Document:

Employment Agreement dated as of March 31, 2000, between RDF ACQUISITION
CORP., a Delaware corporation (the "Company") and PAMELA F. KELLEY (the
"Executive").

                                   BACKGROUND

WHEREAS:

     A. The Company has entered into an Asset Purchase Agreement with RUE DE
FRANCE, INC. ("RDF"), the shareholders of RDF and LILLIAN VERNON CORPORATION
("LVC") dated as of March 31, 2000, (the "Asset Purchase Agreement") to purchase
substantially all of the assets of RDF;

     B. The Executive has been a shareholder, director and officer of RDF, and
as such has substantial experience that has value to the Company;

     C. The Company desires to employ the Executive on the terms and subject to
the conditions hereinafter set forth; and

     D. Capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Asset Purchase Agreement.

     NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and obligations hereinafter set forth, the parties hereto agree as
follows:

     1. EMPLOYMENT. (a) The Company hereby employs the Executive, and the
Executive hereby accepts employment with the Company, upon the terms and
conditions set forth in this Agreement for the period beginning on the date
hereof and ending five (5) years from the date hereof unless sooner terminated
pursuant to the terms hereof (the "Initial Employment Period").

     (b) After the expiration of the Initial Employment Period, this Agreement
shall continue at will terminable upon six (6) months' prior written notice by
either party to the other, which notice may be given at any time provided the
effective date of termination set forth in such notice is on or after the end of
the Initial Employment Period. (The entire period of employment is hereinafter
referred to as the "Employment Period".)

     2. DUTIES. During the Employment Period, the Executive shall be employed by
the Company as its President and shall perform such duties and services
consistent with such position as may be assigned to the Executive by the Board
of Directors of the Company. In

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addition, Executive shall perform such other services for LVC and its Affiliates
as may be reasonably requested by the President or Chief Executive Officer or
Chairman of the Board of Directors of LVC, all without further compensation
hereunder from LVC or any such Affiliate; provided, however, that the parties
recognize that Executive's primary responsibilities shall be to manage and
promote the business of the Company and, accordingly, such other services shall
not be of a nature such that they would materially detract from the ability of
Executive to fulfill such responsibilities. The Executive shall devote
Executive's business time, attention and energies on a full-time basis to the
performance of the duties and responsibilities hereunder.

     3. COMPENSATION; BENEFITS; REIMBURSEMENT.

     (a) BASE SALARY. During the Employment Period, the Company shall pay to the
Executive an annual base salary of One Hundred Thousand ($100,000) Dollars (such
salary being referred to herein as the "Base Salary"). The Base Salary shall be
payable in such installments (but not less frequently than monthly) as is the
policy of the Company.

     (b) BENEFITS. During the Employment Period, the Executive shall be entitled
to such benefits (the "Benefit Arrangements") as are generally made available
from time to time to Vice Presidents of LVC who are not members of LVC's
Management Committee (other than benefits under LVC's bonus policy) subject to
the right of the Company to amend or terminate any or all such Benefit
Arrangements.

     (c) REIMBURSEMENT OF EXPENSES. During the Employment Period, the Company
shall reimburse the Executive, in accordance with the policies and practices of
LVC in effect from time to time with respect to Vice Presidents of LVC who are
not members of its Management Committee, for all reasonable and necessary
traveling expenses and other disbursements incurred by Executive for or on
behalf of the Company in connection with the performance of Executive's duties
hereunder upon presentation by the Executive to the Company of appropriate and
timely documentation therefor.

     (d) DEDUCTIONS. The Company shall deduct from any payments to be made by it
to the Executive under this Agreement any amounts required to be withheld in
respect of any Federal, state or local income or other taxes and any amounts
required to be deducted pursuant to the terms of the Benefit Arrangements.

     4. PERFORMANCE BONUSES.

     (a) The Company agrees to pay to the Executive a bonus of Fifty Thousand
($50,000) Dollars for each EBT Year during the Employment Period in which the
Company earns one-half (1/2) or more of the Projected EBT for such year set
forth in Schedule 1.5(a) to the Asset Purchase Agreement (the "Annual
Performance Bonus").

