EXHIBIT
10.1

    NON-QUALIFIED STOCK OPTION
AGREEMENT

    [EMPLOYEE]

     

    STOCK OPTION AGREEMENT made
as of January 12, 2011, by and between Frederick’s of Hollywood Group Inc., a
New York corporation (the “Company”), and _____________ (the
“Employee”).

     

    WHEREAS, effective on January
12, 2011, pursuant to the terms and conditions of the Company’s 2010 Long-Term
Incentive Equity Plan (the “Plan”), the Compensation Committee of the Board of
Directors of the Company (the “Committee”) authorized the grant to the Employee
of an option (the “Option”) to purchase ________ shares of the authorized but
unissued common stock of the Company, $.01 par value (the “Common Stock”),
conditioned upon the Employee’s acceptance thereof upon the terms and conditions
set forth in this Agreement and subject to the terms of the Plan (capitalized terms used herein
and not otherwise defined shall have the meanings set forth in the
Plan);
and

     

    WHEREAS, the Employee desires
to acquire the Option on the terms and conditions set forth in this Agreement
and subject to the terms of the Plan;

     

    IT IS
AGREED:

     

    1.           Grant
of Stock Option.  The Company
hereby grants the Employee the Option to purchase all or any part of an
aggregate of __________ shares of Common Stock (the “Option Shares”) on the
terms and conditions set forth herein and subject to the provisions of the
Plan.

     

    2.           Non-Qualified
Stock Option.  The Option
represented hereby is not intended to be an Option which qualifies as an
“Incentive Stock Option” under Section 422 of the Internal Revenue Code of
1986, as amended.

     

    3.           Exercise
Price.  The exercise
price of the Option shall be $1.05 per share, subject to
adjustment as hereinafter provided.

     

    4.           Vesting
and Exercisability.  Subject to the
terms and conditions of the Plan, and provided that the Employee has remained
continuously employed by the Company as of each vesting date except as otherwise
provided herein, this Option shall vest and become exercisable in three (3)
equal installments as follows:  (i) ______ Option Shares will become
exercisable on January 12, 2011, (ii) ______ Option Shares will become
exercisable on January 12, 2012 and (iii) ______ Option Shares will become
exercisable on January 12, 2013.  After a portion of the Option
becomes exercisable, it shall remain exercisable, except as otherwise provided
herein, until the close of business on January 11, 2021 (the “Exercise
Period”).


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    5.           Effect
of Termination of Employment.

     

    5.1          Termination
Due to Death. If
Employee’s employment by the Company terminates by reason of death, the portion
of the Option that was exercisable as of the date of death may thereafter be
exercised by the legal representative of the estate or by the legatee of the
Employee under the will of the Employee, for a period of one year from the date
of such death or until the expiration of the Exercise Period, whichever period
is shorter. The portion of the Option, if any, that was not exercisable as of
the date of death shall immediately expire.

     

    5.2          Termination
Due to Disability. If Employee’s employment by
the Company terminates by reason of Disability (as defined under
the Plan), the portion of the Option that was exercisable as of the date
of termination
of employment by reason of such Disability or Normal
Retirement may
thereafter be exercised by the Employee or legal representative for a period of
one year from the date of such termination or until the expiration of the
Exercise Period, whichever period is shorter. The portion of the Option, if any,
that was not exercisable as of the date of termination of employment shall
immediately expire.

     

    5.3          Termination
by the Company Without Cause
or Due to Normal Retirement. If Employee’s employment is
terminated by the Company without cause or due to Normal Retirement
(as defined in the Plan), then the portion of the
Option that was
exercisable as of the date of termination of
employment may be exercised for a period of ninety (90) days from the date of termination of employment.
The portion of the Option, if any, not exercisable as of the date of termination
of employment shall immediately expire.

     

    5.4          Other
Termination.

     

    5.4.1      If Employee’s employment is
terminated for any reason other than (i) death, (ii) Disability, (iii) without cause by the
Company or (iv)
due to Normal Retirement, the Option, whether or not
exercisable, shall expire on the date of termination of
employment.

