to terminate Executive’s
employment with the Company during the Term of Employment except in the event of
a Constructive Termination Without Cause and any voluntary termination of
employment during the Term of Employment in violation of this Agreement shall be
considered a material breach.  In the event the Executive becomes disabled, as
that term is defined under the Company’s Long Term Disability Plan, the
Executive’s termination of employment shall be governed by the terms of Section
8 of this Agreement.
 
(ii)           If, and only if, there is a change in or replacement of the
Company’s Chief Executive Officer during the Original Term of Employment then:
 
(A)           Within seven (7) days after the expiration of the six (6) month
period after the date of such change or replacement, Executive may provide the
Company with a 90-day notice of termination on the Executive’s own initiative;
and
 
(B)           Company, at its option and in its sole discretion, shall select
either:
 
(1)           Upon termination to provide Executive with the entitlements
contained in Section 10(c) of this Agreement and the provisions of Section 12
shall continue to apply; or
 
(2)           Upon termination, to provide Executive with the entitlements
contained in Section 10(b)(ii) of this Agreement and the provisions of Section
12 of this Agreement shall not apply; provided, however that all other
provisions of this Agreement which apply after termination shall continue to
apply.
 
(e)           No Mitigation; No Offset.  In the event of any termination of
employment under this Section 10, the Executive shall not be obligated to seek
other employment; amounts due the Executive under this Agreement shall not be
offset by any remuneration attributable to any subsequent employment that
Executive may obtain.
 
(f)           Nature of Payments.  Any amounts due under this Section 10 are in
the nature of severance payments considered to be reasonable by the Company and
are not in the nature of a penalty.
 
(g)           Exclusivity of Severance Payments.  Upon termination of the
Executive’s employment during the Term of Employment, Executive shall not be
entitled to any severance payments or severance benefits from the Company or any
payments by the Company on account of any claim by Executive of wrongful
termination, including, but not limited to, claims under any federal, state or
local human and civil rights or labor laws, other than the payments and benefits
provided in this Section 10.
 
                                (h)           Release of Employment Claims.  The
Executive agrees, as a condition to receipt of the termination payments and
benefits provided for in this Section 10, that Executive will execute a release
agreement, in a form reasonably satisfactory to the Company, releasing any and
all claims arising out of the Executive’s employment (other than enforcement of
this Agreement).

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                11.          Confidentiality; Cooperation with Regard to
Litigation.
 
(a)           During the Term of Employment and thereafter, the Executive shall
not, without the prior written consent of the Company, disclose to anyone or
make use of any Confidential Information, except when required to do so  in the
normal course of conducting business on behalf of the Company, by legal process,
by any governmental agency having supervisory authority over the business of the
Company or by any administrative or legislative body (including a committee
thereof) that requires Executive to divulge, disclose or make accessible such
information.  In the event that the Executive is so ordered, Executive shall
give prompt prior written notice to the Company in order to allow the Company
the opportunity to object to or otherwise resist such order and consents and
will not object to the Company’s standing to consent or seek protection relating
to any such order.
 
(b)           During the Term of Employment and thereafter, Executive shall not
disclose the existence or contents of this Agreement beyond what is disclosed in
the proxy statement or documents filed with the government unless and to the
extent such disclosure is required by law, by a governmental agency, or in a
document required by law to be filed with a governmental agency or in connection
with enforcement of his rights under this Agreement.  In the event that
disclosure is so required, the Executive shall give prompt prior written notice
to the Company in order to allow the Company the opportunity to object to or
otherwise resist such requirement.  This restriction shall not apply to such
disclosure by Executive to members of Executive’s immediate family, Executive’s
tax, legal or financial advisors, any lender or tax authorities or to potential
future employers to the extent necessary, each of whom shall be advised not to
disclose such information.  Similarly, Executive acknowledges that the Company
shall have the right to advise potential or actual future employers of Executive
of her post-employment obligations under this Agreement.
 