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     (b) EBT shall be determined in accordance with generally accepted
accounting principles consistently applied except that the EBT of the Company
for the period March 1, 2000 through the Closing Date shall be added to the
Company's EBT for the First EBT Year and except that the amortization of any
goodwill or any other intangible assets created as a result of the purchase of
the Purchased Assets shall not be deducted and if any functions are performed
for the Company by LVC or any of its Affiliates such as, but not limited to,
accounting, warehousing, purchasing or distribution, then the cost for such
functions shall be charged to the Company as set forth in Schedule 1.5(b) to the
Asset Purchase Agreement. In computing EBT, the Company shall be charged
interest, fees and costs on all borrowings both short term and long term,
outstanding intercompany balances, capital invested in the Company by LVC
(excepting the Fixed Portion of the Purchase Price and the Contingent Portion of
the Purchase Price) and letters of credit at LVC's cost to borrow money or to
establish letter of credits, as the case may be.

     (c) The sales of all products using the Rue de France service mark as well
as the sales of any other collection of products under any other name whether
similar or dissimilar to RDF's current line of products or price points and
whether through a catalog, website or other direct marketing medium or through
retail stores (each, a "New Business Initiative") which New Business Initiative
was developed by Executive with the approval of LVC shall be conducted by the
Company or if conducted by LVC, the Company shall be given credit for the EBT
generated by the sales of such products. The foregoing shall not prevent LVC
from including in its catalogs products offered for sale by the Company and VICE
VERSA. Any such New Business Initiative proposed by Executive shall be subject
to the same review and capital budget process as is required by the policies of
LVC in effect from time to time with respect to such matters for LVC.

     (d) A calculation of the Company's EBT in reasonable detail shall be
delivered to Executive within ninety (90) days following the end of each EBT
Year during the Initial Employment Period, and, if it shows that the Annual
Performance Bonus has been earned for such EBT Year, then it shall be
accompanied by payment of the same. The payment of any earned Annual Performance
Bonus shall be conditioned upon Executive being employed by the Company through
the end of the applicable EBT Year; provided, however, the foregoing condition
shall not apply if the Company has terminated Executive's employment without
Cause or Executive has terminated Executive's employment hereunder for Good
Reason (as Cause and Good Reason are hereinafter defined), provided, further,
however, if Executive's employment is terminated by reason of Executive's death
or because Executive becomes disabled (defined below), then any Annual
Performance Bonus which would otherwise be due Executive shall be pro rated in
the year this Agreement is so terminated by multiplying such Annual Performance
Bonus by a fraction, the numerator of which is equal the number of days elapsed
from the beginning of such EBT Year until the termination of this Agreement and
the denominator of which is equal to 365 days. The calculation of the Company's
EBT shall be final and binding upon the Executive unless the Executive objects
to the same within thirty (30) days after Executive receives the Company's
calculation of the same. Such objections shall be in writing and shall set forth
in reasonable detail the basis of such objections. If the calculation of the

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Company's EBT is timely disputed by the Executive and the Executive and the
Company cannot resolve such dispute within thirty (30) days after the Company
receives the Executive's written objections, then such dispute shall be
submitted to the American Arbitration Association in the City of New York for
determination in accordance with its rules, and the fees and expenses of the
arbitrators and the American Arbitration Association shall be borne equally by
the parties.

