EXHIBIT 10.13

                              EMPLOYMENT AGREEMENT

         This EMPLOYMENT AGREEMENT is entered into as of July 1, 2006, by and
between Bluefly, Inc., a Delaware corporation (the "Company"), and Patrick C.
Barry ("Barry").

                                    RECITALS

         WHEREAS, the Company desires to provide for the continued retention of
the services of Barry as the Chief Operating Officer and Chief Financial Officer
of the Company in accordance with the terms and conditions of this Agreement.

         WHEREAS, Barry desires to serve the Company as its Chief Operating
Officer and Chief Financial Officer in accordance with the terms and conditions
of this Agreement.

         NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and Barry agree as
follows:

         1.    TERM

         The Company hereby agrees to employ Barry as the Chief Operating
Officer and Chief Financial Officer of the Company, and Barry hereby agrees to
serve in such capacity, for a term commencing on the date hereof and ending July
1, 2009, upon the terms and subject to the conditions contained in this
Agreement; provided, however, that if the Company does not provide Barry with
written notice of its desire not to renew this Agreement at least 90 days prior
to the end of the then current term (including any one year renewal term that is
created as a result of this proviso), this Agreement shall automatically extend
for one year from the end of the then current term.

         2.    DUTIES

         During the term of this Agreement, Barry shall serve as the Chief
Operating Officer and Chief Financial Officer of the Company reporting directly
to the Chief Executive Officer of the Company, and he shall perform such duties,
and have such powers, authority, functions, duties and responsibilities for the
Company as are reasonably assigned to him by the Chief Executive Officer and the
Board of Directors of the Company (the "Board") and as are consistent with the
duties, responsibilities, and activities of a senior executive officer of the
Company. To the extent that the Company becomes a division or subsidiary of
another entity, Barry shall report directly to, and have such powers, authority,
functions, duties and responsibilities as are reasonably assigned to him by, the
Chief Executive Officer of the division or subsidiary that currently comprises
the Company or to a senior executive officer of such other entity. It is
understood that the duties of Barry, should the Company become a division or
subsidiary of another entity, shall be generally consistent with his duties
prior to such event, but shall take into account the changes associated with
running a division or subsidiary, rather than an entire entity.

         The principal location of Barry's employment shall be at the Company's
principal office which shall be located in the New York City vicinity (i.e.
within a twenty (20) mile radius of

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Manhattan), although Barry understands and agrees that he will be required to
travel from time to time for business reasons. Barry shall devote substantially
all of his business time to the performance of his duties as the Chief Operating
Officer and Chief Financial Officer of the Company during the term of this
Agreement. Barry shall not, directly or indirectly, render professional services
to any other person or entity, without the consent of the Company's Board of
Directors; provided, however, that nothing contained herein shall prevent Barry
from rendering any service to any charitable organization or family business so
long as it does not interfere unreasonably with his duties and obligations
hereunder.

         3.    COMPENSATION

         For services rendered by Barry to the Company during the term of this
Agreement, the Company shall pay him a minimum base salary of three hundred
fifty thousand dollars ($350,000) per year ("Base Salary"), payable in
accordance with the standard payroll practices of the Company, subject to
increases in the sole discretion of the Compensation Committee of the Board (the
"Compensation Committee"), taking into account merit, corporate and individual
performance and general business conditions, including changes in the "cost of
living index."

         4.    INCENTIVE  COMPENSATION/EXCHANGE  OF  OPTIONS  FOR  RESTRICTED
               STOCK AND DEFERRED  STOCK UNITS;  NEW GRANT OF DEFERRED  STOCK
               UNITS

               a. Incentive Compensation. For each fiscal year during the Term,
Barry shall be eligible to receive a performance bonus as follows: provided that
Barry remains employed with the Company through the last day of such fiscal
year, Barry will be eligible to earn a performance bonus on the basis of the
achievement of certain targets to be set for each fiscal year by the
Compensation Committee of the Board of Directors in its sole discretion.

               b. Exchange of Certain Outstanding Options Held by Barry
for Restricted Stock and Deferred Stock Units.

         (i) Options Exchanged for Restricted Stock. Barry hereby forfeits all
of his rights to the options listed on Exhibit A hereto to purchase shares of
common stock of the Company ("Shares"), and in consideration for such forfeiture
the Company is simultaneously with the execution of this Agreement, (x) granting
to Barry a Restricted Stock Award under the Company's 2005 Stock Incentive Plan
(the "Plan") for 269,965 Shares in the form attached hereto as Exhibit B and (y)
paying to Barry a cash bonus equal to $123,204. The cash bonus is intended to
compensate Barry for the income taxes payable on the Restricted Stock Award. The
shares subject to the Restricted Stock Award shall vest in full on January 1,
2007.

         (ii) Options Exchanged for Deferred Stock Unit Award. Barry hereby
forfeits all of his rights to the options to purchase Shares listed on Exhibit C
hereto, and in consideration for such forfeiture, the Company is, simultaneously
with the execution of this Agreement, granting to Barry under the Plan, a
Deferred Stock Unit Award for and representing 45,837 underlying Shares under
the Plan in the form attached hereto as Exhibit D.