(c)           “Confidential Information” shall mean all information that is not
known or available to the public concerning the business of the Company or any
Subsidiary relating to any of their products, product development, designs,
costing, marketing plans and strategies, expansion plans and strategies, trade
secrets, customers, suppliers, finances, and business plans and strategies.  For
this purpose, information known or available generally within the trade or
industry of the Company or any Subsidiary shall be deemed to be known or
available to the public.  Confidential Information shall include information
that is, or becomes, known to the public as a result of a breach by the
Executive of the provisions of Section 11(a) above.
 
(d)           “Subsidiary” shall mean any corporation controlled directly or
indirectly by the Company and any affiliate of the Company.
 
(e)           At any time during the Term of Employment when requested by the
Company, or immediately upon Executive’s cessation of employment with the
Company, Executive shall return all Company property to the Company, including,
without limitation all Company issued computers, laptops, PDAs, Blackberries or
other Company property or Confidential Information.
 
(f)           The Executive agrees to cooperate with the Company, during the
Term of Employment and thereafter (including following the Executive’s
termination of employment for any reason), by making himself or herself
available to testify on behalf of the Company or any Subsidiary or affiliate of
the Company, in any action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, and to assist the Company, or any Subsidiary
or affiliate of the Company, in any such action, suit, or pro­ceeding, by
providing information and meeting and consulting with the Board or its
representa­tives or counsel, or representatives or counsel to the Company, or
any Subsidiary or affiliate of the Company, requesting Executive’s provision of
testimony or assistance.
 

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12.          Non-competition.
 
(a)           During the Restriction Period (as defined in Section 12(b) below)
and in consideration for any payments pursuant to Section 10, the Executive
shall not engage in Competition with the Company or any
Subsidiary.  “Competition” shall mean engaging in any activity, except as
provided below, for a Competitor of the Company or any Subsidiary, whether as an
employee, consultant, principal, agent, officer, director, partner, shareholder
(except as a less than one percent shareholder of a publicly traded company) or
otherwise.  A “Competitor” shall mean any designer, manufacturer, wholesaler or
retailer which designs, manufactures, markets or sells in the United States
specialty apparel, clothing or accessories to girls and women between the ages
of 11 and 25 (“Competitive Business”) and (i) operates stores that engage in the
Competitive Business within seventy-five, or (75) miles of any store location of
the Company, or (ii) operates a catalog business that engages in the Competitive
Business or (iii) operates an e-commerce business that engages in the
Competitive Business, including but not limited to, those listed on Exhibit A
annexed hereto.  If the Executive commences employment or becomes a consultant,
principal, agent, officer, director, partner, or shareholder of any entity that
is not a Competitor at the time the Executive initially becomes employed or
becomes a consultant, principal, agent, officer, director, partner, or
shareholder of the entity, future activities of such entity shall not result in
a violation of this provision unless (x) such activities were contemplated at
the time the Executive initially became employed or becomes a consultant,
principal, agent, officer, director, partner, or shareholder of the entity (and
the contemplation of such activities was known to the Executive) or (y) the
Executive commences directly or indirectly overseeing or managing the activities
which are competitive with the activities of the Company or Subsidiary.
 
(b)           For the purposes of this Section 12 and Section 13 below,
“Restriction Period” shall mean the period beginning with the Effective Date and
ending with the first anniversary of such termination.
 
                13.          Non-solicitation
 
                                (a)           Employees.  During the Restriction
Period, Executive shall not induce and/or solicit employees of the Company or
any Subsidiary to terminate their employment.  During the portion of the
Restriction Period following the termination of the Executive’s employment, the
Executive shall not directly or indirectly hire any employee of the Company or
any Subsidiary or any person who was employed by the Company or any Subsidiary
within 180 days of such hiring.
 
(b)           Vendors/Business Partners.  Executive promises and agrees that
during the Restriction Period, Executive will not influence or attempt to
influence vendors, or business partners of the Company or any of its present or
future subsidiaries, either directly or indirectly, to divert from the Company
their business to any individual, partnership, firm, corporation or other entity
then in competition with the business of the Company or any subsidiary or the
Company.
 
