E x h i b i t   1 0 . 1 a
 
 
September 9, 2009

Amy Kocourek
1311 Squirrel Hill Ave.
Pittsburgh, PA  15217

RE:  OFFER OF EMPLOYMENT & EMPLOYMENT TERMS

Dear Amy:

It gives me great pleasure to present our offer of employment as Chief
Merchandising Officer (“CMO”) of our Hot Topic division with Hot Topic, Inc.
(the “Company”).  The following employment terms and conditions are included in
this employment letter agreement (the “Agreement”):

1.           DUTIES

You will be expected to perform various duties consistent with the position of
CMO.  You will report to the Company’s Chief Executive Officer (“CEO”), unless
otherwise assigned by the Company. You will work at our facility located in the
City of Industry.

2.           BASE SALARY

You will be paid a base salary at a bi-weekly rate of $15,961.55, which
annualizes to $415,000 per year, less payroll deductions and all required
withholdings, which will be subject to annual review.  You will also be eligible
for the following Company benefits: health insurance, vacation, sick leave,
holidays, long-term disability, 401k plan, Employee Stock Purchase Plan and
Deferred Compensation Plan. Details about these benefit plans are available for
your review.  The Company may modify benefits from time to time, as it deems
necessary.

3.           SIGN-ON BONUS

You will receive a sign-on bonus in the gross amount of $100,000, which is
subject to standard tax and withholding deductions.  This will be paid on your
second day of employment.    Should you voluntarily resign from the Company or
be terminated for cause within the three (3) months of your start date, you will
be responsible for repayment of the sign-on bonus money received.

4.           BONUS

In addition to your base salary, you will be eligible to earn an annual
performance bonus (“Bonus”) pursuant to the Company’s Executive Incentive Bonus
Plan, as approved by the Board of Directors. Your target Bonus under the Plan is
fifty percent (50%) of your base salary based upon the Hot Topic division’s
achievement of the goals (0% - 100%) set forth in the Plan.  Assuming continuous
employment, the Bonus will be awarded in the first quarter of the Company’s
fiscal year. You must be employed on the date the Bonus is awarded to be
eligible for the Bonus.  The Bonus will not be pro-rated in the event your
employment is terminated with or without Cause (as defined below) prior to the
date on which the Bonus is awarded.  For FY 2009, you will receive a guaranteed
bonus in the gross amount of $100,000, which will be paid at the time of Bonus
distribution on or about April 1, 2010.

 
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5.           LONG TERM INCENTIVE PROGRAM

Effective on your first day of employment, you will be granted an option to
purchase 100,000 shares of Hot Topic’s common stock (the “Option”) under the
Company’s 2006 Equity Incentive Plan subject to vesting over four (4) years with
twenty-five percent (25%) of the shares subject to the Option vesting on the
first anniversary of the grant date and the remaining shares will vest in equal
quarterly installments over the remainder of the vesting period for as long as
you provide continuous service (as defined in the Plan) to the Company.  The
exercise price per share under the Option shall be equal to the closing price of
the Company’s common stock on the effective date the Option is granted (i.e.,
your first day of employment).

In addition, effective on your first day of employment you will be granted a
target award of 30,000 shares of Hot Topic’s common stock (the “Award”) under
the Company’s Performance Share Award Program.  These shares are issuable in
2012 and are based on 2011 Operating Income for Hot Topic, Inc. versus a
specified performance target.  The actual amount of the award may range from
zero shares to 60,000 shares, depending on the actual results achieved.

6.           SALARY REVIEW

You will be eligible for your first salary review and consideration for a merit
increase on or about April 1, 2010.  Any increase awarded will be pro-rated
based upon your employment date.

7.           VACATION

You will be eligible to accrue a maximum of fifteen (15) vacation days per
year.  Vacation time can be taken as it is accrued subject to approval by the
CEO.  You will need to complete ninety (90) days of service prior to using
vacation time.

