ex101to8k06688_01282008.htm


     

    Exhibit
      10.1

    


    


    


    


    


    


     

     

     

     

     

     

     

     

    
 

    


    


    


    
      	 
              
              dELiA*s,
                INC.

              Employment
                Agreement for Michele Donnan Martin

               

               

            


    

    


    


    
 

    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    



    
      
        
        

      

      
        
        

        
          

        

      

      
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    dELiA*s,
      INC.

    Employment
Agreement
      for Michele Donnan Martin

     

    
      
        	 	 	
                Page 

              
	 	 	 
	
                1.

              	
                Definitions

              	
                1

              
	
                2.

              	
                Term
                  of Employment

              	
                2

              
	
                3.

              	
                Position,
                  Duties and Responsibilities

              	
                2

              
	
                4.

              	
                Base
                  Salary

              	
                2

              
	
                5.

              	
                Annual
                  Incentive Awards

              	
                3

              
	
                6.

              	
                Long-Term
                  Stock Incentive Programs

              	
                3

              
	
                7.

              	
                Employee
                  Benefit Programs

              	
                3

              
	
                8.

              	
                Disability

              	
                3

              
	
                9.

              	
                Reimbursement
                  of Business and Other
                  Expenses

              	
                4

              
	
                10.

              	
                Termination
                  of Employment

              	
                4

              
	
                11.

              	
                Confidentiality;
                  Cooperation with Regard to
                  Litigation

              	
                7

              
	
                12.

              	
                Non-competition

              	
                8

              
	
                13.

              	
                Non-solicitation

              	
                9

              
	
                14.

              	
                Remedies

              	
                9

              
	
                15.

              	
                Resolution
                  of Disputes

              	
                9

              
	
                16.

              	
                Indemnification

              	
                10

              
	
                17.

              	
                Effect
                  of Agreement on Other Benefits

              	
                10

              
	
                18.

              	
                Assignability;
                  Binding Nature

              	
                11

              
	
                19.

              	
                Representation

              	
                11

              
	
                20.

              	
                Entire
                  Agreement

              	
                11

              
	
                21.

              	
                Amendment
                  or Waiver

              	
                11

              
	
                22.

              	
                Severability

              	
                11

              
	
                23.

              	
                Survivorship

              	
                11

              
	
                24.

              	
                Beneficiaries/References

              	
                12

              
	
                25.

              	
                Governing
                  Law/Jurisdiction

              	
                12

              
	
                26.

              	
                Notices

              	
                12

              
	
                27.

              	
                Headings

              	
                12

              
	
                28.

              	
                Counterparts

              	
                12

              
	
                29.

              	
                Tax
                  Matters

              	
                 12

              


      



    
      
        
        

      

      
        
        

        
          

        

      

      
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    EMPLOYMENT
      AGREEMENT

     

    AGREEMENT,
      made and entered into as of
      the 28th day of January, 2008 by and between dELiA*s, Inc., a Delaware
      corporation (together with its successors and assigns permitted under this
      Agreement, the “Company”), and Michele Donnan Martin (the
“Executive”).

     

    W
      I T
      N E S S E T H :

     

    WHEREAS,
      the Company desires to employ
      the Executive pursuant to an agreement embodying the terms of such employment
      (this “Agreement”) and the Executive desires to enter into this Agreement and to
      accept such employment, subject to the terms and provisions of this
      Agreement;

     

    NOW,
      THEREFORE, in consideration of the
      premises and mutual covenants contained herein and for other good and valuable
      consideration, the receipt of which is mutually acknowledged, the Company and
      the Executive (individually a “Party” and together the “Parties”) agree as
      follows:

     

    1.         
        Definitions.

     

    
      	
               

            	
              (a)

            	
              “Amended
                and Restated 2005 Stock Incentive Plan” shall have the meaning set forth
                in Section 6 below.

            


    

     

    (b)           “Base
      Salary” shall have the meaning set forth in Section 4 below.

     

    (c)           “Board”
      shall mean the Board of Directors of the Company.

     

    (d)           “Cause”
      shall have the meaning set forth in Section 10(b) below.

     

    (e)           “Confidential
      Information” shall have the meaning set forth in Section 11 below.

     

    
      	
               

            	
              (f)

            	
              “Constructive
                Termination Without Cause” shall have the meaning set forth in Section
                10(c) below.

            


    

     

    (g)           “Effective
      Date” shall have the meaning set forth in Section 2 below.

     

    (h)           “MIP”
      shall have the meaning set forth in Section 5 below.

     

    
      	
               

            	
              (i)

            	
              “Original
                Term of Employment” shall have the meaning set forth in Section 2
                below.

            


    

     

    (j)           “Renewal
      Term” shall have the meaning set forth in Section 2 below.

     

    (k)           “Restriction
      Period” shall have the meaning set forth in Section 12 below.

     

    
      	
               

            	
              (l)

            	
              “Severance
                Period” shall have the meaning set forth in Section 10(c)(ii) below,
                except as provided otherwise in Section 10(e)
                below.

            


    

     

    (m)           “Subsidiary”
      shall have the meaning set forth in Section 11 below.

     

    (n)           “Term
      of Employment” shall have the meaning set forth in Section 2 below.

     

    
      	
               

            	
              (o)

            	
              “Termination
                Without Cause” shall have the meaning set forth in Section 10(c)
                below.

