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                                                                    Exhibit 10-6

                              EMPLOYMENT AGREEMENT


         EMPLOYMENT AGREEMENT, entered into the 20th day of December, 2001,
effective as of the 1st day of February, 2002, between DEB SHOPS, INC., a
Pennsylvania corporation with its principal offices at 9401 Blue Grass Road,
Philadelphia, Pennsylvania 19114 (the "Company") and ALLAN LAUFGRABEN, an
individual residing at 1900 Country Club Drive, Cherry Hill, New Jersey 08003
the "Employee").

         NOW, THEREFORE, in consideration of the foregoing and the promises and
covenants hereinafter set forth, the parties, intending to be legally bound,
hereby agree as follows:

         1. Employment. The Company hereby continues the employment of the
Employee and the Employee agrees to continue his employment with the Company on
the terms and conditions hereinafter set forth.

         2. Term. The term of this Agreement shall commence on February 1, 2002
and shall expire on January 31, 2007 (the "Term"), unless this Agreement is
sooner terminated in accordance with Paragraphs 5 or 6.

         3. Duties. The Employee is presently engaged as the Company's Senior
Vice President-Merchandising and he agrees to continue to perform the duties and
services incident to that position, or such other or further duties and services
of a similar nature as may be reasonably required of him by the Company. The
Employee shall report to, and be subject to the direction and control of the
President of the Company consistent with the terms of this Agreement. The
Employee shall perform his duties for the Company primarily from the Company's
facilities at 9401 Blue Grass Road, Philadelphia, Pennsylvania 19114, or such
other similarly situated locations of the Company to which the Employee may be
assigned to from time to time by the Company. Notwithstanding the foregoing,
Employee acknowledges and agrees that from time to time, in the ordinary course
of the business of the Company that the Employee will be required to travel, and
Employee hereby agrees to undertake such travel. The Employee shall devote his
full business time, attention, energies and best efforts to the performance of
his duties hereunder and to the promotion of the business and interests of the
Company and of any corporate subsidiaries or affiliated companies. Nothing
contained in this Section 3 shall be construed as

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preventing Employee from investing his personal assets, provided that no such
investment (a) shall violate the provisions of Section 7 or 8 of this Agreement
or (b) constitute the usurpation of a corporate opportunity of the Company. For
purposes of this Section 3, a corporate opportunity shall be (i) one presented
to or made available to the Company or any affiliate of the Company and known by
the Employee or (ii) an investment or acquisition known by Employee as being
considered by the Company or any affiliate of the Company, but a corporate
opportunity shall not include any investment opportunity presented to or made to
the Company or any affiliate of the Company which neither the Company nor such
affiliate elects to pursue within a reasonable time. In addition, during the
Term or extended term of this Agreement, the Employee may serve on corporate,
civic or charitable boards or committees, except boards or committees of
corporations that compete with the Company.

         4. Compensation: Expenses.

                  (a) Salary. The Employee shall be paid a salary at the rate of
$400,000 per annum for the period February 1, 2002 through January 31, 2005 and
at the rate of $450,000 per annum for the period February 1, 2005 through
January 31, 2007 (the "Base Salary"). The Base Salary shall be paid in arrears
in accordance with the Company's regular payroll practices. The Base Salary may
be increased, but shall not be decreased, during the Term of this Agreement.

                  (b) Bonus.

                           (i) Employee shall be entitled to receive an annual
bonus ("Bonus"), in the amount and calculated as set forth below, based on the
increase in earnings before interest and taxes ("EBIT") of the Company,
including its apparel subsidiaries, but excluding any subsidiary not engaged in
the apparel business and further excluding Tops `N Bottoms of New York, Inc., on
a consolidated basis, in accordance with GAAP consistently applied (the "Base
Company").

                           (ii) In the event of an acquisition by the Company of
a subsidiary whose merchandising does not come under the supervision of
Employee, the EBIT for such subsidiary shall be excluded from the EBIT of the
Company for purposes of determining Employee's Bonus.