8.           HEALTH BENEFITS

You will be eligible to enroll in the Company’s benefits program on the first
day of regular full-time employment.  The Company will reimburse your COBRA
costs so that you can maintain continuous benefits coverage for your family
until your benefits are effective, which is on the first day of the month
following 30-days of service with the Company.  This plan includes the
opportunity to participate in Group Health, Dental, Vision, Life and Short- and
Long-Term Disability insurance plans as well as other programs that may be
available in accordance with the Company’s employee benefit programs.  The
Company will purchase an Exec-U-Care policy for you, which is an insured medical
reimbursement policy that supplements the basic health plan by reimbursing many
of your out-of-pocket medical expenses not covered under the basic plan – up to
$100,000 per year.

 
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9.           AUTOMOBILE ALLOWANCE

The Company will pay for you to have a Company leased automobile of your choice,
provided that the value of the automobile does not exceed $60,000.  The Company
will also reimburse you for expenses including gas, insurance and maintenance
for the automobile in accordance with the Company’s expense reimbursement
policy.

10.           RELOCATION

The Company will relocate you, Gunter, baby Gunter, Liesl and your household
goods to Southern California. The specific relocation benefits are listed in the
attached “Relocation Expense Agreement”. Should you voluntarily resign or are
terminated for misconduct from the Company within twenty-four (24) months of
your start date; you will be responsible for repayment of relocation expenses
incurred by the Company. You will be asked to sign a “Relocation Expense
Agreement” acknowledging your acceptance of the terms of this relocation program
prior to incurring any relocation expenses.

11.           401(k) PLAN

You will be eligible to participate in the Company’s 401(k) Plan after
completing one year of employment.

12.           DEFERRED COMPENSATION PLAN

You will be eligible to enroll in the Company’s Deferred Compensation Plan
(“DCP”) between thirty-one (31) to sixty (60) days from your hire date for the
current plan year, or you can wait until the next open enrollment period which
will be July every year.  The Company will match 50% of the first 4% of your DCP
contributions, which are subject to a three (3) year vesting period based on
your hire date as follows:  at the end of one year of employment, 0% vested; at
the end of two (2) years, 50% vested; and at the end of three (3) years, 100%
vested.

13.           STOCK PURCHASE PLAN

You will be eligible to participate in the Company’s Stock Purchase Plan after
completing one year of employment.

14.           EQUITY AWARDS

During the term of this Agreement, you may be eligible to receive additional
equity awards under the Company’s 2006 Equity Incentive Plan and various equity
incentive and bonus programs that may be approved from time to time by the Board
or its Compensation Committee in either’s sole discretion.  If you have
questions regarding the tax implications of your equity awards or any part of
your compensation package, please consult with your own tax advisor.

All plans, programs, and policies described above are subject to change at the
discretion of the Company, and all terms above are subject to the terms of the
applicable Company policies. The information provided here contains a brief
overview of relevant plans and is not intended to replace the legal documents
that contain the complete provisions of each plan.  Final interpretation of any
plan is within the discretionary authority and responsibility of the plans’
administrators.

 
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15.           AT-WILL; SEVERANCE

The Company may terminate your employment at any time and for any or no reason,
with or without Cause (as defined herein) or advance notice, by giving written
notice of such termination. Similarly, you may terminate your employment with
the Company at any time at your election, in your sole discretion, for any or no
reason upon two weeks notice to the Company during which time you shall provide
reasonable transition assistance to the Company. The Company reserves the right
to ask you to expedite your resignation date and to leave prior to the end of
the two weeks notice period. The at-will nature of your employment relationship
may not be modified except by a written agreement with the CEO of the Company.

If the Company terminates your employment without Cause and not due to your
death or Disability (as defined herein), then you shall be entitled to receive
the severance benefits described in this Section, subject to your satisfaction
of the conditions set forth herein.  Subject to your delivery to the Company of
an executed release and waiver of claims in the form attached hereto as Exhibit
A or such other form as the Company may require (the “Release”), within the time
period set forth therein, but in no event later than forty-five days following
your termination, and permitting such Release to become effective in accordance
with its terms, you will receive the following severance benefits:

Continued payment of your base salary that is in effect at the time of your
termination, subject to standard payroll deductions and withholdings, for six
(6) months.  Such payments shall be made according to the normal payroll
practice of the Company for a period of six (6) months commencing with the first
payroll period following the effective date of the Release (the “Severance
Period”); and

