Exhibit 10.3a

November 24, 2008

Mr. Chris Daniel

18305 E. San Jose Ave.

City of Industry, CA 91748

RE:        EMPLOYMENT TERMS

Dear Chris,

This amended and restated employment letter agreement (the “Agreement”) with Hot
Topic, Inc. (the “Company”) shall replace and supersede that certain letter
agreement between you and the Company dated September 21, 2004 and that certain
letter agreement between you and the Company dated November 15, 2006
(collectively, the “Prior Agreements”). The Prior Agreements are amended and
restated in their entirety as set forth herein in order to, among other things,
clarify the application of Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”) to the benefits that may be provided to you pursuant to the
terms of this Agreement.

 

1. DUTIES

You will be expected to perform various duties consistent with the position of
President, Torrid. 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

Your base salary is $437,800 per year, less payroll deductions and all required
withholdings, which will be subject to annual review. You will be paid
semi-monthly and you will be eligible for the following Company benefits:
medical 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. 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
will be seventy-five percent of your base salary based upon achievement of the
goals 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.

 

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4. 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.

 

5. EQUITY AWARDS

In addition to any equity awards you have previously received, during the term
of this Agreement, you shall 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.

 

6. TERMINATION

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

 

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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 Hot Topic CEO
or Board of Directors 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.

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.

 

7. 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

 

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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.

 

8. 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.

 

9. 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.

 

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10. PROPRIETARY INFORMATION AGREEMENT

You will continue to be subject to the terms of your Proprietary Information
Agreement dated October 4, 2004, 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.

 

11. ENTIRE AGREEMENT

This Agreement, together with the Exhibit 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.

 

12. 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 County, 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 attorneys’ fees on appeal, if any.

 

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13. 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.

 

Sincerely,

/s/    Betsy McLaughlin

Betsy McLaughlin

Chief Executive Officer

 

Accepted: /s/    Chris Daniel Chris Daniel November 24, 2008 Date

Attachment:            Exhibit A:            Waiver and Release

 

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EXHIBIT A

RELEASE AND WAIVER OF CLAIMS

In consideration of the payments and other benefits set forth in Section 6 of
the Agreement dated November 24, 2008, to which this form is attached, I, CHRIS
DANIEL, 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

 

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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.

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:  

 

      Chris Daniel      

 

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