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                           (iii) The Bonus shall be determined as follows:

                                    (A) The Bonus will equal four (4%) percent
of the increase in EBIT for each fiscal year over the preceding fiscal year.

                                    (B) Notwithstanding the preceding Subsection
4(b)(iii)(A), in the event that the Base Company sustains an operating loss in
any fiscal year, the Bonus will be deemed earned if such operating loss is less
than any operating loss sustained by the Base Company in the preceding fiscal
year; in any such event, the Bonus will be four percent (4%) of the reduction in
the operating loss from the previous year to the current year.

                                    (C) Notwithstanding the preceding
Subsections 4(b)(iii)(A) and (B), in the event that the EBIT for any fiscal year
during the term of this Agreement decreases, then and in such event, the Bonus
for an increase in EBIT in a subsequent fiscal year during the term of this
Agreement shall be based on the increase in EBIT for such fiscal year over the
preceding fiscal year which did not experience a decrease in EBIT.

                           (iv) The Bonus shall be calculated (based on the
audited financial statements of the Company) and paid no later than April 15 of
each fiscal year for the fiscal year ending January 31 of each year. The first
calculation of the Bonus shall be for the fiscal year ending January 31, 2003.


                  (c) Stock Options. On or before March 31, 2002, the Company
shall issue to Employee options to purchase up to 250,000 shares of the Common
Stock of the Company in accordance with the vesting schedule set forth on
Schedule 4(c) attached, and pursuant to the provisions of the Company's
Incentive Stock Option Plan, and subject to applicable law. A copy of the
Company's Incentive Stock Option Plan was delivered to the Employee.
Notwithstanding the above, in the event that the Employee voluntarily terminates
his employment, or in the event that the Company terminates the Employee for
cause as provided in Section 6(a) of this Agreement, any options which have not
vested as of the date of such termination of employment shall be deemed to have
terminated,

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                  (d) Fringe Benefits. The Employee shall be entitled to such
benefits and perquisites as are provided under the Company's standard executive
benefit package to the extent and on the same terms and conditions as are
accorded to other executives of the Company, and as heretofore provided to
Employee, provided however nothing herein, except as provided in Section 4(c)
above, shall be deemed to require grants or awards to Employee under any benefit
plans which provide for grants or awards at the discretion of any Board of
Directors or any committee thereof or administrator. Throughout the Term of this
Agreement, the Company will furnish the Employee with an automobile similar to
that provided to other executive officers in accordance with Company policy and
will pay all reasonable expenses incurred in connection with its operation. In
addition, the Company shall provide at no cost to Employee the Employee and his
spouse with medical coverage substantially equivalent to the Company's standard
executive medical coverage for the period commencing February 1, 2002 and
terminating on the later of the Employee's or his spouse's death. The Company
may provide such medical coverage through it's then current medical plan or by
annuity or by any other similar or reasonable method. Nothing herein shall
require Company to establish, maintain or continue any of the fringe benefits
already in existence or hereafter adopted for employees of the Company, nor
restrict the right of the Company to amend, modify or terminate such fringe
benefit programs in a manner which does not discriminate against Employee as
compared to other executive employees of the Company. The Employee shall also be
entitled to up to three (3) weeks' paid vacation during each year of this
Agreement, provided, however, in the event of any Change in Control of the
Company as hereinafter defined the Employee shall be entitled to up to four (4)
weeks paid vacation during each remaining year of this Agreement. Any vacations
shall be taken at such times as are mutually convenient for the Company and the
Employee.

                  (e) Business Expenses. The Company will pay, or reimburse the
Employee for, all ordinary and reasonable out-of-pocket business expenses
incurred by Employee in connection with his performance of services hereunder
upon the Employee's submission of a written, itemized account of such business
expenses in accordance with the Company's expense authorization and approval
procedures then in effect.