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         (iii) Additional Deferred Stock Unit Award. Subject to the approval by
the stockholders of the Company of an amendment to the Plan to increase the
number of shares available for grant thereunder and the maximum annual award to
any one participant under the Plan, Barry shall be granted under the Plan an
additional Deferred Stock Unit Award (the "Supplementary DSUs") for and
representing 4,062,692 underlying Shares in the form attached hereto as Exhibit
E. The Deferred Stock Units making up the Deferred Stock Unit Awards referred to
in subparagraphs 4(b)(ii) and 4(b)(iii) of this Agreement are hereinafter
referred to as the "DSUs".

         (iv) Terms of the DSUs. The DSUs are not Shares, but rather a promise
to deliver actual Shares in the future. The DSUs awarded hereunder will be
credited to an unfunded, bookkeeping account of the Company maintained on
Barry's behalf and will be distributable and subject to the restrictions
contained in the Plan and in the applicable DSU Award.

               (A) Vesting of DSUs. The DSUs shall vest as follows: (I)
               one-third of the Supplementary DSUs shall vest in four equal
               quarterly installments commencing on October 1, 2006 (e.g.,
               the first of four equal quarterly vesting periods will begin
               on October 1, 2006 so that 25% of such DSUs shall have vested
               as of January 1, 2007) (the "One-Year DSUs"), (II) both (a)
               one-third of the Supplementary DSUs and (b) the 45,837 DSUs
               issued in exchange for options with a vesting date prior to
               August 31, 2007, shall vest in eight equal quarterly
               installments commencing on October 1, 2006 (e.g., the first of
               eight equal quarterly vesting periods will begin on October 1,
               2006 so that 12.5% of such DSUs shall have vested as of
               January 1, 2007) (collectively, the "Two-Year DSUs"), and
               (III) one-third of the Supplementary DSUs shall vest in twelve
               equal quarterly installments commencing on October 1, 2006
               (e.g., the first of twelve equal quarterly vesting periods
               will begin on October 1, 2006 so that approximately 8.33% of
               such DSUs shall have vested as of January 1, 2007)
               (collectively, the "Three-Year DSUs").

               (B) Termination of Employment; Forfeiture. In the event that
               Barry's employment is terminated prior to the vesting of any
               of such DSUs, unless such termination is a Constructive
               Termination or a termination without Cause as such terms are
               defined in paragraph 7 below (in which case the vesting shall
               be accelerated as set forth therein), all unvested DSUs as of
               the date of such termination shall be forfeited immediately by
               Barry.

               (C) Distribution of DSUs. Subject to paragraph 4(b)(iv)(B),
               all of the vested DSUs underlying a Deferred Stock Unit Award
               will be distributable in Shares on the date of distribution on
               the earliest to occur of: (I) (a) with respect to the One-Year
               DSUs only, October 1, 2007, (b) with respect to the Two-Year
               DSUs only, October 1, 2008, and (c) with respect to the
               Three-Year DSUs only, October 1, 2009, (II) death, (III) the
               date on which Barry is "disabled" (as such term is defined in
               Section 409A(a)(2)(C) of the Internal Revenue Code of 1986, as
               amended ("Code") and the official guidance issued thereunder),
               (IV) subject to paragraph 7(c), the effective date of Barry's
               Constructive Termination or

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               termination without Cause, or (V) to the extent provided in
               paragraph 8, immediately following a Change of Control (as
               defined below) and thereafter.

               (D) No Rights as Shareholders. Barry shall not have any rights
               of a Shareholder with respect to the DSUs, including the right
               to vote such shares or the right to receive dividends or other
               distributions made with respect to the shares, until the
               Shares underlying the DSUs are distributed to Barry. However,
               if any dividends are paid on the Shares underlying the DSUs,
               whether in cash or stock, Barry will be credited with
               "Dividend Rights." Such Dividend Rights shall be credited to
               Barry's DSU account as follows: Barry shall be credited with
               additional DSUs equal to the value of such dividend on the
               date such dividend is paid divided by the Fair Market Value
               (as determined under the Plan) on the date the dividend is
               paid multiplied by the number of DSUs credited to Barry on the
               date the dividend is paid. The Dividend Rights credited to
               Barry will be subject to the same restrictions applicable to
               the DSUs to which they relate as initially credited to Barry
               under this paragraph 4(b).

               (E) Tax Withholding. Barry shall be responsible to fulfill any
               withholding tax requirements on the DSUs as specified in the
               Plan and as required by applicable law. Barry shall notify the
               Company no later than fifteen business days prior to a
               distribution date, as to whether he intends to make a cash
               payment to the Company for the withholding amount or would
               like the Company to make arrangements for such payment. If he
               elects to have the Company make the arrangements or fails to
               provide the required notice, the Company shall satisfy such
               withholding tax requirements, through withholding distribution
               of a portion of the DSUs equal to the withholding obligation
               based on the Fair Market Value of the Shares already owned by
               Barry on the date of distribution; provided that if the
               Company's Board of Directors determines that it would not be
               prudent to use the Company's cash flow for such purpose, the
               Company shall advise Barry who can then arrange to sell Shares
               for the purpose of satisfying the withholding tax requirement
               prior to the distribution of the applicable Shares.