Assuming you timely and accurately elect to continue your medical, dental and
vision group health insurance benefits under the Consolidated Omnibus Budget
Reconciliation Act of 1985 (“COBRA”), commencing with the effective date of the
Release the Company shall pay the same percentage of the COBRA premiums for you
and your qualified beneficiaries as it paid for you and your qualified
beneficiaries at the time of your termination of employment until the earliest
of (i) the end of the Severance Period or (ii) the expiration of your
continuation coverage under COBRA and any applicable state COBRA-like statute
that provides mandated continuation coverage.  For purposes of this provision,
references to COBRA premiums shall not include any amounts payable under a Code
Section 125 health care reimbursement plan.

If you voluntarily resign or your employment is terminated for Cause or due to
your death or Disability (as defined herein), all compensation and benefits will
cease immediately and you will receive no additional payments from the Company
other than your accrued base salary and accrued and unused vacation benefits
earned through the date of your termination.

For purposes of this Agreement, “Cause” shall mean (i) willful misconduct by
you, including, but not limited to, dishonesty which materially and adversely
reflects upon your ability to perform your duties for the Company, (ii) your
conviction of, or the entry of a pleading of guilty or nolo contendere by you
to, any crime involving moral turpitude or any felony, (iii) fraud, embezzlement
or theft against the Company, (iv) a material breach by you of any material
provision of any employment contract, assignment of inventions, confidentiality
and/or nondisclosure agreement between you and the Company, or (v) your willful
and habitual failure to attend to your duties as assigned by the CEO of the
Company, after written notice to you and no less than a 90 day period to cure
such failure provided such failure to perform is subject to cure with the
passage of time.

 
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For purposes of this Agreement, “Disability” shall mean your inability to
perform your duties under this Agreement, even with reasonable accommodation,
because you have become permanently disabled within the meaning of any policy of
disability income insurance covering employees of the Company then in force.  In
the event the Company has no policy of disability income insurance covering
employees of the Company in force when you become disabled, the term
“Disability” shall mean your inability to perform your duties under this
Agreement, whether with or without reasonable accommodation, by reason of any
incapacity, physical or mental, which the Board, based upon medical advice or an
opinion provided by a licensed physician acceptable to the Board, determines to
have incapacitated you from satisfactorily performing all of your usual services
for the Company, with or without reasonable accommodation, for a period of at
least nine (9) consecutive months during any twelve (12) month period.  Based
upon such medical advice or opinion, the determination of the Board shall be
final and binding and the date such determination is made shall be the date of
such Disability for purposes of this Agreement.
 
 16.           CHANGE OF CONTROL

Following a Change in Control (as defined herein) that occurs prior to the
termination of your employment with the Company the vesting of your stock
options will be immediately accelerated such that one hundred percent (100%) of
the stock options shall be vested and exercisable. For purposes of this
Agreement, Change of Control is defined as follows: (i) a sale of all or
substantially all of the assets of the Company; (ii) a merger or consolidation
in which the Company is not the surviving corporation and in which beneficial
ownership of securities of the Company representing at least fifty percent (50%)
of the combined voting power entitled to vote in the election of Directors has
changed; (iii) an acquisition by any person, entity or group within the meaning
of Section 13(d) or 14(d) of the Exchange Act, or any comparable successor
provisions (excluding any employee benefit plan, or related trust, sponsored or
maintained by the Company or subsidiary of the Company or other entity
controlled by the Company) of the beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act, or comparable successor rule) of
securities of the Company representing at least fifty percent (50%) of the
combined voting power entitled to vote in the election of Directors.

17.           APPLICATION OF INTERNAL REVENUE CODE SECTION 409A

Notwithstanding anything to the contrary set forth herein, any payments and
benefits provided under this Agreement (the “Severance Benefits”) that
constitute “deferred compensation” within the meaning of Section 409A of the
Code and the regulations and other guidance thereunder and any state law of
similar effect  (collectively “Section 409A”) shall not commence in connection
with your termination of employment unless and until you have also incurred a
“separation from service” (as such term is defined in Treasury Regulation
Section 1.409A-1(h)) (“Separation From Service”), unless the Company reasonably
determines that such amounts may be provided to you without causing you to incur
the additional 20% tax under Section 409A.