                14.
Remedies.

 
In addition to whatever other rights and remedies the Company may have at equity
or in law, if the Executive breaches any of the provisions contained in Sections
11, 12 or 13 above or any other obligations of Executive to the Company under
this Agreement, the Company (a) shall have the right to immediately terminate
all payments and benefits due under this Agreement (b) shall have the right to
seek injunctive relief without the necessity for posting a bond and (c) shall
have the right to seek attorneys’ fees and costs associated with enforcing its
rights under this Agreement.  The Executive acknowledges that such a breach
would cause irreparable injury and that money damages would not provide an
adequate remedy for the Company and that the Company retains its rights to seek
all other available relief in addition to the relief set forth in this Section.
 

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15.          Resolution of Disputes.
 
Any disputes arising under or in connection with this Agreement, other than
seeking injunctive relief under Section 14, shall be resolved by binding
arbitration, to be held at an office closest to the Company’s principal offices
in accordance with the Commercial rules and procedures of the American
Arbitration Association, except that disputes arising under or in connection
with Sections 11, 12 and 13 above shall be submitted to the federal or state
courts in the State of New York, New York County.  Discovery in any arbitration
shall be conducted in accordance with the Federal Rules of Civil
Procedure.  Judgment upon the award rendered by the arbitrator(s) may be entered
in any court having jurisdiction thereof.  Pending the resolution of any
arbitration or court proceeding, the Company shall continue payment of all
amounts and benefits due the Executive under this Agreement.
 
16.           Indemnification.
 
(a)           Company Indemnity.  The Company agrees that if the Executive is
made a party, or is threatened to be made a party, to any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
“Proceeding”), by reason of the fact that Executive is or was a director,
officer or employee of the Company or any Subsidiary or is or was serving at the
request of the Company or any Subsidiary as a director, officer, member,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, including service with respect to employee benefit plans,
whether or not the basis of such Proceeding is the Executive’s alleged action in
an official capacity while serving as a director, officer, member, employee or
agent, the Executive shall be indemnified and held  harmless by the Company to
the fullest extent legally permitted or authorized by the Company’s certificate
of incorporation or bylaws or resolutions of the Company's Board of Directors
or, if greater, by the laws of the State of Delaware, against all cost, expense,
liability and loss (including, without limitation, attorney’s fees, judgments,
fines, ERISA excise taxes or penalties and amounts paid or to be paid in
settlement) reasonably incurred or suffered by the Executive in connection
therewith, and such indemnification shall continue as to the Executive even if
Executive has ceased to be a director, member, officer, employee or agent of the
Company or other entity and shall inure to the benefit of the Executive s heirs,
executors and administrators.
 
(b)           No Presumption Regarding Standard of Conduct.  Neither the failure
of the Company (including its board of directors, independent legal counsel or
stockholders) to have made a determination prior to the commencement of any
proceeding concerning payment of amounts claimed by the Executive under Section
16(a) above that indemnification of the Executive is proper because Executive
has met the applicable standard of conduct, nor a determination by the Company
(including its board of directors, independent legal counsel or stockholders)
that the Executive has not met such applicable standard of conduct, shall create
a presumption that the Executive has not met the applicable standard of conduct.
 
(c)           Liability Insurance.  The Company agrees to continue and maintain
a directors and officers liability insurance policy covering the Executive to
the extent the Company provides such coverage for its other executive officers.
 
17.          Effect of Agreement on Other Benefits.
 
Except as specifically provided in this Agreement, the existence of this
Agreement shall not be interpreted to preclude, prohibit or restrict the
Executive’s participation in any other employee benefit or other plans or
programs in which Executive currently participates.
 

 

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18.          Assignability; Binding Nature.
 