     

    
      
         


      

      
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    5.4.2      If the Employee’s employment
is terminated
(i) for
cause or (ii)
for any reason and Employee engages in conduct specified in Section 12.3(a) of
the Plan, (i)
this Option, whether or not exercisable, shall immediately expire and (ii) the
Company may require the Employee to pay to the Company the economic value of any
Option Shares purchased hereunder by the Employee within the six (6) month
period prior to the date of termination of employment. For this purpose, the term
“economic value” means the difference between the
Fair Market Value (as defined in the
Plan) of the
Option Shares on the date of such termination of employment (or the sales price
of such shares if the Option Shares were sold during such six (6) month period)
and the Exercise Price of such shares.  In such event, the Employee
hereby agrees to remit to the Company, in cash, by no later than thirty (30)
days after the date of termination, an amount equal to the economic value as
defined above.

     

    5.4.3      For purposes of this Agreement,
“cause” shall mean (a) the refusal, or
failure resulting from the lack of good faith efforts, by Employee to carry out specific
directions of the Board of the Directors or the
Chief Executive Officer of the Company which are of a material
nature and consistent with Employee’s then current status with the
Company, or the refusal, or failure resulting from the lack of good faith
efforts, by Employee to perform a material part
of Employee’s duties; (b) fraud or
dishonest action by Employee in Employee’s relations with the Company
or any of its subsidiaries or affiliates, or with any customer or business
contact of the Company or any of its subsidiaries or affiliates (“dishonest” for
these purposes shall mean Employee knowingly making a material
misstatement or omission, or knowingly committing a material improper act, for
Employee’s personal benefit); or
(c) the conviction of
Employee of any crime involving an
act of moral turpitude.  Notwithstanding the foregoing, no
“cause” for termination shall
be deemed to exist with respect to Employee’s acts described in clause (a)
above, unless the Company shall have given written notice to Employee specifying the “Cause” with
reasonable particularity and, within thirty (30) calendar days after such
notice, Employee shall not have cured or
eliminated the problem or thing giving rise to such “Cause;” provided, however,
that a repeated breach after notice and cure of any provision of clause (a)
above involving the same or substantially similar actions or conduct, shall be
grounds for termination for “cause” without any additional
notice from the Company.  Notwithstanding the
foregoing, if Employee has entered into an employment
agreement with the Company and such agreement has a
definition of “cause” different from the
definition above, the definition in such employment agreement shall control
herein and therein.

     

    
      
         


      

      
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    6.           Withholding
Tax.  Not later than
the date as of which an amount first becomes includible in the gross income of
the Employee for Federal income tax purposes with respect to the Option, the
Employee shall pay to the Company, or make arrangements satisfactory to the
Committee regarding the payment of, any Federal, state and local taxes of any
kind required by law to be withheld or paid with respect to such amount
(“Withholding Tax”).  The obligations of the Company under the Plan
and pursuant to this Agreement shall be conditional upon such payment or
arrangements with the Company and the Company shall, to the extent permitted by
law, have the right to deduct any Withholding Taxes from any payment of any kind
otherwise due to the Employee from the Company.

     

    7.           Adjustments.

     

    7.1          In the event of a stock
split, stock dividend, combination of shares, or any other similar change in the
Common Stock of the Company as a whole, the Board of Directors of the Company
shall make equitable, proportionate adjustments in the number and kind of shares
covered by the Option and in the option price hereunder.

     

    7.2          In the event of any
reclassification or reorganization of the outstanding shares of Common Stock
other than a change covered by Section 7.1 or that solely affects the par value
of such shares of Common Stock, or in the case of any merger or consolidation of
the Company with or into another corporation (other than a consolidation or
merger in which the Company is the continuing corporation and that does not
result in any reclassification or reorganization of the outstanding shares of
Common Stock), the Employee shall have the right thereafter (until the
expiration of the right of exercise of this Option) to receive upon the exercise
hereof after such event, for the same aggregate Exercise Price payable hereunder
immediately prior to such reclassification, reorganization, merger or
consolidation, the amount and kind of consideration receivable by a holder of
the number of shares of Common Stock of the Company obtainable upon exercise of
this Option immediately prior to such event.  The provisions of this
Section 7.2 shall similarly apply to successive reclassifications,
reorganizations, mergers or consolidations, sales or other
transfers.