     5. TERMINATION

     (a) The Company shall be entitled, in accordance with the procedures set
forth below, to terminate this Agreement and to discharge the Executive for
"Cause" without further obligation or liability on the part of the Company under
the terms of this Agreement or otherwise relating to Executive's employment
except for accrued compensation and benefits. The term Cause shall be limited to
the following grounds:

          (i) The Executive materially breaches any of Executive's obligations
     to the Company hereunder or fails to comply with any material written
     policy of the Company which is generally applicable to employees at
     Executive's level; provided, however, if such breach is capable of being
     remedied (a "Remediable Obligation"), then the Executive shall have a
     period of ten (10) business days to cure such breach after Executive has
     received written notice from the Company specifying such breach in
     reasonable detail;

          (ii) The Executive shall materially breach any such Remediable
     Obligation on a second occasion after Executive has received written notice
     of such breach as provided in subsection 5(a)(i) above;

          (iii) Conviction of a felony crime;

          (iv) Theft or misappropriation of the property of the Company or of
     any of its Affiliates;

          (v) Intentionally making a material false written statement regarding
     the affairs of the Company to a director or auditor or attorney, or to an
     officer, of either the Company or LVC;

          (vi) Intentionally making a material false oral statement regarding
     the affairs of the Company to a director or auditor or attorney, or to an
     officer, of either the Company or LVC; provided, however, that such oral
     statement shall have been made by Executive to two (2) or more of such
     persons at either the same or different times; and

          (vii) Executive shall become disabled.

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     For purposes of this Agreement, "disabled" shall mean an illness,
disability or other incapacity (whether physical or mental) which has prevented
Executive from performing Executive's regular duties on a full-time basis for
ninety (90) consecutive days, or ninety (90) days in any consecutive twelve (12)
month period. In the event Executive disputes that Executive is disabled and
provides to the Company a written opinion of a licensed physician of the State
of Rhode Island (the "Executive's Physician") to that effect at Executive's
expense, then Executive agrees to submit to a physical examination by a licensed
physician of the State of New York chosen by the Company (the "Company's
Physician") at the Company's expense. If the Company's Physician issues a
written opinion to the effect that Executive is disabled, then such dispute
shall be submitted to a third physician chosen jointly by the Executive and the
Company (the "Neutral Physician"). If the Executive and the Company cannot agree
upon the Neutral Physician within ten (10) days after the issuance of the
Company's Physician's opinion, then either party may apply to the American
Arbitration Association for the appointment of the Neutral Physician. The
determination of the Neutral Physician shall be final and binding upon the
parties hereto. The fees and expenses of the Neutral Physician and, if
necessary, the American Arbitration Association shall be borne equally by the
parties.

          (b) (i) In the event the Company terminates Executive's employment
     without Cause during the Initial Employment Period (i.e., not pursuant to
     the provisions of Section 5(a) above) or if Executive shall terminate this
     Agreement during the Initial Employment Period for Good Reason as defined
     below, then the Company shall pay to Executive in accordance with its then
     customary payroll practices a severance amount equal to One Hundred
     Thousand ($100,000) Dollars per annum (such amount not to be increased if
     Executive's Base Salary is increased hereunder after the date hereof) plus,
     if earned, the Annual Performance Bonus until the earlier of (x) the
     expiration of the Initial Employment Period and (y) the date Executive
     becomes employed by or becomes a consultant to anyone else (the "Severance
     Period"). Executive shall be entitled to terminate this Agreement for "Good
     Reason" if the Company materially breaches any of its obligations to
     Executive hereunder; provided, however, if such breach is capable of being
     remedied, then the Company shall have a period of ten (10) business days to
     cure such breach after it has received written notice from Executive
     specifying such breach in reasonable detail. Executive shall not be
     obligated to mitigate damages. Although Executive shall not be considered
     an employee of the Company during the Severance Period for vesting or any
     other purpose whatsoever, Executive shall be entitled to continued medical
     insurance and life insurance coverage under the Company's medical and life
     insurance plans in effect from time to time during the Severance Period.

          (ii) The above provisions are intended to fully compensate Executive
     for a termination by the Company without Cause or a termination by
     Executive for Good Reason and Executive shall have no other or further
     claim against the Company for wrongful discharge under the terms of this
     Agreement, pursuant to the Company's policies or under any Federal, state
     or local law relating to termination of Executive's employment by the
     Company.