         5.    EXPENSE REIMBURSEMENT AND PERQUISITES

               a. During the term of this Agreement, Barry shall be entitled
to reimbursement of all reasonable and actual out-of-pocket expenses incurred by
him in the performance of his services to the Company consistent with corporate
policies, provided that the expenses are properly accounted for.

               b. During each calendar year of the term of this Agreement,
Barry shall be entitled to reasonable vacation with full pay; provided, however,
that Barry shall schedule such vacations at times convenient to the Company.

               c. During the term of this Agreement, the Company shall
provide an annual allowance of seventeen thousand five hundred dollars ($17,500)
for the purchase of term life insurance by the Company for the benefit of Barry
(which shall be in lieu of any other life insurance benefit) and the purchase of
a supplemental disability insurance policy, which together

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with any other group coverage offered by the Company, provide for coverage of
the maximum allowable disability benefit. Barry shall be entitled to participate
in all dental insurance and disability plans, major medical insurance and other
medical, insurance, and employee benefit plans instituted by the Company from
time to time on the same terms and conditions as those offered to other senior
executive officers of the Company, to the extent permitted by law.

         6.    NON-COMPETITION; NON-SOLICITATION

               a. In consideration of the Incentive Award and severance
benefits hereunder, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, during the term of this
Agreement and during the "Non-Competition Period" (as defined in paragraph 6(c)
below) Barry shall not, without the prior written consent of the Company,
anywhere in the world, directly or indirectly, (i) enter into the employ of or
render any services to any "Competitive Business" (as defined below); (ii)
engage in any Competitive Business for his own account; (iii) become associated
with or interested in any Competitive Business as an individual, partner,
shareholder, creditor, director, officer, principal, agent, employee, trustee,
consultant, advisor or in any other relationship or capacity; (iv) employ or
retain, or have or cause any other person or entity to employ or retain, any
person who was employed or retained by the Company on the date of termination of
this Agreement or who had been employed by the Company within the nine month
period prior to the date of termination of this Agreement, except if, at the
time of such employment or retention, such person had not been employed by the
Company during the nine month period immediately preceding such employment or
retention; or (v) solicit, interfere with, or endeavor to entice away from the
Company, for the benefit of a Competitive Business, any of its customers or
other persons with whom the Company has a contractual relationship. For purposes
of this Agreement, a "Competitive Business" shall mean: (a) any person,
corporation, partnership, firm or other entity whose primary business is the
sale or consignment of off-price apparel and/or off-price fashion accessories;
(b) any division of a person, corporation, partnership, firm or other entity
(but not the person, corporation, partnership, firm or other entity itself)
whose primary business is internet based selling or consignment, and, in either
such case, consists of ten (10) or more brands of off-price apparel and/or
off-price fashion accessories; or (c) the off-price divisions of Nordstrom, Saks
Fifth Avenue, Neiman Marcus or the off-price division of another retailer of ten
(10) or more brands of apparel and/or fashion accessories. However, nothing in
this Agreement shall preclude Barry from investing his personal assets in the
securities of any corporation or other business entity which is engaged in a
Competitive Business if such securities are traded on a national stock exchange
or in the over-the-counter market and if such investment does not result in him
beneficially owning, at any time, more than 3% of the publicly-traded equity
securities of such Competitive Business.

               b. Barry and the Company agree that the covenants of
non-competition and non-solicitation contained in this paragraph 6 are
reasonable covenants under the circumstances, and further agree that if, in the
opinion of any court of competent jurisdiction, such covenants are not
reasonable in any respect, such court shall have the right, power and authority
to excise or modify such provision or provisions of these covenants as to the
court shall appear not reasonable and to enforce the remainder of these
covenants as so amended. Barry agrees that any breach of the covenants contained
in this paragraph 6 would irreparably injure the Company.

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Accordingly, Barry agrees that the Company, in addition to pursuing any other
remedies it may have in law or in equity, may obtain an injunction against Barry
from any court having jurisdiction over the matter, restraining any further
violation of this paragraph 6.

               c. The "Non-Competition Period" shall extend for a period of
eighteen months following the end of the term of this Agreement; provided,
however that, in the event that the Agreement is terminated by the Company
without "Cause" (as defined in paragraph 7(a)(iv)), or by Barry pursuant to a
"Constructive Termination" (as defined in paragraph 7(a)(iii)), the
Non-Competition Period shall expire on the first anniversary of the termination
of this Agreement (the "Modified Non-Competition Period"); and further provided
that in the event that during the Non-Competition Period or the Modified
Non-Competition Period, as the case may be, Barry receives notice in writing
from the Company of any material breach of any of the covenants contained in
this paragraph 6 by him and Barry cures such material breach within 21 days of
the date he receives such notice, then the Company will continue the Severance
Benefits provided pursuant to paragraph 7(b) below; provided, that Barry shall
not be entitled to Severance Benefits for periods during which he was in
material breach of such covenants.