     

    8.           Method
of Exercise.

     

    8.1          Notice
to the Company.  The Option shall
be exercised in whole or in part by written notice in substantially the form
attached hereto as Exhibit A directed to the Company at its principal place
of business accompanied by full payment as hereinafter provided of the exercise
price for the number of Option Shares specified in the notice and of the
Withholding Taxes, if any.

     

    8.2          Delivery
of Option Shares.  The Company
shall deliver a certificate for the Option Shares to the Employee as soon as
practicable after payment therefor.

     

    
      
         


      

      
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    8.3          Payment
of Purchase Price.  The Employee
shall make cash payments by certified or bank check, in each case payable to the
order of the Company; the Company shall not be required to deliver certificates
for Option Shares until the Company has confirmed the receipt of good and
available funds in payment of the purchase price thereof and of the Withholding
Taxes, if any.

     

    9.           Nonassignability.  The Option shall
not be assignable or transferable except by will or by the laws of descent and
distribution in the event of the death of the Employee.  No transfer
of the Option by the Employee by will or by the laws of descent and distribution
shall be effective to bind the Company unless the Company shall have been
furnished with written notice thereof and a copy of the will and such other
evidence as the Company may deem necessary to establish the validity of the
transfer and the acceptance by the transferee or transferees of the terms and
conditions of the Option.

     

    10.         Company
Representations.  The Company
hereby represents and warrants to the Employee that:

     

    (i)           the Company, by appropriate
and all required action, is duly authorized to enter into this Agreement and
consummate all of the transactions contemplated hereunder;
and

     

    (ii)          the Option Shares, when
issued and delivered by the Company to the Employee in accordance with the terms
and conditions hereof, will be duly and validly issued and fully paid and
non-assessable.

     

    11.         Employee
Representations.  The Employee
hereby represents and warrants to the Company that:

     

    (i)           the Employee is acquiring the
Option and shall acquire the Option Shares for the Employee’s own account and
not with a view towards the distribution thereof;

     

    (ii)          the Employee has received a
copy of the Plan as in effect as of the date of this
Agreement;

     

    (iii)         the Employee has received a
copy of all reports and documents required to be filed by the Company with the
Commission pursuant to the Exchange Act within the last 24 months and all
reports issued by the Company to its stockholders;

     

    
      
         


      

      
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    (iv)         the Employee understands that
the Employee must bear the economic risk of the investment in the Option Shares,
which cannot be sold by the Employee unless they are registered under the
Securities Act of 1933 (the “1933 Act”) or an exemption therefrom is available
thereunder and that the Company is under no obligation to register the Option
Shares for sale under the 1933 Act;

     

    (v)  
       in Employee’s position with
the Company, the Employee has had both the opportunity to ask questions and
receive answers from the officers and directors of the Company and all persons
acting on its behalf concerning the terms and conditions of the offer made
hereunder and to obtain any additional information to the extent the Company
possesses or may possess such information or can acquire it without unreasonable
effort or expense necessary to verify the accuracy of the information obtained
pursuant to clause (ii) above;

     

    (vi)         the Employee is aware that the Company
shall place stop transfer orders with its transfer agent against the transfer of
the Option Shares in the absence of registration under the 1933 Act or an
exemption therefrom as provided herein;

     

    (vii)        the Employee has received a
copy of the Plan and understands Employee’s rights with respect to the
Option Shares shall, in all respects, be subject to the terms and conditions of
the Plan and this Agreement;

     

    (viii)       the Employee is aware of and
understands that Employee is subject to the Company’s Insider Trading Policy and
has received a copy of such policy as of the date of this Agreement;
and

     

    (ix)          in the absence of an
effective registration statement under the 1933 Act, the certificates evidencing
the Option Shares shall bear the following legend:

     

    “The shares represented by
this certificate have been acquired for investment and have not been registered
under the Securities Act of 1933.  The shares may not be sold or
transferred in the absence of such registration or an exemption therefrom under
said Act.”