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          (iii) Notwithstanding the termination of this Agreement by the Company
     without Cause or by the Executive with Good Reason, Executive's obligations
     under Section 3.1 of the Asset Purchase Agreement and Executive's
     obligations under the Intellectual Property Protection Agreement executed
     simultaneously herewith shall continue and in addition to any and all other
     legal and equitable remedies available to the Company under Section 3.1 of
     the Asset Purchase Agreement or under the Intellectual Property Protection
     Agreement, the Company's obligation to pay severance and, if earned, the
     Annual Performance Bonus to Executive under this Section 5(b) shall
     terminate if Executive violates any of the provisions thereof.

     (c) The term of employment of Executive hereunder shall terminate in the
event of the death of Executive without further obligation or liability on the
part of the Company under the terms of this Agreement or otherwise relating to
Executive's employment, except that Executive shall be entitled to receive all
accrued Base Salary and, if earned, a pro rata portion of the Annual Performance
Bonus as provided in Section 4 hereof.

     (d) If the Executive terminates her employment at any time without Good
Reason, then the Company shall have no further obligation or liability to
Executive under the terms of this Agreement or otherwise relating to Executive's
employment except for Base Salary and benefits accrued to the termination date
and payment of the Annual Performance Bonus but only if earned and payable to
her pursuant to the provisions of this Agreement. Notwithstanding any
termination of this Agreement by the Executive without Good Reason, Executive
shall remain obligated under Section 3.1 of the Asset Purchase Agreement and
under the Intellectual Property Protection Agreement.

     6. CONFIDENTIALITY; NON-COMPETITION; RIGHTS TO PROPRIETARY PROPERTY.

     In consideration of Executive's employment hereunder and the consummation
of the transactions contemplated under the Asset Purchase Agreement, the
Executive agrees to execute the Intellectual Property Protection Agreement
annexed hereto as Exhibit A. In addition, Executive acknowledges that she is
bound by the provision of Section 3.1 of the Asset Purchase Agreement, which
Section is titled "Confidentiality; Non-Competition".

     7. KEY PERSON LIFE INSURANCE. Executive agrees to cooperate with the
Company including submitting to medical examinations and providing medical and
other information to life insurance carriers to enable the Company to obtain key
person life insurance on Executive's life for the benefit of the Company.
Executive hereby represents and warrants to the Company that to Executive's
knowledge Executive's life is insurable at no worse than standard rates.

     8. EXECUTIVE'S REPRESENTATIONS. The Executive hereby represents and
warrants to the Company that (i) the execution, delivery and performance of this
Agreement by the Executive does not and will not conflict with, breach, violate
or cause a default under any agreement, contract or instrument to which the
Executive is a party or any judgment, order or decree to

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<PAGE>

which the Executive is subject, (ii) the Executive is not a party to or bound by
any employment agreement, consulting agreement, noncompete agreement,
confidentiality agreement or similar agreement with any other person or entity
and (iii) upon the execution and delivery of this Agreement by the Company, this
Agreement will be a valid and binding obligation of the Executive, enforceable
in accordance with its terms.

     9. GENERAL PROVISIONS.

     (a) ENTIRE AGREEMENT; AMENDMENTS. This Agreement contains the entire
agreement between the parties hereto with respect to the transactions
contemplated hereby and supersedes all prior agreements or understandings
between the parties with respect thereto. This Agreement shall not be altered or
otherwise amended or terminated (except as provided in Sections 1(b) and 5
hereof) except pursuant to an instrument in writing signed by each of the
parties hereto.

     (b) DESCRIPTIVE HEADINGS. Descriptive headings are for convenience only and
shall not control or affect the meaning or construction of any provisions of
this Agreement.