         5. Death or Disability of the Employee.

                  (a) Death. In the event of the death of the Employee during
the Term of this Agreement, this Agreement shall terminate effective as of the
date of the Employee's death, and the Company shall not have any further
obligation or liability hereunder except that the Company shall pay to
Employee's estate, as soon as practicable (i) any accrued and unpaid Base
Salary, (ii) a pro rata portion of any Bonus (based upon the period of

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Employee's employment) otherwise payable with respect to the fiscal year in
which Employee died, (iii) the amount of any Bonus for prior periods which Bonus
was earned but not paid prior to Employee's death, (iv) unreimbursed business
expenses for which Employee is entitled to be reimbursed under Section 4 of this
Agreement to the date of the Employee's death, and (v) continued medical
coverage for Employee's spouse as provided above.

                  (b) Disability. In the event of the Total Disability (as
hereafter defined) of the Employee, the Company shall have the right to
terminate the Employee's employment hereunder by giving the Employee 90 days
prior written notice thereof and, upon expiration of such 90-day period, the
Company shall not have any further obligation or liability under this Agreement
except that the Company shall pay to the Employee, as soon as practicable (i)
any accrued and unpaid Base Salary, (ii) a pro rata portion (based upon the
period of Employees employment) of any Bonus otherwise payable with respect to
the fiscal year in which Employee became totally Disabled, (iii) the amount of
any Bonus for prior periods which Bonus was earned but not paid prior to
Employee's Total Disability, (iv) any unreimbursed business expenses in
accordance with the provisions of Paragraph 4 hereof to the date of such Total
Disability; provided, however, that if the Employee, during any period of
disability, receives any periodic payments representing lost compensation under
any disability insurance plan, the premiums for which have been paid by the
Company, the amount of compensation that the Employee would be entitled to
receive from the Company during such period of disability shall be decreased by
the amounts of such payments, and (v) continued medical coverage as provided
above.

                  The term "Total Disability", when used herein, shall mean a
mental, emotional or physical condition which has rendered the Employee for a
period of 180 consecutive days, or for a total of 180 days during any period of
12 consecutive months, during the term of this Agreement unable or incompetent
to carry out, on a substantially full time basis, the Employee's normal and
customary job responsibilities he held or tasks that he was assigned at the time
the disability was incurred. The Employee agrees, in the event of any dispute as
to the determination made pursuant to this Paragraph 5, to submit to a physical
or other examination by a licensed physician approved by Company, and such
physician's determination and resolution of the dispute shall be binding and
conclusive. During the period in which the determination of the Employee's Total
Disability shall be under review, the Employee shall continue to be treated for
all purposes of this Agreement as an employee of the Company, enjoying the full
status with full pay to which he would otherwise be entitled under this
Agreement.

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         6. Termination.

                  (a) Termination by Company for Cause. Company shall have the
right to terminate this Agreement and employment hereunder "for cause" by giving
Employee ten (10) days advance written notice to that effect. Any such
termination of employment shall be effective on the date specified in such
notice. In the event of such termination for cause, Company shall pay to
Employee (i) his accrued and unpaid Base Salary to the effective date of the
termination, and (ii) any business expenses remaining unpaid on the effective
date of the termination for which Employee is entitled to be reimbursed under
Section 4 of this Agreement. For the purpose of this Agreement, "for cause"
shall mean (i) commission of a willful act of dishonesty in the course of
Employee's duties hereunder which injures Company, (ii) conviction by a court of
competent jurisdiction of a crime constituting a felony or conviction in respect
of any act involving fraud, dishonesty, or moral turpitude, (iii) Employee's
continued, habitual intoxication or performance under the influence of
controlled substances, after Company shall have provided written notice to
Employee and given Employee 30 days within which to commence rehabilitation with
respect thereto, and Employee shall have failed to commence or thereafter
complete such rehabilitation, (iv) frequent or extended absenteeism (not as a
result of incapacity or disability) resulting in a material failure by Employee
in the performance of his duties hereunder and which shall not have been cured
within 30 days after Company shall have advised Employee in writing of its
intention to terminate Employee's employment in accordance with the provisions
of this Subsection 6(a), in the event such condition shall not have been cured,
(v) engaging in any act which has the potential for material injury to Company
and which shall not have been cured within thirty days after Company shall have
advised Employee in writing of its intention to terminate Employee's employment
in accordance with the provisions of this Subsection 6(a), in the event such act
shall not have been cured, (vi) any act constituting a violation of the written
firearm and dangerous weapons policy of Company, a copy of which has been
provided to the Employee, or (vii) breach of any of the provisions of Sections 7
or 8 of this Agreement or non-compliance with or breach of any of the material
terms or provisions of this Agreement, which shall not have been cured within
thirty (30) days after the Company shall have advised the Employee in writing of
its intention to terminate the Employee's employment in accordance with the
provisions of this Subsection 6(a), in the event such act shall not have been
cured.