     

    12.         Restriction
on Transfer of Option Shares.  Anything in this
Agreement to the contrary notwithstanding, the Employee hereby agrees that the
Employee shall not sell, transfer by any means or otherwise dispose of the
Option Shares acquired by the Employee without registration under the 1933 Act,
or in the event that they are not so registered, unless (i) an exemption
from the 1933 Act registration requirements is available thereunder,
(ii) the Employee has furnished the Company with notice of such proposed
transfer and the Company’s legal counsel, in its reasonable opinion, shall deem
such proposed transfer to be so exempt and (iii) such transfer is in compliance
with the Company’s Insider Trading Policy, as in effect at such
time.

     

    
      
         


      

      
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    13.         Miscellaneous.

     

    13.1        Notices.  All notices,
requests, deliveries, payments, demands and other communications which are
required or permitted to be given under this Agreement shall be in writing and
shall be either delivered personally or sent by registered or certified mail, or
by private courier, return receipt requested, postage prepaid to the parties at
their respective addresses set forth herein, or to such other address as either
shall have specified by notice in writing to the other.  Notice shall
be deemed duly given hereunder when delivered or mailed as provided
herein.

     

    13.2        Plan
Paramount; Conflicts with Plan.  This Agreement
and the Option shall, in all respects, be subject to the terms and conditions of
the Plan, whether or not stated herein.  In the event of a conflict
between the provisions of the Plan and the provisions of this Agreement, the
provisions of the Plan shall in all respects be controlling.

     

    13.3        Shareholder
Rights.  The Employee
shall not have any of the rights of a shareholder with respect to the Option
Shares until such shares have been issued after the due exercise of the
Option.

     

    13.4        Waiver.  The waiver by
any party hereto of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any other or subsequent
breach.

     

    13.5        Entire
Agreement.  This Agreement
constitutes the entire agreement between the parties with respect to the subject
matter hereof.  This Agreement may not be amended except by writing
executed by the Employee and the Company.

     

    13.6        Binding
Effect; Successors.  This Agreement
shall inure to the benefit of and be binding upon the parties hereto and, to the
extent not prohibited herein, their respective heirs, successors, assigns and
representatives.  Nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto and as provided
above, their respective heirs, successors, assigns and representatives any
rights, remedies, obligations or liabilities.

     

    13.7        Governing
Law.  This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York, without regard to choice of law provisions.

     

    13.8        Headings.  The headings
contained herein are for the sole purpose of convenience of reference, and shall
not in any way limit or affect the meaning or interpretation of any of the terms
or provisions of this Agreement.

     

    
      
         


      

      
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    13.9        Section
409A.  The Option
granted hereunder is intended to be exempt from the provisions of Section 409A
of the Internal Revenue Code of 1986, as amended ("Section 409A
").  To the extent that the Options or any payments or benefits
provided hereunder are considered deferred compensation subject to Section 409A,
the Company intends for this Agreement and the Option to comply with the
standards for nonqualified deferred compensation established by Section 409A
(the “409A Standards”).  Notwithstanding
anything herein to the contrary, to the extent that any terms of this Agreement
or the Option would subject the Employee to gross income inclusion, interest or
an additional tax pursuant to Section 409A, those terms are to that extent
superseded by the 409A Standards.  The Company reserves the right to
amend the Option granted hereunder to cause such Option to comply with or be
exempt from Section 409A.

     

    [THE REMAINDER OF THIS PAGE
HAS BEEN INTENTIONALLY LEFT BLANK]


    
      
         


      

      
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    IN WITNESS WHEREOF, the
parties hereto have signed this Agreement as of the day and year first above
written.