     (c) NOTICES. All notices or other communications pursuant to this Agreement
shall be in writing and shall be deemed to be sufficient if telecopied or sent
by nationally-recognized, overnight courier to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):

     if to the Company, to:

              c/o Lillian Vernon Corporation
              One Theall Road
              Rye, New York 10580-1450
              Attention: Chief Executive Officer
              Telecopier: (914) 925-1444

     with copies to:

              Salon, Marrow, Dyckman & Newman, LLP
              685 Third Avenue
              New York, New York 10017
              Attention: Joel Salon
              Telecopier: (212) 661-3339

     if to the Executive, to:

              Pamela F.  Kelley
              20 Willow Street
              Newport, Rhode Island 02840

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     with copies to:

              Lawson & Weitzen, LLP
              425 Summer Street
              Boston, Massachusetts 02210
              Attention: George Christodoulo
              Telecopier: (617) 439-3987

All such notices and other communications shall be deemed to have been delivered
and received (A) in the case of delivery by telecopy, on the date of such
delivery if delivery is confirmed on that date by telephone call with the
recipient and (B) in the case of delivery by nationally-recognized, overnight
courier, on the Business Day (defined below) following dispatch. As used herein,
"Business Day" shall mean any day that is not a Saturday, Sunday or a day on
which banking institutions in New York, New York are not required to be open.
Failure to accept a notice does not invalidate same.

     (d) ARBITRATION. Except as hereinafter provided with respect to injunctive
relief, the parties agree to arbitrate any and all claims, controversies or
disputes arising under or out of this Agreement or relating in any way thereto.
All such claims, controversies or disputes shall be submitted to arbitration in
the City of New York, State of New York, to arbitrators designated under and
pursuant to the Rules of the American Arbitration Association, and the
arbitration shall be had under the auspices of said Association and subject to
its rules. The parties consent to the jurisdiction of the Supreme Court of the
State of New York and of any United States District Court sitting in the State
of New York with respect to any and all proceedings relating to any such
arbitration, and the parties further agree that any and all process and notices
of motions or applications in relation to any such arbitration may be served
upon a party personally or by registered or certified mail, return receipt
requested. Such service may be accomplished either within or without the State
of New York, and such notice shall be given of all applications and hearings as
is provided by the laws of the State of New York. The award of the arbitrators
shall be final and binding upon the parties and judgment thereon may be entered
as provided by the laws of the State of New York. Executive acknowledges that
the Company's remedy at law for breach by Executive of the provisions of the
Intellectual Property Protection Agreement is inadequate. Accordingly, Executive
agrees that in addition to all other rights and remedies which the Company may
have, the Company shall have the right to apply for injunctive relief in the
Supreme Court of the State of New York or the United States District Courts
sitting in the State of New York (or any other court of competent jurisdiction)
and Executive consents to the IN PERSONAM jurisdiction of the Supreme Court of
the State of New York or the United States District Courts sitting in the State
of New York whether or not Executive is then residing in the State of New York.

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     (e) GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE
STATE OF NEW YORK OR ANY OTHER JURISDICTION OTHER THAN THE STATE OF NEW YORK) TO
BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF
NEW YORK WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT,
EVEN IF UNDER SUCH JURISDICTION'S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE
SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.

     (f) BENEFITS OF AGREEMENT; ASSIGNMENT. The terms and provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors, assigns, representatives, heirs and estate, as
applicable. If this Agreement is assigned by the Company in connection with the
sale of all or substantially all of the operating assets of the Company and the
obligations hereunder of the Company are assumed in writing by the purchaser of
such assets, then in such event the Company shall have no further liability
hereunder to the Executive. Anything contained herein to the contrary
notwithstanding, this Agreement shall not be assignable by the Executive.

     (g) WAIVER OF BREACH. The waiver by either party of a breach of any
provision of this Agreement by the other party must be in writing and shall not
operate or be construed as a waiver of any subsequent breach by such other
party.

     (h) SEVERABILITY. It is the desire and intent of the parties hereto that
the provisions of this Agreement be enforced to the fullest extent permissible
under the laws and public policies applied in each jurisdiction in which
enforcement is sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated by a court of competent jurisdiction to be
invalid, prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.

