EXHIBIT
10.46


AMENDMENT
NO. 1 TO


EMPLOYMENT
AGREEMENT





This AMENDMENT NO. 1 TO THE EMPLOYMENT
AGREEMENT, effective as of December 18, 2008 (“Amendment No. 1”), is by and
between Melissa Payner-Gregor (“Payner”) and Bluefly, Inc. (the
“Company”).





Capitalized terms used in this
Amendment No. 1 that are not otherwise defined herein shall have the same
meaning as such terms are defined in the Amended and Restated Employment
Agreement between the Company and Payner, dated as of July 1, 2006 (the
“Agreement”).





WHEREAS, the parties entered into the
Agreement under which the parties agreed upon the terms pursuant to which Payner
would provide services to the Company as further described therein,
and





WHEREAS, the Company and Payner desire
to amend the Agreement to comply with the final regulations issued under Section
409A of the Internal Revenue Code of 1986, as amended.





NOW THEREFORE, the parties hereby agree
to amend the Agreement, effective as of the date set forth above, as
follows:





1.           Section
4(a) is hereby amended and restated in its entirety to read as
follows:




“Incentive
Compensation.  For each fiscal year during the Term, Payner
shall be eligible to receive a performance bonus as follows: provided that
Payner remains employed with the Company at the time that bonuses are awarded,
Payner will be eligible to earn a performance bonus for each fiscal year in an
amount to be set by the Compensation Committee of the Board of Directors in its
sole discretion.”




2.           Section
7(a)(iii) is hereby amended and restated in its entirety to read as
follows:




“(iii)  a
‘Constructive Termination’ by the Company during the Employment Term, which, for
purposes of this Agreement shall be deemed to have occurred upon (A) the removal
of Payner without her consent from her position as Chief Executive Officer of
the Company, or (B) the material breach by the Company of this Agreement;
provided, however, that a Constructive Termination shall not be deemed to have
occurred unless: (1) Payner gives the Company notice within ninety (90) days
after an event or occurrence which Payner believes constitutes a Constructive
Termination, specifying the event or occurrence which Payner believes
constitutes a







Constructive
Termination; and (2) the Company fails to cure such act or failure to act within
thirty (30) days after receipt of such notice.




3.           A
new sentence shall be added to the end of Section 8(a), to read as
follows:




“Notwithstanding
any other provision of this Agreement, no distributions shall be made under this
Section 8(a) upon a Change in Control, unless such Change in Control meets the
requirements of a ‘change in control event,’ as set forth in Treasury Regulation
§1.409A-3(i)(5).”




4.           The
flush language at the end of Section 8(d) is hereby amended and restated in its
entirety to read as follows:




then the
Compensation Committee may, in its sole and reasonable discretion and upon at
least 10 business days advance notice to Payner, vest in whole or in part any
outstanding unvested DSUs.  The terms of this sub-paragraph 8(d) may
be varied by the Compensation Committee in any particular DSU Award Agreement to
which Payner is a party; provided however, that the Compensation Committee may
not accelerate distribution of the DSUs, unless such acceleration complies with
Section 409A of the Code.”




5.           No
Other Changes.  Except as expressly provided in this Amendment No. 1,
all terms of the Agreement shall remain in full force and effect.




6.           Counterparts.  This
Amendment No. 1 may be executed in two or more counterparts, each of which shall
be deemed an original, but both of which together shall constitute one and the
same instrument.




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In
WITNESS WHEREOF, the Parties have caused this Amendment No. 1 to be duly
executed as of the date set forth above.




BLUEFLY,
      INC.By:
                                    /s/
      David WassongName:
                                    David
      WassongTitle:
                                    Interim
      Chairman of the Board


EXECUTIVE/s/
      Melissa Payner-GregorMelissa
      Payner-Gregor



















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