            


    

     


    
      
        
        

      

      
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    2.         
        Term of Employment.

     

    (a)          
      The term of the Executive's employment under this Agreement shall commence
      on
      January 28, 2008 (the “Effective Date”) and end on the fourth anniversary of
      such date, unless Executive’s employment ceases earlier pursuant to the terms of
      this Agreement (the “Original Term of Employment”).  The Original Term
      of Employment shall be automatically renewed for successive one-year terms
      (the
“Renewal Terms”) unless at least 180 days prior to the expiration of the
      Original Term of Employment or any Renewal Term, either Party notifies the
      other
      Party in writing that Executive is electing to terminate this Agreement at
      the
      expiration of the then current Term of Employment.  “Term of
      Employment” shall mean the Original Term of Employment and all Renewal
      Terms.

     

    (b)          
      Notwithstanding anything in this Agreement to the contrary, at least one year
      prior to the expiration of the Original Term of Employment, the Parties shall
      meet to discuss this Agreement and attempt to negotiate a mutually acceptable
      new employment agreement or amendment to this Agreement, governing the period
      subsequent to the Original Term of Employment.  Nothing in this
      subparagraph 2(b) shall obligate Company or Executive to enter into a new
      employment agreement or an amendment of this Agreement.

     

    3.         
        Position, Duties and
      Responsibilities.

     

    (a)           Generally.  Executive
      shall serve initially as President of the Company’s dELiA*s Brand (Retail and
      Direct) reporting to the Company’s Chief Executive
      Officer.  Initially, Executive shall be responsible for merchandising,
      art and visual design, fashion and styling  direction and trend and
      color direction on all dELiA*s Brand merchandise whether in the catalog, on
      dELiA*s website or in the stores.  Within a reasonable period of time
      as determined by Company, Executive’s responsibilities are expected to expand to
      include all creative and design elements as they pertain to the design and
      creative direction of the dELiA*s catalog, as well as visual merchandising
      of
      the stores.   Executive shall have and perform such duties,
      responsibilities, and authorities as shall be reasonably assigned by the Company
      from time to time and as are consistent with the above-mentioned position,
      which
      may be modified as the Company deems necessary in its reasonable
      discretion.  Executive shall devote substantially all of Executive’s
      business time and attention (except for periods of vacation or absence due
      to
      illness), and Executive’s best efforts, abilities, experience, and talent to
      Executive’s position and the businesses of the Company in accordance with all
      Company policies.

     

    (b)           Other
      Activities.  Anything herein to the contrary notwithstanding,
      nothing in this Agreement shall preclude the Executive from (i) engaging in
      reasonable charitable activities and community affairs and (ii) managing
      Executive’s personal investments and affairs, provided that such activities do
      not materially interfere with the proper performance of Executive’s duties and
      responsibilities under this Agreement and not otherwise detrimental to the
      interests of the Company.  Unless approved in writing by the Board of
      the Company, the Executive may not serve on the board of directors of any
      corporation or the board of any association and/or charitable
      organization.

     

    
      	
               

            	
              4.

            	
              Base
Salary.

            


    

     

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

     


    
      
        
        

      

      
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    5.         
        Annual Incentive Awards.

     

    (a)           Subject
      to the terms and conditions of the plan that shall govern eligibility and
      participation, Executive shall participate in the Company’s Management Incentive
      Plan each year during the Term of Employment (the “MIP”) with a target annual
      incentive award opportunity of no less than 60% of Base Salary or in a successor
      plan to the MIP that provides the Executive with a substantially equivalent
      opportunity.  Payment of annual incentive awards shall be made at the
      same time that other participants in the MIP receive their incentive
      awards.

     

    (b)          
      Additionally, the minimum amount of the annual incentive award payable to
      Executive under the 2008 MIP for the Company’s fiscal year ending January 31,
      2009 shall be ($300,000), subject to the terms and conditions of the plan that
      shall govern eligibility and participation.  Such amount shall be
      payable as follows: 40% of the minimum bonus ($120,000) will be paid in August,
      2008 and the remaining 60% of the minimum bonus amount ($180,000) will be paid
      on or about March,  2009.  Such minimum amount shall be
      pro-rated for the amount of time Executive is employed by the Company for fiscal
      year 2008 if Executive is not employed by the Company for the entire 2008 fiscal
      year.

     

    6.         
        Long-Term Stock Incentive
      Programs.

     

    (a)           General/Options.  Subject
      to the terms and conditions of the Amended and Restated 2005 Stock Incentive
      Plan governing eligibility and participation, Executive shall be eligible to
      participate in and to receive stock incentive awards under the Amended and
      Restated 2005 Stock Incentive Plan and any successor plan.  Executive
      shall also receive an initial stock option grant of 275,000 stock options at
      an
      exercise price equal to the closing price of dELiA*s stock on NASDAQ on the
      day
      prior to the Effective Date.  Such stock options shall vest in four
      equal installments of 68,750 on each of the 1st, 2nd,
      3rd and 4th
      anniversaries of
      the Effective Date.

     

    (b)           Restricted
      Stock.  On Effective Date, the Company shall grant Executive a
      restricted stock grant of 25,000 shares of the Company’s common stock, which
      restrictions shall lapse in four (4) equal installments of 6,250 shares on
      each
      of the 1st,
      2nd, 3rd
      and 4th anniversaries
      of
      the Effective Date.