     (i) INTERPRETATION AND CONSTRUCTION.

          (i) This Agreement shall be construed according to its fair meaning as
     if prepared jointly by the parties hereto.

          (ii) Each section, subsection and lesser section of this Agreement
     constitutes a separate and distinct undertaking, covenant and/or provision
     hereof.

          (iii) This Agreement may be executed in counterparts, each of which
     shall be deemed an original, and all of which shall constitute but one and
     the same instrument which may be sufficiently evidenced by one counterpart.

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

                                          RDF ACQUISITION CORP.

                                          By:
                                             -----------------------------------
                                             Kevin A. Green, President

                                          --------------------------------------
                                          PAMELA F. KELLEY

     The undersigned LILLIAN VERNON CORPORATION does hereby unconditionally
guaranty the due and timely performance by the Company of its obligations under
the foregoing Employment Agreement between the Company and Pamela F. Kelley.

Dated: As of March 31, 2000

                                          LILLIAN VERNON CORPORATION

                                          By:
                                              ----------------------------------
                                              Lillian Vernon,
                                              Chief Executive OfficerINTELLECTUAL PROPERTY PROTECTION AGREEMENT

         In consideration of my employment -- and of my continued employment --
and my compensation, and the equipment, materials, facilities and the Company's
Confidential Information supplied to me, the Company and I understand and agree
that:

         1. RECORDS OF INVENTIONS AND WORKS OF AUTHORSHIP. I will keep complete
and current written records of all Inventions and Works of Authorship (including
illustrations, writings, mask works, software and computer programs) I make
during the period of time I am employed by the Company and promptly and
completely disclose all such Inventions and Works of Authorship in writing to
the Company for the purpose of adequately determining the Company's rights in
each such Invention and Work of Authorship. I will supplement any such
disclosures to the extent the Company may request. If I have any doubt as to
whether or not to disclose an Invention or Work of Authorship to the Company, I
will disclose it. In this connection, I will not file any patent or copyright
application relating to any Invention or Work of Authorship I Make during the
period of time I am employed by the Company without the prior written approval
of the Company.

         2. OWNERSHIP OF INVENTIONS AND WORKS OF AUTHORSHIP. Each and every
Invention and Work of Authorship I Make during the period of time I am employed
by the Company which (a) relates to the business of the Company or to the
Company's actual or demonstrably anticipated research or development, (b)
results from any work I perform for the Company, or (c) relates to the Company's
Confidential Information, is the sole and exclusive property of the Company and
I will assign my entire right, title and interest in each such Invention or Work
of Authorship to the Company, except those excluded from any obligation to
assign to the Company as a matter of law existing at the time such Invention or
Work of Authorship is Made. If I assert any property right in an Invention or
Work of Authorship I Make during the period of time I am employed by the Company
as provided by law, I will promptly notify the Company in writing.

         3. DISCLOSURE OF INVENTION OR WORK OF AUTHORSHIP AFTER TERMINATION. I
will promptly and completely disclose in writing to the Company all Inventions
or Works of Authorship which I Make during the one year period immediately
following the end of my employment with the Company which (a) relates to the
business of the Company or to the Company's actual or demonstrably anticipated
research or development, (b) results from work I performed for the Company, or
(c) relates to the Company's Confidential Information, for the purpose of
determining the Company's rights in each such Invention or Work of Authorship.
During this period, I will not file any patent or copyright application relating
to any such Invention or Work of Authorship without the prior written consent of
the Company. If I do not prove that I Made the Invention or Work of Authorship
entirely after leaving the Company's employment or if I do not prove that the
Invention or Work of Authorship does not in any way relate to my work assignment
at the Company, to the Company's business, or to the Company's Confidential
Information, the Invention or Work of Authorship shall conclusively be presumed
to be the property of the Company. I acknowledge that the conditions of this
paragraph are no greater than is necessary for protecting the Company's
interests in the Company's Confidential Information and in Inventions or Works
of Authorship to which it is rightfully entitled. I agree to assign to the
Company all of my interest in such Inventions or Works of Authorship belonging
to the Company and I will execute any papers and do any acts which the Company
considers necessary to secure to it any all rights relating to such Inventions
or Works of Authorship.