         7.    TERMINATION

               a. This Agreement (other than as specifically stated herein),
the employment of Barry, and Barry's position as Chief Operating Officer and
Chief Financial Officer of the Company shall terminate upon the first to occur
of:

               (i)      his death;

               (ii)     his "permanent disability," due to injury or sickness
                        for a continuous period of four (4) months, or a
                        total of eight months in a twelve (12) month period
                        (vacation time excluded), during which time Barry is
                        unable to attend to his ordinary and regular duties;

               (iii)    a "Constructive Termination" by the Company, which,
                        for purposes of this Agreement, shall be deemed to
                        have occurred upon (A) the removal of Barry from both
                        his positions as Chief Operating Officer and Chief
                        Financial Officer of the Company (it being understood
                        that the removal of Barry from either such position
                        shall not be deemed a "Constructive Termination"),
                        (B) the material breach by the Company of this
                        Agreement, including any material diminution in the
                        nature or scope of the authorities, powers,
                        functions, duties or responsibilities of Barry as
                        Chief Operating Officer and Chief Financial Officer
                        and a senior executive officer of the Company (or to
                        the extent that the Company becomes a division or
                        subsidiary of another entity, the authorities,
                        powers, functions, duties or responsibilities of the
                        Chief Operating Officer and Chief Financial Officer
                        or senior executive officer of such division or
                        subsidiary); provided that no such breach shall be
                        considered a Constructive Termination unless Barry
                        has provided the Company with written notice of such
                        breach and the Company has failed to cure such

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                        breach within the thirty (30) day period following
                        its receipt of such notice;

               (iv)     the termination of this Agreement at any time without
                        Cause (as defined below) by the Company;

               (v)      subject to compliance with the notice provisions
                        contained in paragraph 1 of this Agreement, the
                        non-renewal of this Agreement by the Company and/or
                        the Board of Directors;

               (vi)     the termination of this Agreement for "Cause", which,
                        for purposes of this Agreement, shall mean that (1)
                        Barry has been convicted of a felony or any serious
                        crime involving moral turpitude, or engaged in
                        materially fraudulent or materially dishonest actions
                        in connection with the performance of his duties
                        hereunder, (2) Barry has willfully and materially
                        failed to perform his reasonably assigned duties
                        hereunder, (3) Barry has breached the terms and
                        provisions of this Agreement in any material respect,
                        or (4) Barry has failed to comply in any material
                        respect with the Company's written policies of
                        conduct of which he had actual notice, including with
                        respect to trading in securities; provided that the
                        Company shall not have any right to terminate this
                        Agreement for Cause pursuant to clauses (2), (3) or
                        (4) of this sub-paragraph (vi) as a result of a
                        breach unless the Company has provided Barry with
                        written notice of such breach and Barry has failed to
                        cure such breach within the twenty day period
                        following his receipt of such notice; or

               (vii)    the termination of this Agreement by Barry, which
                        shall occur on not less than thirty (30) days prior
                        written notice from Barry.

               b. In the event that this Agreement is terminated, other than
as a result of a Constructive Termination or by the Company without Cause, the
Company shall pay Barry his accrued but unpaid Base Salary and unreimbursed
business expenses and bonuses that have been earned and awarded but not yet paid
as of the date of his termination of employment and shall make no other payments
or provide any other benefits under this Agreement except that, unless this
Agreement is terminated for Cause, any other vested stock options shall be
exercisable for a period equal to the lesser of (x) one year from the date this
Agreement is terminated; (y) the remaining term of the applicable vested stock
option and (z) the period required to avoid any tax imposed under Section 409A
of the Code. In the event that this Agreement is terminated by the Company
without Cause pursuant to paragraph 7(a)(iv) or through a Constructive
Termination pursuant to paragraph 7(a)(iii), and subject to Barry's execution of
a mutual release reasonably acceptable to the Company and Barry, the Company
shall pay Barry his Base Salary through the date of termination, plus
unreimbursed business expenses and bonuses that have been earned and awarded but
not yet paid, as well as the following severance and noncompetition payments set
forth below (the "Severance Benefits"):

               (i)      the then-current Base Salary for a period of nine (9)
                        months from the date of termination;

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               (ii)     any unvested stock options, Restricted Stock or DSUs
                        that have been granted to Barry which are outstanding
                        as of the date of such termination shall be deemed to
                        be fully vested as of that date and such stock
                        options shall be exercisable for a period equal to
                        the lesser of (x) one year from the date of
                        termination of this Agreement; (y) the remaining term
                        of the applicable stock option; and (z) the period
                        required to avoid any tax imposed under Section 409A
                        of the Code.