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                  (b) Termination Without Cause. The Company shall have the
right to terminate Employee's employment without cause. In the event of such
termination, or if the Employee resigns for Good Reason (as hereafter defined)
Company shall pay Employee an amount equal to the lesser of (i) Employee's
remaining Base Salary for the balance of the Term or (ii) six (6) months Base
Salary, provided, however, in the event of any Change in Control of the Company
as hereinafter defined the Company shall pay Employee an amount equal to the
lesser of (i) Employee's remaining Base Salary for the balance of Term or (ii)
three (3) year's Base Salary. This provision shall only apply to the initial
Term of this Agreement and not to any extensions of this Agreement. Upon such
payment, Company shall have no further obligations with respect to Employee.
"Good Reason" shall mean the resignation of the Employee from employment by the
Company as a result of a reduction in his Base Salary or Bonus, or a substantial
diminution in his duties, responsibilities or reporting responsibility, without
his express prior written consent.

                  (c) Pro Rata Payments. In the event of the termination of
Employee as described in Sections 6 (a) and (b), Company shall pay to Employee
(i) a pro rata portion of any Bonus for the year in which termination occurs,
such bonus prorated based upon the date of such termination, (ii) the amount of
any Bonus for prior fiscal years which Bonus was earned but not paid prior to
Employee's termination and (iii) unreimbursed business expenses for which
Employee is entitled to be reimbursed under Section 4 of this Agreement to the
date of Employee's termination.

                  (d) Change in Control. A "Change in Control of the Company"
shall mean (i) an acquisition (other than directly from the Company) of any
Voting Securities by any "Person" (as such term is defined in Sections 13(d) or
14(d) of the Securities Exchange Act of 1934 ("Exchange Act")) immediately after
which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of the combined voting power
of the Company's then outstanding Voting Securities, provided that Marvin
Rounick and Warren Weiner own less than 50% of the Company's then outstanding
Voting Securities, or (ii) approval by stockholders of the Company of(A) a
merger, consolidation or reorganization involving the Company, pursuant to which
Marvin Rounick and Warren Weiner own less than 50% of the Company's then
outstanding Voting Securities, (B) a complete liquidation or dissolution of the
Company, or (C) an agreement for the sale or other disposition of all or
substantially all of the assets of the Company to any Person (other than a
transfer to a Subsidiary or affiliate of the Company).

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         7. Confidential and Proprietary Information. Employee recognizes and
acknowledges that he will have access to certain confidential information of the
Company and its affiliates and that such information constitutes valuable,
special and unique property of the Company and its affiliates. Employee agrees
that he will not, for any reason or purpose whatsoever, during or after the term
of his employment, disclose any of such confidential information to any party
without express authorization of the Company, except as necessary in the
ordinary course of performing his duties hereunder. Employee further
specifically agrees:

                  (a) All proprietary business and technical information
(whether written or oral) disclosed in connection with this Agreement or
otherwise known to the Employee regarding the Company shall be received and
retained by the Employee as strictly confidential, and such information shall
only be disseminated internally within the Company and its affiliates and on a
need-to-know basis.