     

    7.        
         Employee Benefit
      Programs.

     

    During
      the Term of Employment, the
      Executive shall be entitled to participate in such employee pension and welfare
      benefit plans and programs of the Company as are made available to the Company’s
      employees generally, as such plans or programs may be in effect or modified
      from
      time to time, including, without limitation, health, medical, dental, long-term
      disability, life insurance, 401(k) with Company match and employee
      discounts.  Executive will be eligible for four (4) weeks paid
      vacation as well as Company observed holidays, five (5) sick days and three
      (3)
      personal days in accordance with Company policy.  The terms of the
      Company’s official plan documents shall govern the terms of Executive’s
      eligibility and participation in Company’s benefit plans.

     

    8.       
          Disability.

     

    (a)           During
      the Term of Employment, and subject to the terms and conditions on eligibility
      and participation as set forth in the Company’s Long-Term Disability Plan
      documents, the Executive shall be entitled to disability coverage as described
      in this Section 8(a).  In the event the Executive becomes disabled, as
      that term is defined under the Company’s Long-Term Disability Plan, the
      Executive shall be entitled to receive benefits pursuant to the Company’s
      Long-Term Disability Plan in place of Executive’s Base Salary and any other
      employee benefits other than for disabled employees in an amount pursuant to
      the
      Company’s Long-Term Disability Plan in effect at the commencement date of
      the

     


    
      
        
        

      

      
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    disability
      (“Commencement Date”) for a period beginning on the Commencement Date and ending
      with the Executive’s attainment of age 65.  If (i) the Executive
      ceases to be disabled  (as determined in accordance with the terms of
      the Long-Term Disability Plan) during the Term of Employment,
      (ii) Executive’s position or another senior executive position is then
      vacant and (iii) the Company requests in writing that Executive resume such
      position, Executive may elect to resume such position by written notice to
      the
      Company within 15 days after the Company delivers its request.  If
      Executive resumes such position, Executive shall thereafter be entitled to
      Executive’s Base Salary at the annual rate in effect at the Commencement Date
      and, for the year Executive resumes Executive’s position, a pro rata annual
      incentive award and to participate in any other employee benefit programs
      outlined in Section 6 and 7 of this Agreement that are then in
      effect.  If Executive ceases to be disabled and does not resume
      Executive’s position in accordance with the preceding sentence, Executive shall
      be treated as if Executive voluntarily terminated Executive’s employment
      pursuant to Section 10(e) as of the date the Executive ceases to be
      disabled.  If the Executive is not offered Executive’s position or
      another executive position after Executive ceases to be disabled during the
      Term
      of Employment, Executive shall be treated as if Executive’s employment was
      terminated without Cause pursuant to Section 10(c) as of the date the Executive
      ceases to be disabled.

     

    (b)           Subject
      to the applicable plan documents,  during the period the Executive is
      receiving disability benefits pursuant to Section 8(a) above, Executive shall
      continue to be treated as an employee for purposes of all employee benefits
      and
      entitlements in which Executive was participating on the Commencement Date,
      including without limitation, the benefits and entitlements referred to in
      Sections 6 and 7 above, except that the Executive shall not be entitled to
      receive any annual salary increases or any new stock incentive awards following
      the Commencement Date.

     

    
      	
               

            	
              9.

            	
              Reimbursement
of
                Business and Other
                Expenses.

            


    

     

    The
      Executive is authorized to incur
      reasonable  expenses in carrying out Executive’s duties and
      responsibilities under this Agreement, and the Company shall promptly reimburse
      Executive for all business expenses incurred in connection therewith, subject
      to
      documentation in accordance with the Company’s travel and expense reimbursement
      policy.

     

                
      10.          
  Termination of Employment.

    
       

      (a)           Termination
        Due to Death.  In the event the Executive’s employment with the
        Company is terminated due to Executive’s death, Executive’s estate or
        Executive’s beneficiaries, as the case may be, shall be entitled to and their
        sole remedies under this Agreement shall be:

       

      (i)           Base
        Salary through the date of death, which shall be paid in a single lump sum
        not
        later than 15 days following the Executive’s death;

       

      (ii)           the
        right to exercise all outstanding stock options that are vested as of the
        date
        of death for a period of one year  following death or for the
        remainder of the exercise period, if less;

       

      (iii)           the
        restrictions shall lapse on all shares of restricted stock awarded where
        restrictions have not yet lapsed; and

       

      (iv)           other
        or additional benefits then due or earned in accordance with applicable plans
        and programs of the Company.

       

      (b)           Termination
        by the Company for Cause.

       

      (i)           
        “Cause” shall mean:

       

       

      
        
          
          

        

        
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      (A)           Executive’s
        conviction of, entrance of a plea of guilty or nolo contendere to, a felony
        unless the Executive’s conduct is so severe or the threat to the Company’s
        reputation requires the Company to terminate the Executive immediately in
        its
        reasonable discretion or business judgement; or

       

      (B)           fraudulent
        conduct by Executive in connection with the business affairs of the Company;
        or

       

      (C)           theft,
        embezzlement, or other criminal misappropriation of funds by Executive from
        the
        Company (other than good faith expense account disputes); or

       

      (D)           Executive’s
        willful misconduct, which has, or would if generally known, material adversely
        affect the goodwill, business, or reputation of the Company; or

       

      (E)           Executive’s
        material breach of this Agreement.