               (iii)    the Company shall maintain in effect, or reimburse
                        Barry for the cost of maintaining, the medical and
                        dental insurance and disability and hospitalization
                        plans of the Company as well as any Company sponsored
                        life insurance policy in which Barry participates as
                        of the date of such termination for a period of one
                        year from the date of termination.

The Severance Benefits shall be payable in periodic installments in accordance
with the Company's standard payroll practices.

               c. Notwithstanding anything herein to the contrary, if any
payments due under this Agreement (including, but not limited to the
distribution of the DSUs hereunder) would subject Barry to any tax imposed under
Section 409A of the Code if such payments were made at the time otherwise
provided herein, then the payments that cause such taxation shall be payable in
a single lump sum on the first day which is at least six (6) months after the
date of Barry's "separation from service" as set forth in Code Section
409A(2)(A)(i) and the official guidance issued thereunder

         8.    CHANGE OF CONTROL

               a. In the event that a Change of Control (as defined below)
occurs during the term of this Agreement, any unvested stock options, Restricted
Stock and one half of any DSUs granted to Barry which are outstanding as of the
date of that Change of Control and have not yet vested ("COC Unvested DSUs")
shall be deemed to be fully vested as of that date. Subject to paragraph 7(c),
the remaining one half of the COC Unvested DSUs shall vest on the earliest to
occur of (x) the scheduled vesting date and (y) twelve (12) months from the date
of such Change of Control, subject, in each case, to Barry's continued
employment with the Company on such dates and (z) Barry's Constructive
Termination or termination without Cause following such Change of Control. The
DSUs that become vested due to the application of this paragraph 8 shall be
distributable upon the date that they become vested.

               b. For purposes of this Agreement, "Change of Control" shall
be deemed to occur upon:

                  (1) the acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty
percent (50%) or more (on a fully diluted basis) of either (A) the then
outstanding shares of common stock of the Company, taking into account as
outstanding for this purpose such common stock issuable upon the exercise of
options or

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warrants, the conversion of convertible stock or debt, and the exercise of any
similar right to acquire such common stock (the "Outstanding Company Common
Stock") or (B) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided, however, that
for purposes of this Agreement, the following acquisitions shall not constitute
a Change of Control: (I) any acquisition by the Company or any "Affiliate" (as
defined below), (II) any acquisition by any employee benefit plan sponsored or
maintained by the Company or any Affiliate, (III) any acquisition by Quantum
Industrial Partners LDC, Soros Fund Management LLC, and/or SFM Domestic
Investments LLC and/or any of their affiliates (collectively, "Soros"), or (IV)
any acquisition which complies with clauses (A), (B) and (C) of sub-paragraph
(a)(5) hereof ;

                  (2) Individuals who, on the date hereof, constitute the Board
(the "Incumbent Directors") cease for any reason to constitute at least a
majority of the Board, provided that any person becoming a director subsequent
to the date hereof, whose election or nomination for election was approved by a
vote of at least two-thirds of the Incumbent Directors then on the Board (either
by a specific vote or by approval of the proxy statement of the Company in which
such person is named as a nominee for director, without written objection to
such nomination) shall be an Incumbent Director; provided, however, that no
individual initially elected or nominated as a director of the Company as a
result of an actual or threatened election contest with respect to directors or
as a result of any other actual or threatened solicitation of proxies or
consents by or on behalf of any person other than the Board shall be deemed to
be an Incumbent Director;

                  (3) the dissolution or liquidation of the Company;

                  (4) the sale of all or substantially all of the business or
assets of the Company; or

                  (5) the consummation of a merger, consolidation, statutory
share exchange or similar form of corporate transaction involving the Company
that requires the approval of the Company's stockholders, whether for such
transaction or the issuance of securities in the transaction (a "Business
Combination"), unless immediately following such Business Combination: (A) more
than fifty percent (50%) of the total voting power of (x) the corporation
resulting from such Business Combination (the "Surviving Corporation"), or (y)
if applicable, the ultimate parent corporation that directly or indirectly has
beneficial ownership of sufficient voting securities eligible to elect a
majority of the directors of the Surviving Corporation (the "Parent
Corporation"), is represented by the Outstanding Company Voting Securities that
were outstanding immediately prior to such Business Combination (or, if
applicable, is represented by shares into which the Outstanding Company Voting
Securities were converted pursuant to such Business Combination), and such
voting power among the holders thereof is in substantially the same proportion
as the voting power of the Company's Voting Securities among the holders thereof
immediately prior to the Business Combination, (B) no Person (other than Soros
or any employee benefit plan sponsored or maintained by the Surviving
Corporation or the Parent Corporation), is or becomes the beneficial owner,
directly or indirectly, of thirty percent (30% ) or more of the total voting
power of the outstanding voting securities

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eligible to elect directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) and (C) at least a majority of the
members of the board of directors of the Parent Corporation (or, if there is no
Parent Corporation, the Surviving Corporation) following the consummation of the
Business Combination were Board members at the time of the Board's approval of
the execution of the initial agreement providing for such Business Combination.