It is intended that each installment of the Severance Benefit payments provided
for in this Agreement is a separate “payment” for purposes of Treasury
Regulation Section 1.409A-2(b)(2)(i).  For the avoidance of doubt, it is
intended that payments of the Severance Benefits set forth in this Agreement
satisfy, to the greatest extent possible, the exemptions from the application of
Section 409A provided under Treasury Regulation Sections 1.409A-1(b)(4),
1.409A-1(b)(5) and 1.409A-1(b)(9).  However, if the Company (or, if applicable,
the successor entity thereto) determines that the Severance Benefits constitute
“deferred compensation” under Section 409A and you are, on the termination of
service, a “specified employee” of the Company or any successor entity thereto,
as such term is defined in Section 409A(a)(2)(B)(i) of the Code, then, solely to
the extent necessary to avoid the incurrence of the adverse personal tax
consequences under Section 409A, the timing of the Severance Benefit payments
shall be delayed until the earlier to occur of: (i) the date that is six months
and one day after your Separation From Service, or (ii) the date of your death
(such applicable date, the “Specified Employee Initial Payment Date”), the
Company (or the successor entity thereto, as applicable) shall (A) pay to you a
lump sum amount equal to the sum of the Severance Benefit payments that you
would otherwise have received through the Specified Employee Initial Payment
Date if the commencement of the payment of the Severance Benefits had not been
so delayed pursuant to this Section and (B) commence paying the balance of the
Severance Benefits in accordance with the applicable payment schedules set forth
in this Agreement.
 
 
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18.           COMPANY POLICY

As a Company employee, you will be expected to abide by Company rules and
regulations and acknowledge in writing that you have read the Company’s Employee
Handbook which will govern the terms and conditions of your employment. The
Company’s Employee Handbook may be modified from time to time at the sole
discretion of the Company.

19.           PROPRIETARY INFORMATION AGREEMENT

You will be subject to the terms of the Proprietary Information Agreement, which
prohibits unauthorized use or disclosure of the Company’s proprietary
information, among other things.

In your work for the Company, you will be expected not to use or disclose any
confidential information, including trade secrets, of any former employer or
other person to whom you have an obligation of confidentiality. Rather, you will
be expected to use only that information which is generally known and used by
persons with training and experience comparable to your own, which is common
knowledge in the industry or otherwise legally in the public domain, or which is
otherwise provided or developed by the Company. During our discussions about
your proposed job duties, you assured us that you would be able to perform those
duties within the guidelines just described. You agree that you will not bring
onto Company premises any unpublished documents or property belonging to any
former employer or other person to whom you have an obligation of
confidentiality.

20.           ENTIRE AGREEMENT

This Agreement, together with the Exhibits attached hereto and the stock option
documents referred to herein, forms the complete and exclusive statement of the
terms of your employment with the Company. The employment terms in this
Agreement supersede any other agreements or promises made to you by anyone,
whether oral or written.

 
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21.           GOVERNING LAW

This Agreement will be governed by and construed according to the laws of the
State of California. You hereby expressly consent to the personal jurisdiction
of the state and federal courts located in Los Angeles, California for any
lawsuit filed there against you by the Company arising from or related to this
Agreement. In the event of any litigation arising out of or relating to this
Agreement, its breach or enforcement, including an action for declaratory
relief, the prevailing party in such action or proceeding shall be entitled to
receive his or its damages, court costs, and all out-of-pocket expenses,
including attorneys fees. Such recovery shall include court costs, out-of-pocket
expenses, and attorney’s fees on appeal, if any.

22.           SUCCESSORS AND ASSIGNS.

This Agreement will be binding upon your heirs, executors, administrators and
other legal representatives and will be for the benefit of the Company, its
successors, and its assigns.