                  (b) All business or technical information identified by the
Company or reasonably identifiable and of which the Employee became aware in the
conduct of his duties hereunder and which is proprietary to the Company shall be
and remain the exclusive property of the Company at all times and shall be
returned to the Company upon its request or upon termination or cancellation of
this Agreement. In the event that Employee is required by legal process to
disclose any confidential information, Employee shall, provided Employee is not
prohibited by law or has reasonable grounds to believe Employee is not
prohibited by law provide the Company with prompt notice of such requirement so
that the Company may seek a protective order or other appropriate remedy or
waive compliance with the provisions of this Agreement. In the event that a
protective order is obtained, Employee shall use reasonable efforts to assure
that all such information disclosed will be covered by such order or other
remedy. Whether or not such protective order or other remedy is obtained, or
that the Company waives compliance with the provisions of this Agreement,
Employee will disclose only that portion of such information which Employee is
legally required to disclose.

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                  Notwithstanding the foregoing, there shall be no obligation to
retain as confidential information which is in the public domain at the time of
receipt or comes into the public domain without breach of this Agreement.

         8. Equitable Relief.

                  (a) The Employee acknowledges that by reason, among others, of
the uniqueness of the Company's business, that the covenants set forth in
Section 7 are reasonable and necessary for the protection of the Company's
legitimate business interests.

                  (b) The Employee hereby acknowledges that irreparable harm
will result to the Company in the event of the breach of any of the covenants
contained in Section?. In the event that the Employee breaches any of the
covenants contained in Section 7, the Employee agrees that in addition to all
other remedies or damages which may be available to the Company, the Company
shall be entitled to seek and obtain both temporary and permanent restraining
orders or injunctions or similar equitable relief issued by a court to prevent
the violation of any of the covenants made by the Employee pursuant to this
Agreement, without any necessity to prove actual damages.

                  (c) The Employee expressly acknowledges and agrees that the
provisions of Section 7 shall survive the termination of this Agreement.

         9. Severability: Governing Law; Jurisdiction.

                  (a) Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction. If the final judgment of a court of competent
jurisdiction declares that any term or provision of Section 7 hereof is invalid
or unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope of the
term or provision, to delete specific words or phrases, or to replace any
invalid or unenforceable term or provision with a term or provision that is
valid and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time within which the
judgment may be appealed.

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                  (b) This Agreement shall be governed by and construed in
accordance with the internal laws of the Commonwealth of Pennsylvania without
giving effect to any choice or conflict of law provision or rule (whether of the
Commonwealth of Pennsylvania or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the internal laws of the
Commonwealth of Pennsylvania.

                  (c) Each of the parties hereto submits to the exclusive
jurisdiction and venue of the appropriate state court in Montgomery County,
Pennsylvania or the federal courts of the Eastern District of Pennsylvania, in
any action or proceeding arising out of or relating to this Agreement, agrees
that all claims in respect of the action or proceeding shall be heard and
determined exclusively in such court, and agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court.

         10. Notices. All notices, requests, demands, claims, and other
communications hereunder (each, a "Notice") will be in writing, and sent by
registered or certified mail, return receipt requested, postage prepaid, by
overnight courier service, or by any other means reasonably calculated to
provide notice (including personal delivery, expedited courier, messenger
service, telecopy, telex, or ordinary mail) and addressed to the intended
recipient as set forth below:

         If to the Employee:              Copy to:
         Allan Laufgraben                 Steven R. Tannenbaum, Esquire
         1900 Country Club Drive          Solomon & Tannenbaum
         Cherry Hill, NJ 08003            707 Westchester Avenue
                                          Suite 205
                                          White Plains, NY 10604
                                          Fax: (914) 289-1800