               c. For purposes of this paragraph 8, the term "Affiliate"
shall mean any entity that directly or indirectly is controlled by, controls or
is under common control with the Company.

               d. Notwithstanding any provision of this Agreement to the
contrary, in the event of any of the following:

               (1) the Company is merged or consolidated with another
corporation or entity and, in connection therewith, consideration is received by
stockholders of the Company in a form other than stock or other equity interests
of the surviving entity;

               (2) all or substantially all of the assets of the Company are
acquired by another person;

               (3) the reorganization or liquidation of the Company; or

               (4) the Company shall enter into a written agreement to
undergo an event described in clauses (1), (2) or (3) above:

then the Compensation Committee may, in its sole and reasonable discretion and
upon at least 10 business days advance notice to Barry, cancel any outstanding
DSUs and pay to Barry, in cash or stock, or any combination thereof, the value
of such DSUs based upon the price per share of stock received or to be received
by other stockholders of the Company in the event. The terms of this
sub-paragraph 8(c) may be varied by the Compensation Committee in any particular
DSU Award Agreement to which Barry is a party.

               e. Reduction of Payments in Certain Cases.

               (i)     For purposes of this paragraph 8(d) (A) a "Payment" shall
                       mean any payment or distribution in the nature of
                       compensation to or for the benefit of Barry, whether paid
                       or payable pursuant to this Agreement or otherwise; (B)
                       "Agreement Payment" shall mean a Payment paid or payable
                       pursuant to this Agreement (disregarding this paragraph);
                       (C) "Net After Tax Receipt" shall mean the "Present
                       Value" (as defined below) of a Payment net all of
                       federal, state and local taxes imposed on Barry with
                       respect thereto (including without limitation under
                       Section 4999 of the Code, determined by applying the
                       highest marginal rates of such taxes that applied to
                       Barry's taxable income for the immediately preceding
                       taxable year, or such other rate(s) as Barry shall in his
                       sole discretion certify as likely to apply to Barry in
                       the relevant tax year(s); (D) "Present Value" shall mean
                       such value determined in accordance with

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                       Section 280G(d)(4) of the Code; and (E) "Reduced Amount"
                       shall mean the smallest aggregate amount of Agreement
                       Payments which (I) is less than the sum of all Agreement
                       Payments and (II) results in aggregate Net After Tax
                       Receipts which are equal to or greater than the Net After
                       Tax Receipts which would result if the aggregate
                       Agreement Payments were any other amount less than the
                       sum of all Agreement Payments.

               (ii)    Anything in this Agreement to the contrary
                       notwithstanding, in the event that a nationally
                       recognized certified public accounting firm designated by
                       the Company (the "Accounting Firm") shall determine that
                       receipt of all Payments would subject Barry to tax under
                       Section 4999 of the Code, it shall determine whether some
                       amount of Agreement Payments would meet the definition of
                       a "Reduced Amount." If said firm reasonably determines
                       that there is a Reduced Amount, the aggregate Agreement
                       Payments shall be reduced to such Reduced Amount.

               (iii)   If the Accounting Firm reasonably determines that
                       aggregate Agreement Payments should be reduced to the
                       Reduced Amount, the Company shall promptly give Barry
                       notice to that effect and a copy of the detailed
                       calculation thereof, and Barry may then elect, in his
                       sole discretion, which and how much of the Agreement
                       Payments shall be eliminated or reduced (as long as after
                       such election the present value of the aggregate
                       Agreement Payments equals the Reduced Amount), and shall
                       advise the Company in writing of his election within ten
                       business days of his receipt of notice. If no such
                       election is made by Barry within such ten-day period, the
                       Company may elect which of such Agreement Payments shall
                       be eliminated or reduced (as long as after such election
                       the present value of the aggregate Agreement Payments
                       equals the Reduced Amount) and shall notify Barry
                       promptly of such election. All reasonable determinations
                       made by the Accounting Firm under this paragraph 8(d)
                       shall be binding upon the Company and Barry. As promptly
                       as practicable following such determination, the Company
                       shall pay to or distribute for the benefit of Barry such
                       Agreement Payments as are then due to Barry under this
                       Agreement and shall promptly pay to or distribute for the
                       benefit of Barry in the future such Agreement Payments as
                       become due to Barry under this Agreement.

               (iv)    While it is the intention of the Company and Barry to
                       reduce the amounts payable or distributable to Barry
                       hereunder only if the aggregate Net After Tax Receipts to
                       Barry would thereby be increased, as a result of the
                       uncertainty in the application of Section 4999 of the
                       Code at the time of the initial determination by the
                       Accounting Firm hereunder, it is possible that amounts
                       will have been paid or distributed by the Company to or
                       for the benefit of Barry pursuant to this Agreement which
                       should not have been so paid or distributed
                       ("Overpayment") or that additional amounts which will
                       have not been paid or distributed by the Company to or
                       for the

                                     - 11 -
<PAGE>

                       benefit of Barry pursuant to this Agreement could have
                       been so paid or distributed ("Underpayment"), in each
                       case, consistent with the calculation of the Reduced
                       Amount hereunder. In the event that the Accounting Firm,
                       based upon the assertion of a deficiency by the Internal
                       Revenue Service against either the Company or Barry which
                       the Accounting Firm reasonably believes has a high
                       probability of success determines that an Overpayment has
                       been made, then Barry shall repay to the any such
                       Overpayment to the Company within ten business days of
                       his receipt of notice of such Overpayment. In the event
                       that the Accounting Firm, based upon controlling
                       precedent or substantial authority, reasonably determines
                       that an Underpayment has occurred, any such underpayment
                       shall be promptly paid by the Company to or for the
                       benefit of Barry.