       

      For
        purposes of this Agreement, an act or failure to act on Executive’s part shall
        be considered “willful” if it was done or omitted to be done by Executive not in
        good faith, and shall not include any act or failure to act resulting from
        any
        incapacity of Executive.

       

      (ii)           In
        the event the Company terminates the Executive’s employment for Cause, Executive
        shall be entitled to and Executive‘s sole remedies under this Agreement shall
        be:

       

      (A)           Base
        Salary through the date of the termination of Executive’s employment for Cause,
        which shall be paid in a single lump sum not later than 15 days following
        the
        Executive s termination of employment; and

       

      (B)           other
        or additional benefits, to the extent then due or earned in accordance with
        applicable plans or programs of the Company.

       

      (c)           Termination
        Without Cause or Constructive Termination Without Cause.  In the
        event the Executive’s employment with the Company is terminated without Cause
        (which termination shall be effective as of the date specified by the Company
        in
        a written notice to the Executive), other than due to death, or in the event
        there is a Constructive Termination Without Cause (as defined below), the
        Executive shall be entitled to and Executive’s sole remedies under this
        Agreement shall be:

       

      (i)           Base
        Salary through the date of termination of the Executive’s employment, which
        shall be paid in a single lump sum not later than 15 days following the
        Executive’s termination of employment;

       

      (ii)           Base
        Salary, at the annualized rate in effect immediately prior to the date of
        communication (verbal or otherwise) from Company to Executive of termination
        of
        the Executive’s employment (or in the event a reduction in Base Salary is the
        basis for a Constructive Termination Without Cause, then the Base Salary
        in
        effect immediately prior to such reduction), for a period of 12 months following
        such termination to be paid, less applicable withholdings, in accordance
        with
        the Company’s standard payroll cycle (the “Severance Period”); provided further
        that the salary continuation payment under this Section 10(c)(ii) shall be
        in
        lieu of any salary continuation arrangements under any other severance program
        of the Company or any other agreement between the Executive and the
        Company;

       

      (iii)           (A)
        the tranche of stock options which are scheduled to vest on the next succeeding
        anniversary date of the Effective Date after the date of termination shall
        vest
        as of the date of termination and (B) the right to exercise all outstanding
        stock options that are vested as of the date of termination during the 90-day
        period following termination or for the remainder of the
        exercise period, if less;

       

       

      
        
          
          

        

        
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      (iv)          (A)      
            the restrictions on the tranche of shares of restricted
        shares which are scheduled to lapse on the next succeeding anniversary of
        the
        Effective Date after the date of termination shall lapse as of the date of
        termination and (B) all other shares of restricted stock awarded where
        restrictions have not yet lapsed as of the date of termination shall be
        cancelled as of the date of termination;

       

      (v)           continued
        participation in all medical, and dental plans at the same benefit level
        at
        which Executive was participating on the date of the termination of Executive’s
        employment, subject to the terms and conditions of the official plan documents,
        until the earlier of:

       

      (A)           the
        end of the Severance Period; or

       

      (vi)           other
        or additional benefits then due or earned in accordance with applicable plans
        and programs of the Company.

       

      “Termination
        Without Cause” shall mean the Executive’s employment is terminated by the
        Company for any reason other than Cause (as defined in Section 10 (b)) or
        due to
        death.

       

       “Constructive
        Termination Without Cause” shall mean a termination of the Executive’s
        employment at Executive’s initiative as provided in this Section 10(c) following
        the occurrence, without the Executive’s written consent, of one or more of the
        following events (except as a result of a prior termination):

       

      (A)           a
        material reduction in Executive’s title or a material reduction of Executive’s
        duties or responsibilities;

       

      (B)           a
        material decrease in annual Base Salary, or target annual incentive award
        opportunity below 60% of Base Salary; or

       

      (C)           a
        failure by the Company to perform any
        material obligation under, or breach by the Company of any material provision
        of, this Agreement that is not cured within 30 days of receipt of written
        notice
        from Executive.

       

       

      
        
          
          

        

        
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      (d)           Voluntary
        Termination.

       

      (i)           In
        the event of a termination of employment by the Executive on Executive’s own
        initiative after delivery of 90 days advance written notice, other than a
        termination due to death or Constructive Termination Without Cause, the
        Executive shall have the same entitlements as provided in Section 10(b)(ii)
        above for a termination for Cause.  Notwithstanding any implication to
        the contrary, the Executive shall not have the right to terminate Executive’s
        employment with the Company during the Term of Employment except in the event
        of
        a Constructive Termination Without Cause and any voluntary termination of
        employment during the Term of Employment in violation of this Agreement shall
        be
        considered a material breach.  In the event the Executive becomes
        disabled, as that term is defined under the Company’s Long Term Disability Plan,
        the Executive’s termination of employment shall be governed by the terms of
        Section 8 of this Agreement.