     

    
      
        	
                EMPLOYEE:

              	 
      	
                FREDERICK’S OF
      HOLLYWOOD GROUP INC.

              
	 
      	 
      	 
      
	 
      	 
      	
                By:

              	 
      
	
                Name:

              	 
      	 
      	
                Name:

              
	 
      	 
      	 
      	
                Title:

              


      

    

     

    
      	
              Address of
      Employee:

            	
              Address of
      Company:

            
	 
      	
              6255 W. Sunset
      Blvd.

            
	 
      	
              Hollywood, CA
      90028

            


    


    
      
         


      

      
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     EXHIBIT A

    


    FORM OF NOTICE OF EXERCISE OF
OPTION

    


    ____________________

      DATE

    


    Frederick’s of Hollywood
Group Inc.

    6255 W. Sunset
Boulevard

    6th Floor

    Hollywood, CA
90028

    


    Attention:  The
Board of Directors

    


    Re:         Purchase
of Option Shares

    


    Gentlemen:

    


    In accordance with my Stock
Option Agreement dated as of January 12, 2011 (“Agreement”) with
Frederick’s of Hollywood Group Inc. (the “Company”), I hereby irrevocably elect
to exercise the right to purchase _________ shares of the Company’s common
stock, par value $.01 per share (“Common Stock”), which are being purchased for
investment and not for resale.

    


    As payment for my shares,
enclosed is a certified or bank check payable to Frederick’s of Hollywood Group
Inc. in the sum of $                  .

    


    I hereby represent, warrant
to, and agree with, the Company that

    


    (i)           I acquired the Option and
shall acquire the Option Shares for my own account and not with a view towards
the distribution
thereof;

    


    (ii)          I have received a copy of all
reports and documents required to be filed by the Company with the Commission
pursuant to the Exchange Act within the last 24 months and all reports issued by
the Company to its stockholders;

    


    (iii)         I understand that I must bear
the economic risk of the investment in the Option Shares, which cannot be sold
by me unless they are registered under the Securities Act of 1933 (the “1933
Act”) or an exemption therefrom is available thereunder and that the Company is
under no obligation to register the Option Shares for sale under the 1933
Act;

    


    (iv)       
 in my position
with the Company, I have had both the opportunity to ask questions and receive
answers from the officers and directors of the Company and all persons acting on
its behalf concerning the terms and conditions of the offer made hereunder and
to obtain any additional information to the extent the Company possesses or may
possess such information or can acquire it without unreasonable effort or
expense necessary to verify the accuracy of the information obtained pursuant to
clause (ii) above;

    


    (v)        
 I am aware that
the Company shall place stop transfer orders with its transfer agent against the
transfer of the Option Shares in the absence of registration under the 1933 Act
or an exemption therefrom as provided herein;


    
      
         


      

      
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    (vi)         I have received a copy of the
Company’s 2010 Long-Term Incentive Equity Plan and understand my rights with
respect to the Option Shares shall, in all respects, be subject to the terms and
conditions of this Company’s 2010 Long-Term Incentive Equity Plan and this
Agreement;

    


    (vii)        I am aware of and understand
that I am subject to the Company’s Insider Trading Policy and have received a
copy of such policy; and

    


    (viii)       in the absence of an
effective registration statement under the 1933 Act, the certificates evidencing
the Option Shares shall bear the following legend:

    


    “The shares represented by
this certificate have been acquired for investment and have not been registered
under the Securities Act of 1933.  The shares may not be sold or
transferred in the absence of such registration or an exemption therefrom under
said Act.”

    


    Kindly forward to me my
certificate at your earliest convenience.

    


    Very truly
yours,

    


    
      
        	 
      	 
      	 
      
	
                (Signature)

              	 
      	
                (Address)

              
	 
      	 
      	 
      
	
                (Print
      Name)

              	 
      	
                (Address)

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	
                (Social Security
      Number)

              


      

    


    
      
         


      

      
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