               (v)     All fees and expenses of the Accounting Firm in
                       implementing the provisions of this paragraph 8(d) shall
                       be borne by the Company.

         9.    CONFIDENTIALITY; INVENTIONS

               a. Barry recognizes that the services to be performed by him
are special, unique and extraordinary in that, by reason of his employment under
this Agreement, he may acquire or has acquired confidential information and
trade secrets concerning the operation of the Company, its predecessors, and/or
its affiliates, the use or disclosure of which could cause the Company, or its
affiliates substantial loss and damages which could not be readily calculated
and for which no remedy at law would be adequate. Accordingly, Barry covenants
and agrees with the Company that he will not, directly or indirectly, at any
time during the term of this Agreement or thereafter, except in the performance
of his obligations to the Company or with the prior written consent of the Board
of Directors or as otherwise required by court order, subpoena or other
government process, directly or indirectly, disclose any secret or confidential
information that he may learn or has learned by reason of his association with
the Company. If Barry shall be required to make such disclosure pursuant to
court order, subpoena or other government process, he shall notify the Company
of the same, by personal delivery or electronic means, confirmed by mail, within
24 hours of learning of such court order, subpoena or other government process
and, at the Company's expense, shall (i) take all reasonably necessary and
lawful steps required by the Company to defend against the enforcement of such
subpoena, court order or government process, and (ii) permit the Company to
intervene and participate with counsel of its choice in any proceeding relating
to the enforcement thereof. The term "confidential information" includes,
without limitation, information not in the public domain and not previously
disclosed to the public or to the trade by the Company's management with respect
to the Company's or its affiliates' facilities and methods, studies, surveys,
analyses, sketches, drawings, notes, records, software, computer-stored or
disk-stored information, processes, techniques, research data, marketing and
sales information, personnel data, trade secrets and other intellectual
property, designs, design concepts, manuals, confidential reports, supplier
names and pricing, customer names and prices paid, financial information or
business plans.

               b. Barry confirms that all confidential information is and
shall remain the exclusive property of the Company. All memoranda, notes,
reports, software, sketches,

                                     - 12 -
<PAGE>

photographs, drawings, plans, business records, papers or other documents or
computer-stored or disk-stored information kept or made by Barry relating to the
business of the Company shall be and will remain the sole and exclusive property
of the Company and shall be promptly delivered and returned to the Company
immediately upon the termination of his employment with the Company.

               c. Barry shall make full and prompt disclosure to the Company
of all inventions, improvements, ideas, concepts, discoveries, methods,
developments, software and works of authorship, whether or not copyrightable,
trademarkable or licensable, which are created, made, conceived or reduced to
practice by Barry for the Company during his services with the Company, whether
or not during normal working hours or on the premises of the Company (all of
which are collectively referred to in this Agreement as "Developments"). All
Developments shall be the sole property of the Company, and Barry hereby assigns
to the Company, without further compensation, all of his rights, title and
interests in and to the Developments and any and all related patents, patent
applications, copyrights, copyright applications, trademarks and tradenames in
the United States and elsewhere.

               d. Barry shall assist the Company in obtaining, maintaining
and enforcing patent, copyright and other forms of legal protection for
intellectual property in any country. Upon the request of the Company, Barry
shall sign all applications, assignments, instruments and papers and perform all
acts necessary or desired by the Company in order to protect its rights and
interests in any Developments.

               e. Barry agrees that any breach of this paragraph 9 will cause
irreparable damage to the Company and that, in the event of such breach, the
Company will have, in addition to any and all remedies of law, including rights
which the Company may have to damages, the right to equitable relief including,
as appropriate, all injunctive relief or specific performance or other equitable
relief. Barry understands and agrees that the rights and obligations set forth
in paragraph 9 shall survive the termination or expiration of this Agreement.

         10.   REPRESENTATIONS AND WARRANTIES

               a. Barry represents and warrants to the Company that he was
advised to consult with an attorney of Barry's own choosing concerning this
Agreement and that Barry has done so.

               b. Barry represents and warrants to the Company that the
execution, delivery and performance of this Agreement by Barry complies with all
laws applicable to Barry or to which his properties are subject and does not
violate, breach or conflict with any agreement by which he or his assets are
bound or affected.