       

      (ii)           If,
        and only if, there is a change in or replacement of the Company’s Chief
        Executive Officer during the Original Term of Employment then:

       

      (A)           Within
        seven (7) days after the expiration of the six (6) month period after the
        date
        of such change or replacement, Executive may provide the Company with a 90-day
        notice of termination on the Executive’s own initiative; and

       

      (B)           Company,
        at its option and in its sole discretion, shall select either:

       

      (1)           Upon
        termination to provide Executive with the entitlements contained in Section
        10(c) of this Agreement and the provisions of Section 12 shall continue to
        apply; or

       

      (2)           Upon
        termination, to provide Executive with the entitlements contained in Section
        10(b)(ii) of this Agreement and the provisions of Section 12 of this Agreement
        shall not apply; provided, however that all other provisions of
        this Agreement which apply after termination shall continue to
        apply.

       

      (e)           No
        Mitigation; No Offset.  In the event of
        any termination of employment under this Section 10, the Executive shall
        not be
        obligated to seek other employment; amounts due the Executive under this
        Agreement shall not be offset by any remuneration attributable to any subsequent
        employment that Executive may obtain.

       

      (f)           Nature
        of Payments.  Any amounts due under this Section 10 are in the
        nature of severance payments considered to be reasonable by the Company and
        are
        not in the nature of a penalty.

       

      (g)           Exclusivity
        of Severance Payments.  Upon termination of the Executive’s
        employment during the Term of Employment, Executive shall not be entitled
        to any
        severance payments or severance benefits from the Company or any payments
        by the
        Company on account of any claim by Executive of wrongful termination, including,
        but not limited to, claims under any federal, state or local human and civil
        rights or labor laws, other than the payments and benefits provided in this
        Section 10.

       

                                     
        (h)           Release of Employment
        Claims.  The
        Executive agrees, as a condition to receipt of the termination payments and
        benefits provided for in this Section 10, that Executive
        will execute a release agreement, in a
        form reasonably satisfactory to the Company, releasing any and all claims
        arising out of the Executive’s employment (other than enforcement of this
        Agreement).


    

    
      
        
        

      

      
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                    11.    
           Confidentiality; Cooperation
      with Regard to Litigation.

     

    (a)           During
      the Term of Employment and thereafter, the Executive shall not, without the
      prior written consent of the Company, disclose to anyone or make use of any
      Confidential Information, except when required to do so  in the normal
      course of conducting business on behalf of the Company, by legal process, by
      any
      governmental agency having supervisory authority over the business of the
      Company or by any administrative or legislative body (including a committee
      thereof) that requires Executive to divulge, disclose or make accessible such
      information.  In the event that the Executive is so ordered, Executive
      shall give prompt prior written notice to the Company in order to allow the
      Company the opportunity to object to or otherwise resist such order and consents
      and will not object to the Company’s standing to consent or seek protection
      relating to any such order.

     

    (b)           During
      the Term of Employment and thereafter, Executive shall not disclose the
      existence or contents of this Agreement beyond what is disclosed in the proxy
      statement or documents filed with the government unless and to the extent such
      disclosure is required by law, by a governmental agency, or in a document
      required by law to be filed with a governmental agency
      or in connection with enforcement of his rights under this
      Agreement.  In the event that disclosure is so required, the Executive
      shall give prompt prior written notice to the Company in order to allow the
      Company the opportunity to object to or otherwise resist such
      requirement.  This restriction shall not apply to such disclosure by
      Executive to members of Executive’s immediate family, Executive’s tax, legal or
      financial advisors, any lender or tax authorities or to potential future
      employers to the extent necessary, each of whom shall be advised not to disclose
      such information.  Similarly, Executive acknowledges that the Company
      shall have the right to advise potential or actual future employers of Executive
      of her post-employment obligations under this Agreement.

     

    (c)           “Confidential
      Information” shall mean all information that is not known or available to the
      public concerning the business of the Company or any Subsidiary relating to
      any
      of their products, product development, designs, costing, marketing plans and
      strategies, expansion plans and strategies, trade secrets, customers, suppliers,
      finances, and business plans and strategies.  For this purpose,
      information known or available generally within the trade or industry of the
      Company or any Subsidiary shall be deemed to be known or available to the
      public.  Confidential Information shall include information that is,
      or becomes, known to the public as a result of a breach by the Executive of
      the
      provisions of Section 11(a) above.

     

    (d)           “Subsidiary”
      shall mean any corporation controlled directly or indirectly by the Company
      and
      any affiliate of the Company.

     

    (e)           At
      any time during the Term of Employment when requested by the Company, or
      immediately upon Executive’s cessation of employment with the Company, Executive
      shall return all Company property to the Company, including, without limitation
      all Company issued computers, laptops, PDAs, Blackberries or other Company
      property or Confidential Information.

     

    (f)           The
      Executive agrees to cooperate with the Company, during the Term of Employment
      and thereafter (including following the Executive’s termination of employment
      for any reason), by making himself or herself available to testify on behalf
      of
      the Company or any Subsidiary or affiliate of the Company, in any action, suit,
      or proceeding, whether civil, criminal, administrative, or investigative, and
      to
      assist the Company, or any Subsidiary or affiliate of the Company, in any such
      action, suit, or pro­ceeding, by providing information and meeting and
      consulting with the Board or its representa­tives or counsel, or
      representatives or counsel to the Company, or any Subsidiary or affiliate of
      the
      Company, requesting Executive’s provision of testimony or
      assistance.

     


    
      
        
        

      

      
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    12.          Non-competition.