This Agreement shall be binding upon and inure to the benefit of the Parties and
their respective successors, heirs (in the case of the Executive) and permitted
assigns. No rights or obligations of the Company under this Agreement may be
assigned or transferred by the Company except that such rights or obligations
may be assigned or transferred to a subsidiary of the Company or in connection
with the sale or transfer of all or substantially all of the assets of the
Company, provided that the assignee or transferee is the successor to all or
substantially all of the assets of the Company and such assignee or transferee
assumes the liabilities, obligations and duties of the Company, as contained in
this Agreement, either contractually or as a matter of law.  The Company further
agrees that, in the event of a sale or transfer of assets as described in the
preceding sentence, it shall use reasonable efforts in order to cause such
assignee or transferee to expressly assume the liabilities, obligations and
duties of the Company hereunder.  No rights or obligations of the Executive
under this Agreement may be assigned or transferred by the Executive other than
Executive’s rights to compensation and benefits, which may be transferred only
by will or operation of law, except as provided in Section 24 below.
 
19.          Representation.
 
Each Party represents and warrants that it is fully authorized and empowered to
enter into this Agreement and that the performance of its obligations under this
Agreement will not violate any agreement between it and any other person, firm
or organization.
 
20.          Entire Agreement.
 
This Agreement contains the entire understanding and agreement between the
Parties concerning the subject matter hereof and supersedes all prior
agreements, understandings, discussions, negotiations and undertakings, whether
written or oral, between the Parties with respect thereto.
 
21.          Amendment or Waiver.
 
No provision in this Agreement may be amended unless such amendment is agreed to
in writing and signed by the Executive and an authorized officer of the
Company.  No waiver by either Party of any breach by the other Party of any
condition or provision contained in this Agreement to be performed by such other
Party shall be deemed a waiver of a similar or dissimilar condition or provision
at the same or any prior or subsequent time.  Any waiver must be in writing and
signed by the Executive or an authorized officer of the Company, as the case may
be.
 
22.          Severability and Modification.
 
In the event that any provision or portion of this Agreement shall be determined
to be invalid or unenforceable for any reason, in whole or in part, the
remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.  In the
event that a court or other tribunal determines that the restraints in Sections
11, 12 and 13 are in any way overbroad or unenforceable, the Parties acknowledge
and agree that the court or tribunal shall have the right to modify or sever the
restraints in order to enforce them to the fullest extent permitted by
applicable law.
 
23.          Survivorship.
 
The respective rights and obligations of the Parties hereunder shall survive any
termination of the Executive’s employment to the extent necessary to the
intended preservation of such rights and obligations.
 
 
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24.          Beneficiaries/References.
 
The Executive shall be entitled, to the extent permitted under any applicable
law, to select and change a beneficiary or beneficiaries to receive any
compensation or benefit payable hereunder following the Executive’s death by
giving the Company written notice thereof.  In the event of the Executive's
death or a judicial determination of Executive’s incompetence, reference in this
Agreement to the Executive shall be deemed, where appropriate, to refer to
Executive’s beneficiary, estate or other legal representative.
 
25.          Governing Law/Jurisdiction.
 
This Agreement shall be governed by and construed and interpreted in accordance
with the laws of New York without reference to principles of conflict of
laws.  Subject to Section 15, the Company and the Executive hereby consent to
the exclusive jurisdiction of any or all of the following courts for purposes of
resolving any dispute under this Agreement: (i) the United States District Court
for New York and (ii) the Supreme Court of the State of New York, New York
County.  The Company and the Executive hereby waive, to the fullest extent
permitted by applicable law, any objection which it or he may now or hereafter
have to such jurisdiction and any defense of inconvenient forum.
 
26.          Notices.
 
Any notice given to a Party shall be in writing and shall be deemed to have been
given when delivered personally or sent by certified or registered mail, postage
prepaid, return receipt requested, or via nationally recognized overnight
courier prepaid, duly addressed to the Party concerned at the address indicated
below or to such changed address as such Party may subsequently give such notice
of:

 
If to the Company:
dELiA*s, Inc.
50 West 23rd St.
New York, New York 10010
Attention: Vice President Human Resources and Vice President and General Coun

 
 
If to the Executive:
Michele Donnan Martin
950 Forest Avenue
Rye, New York 10580

                 27.         Headings.
 
The headings of the sections contained in this Agreement are for convenience
only and shall not be deemed to control or affect the meaning or construction of
any provision of this Agreement.
 
28.          Counterparts
 
This Agreement may be executed in two or more counterparts.
 