By signing this letter, you acknowledge that the terms described in this letter,
along with the Employment and Proprietary Information Agreement being
concurrently provided to you, sets forth the entire understanding regarding your
employment with us; there are no terms, conditions, representations, warranties
or covenants other than those contained herein.  Please acknowledge your intent
to accept this offer of employment on the terms indicated by signing the
enclosed copy of this letter and returning it to me by no later than September
25, 2009.  No term or provision of this letter may be amended, waived, released,
discharged or modified except in writing, signed by you and the CEO of Hot
Topic.

Amy, I am so excited that you will be joining the HOTT team.  I look forward to
our partnership!

Sincerely,
 
 
 
   
Betsy McLaughlin
   
Chief Executive Officer
         
Accepted:
               
 
   
Amy Kocourek
Date  

 
Attachments:
Exhibit A:  Waiver and Release
Exhibit B:  Relocation Expense Agreement
Proprietary Information and Inventions Agreement
 
 
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EXHIBIT A

RELEASE AND WAIVER OF CLAIMS

In consideration of the payments and other benefits set forth in Section 15 of
the Agreement dated September 9, 2009 to which this form is attached, I, AMY
KOCOUREK, hereby furnish Hot Topic, Inc. (the “Company”), with the following
release and waiver (“Release and Waiver”).

I hereby confirm my obligations under the Company’s Proprietary Information
Agreement.
 
I understand that this Release and Waiver, together with the Agreement,
constitutes the complete, final and exclusive embodiment of the entire agreement
between the Company, affiliates of the Company and me with regard to the subject
matter hereof.  I am not relying on any promise or representation by the Company
that is not expressly stated therein.

Except as otherwise set forth in this Release and Waiver, I hereby release,
acquit and forever discharge the Company, its parents and subsidiaries, and
their officers, directors, agents, servants, employees, shareholders,
successors, assigns and affiliates, of and from any and all claims, liabilities,
demands, causes of action, costs, expenses, attorneys fees, damages, indemnities
and obligations of every kind and nature, in law, equity, or otherwise, known
and unknown, suspected and unsuspected, disclosed and undisclosed (other than
any claim for indemnification I may have as a result of any third party action
against me based on my employment with the Company), arising out of or in any
way related to agreements, events, acts or conduct at any time prior to the date
I execute this Release and Waiver, including, but not limited to: all such
claims and demands directly or indirectly arising out of or in any way connected
with my employment with the Company or the termination of that employment,
including but not limited to, claims of intentional and negligent infliction of
emotional distress, any and all tort claims for personal injury, claims or
demands related to salary, bonuses, commissions, stock, stock options, or any
other ownership interests in the Company, vacation pay, fringe benefits, expense
reimbursements, severance pay, or any other form of disputed compensation;
claims pursuant to any federal, state or local law or cause of action including,
but not limited to, the federal Civil Rights Act of 1964, as amended; the
federal Age Discrimination in Employment Act of 1967, as amended (“ADEA”); the
federal Employee Retirement Income Security Act of 1974, as amended; the federal
Americans with Disabilities Act of 1990; the federal Worker Adjustment and
Retraining Notification Act of 1988; the California Fair Employment and Housing
Act, as amended; tort law; contract law; statutory law; common law; wrongful
discharge; discrimination; fraud; defamation; emotional distress; and breach of
the implied covenant of good faith and fair dealing; provided, however, that
nothing in this paragraph shall be construed in any way to release the Company
from its obligation to indemnify me pursuant to the Company’s indemnification
obligation pursuant to agreement or applicable law.

I also acknowledge that I have read and understand Section 1542 of the
California Civil Code which reads as follows: “A GENERAL RELEASE DOES NOT EXTEND
TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR.” I hereby expressly waive and
relinquish all rights and benefits under that section and any law of any
jurisdiction of similar effect with respect to any claims I may have against the
Company.