         If to the Company:               Copy to:
         Marvin Rounick, President        Barry H. Frank, Esquire
         Deb Shops, Inc.                  Schnader Harrison Segal & Lewis LLP
         9401 Blue Grass Road             1735 Market Street
         Philadelphia, PA 19114           Philadelphia, PA 19103
         Fax: (215) 698-8664              Fax: (215) 994-1111

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A Notice shall be deemed to have been duly given when it actually is received or
when receipt is refused by the intended recipient. Any party may change the
address to which Notices hereunder are to be delivered by giving the other party
notice in the manner herein set forth.

         11.  Miscellaneous.

                  (a) This Agreement constitutes the entire agreement between
the parties hereto relating to the subject matter hereof and supersedes any
prior or contemporaneous understandings, agreements, or representations by or
between the parties hereto, written or oral, to the extent they relate in any
way to the subject matter hereof.

                  (b) This Agreement shall be binding upon and inure to the
benefit of the parties named herein and their successors and permitted assigns.
The services provided by the Employee under this Agreement are of a personal
nature, and the Employee shall not assign, convey or transfer this Agreement or
any part of his rights under this Agreement without the prior written consent of
the Company. The Company may directly or indirectly assign any or all of its
rights hereunder to any affiliate, or to any successor to substantially all of
the assets or business of the Company. In the event that Company assigns any of
its rights or obligations hereunder to any of its affiliates, the Company will
remain liable for the obligations hereunder. In the event that the Company
assigns this Agreement to a purchaser of all or substantially all of the assets
and business of the Company, the Company's obligations hereunder will cease,
provided the purchaser assumes such obligations, including the obligation to
continued medical coverage as provided above, in writing, and further provided
that such purchaser is not an affiliate of the Company. As used in this
Agreement the term "Company" shall mean both the Company as defined above and
any such successor that assumes this Agreement by operation of law or otherwise.

                  (c) No amendment of any provision of this Agreement shall be
valid unless the same shall be in writing and signed by the parties hereto. No
waiver by any party of any provision hereof shall be deemed to extend to any
prior or subsequent breach of any such provision or constitute a waiver of any
other provision hereof or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.

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                  (d) The headings contained herein are inserted for convenience
only and shall not be deemed to have any substantive meaning.

                  (e) The Company shall reimburse the Employee for reasonable
attorneys' fees incurred by the Employee in the review and negotiation of this
Agreement, up to a maximum of $2,000.

                  (f) The Company shall maintain officers liability insurance on
behalf of the Employee during the Term and any extended term of this Agreement.
Following the termination of the Employee's employment, the Employee shall
retain all rights to indemnification under applicable law or under the Company's
Certificate of Incorporation or By-Laws, as they may be amended or restated from
time to time.

         IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the date first above written.


                                                   DEB SHOPS, INC.


                                                   By: /s/ Marvin Rounick
                                                      -------------------------
                                                            MARVIN ROUNICK,
                                                            PRESIDENT



                                                   By: /s/ Allan Laufgraben
                                                      -------------------------
                                                            ALLAN LAUFGRABEN








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                                  SCHEDULE 4(c)



The Employee's entitlement to exercise the options described in Section 4(c) of
the Employment Agreement effective February 1, 2002, between Deb Shops, Inc. and
the Employee shall vest approximately in accordance with the following schedule:

                                                Number of Shares which may be
    Vesting Date                            Acquired pursuant to Option Exercise
    ------------                            ------------------------------------

    One year after Grant                                 50,000
    One year and six months after Grant                  25,000
    Two years after Grant                                25,000
    Two years and six months after Grant                 25,000
    Three years after Grant                              25,000
    Three years and six months after Grant               25,000
    Four years after Grant                               25,000
    Four years and six months after Grant                25,000
    Five years after Grant                               25,000
                                                        -------
    TOTAL                                               250,000