         11.   GOVERNING LAW; ARBITRATION

         This Agreement shall be deemed a contract made under, and for all
purposes shall be construed in accordance with, the laws of the State of New
York, without giving effect to its conflict of law provisions. Except as set
forth below, any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be resolved by arbitration in accordance
with the rules of the American Arbitration Association (the "AAA") then
pertaining in the City

                                     - 13 -
<PAGE>

of New York, New York, by a single arbitrator to be mutual agreed upon by the
parties or, if they are unable to so agree, by an arbitrator selected by the
AAA. The parties shall be entitled to a minimal level of discovery as determined
by the arbitrator. The arbitrator shall be empowered to award attorney's fees
and costs to Barry (but not the Company) if he or she deems such award
appropriate. Judgment upon any award rendered by the arbitrator may be entered
in any court having jurisdiction thereof. Nothing contained in this paragraph 11
or the remainder of this Agreement shall be construed so as to deny the Company
the right and power to seek and obtain injunctive relief in a court of equity
for any breach or threatened breach by Barry of the covenants contained in
paragraphs 6 and 9 of this Agreement.

         12.   INDEMNIFICATION

               a. The Company agrees that it shall to the fullest extent
permitted by law indemnify and hold Barry harmless and shall pay and reimburse
Barry for any loss, cost, damage, injury or other expense (including without
limitation reasonable attorneys' fees) which Barry incurs by reason of being or
having been an officer of the Company or by reason of the fact that Barry is or
was serving at the request of the Company as an officer, employee, fiduciary or
other representative of the Company. All indemnification shall be paid by the
Company in advance of the final disposition of the matter (as incurred by Barry)
provided that Barry executes and deliver to the Company an undertaking to repay
any amounts so advanced in the event that it shall be determined that Barry is
not entitled to indemnification hereunder. This indemnification obligation is in
addition to any other indemnification provision contained in the Company's
By-laws or pursuant to any other document, instrument or agreement and shall
survive the term of Barry's employment hereunder.

               b. In the event that Barry asserts his right of
indemnification under paragraph 12(a) above, the Company shall have the right to
select Barry's counsel provided that there is no material conflict of interest
between the Company and Barry and provided such counsel is reasonably acceptable
to Barry. Notwithstanding the foregoing, the Company shall have the right to
participate in, or fully control, any proceeding, compromise, settlement,
resolution or other disposition of the claim or proceeding so long as Barry is
provided with a general release from the Company and the claimant in form and
substance reasonably satisfactory to Barry and no restrictions are imposed on
Barry as a result of the settlement.

         13.   ENTIRE AGREEMENT

         This Agreement together with any stock option agreements to which Barry
and the Company are a party contain all of the understandings between Barry and
the Company pertaining to Barry's employment with the Company and supersedes all
undertakings and agreements, whether oral or in writing, previously entered into
between them.

         14.   AMENDMENT OR MODIFICATION; WAIVER

         No provision of this Agreement may be amended or modified unless such
amendment or modification is agreed to in writing, signed by Barry and by an
officer of the Company duly authorized to do so. Except as otherwise
specifically provided in this Agreement, no waiver by either party of any breach
by the other party of any condition or provision of this Agreement to

                                     - 14 -
<PAGE>

be performed by such other party shall be deemed a waiver of a similar or
dissimilar provision or condition at the same or any prior or subsequent time.

         15.   NOTICES.

         Any notice to be given hereunder shall be in writing and delivered
personally or sent by certified mail, postage prepaid, return receipt requested,
addressed to the party concerned at the address indicated below or to such other
address as such party may subsequently designate by like notice:

         If to the Company, to:

               Bluefly, Inc.
               42 West 39th Street, 9th Floor
               New York, NY 10018
               Attn: Chairman of Compensation Committee

         With a copy to:

               Dechert LLP
               30 Rockefeller Plaza
               23rd Floor
               New York, New York 10112
               Attention:  Richard Goldberg

         If to Barry, to:

               Patrick C. Barry
               c/o Bluefly, Inc.
               42 West 39th Street, 9th Floor
               New York, NY 10018

         With a copy to:

               Howard J. Rubin, Esq.
               Davis & Gilbert LLP
               1740 Broadway
               New York, New York  10019

         16.   SEVERABILITY

         In the event that any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, the remaining
provisions or portions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.

                                     - 15 -
<PAGE>

         17.   TITLES

         Titles of the paragraphs of this Agreement are intended solely for
convenience of reference and no provision of this Agreement is to be construed
by reference to the title of any paragraph.

         18.   DUTY TO MITIGATE

         Barry shall not be obligated to seek other employment by way of
mitigation of the amounts payable to him under any provision of this Agreement.

         19.   COUNTERPARTS

         This Agreement may be executed in counterparts, each of which shall be
deemed an original, and all of which together shall constitute one and the same
instrument.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date written below.

                                            BLUEFLY, INC.


                                            By: /s/ NEAL MOSZKOWSKI
                                                --------------------------------
                                                Member of Compensation Committee


                                                /s/ PATRICK C. BARRY
                                                --------------------------------
                                                Patrick C. Barry


DATED: November 14, 2006

                                     - 16 -