     

    (a)           During
      the Restriction Period (as defined in Section 12(b) below) and in consideration
      for any payments pursuant to Section 10, the Executive shall not engage in
      Competition with the Company or any Subsidiary.  “Competition” shall
      mean engaging in any activity, except as provided below, for a Competitor of
      the
      Company or any Subsidiary, whether as an employee, consultant, principal, agent,
      officer, director, partner, shareholder (except as a less than one percent
      shareholder of a publicly traded company) or otherwise.  A
“Competitor” shall mean any designer, manufacturer, wholesaler or retailer which
      designs, manufactures, markets or sells in the United States specialty apparel,
      clothing or accessories to girls and women between the ages of 11 and 25
      (“Competitive Business”) and (i) operates stores that engage in the Competitive
      Business within seventy-five, or (75) miles of any store location of the
      Company, or (ii) operates a catalog business that engages in the Competitive
      Business or (iii) operates an e-commerce business that engages in the
      Competitive Business, including but not limited to, those listed on Exhibit
      A
      annexed hereto.  If the Executive commences employment or becomes a
      consultant, principal, agent, officer, director, partner, or shareholder of
      any
      entity that is not a Competitor at the time the Executive initially becomes
      employed or becomes a consultant, principal, agent, officer, director, partner,
      or shareholder of the entity, future activities of such entity shall not result
      in a violation of this provision unless (x) such activities were contemplated
      at
      the time the Executive initially became employed or becomes a consultant,
      principal, agent, officer, director, partner, or shareholder of the entity
      (and
      the contemplation of such activities was known to the Executive) or (y) the
      Executive commences directly or indirectly overseeing or managing the activities
      which are competitive with the activities of the Company or
      Subsidiary.

     

    (b)           For
      the purposes of this Section 12 and Section 13 below, “Restriction Period” shall
      mean the period beginning with the Effective Date and ending with the first
      anniversary of such termination.

     

                
         13.       
  Non-solicitation

     

                                  
       (a)           Employees.  During
      the Restriction Period, Executive shall not induce and/or solicit employees
      of
      the Company or any Subsidiary to terminate their employment.  During
      the portion of the Restriction Period following the termination of the
      Executive’s employment, the Executive shall not directly or indirectly hire any
      employee of the Company or any Subsidiary or any person who was employed by
      the
      Company or any Subsidiary within 180 days of such hiring.

     

    (b)           Vendors/Business
      Partners.  Executive promises and agrees that during the
      Restriction Period, Executive will not influence or attempt to influence
      vendors, or business partners of the Company or any of its present or future
      subsidiaries, either directly or indirectly, to divert from the Company their
      business to any individual, partnership, firm, corporation or other entity
      then
      in competition with the business of the Company or any subsidiary or the
      Company.

     

    
      	
                         
                    14.

            	
              Remedies.

            


    

     

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

     


    
      
        
        

      

      
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    15.      
         Resolution of Disputes.

     

    Any
      disputes arising under or in
      connection with this Agreement, other than seeking injunctive relief under
      Section 14, shall be resolved by binding arbitration, to be held at an office
      closest to the Company’s principal offices in accordance with the Commercial
      rules and procedures of the American Arbitration Association, except that
      disputes arising under or in connection with Sections 11, 12 and 13 above shall
      be submitted to the federal or state courts in the State of New York, New York
      County.  Discovery in any arbitration shall be conducted in accordance
      with the Federal Rules of Civil Procedure.  Judgment upon the award
      rendered by the arbitrator(s) may be entered in any court having jurisdiction
      thereof.  Pending the resolution of any arbitration or court
      proceeding, the Company shall continue payment of all amounts and benefits
      due
      the Executive under this Agreement.

     

    16.           Indemnification.

     

    (a)           Company
      Indemnity.  The Company agrees that if the Executive is made a
      party, or is threatened to be made a party, to any action, suit or proceeding,
      whether civil, criminal, administrative or investigative (a “Proceeding”), by
      reason of the fact that Executive is or was a director, officer or employee
      of
      the Company or any Subsidiary or is or was serving at the request of the Company
      or any Subsidiary as a director, officer, member, employee or agent of another
      corporation, partnership, joint venture, trust or other enterprise, including
      service with respect to employee benefit plans, whether or not the basis of
      such
      Proceeding is the Executive’s alleged action in an official capacity while
      serving as a director, officer, member, employee or agent, the Executive shall
      be indemnified and held  harmless by the Company to the fullest extent
      legally permitted or authorized by the Company’s certificate of incorporation or
      bylaws or resolutions of the Company's Board of Directors or, if greater, by
      the
      laws of the State of Delaware, against all cost, expense, liability and loss
      (including, without limitation, attorney’s fees, judgments, fines, ERISA excise
      taxes or penalties and amounts paid or to be paid in settlement) reasonably
      incurred or suffered by the Executive in connection therewith, and such
      indemnification shall continue as to the Executive even if Executive has ceased
      to be a director, member, officer, employee or agent of the Company or other
      entity and shall inure to the benefit of the Executive s heirs, executors and
      administrators.

     

    (b)           No
      Presumption Regarding Standard of Conduct.  Neither the failure of
      the Company (including its board of directors, independent legal counsel or
      stockholders) to have made a determination prior to the commencement of any
      proceeding concerning payment of amounts claimed by the Executive under Section
      16(a) above that indemnification of the Executive is proper because Executive
      has met the applicable standard of conduct, nor a determination by the Company
      (including its board of directors, independent legal counsel or stockholders)
      that the Executive has not met such applicable standard of conduct, shall create
      a presumption that the Executive has not met the applicable standard of
      conduct.