29.          Tax Matters
 
(a)           Tax Withholding.  The Company shall withhold from any amounts
payable under this Agreement such federal, state and local taxes as may be
required to be withheld pursuant to any applicable law or regulation.
 
(b)           Section 409A Compliance.  The intent of the parties is that
payments and benefits under this Agreement comply with Internal Revenue Code
Section 409A and the regulations and guidelines promulgated thereunder
(collectively “Code Section 409A”) and, accordingly, to the maximum extent
permitted, this Agreement shall be interpreted to be in compliance
therewith.  If Executive notifies the Company (with specificity as to the reason
therefore) that Executive believes that any provision of this Agreement (or of
any award of compensation, including equity compensation or benefits) would
cause Executive to incur any additional tax or interest under Code Section 409A,
the Company shall, after consulting with Executive, reform such provision to try
to comply with Code Section 409A through good faith modifications to the minimum
extent reasonably appropriate to conform with Code Section 409A.  To the extent
that any provision hereof is modified in order to comply with Code Section 409A,
such modification shall be made in good faith and shall, to the maximum extent
reasonably possible, maintain the original intent and economic benefit to
Executive and the Company of the applicable provision without violating the
provision of Code Section 409A.
 
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(c)           Special Section 409A Rules.  This paragraph shall apply to all or
any portion of any payment or benefit a payable under the Agreement as a result
of termination of Executive’s employment that is not exempted from Code Section
409A (“409A Severance Compensation”).
 
(i)           Separation from Service.  If the termination of the Employee’s
employment does not qualify as a “separation from service” within the meaning of
Treasury Regulation section 1.409A-1(h) from the “Company’s Controlled Group”,
then any 409A Severance Compensation will not commence until a “separation from
service” occurs or, if earlier, the earliest other date as is permitted under
Code Section 409A.  For this purpose, the “Company’s Controlled Group” means the
Company (i) any corporation which is a member of a controlled group of
corporations (as defined in Code Section 414(b)) which includes the Company and
(ii) any trade or business (whether or not incorporated) which is under common
control (as defined in Code Section 414(c)) with the Company.
 
(ii)           Six-Month Delay for “Specified Employees”.  Notwithstanding any
provisions to the contrary in this Agreement, if the Executive is deemed on the
date of termination to be a “specified employee” within the meaning of that term
under Code Section 409A (a)(2)(B), then with regard to any payment or the
provision of any benefit that is specified as subject to this Section, such
payment or benefit shall not be made or provided prior to the earlier or (i) the
expiration of six (6)-month period measured from the date of Executive’s
“separation from service” (as such term is defined under Code Section 409A), and
(ii) the date of Executive’s death (the “Delay Period”).  Upon the expiration of
the Delay Period, all payments and benefits delayed pursuant to this Section
30(c) (whether they would have otherwise been payable in a single sum or in
installments in absence of such delay) shall be reimbursed to the Executive in a
lump sum, and any remaining payments and benefits due under this Agreement shall
be paid or provided in accordance with the normal payment dates specified for
them herein.
 
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first written above.
 

 
dELiA*s, INC.
 
By:
 /s/ Walter Killough
Name: Walter Killough
Title: Cheif Operating Officer
   
EXECUTIVE
     /s/ Michele Donnan Martin
Michele Donnan Martin

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EXHIBIT A

Guess? Inc.
Aeropostale, Inc.
Zumiez, Inc.
Abercrombie & Fitch, Co.
American Eagle Outfitters, Inc.
Gap, Inc.
Wet Seal, Inc.
Pacific Sunwear of California, Inc.
Limited Brands, Inc.
Hot Topic, Inc.
The Buckle, Inc.
J. Crew Group, Inc.
Urban Outfitters, Inc.
Charlotte Russe Holding, Inc.
Forever 21
H & M
Genesco, Inc.
Garage
Top Shops
Zara
Next Plc
Liz Claiborne, Inc. (Juicy and Lucky divisions)
AGX
Mast Industries
Femme Knits

All subsidiaries, divisions, affiliates and successors of the above-named
entities are included.

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