 
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I acknowledge that, among other rights, I am waiving and releasing any rights I
may have under the ADEA, that this Release and Waiver is knowing and voluntary,
and that the consideration given for this Release and Waiver is in addition to
anything of value to which I was already entitled as an executive of the
Company. I further acknowledge that I have been advised, as required by the
Older Workers Benefit Protection Act, that: (a) the Release and Waiver granted
herein does not relate to claims which may arise after this Release and Waiver
is executed; (b) I should consult with an attorney prior to executing this
Release and Waiver (although I may choose voluntarily not to do so); and if I am
over 40 years of age upon execution of this Release and Waiver: (c) I have
twenty-one (21) days from the date of termination of my employment with the
Company in which to consider this Release and Waiver (although I may choose
voluntarily to execute this Release and Waiver earlier); (d) I have seven (7)
days following the execution of this Release and Waiver to revoke my consent to
this Release and Waiver; and (e) this Release and Waiver shall not be effective
until the seven (7) day revocation period has expired.
 

Date:
 
 
 
   
By:     
            Amy Kocourek   

 
 
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EXHIBIT B

RELOCATION EXPENSE AGREEMENT

Hot Topic, Inc. (herein referred to as “Company” or “Hot Topic”) is paying
expenses associated with my relocation.  Per Company policy, should I
voluntarily terminate employment or my employment is terminated for misconduct
anytime within the first twenty-four (24) months following my start date.  I
will be responsible for repaying all of the benefits paid by the Company in
connection with my relocation.  Repayment will be paid in full at one hundred
percent (100%) if employment ends within the first twelve (12) months of start
date.  Repayment will be fifty percent (50%) between the thirteenth and
twenty-fourth months (13-24) after start date.  No repayment applies after
completion of twenty-four (24) months of employment with the company.

Hot Topic agrees to reimburse or pay for the following relocation expenses:

·     
House Hunting – A house hunting trip for you and your family for up to five
days.  Items covered will include airfare, car rental or mileage, meals and
lodging.  If needed, a second house hunting trip will be provided.

·     
Relocation Costs – In addition to covering the cost for house hunting trip(s),
the Company will reimburse the following costs not to exceed a total gross
amount of $400,000.

o     
Movement of Household Goods – A national moving van line will pack, unpack and
move your household goods to Southern California.

o     
Automobile Shipment – This includes shipping two automobiles to California and a
car rental, if needed, while your automobile(s) is/are in transit

o     
Temporary Housing and Storage – Temporary housing and storage of your household
goods for 90 days, which can be extended for an additional 90 days if you have
not sold your Pittsburgh home and have not purchased a home in California.

o     
Realtor Fees and Closing Costs – The standard and customary costs associated
with the sale of your home in Pittsburgh.  In addition, the standard and
customary closing costs (home inspection fee, doc fees, etc.), excluding points
on a loan, associated with your purchase of a home in California will be
covered.

o     
Duplicate Mortgage Payments – In the event you have not sold your home in
Pittsburgh at the time you purchase a new home in California and as such you
have duplicate mortgage payments, the Company will cover the monthly mortgage
payment for your Pittsburgh home for up to nine (9) months.

o     
Property Taxes for Pittsburgh Home – If you have not sold your Pittsburgh home
at the time property taxes are due, approximately April 2010; the Company will
cover the cost.

o     
Miscellaneous Costs – airline fares and related travel expenses for the family’s
move trip to California, car registration and utility fees.

I understand and agree to the following:

·     
This is a financial agreement and failure to make payment when due will subject
to collection activities.  It will also entitle the Company to reasonable
attorney fees and all other costs incurred in collection of such payment.

·     
In the event, I am involuntarily terminated by the Company during the two year
period following my relocation, with the exception of termination for misconduct
as stated above, I will not be liable to repay any relocation expense benefits.

 
 
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·     
The Company may at its discretion offset any repayment obligation under this
agreement with any payments that may be owed to me upon my separation from
employment, including wages.  Should the offset be less than the actual amount
owed, I agree I will repay whatever is owed to the Company.

·     
Current IRS regulations require that Hot Topic report as part of an employee’s
gross annual income some relocation reimbursements such as house hunting,
temporary living and lease break expenses.  Hot Topic will ‘gross up’ your
temporary housing expenses.

To acknowledge your understanding and agreement of this required provision,
please sign and return this original agreement.  Please keep a copy for your
records.

I have read and agree to the terms outlined above:

 
 
 
Amy Kocourek
 
Date

 
 
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