     

    (c)           Liability
      Insurance.  The Company agrees to continue and maintain a
      directors and officers liability insurance policy covering the Executive to
      the
      extent the Company provides such coverage for its other executive
      officers.

     

    17.      
         Effect of Agreement on Other
      Benefits.

     

    Except
      as specifically provided in this
      Agreement, the existence of this Agreement shall not be interpreted to preclude,
      prohibit or restrict the Executive’s participation in any other employee benefit
      or other plans or programs in which Executive currently
      participates.

     

    


     


    
      
        
        

      

      
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    18.          Assignability;
      Binding Nature.

     

    This
      Agreement shall be binding upon
      and inure to the benefit of the Parties and their respective successors, heirs
      (in the case of the Executive) and permitted assigns. No rights or obligations
      of the Company under this Agreement may be assigned or transferred by the
      Company except that such rights or obligations may be assigned or transferred
      to
      a subsidiary of the Company or in connection with the sale or transfer of all
      or
      substantially all of the assets of the Company, provided that the assignee
      or
      transferee is the successor to all or substantially all of the assets of the
      Company and such assignee or transferee assumes the liabilities, obligations
      and
      duties of the Company, as contained in this Agreement, either contractually
      or
      as a matter of law.  The Company further agrees that, in the event of
      a sale or transfer of assets as described in the preceding sentence, it shall
      use reasonable efforts in order to cause such assignee or transferee to
      expressly assume the liabilities, obligations and duties of the Company
      hereunder.  No rights or obligations of the Executive under this
      Agreement may be assigned or transferred by the Executive other than Executive’s
      rights to compensation and benefits, which may be transferred only by will
      or
      operation of law, except as provided in Section 24 below.

     

    19.       
        Representation.

     

    Each
      Party represents and warrants that
      it is fully authorized and empowered to enter into this Agreement and that
      the
      performance of its obligations under this Agreement will not violate any
      agreement between it and any other person, firm or organization.

     

    20.     
          Entire Agreement.

     

    This
      Agreement contains the entire
      understanding and agreement between the Parties concerning the subject matter
      hereof and supersedes all prior agreements, understandings, discussions,
      negotiations and undertakings, whether written or oral, between the Parties
      with
      respect thereto.

     

    21.          Amendment
or
      Waiver.

     

    No
      provision in this Agreement may be
      amended unless such amendment is agreed to in writing and signed by the
      Executive and an authorized officer of the Company.  No waiver by
      either Party of any breach by the other Party of any condition or provision
      contained in this Agreement to be performed by such other Party shall be deemed
      a waiver of a similar or dissimilar condition or provision at the same or any
      prior or subsequent time.  Any waiver must be in writing and signed by
      the Executive or an authorized officer of the Company, as the case may
      be.

     

    22.          Severability
and
      Modification.

     

    In
      the event that any provision or
      portion of this Agreement shall be determined to be invalid or unenforceable
      for
      any reason, in whole or in part, the remaining provisions of this Agreement
      shall be unaffected thereby and shall remain in full force and effect to the
      fullest extent permitted by law.  In the event that a court or other
      tribunal determines that the restraints in Sections 11, 12 and 13 are in any
      way
      overbroad or unenforceable, the Parties acknowledge and agree that the court
      or
      tribunal shall have the right to modify or sever the restraints in order to
      enforce them to the fullest extent permitted by applicable law.

     

    23.     
          Survivorship.

     

    The
      respective rights and obligations
      of the Parties hereunder shall survive any termination of the Executive’s
      employment to the extent necessary to the intended preservation of such rights
      and obligations.

     

     

    
      
        
        

      

      
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    24.     
          Beneficiaries/References.

     

    The
      Executive shall be entitled, to the
      extent permitted under any applicable law, to select and change a beneficiary
      or
      beneficiaries to receive any compensation or benefit payable hereunder following
      the Executive’s death by giving the Company written notice
      thereof.  In the event of the Executive's death or a judicial
      determination of Executive’s incompetence, reference in this Agreement to the
      Executive shall be deemed, where appropriate, to refer to Executive’s
      beneficiary, estate or other legal representative.

     

    25.          Governing
Law/Jurisdiction.

     

    This
      Agreement shall be governed by and
      construed and interpreted in accordance with the laws of New York without
      reference to principles of conflict of laws.  Subject to Section 15,
      the Company and the Executive hereby consent to the exclusive jurisdiction
      of
      any or all of the following courts for purposes of resolving any dispute under
      this Agreement: (i) the United States District Court for New York and (ii)
      the
      Supreme Court of the State of New York, New York County.  The Company
      and the Executive hereby waive, to the fullest extent permitted by applicable
      law, any objection which it or he may now or hereafter have to such jurisdiction
      and any defense of inconvenient forum.

     

    26.   
            Notices.

     

    Any
      notice given to a Party shall be in
      writing and shall be deemed to have been given when delivered personally or
      sent
      by certified or registered mail, postage prepaid, return receipt requested,
      or
      via nationally recognized overnight courier prepaid, duly addressed to the
      Party
      concerned at the address indicated below or to such changed address as such
      Party may subsequently give such notice of:

    


    
      	
               

            	
              If
                to the Company:

            	
              dELiA*s,
                Inc.

              50
                West 23rd
                St.

              New
                York, New York 10010

              Attention:
                Vice President Human Resources and Vice President and General
                Coun

            


    

     

    
      	
               

            	
              If
                to the Executive:

            	
              Michele
                Donnan Martin

              950
                Forest Avenue

              Rye,
                New York 10580

            


    

    
    

                 
         27.         Headings.

     

    The
      headings of the sections contained
      in this Agreement are for convenience only and shall not be deemed to control
      or
      affect the meaning or construction of any provision of this
      Agreement.

     

    28.       
        Counterparts

     

    This
      Agreement may be executed in two
      or more counterparts.

     

    29.      
         Tax Matters

     

    (a)           Tax
      Withholding.  The Company shall withhold from any amounts payable
      under this Agreement such federal, state and local taxes as may be required
      to
      be withheld pursuant to any applicable law or regulation.

     

    (b)           Section
      409A Compliance.  The intent of the parties is that payments and
      benefits under this Agreement comply with Internal Revenue Code Section 409A
      and
      the regulations and guidelines promulgated thereunder (collectively “Code
      Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement
      shall be interpreted to be in compliance therewith.  If Executive
      notifies the Company (with specificity as to the reason therefore) that
      Executive believes that any provision of this Agreement (or of any award of
      compensation, including equity compensation or benefits) would cause Executive
      to incur any additional tax or interest under Code Section 409A, the Company
      shall, after consulting with Executive, reform such provision to try to comply
      with Code Section 409A through good faith modifications to the minimum extent
      reasonably appropriate to conform with Code Section 409A.  To the
      extent that any provision hereof is modified in order to comply with Code
      Section 409A, such modification shall be made in good faith and shall, to the
      maximum extent reasonably possible, maintain the original intent and economic
      benefit to Executive and the Company of the applicable provision without
      violating the provision of Code Section 409A.

     

    
      
        
        

      

      
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    (c)           Special
      Section 409A Rules.  This paragraph shall apply to all or any
      portion of any payment or benefit a payable under the Agreement as a result
      of
      termination of Executive’s employment that is not exempted from Code Section
      409A (“409A Severance Compensation”).

     

    (i)           Separation
      from Service.  If the termination of the Employee’s employment
      does not qualify as a “separation from service” within the meaning of Treasury
      Regulation section 1.409A-1(h) from the “Company’s Controlled Group”, then any
      409A Severance Compensation will not commence until a “separation from service”
occurs or, if earlier, the earliest other date as is permitted under Code
      Section 409A.  For this purpose, the “Company’s Controlled Group”
means the Company (i) any corporation which is a member of a controlled group
      of
      corporations (as defined in Code Section 414(b)) which includes the Company
      and
      (ii) any trade or business (whether or not incorporated) which is under common
      control (as defined in Code Section 414(c)) with the Company.

     

    (ii)           Six-Month
      Delay for “Specified Employees”.  Notwithstanding any provisions
      to the contrary in this Agreement, if the Executive is deemed on the date of
      termination to be a “specified employee” within the meaning of that term under
      Code Section 409A (a)(2)(B), then with regard to any payment or the provision
      of
      any benefit that is specified as subject to this Section, such payment or
      benefit shall not be made or provided prior to the earlier or (i) the expiration
      of six (6)-month period measured from the date of Executive’s “separation from
      service” (as such term is defined under Code Section 409A), and (ii) the date of
      Executive’s death (the “Delay Period”).  Upon the expiration of the
      Delay Period, all payments and benefits delayed pursuant to this Section 30(c)
      (whether they would have otherwise been payable in a single sum or in
      installments in absence of such delay) shall be reimbursed to the Executive
      in a
      lump sum, and any remaining payments and benefits due under this Agreement
      shall
      be paid or provided in accordance with the normal payment dates specified for
      them herein.

     

    IN
      WITNESS WHEREOF, the undersigned
      have executed this Agreement as of the date first written above.

     

    
      


       

      
        	
                dELiA*s,
                  INC.

              
	 
	
                By:

              
	 /s/
                Walter Killough
	
                Name:
                  Walter Killough

              
	
                Title:
                  Cheif Operating Officer

              
	 
	 
	
                EXECUTIVE

              
	 
	 
	 /s/
                Michele
                Donnan Martin
	
                Michele
                  Donnan Martin

              


      

      



      
        
          
          

        

        
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    EXHIBIT
      A

    


    


    Guess?
      Inc.

    Aeropostale,
      Inc.

    Zumiez,
      Inc.

    Abercrombie
      & Fitch, Co.

    American
      Eagle Outfitters, Inc.

    Gap,
      Inc.

    Wet
      Seal,
      Inc.

    Pacific
      Sunwear of California, Inc.

    Limited
      Brands, Inc.

    Hot
      Topic, Inc.

    The
      Buckle, Inc.

    J.
      Crew
      Group, Inc.

    Urban
      Outfitters, Inc.

    Charlotte
      Russe Holding, Inc.

    Forever
      21

    H
&
      M

    Genesco,
      Inc.

    Garage

    Top
      Shops

    Zara

    Next
      Plc

    Liz
      Claiborne, Inc. (Juicy and Lucky divisions)

    AGX

    Mast
      Industries

    Femme
      Knits

    


    


    


    


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


    
      
        
        

      

      
        14