         4. COOPERATION WITH THE COMPANY. I will assist and fully cooperate with
the

<PAGE>

Company in obtaining and maintaining the fullest measure of legal protection
which the Company elects to obtain for Inventions and Works of Authorship in
which it has a property right. I will execute any lawful document the Company
requests me to execute relating to obtaining and maintaining legal protection
for any said Invention or Work of Authorship (including, but not limited to,
executing applications, assignments, oaths, declarations, and affidavits) and I
will make myself available for interviews, depositions and testimony relating to
any said Invention or Work of Authorship.

         5. PRE-EMPLOYMENT INVENTIONS OR WORKS OF AUTHORSHIP. On Schedule A (an
integral part of this Agreement on page 6) I have completely identified, without
disclosing any trade secret or other confidential information, every Invention
or Work of Authorship I made before my employment by the Company in which I have
an ownership interest, and which is not the subject matter of an issued patent
or printed publication at the time I sign this Agreement. If I become aware of
any projected or actual use of any such Invention or Work of Authorship by the
Company, I will promptly notify the Company in writing of said use. Except as to
the Inventions or Works of Authorship listed on Schedule A or those which are
the subject matter of an issued patent or printed publication at the time I sign
this Agreement, I will not assert any rights against the Company with respect to
any Invention or Work of Authorship made before my employment with the Company.

         6. THE COMPANY'S CONFIDENTIAL INFORMATION; RESTRICTIVE COVENANTS.
During the period of time I am employed by the Company and indefinitely
thereafter with respect to Confidential Information which constitute trade
secrets and for a period of five years after my employment with the Company
terminates with respect to Confidential Information which does not constitute
trade secrets, I will not, directly or indirectly, use the Company's
Confidential Information except in the furtherance of the Company's business nor
will I disclose or disseminate the Company's Confidential Information to anyone
who is not an officer, director, employee, attorney or authorized agent of the
Company without the prior written consent of the Company, unless the specific
item of the Company's Confidential Information is now in, or hereafter (through
no breach of this Agreement) becomes part of the public domain; provided,
however, I agree that none of the provisions of this Agreement including the
foregoing exception for Confidential Information which becomes part of the
public domain and the five year time period with respect to certain Confidential
Information shall be construed to constitute: (a) a waiver by the Company of any
of its right in, or to protect specific items of the Company's Confidential
Information which constitute trade secrets, or (b) a release of or limit to my
legal obligation not to disclose or misappropriate any such Company trade
secrets, during or after my employment with the Company. I understand that such
use, disclosure or dissemination of the Company's Confidential Information would
become accessible to and reasonably be considered useful to a competitor of the
Company or to a third party which would be assisted in becoming a competitor of
the Company. I will execute any agreement relating to the protection of the
Company's Confidential Information or the Confidential Information of any third
party with whom the Company is under legal obligation to protect that third
party's confidential information if the Company requests.

         During the period of time that I am employed by the Company, and for a
period (the "Restricted Period") equal to the longer of (x) five years after the
date hereof and (y) ninety days after the termination of my employment with the
Company, regardless of the reasons for or circumstances surrounding such
termination of employment, I will not without prior written consent of the
Company become in competition with the Company, or directly or indirectly accept
employment with, or render services on behalf of, a competitor of the Company or
any other third party in any capacity where the Confidential Information of the
Company acquired by

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<PAGE>

me during my employment with the Company would reasonably be considered to be
useful to the competitor or to such other third party to become a competitor of
the Company based in whole or in part on such Confidential Information or where
it could be reasonably anticipated that I would use, disclose or otherwise
compromise the integrity of such Confidential Information.

         Without limiting the foregoing, during the Restricted Period I will not
attempt to divert nor assist others to acquire any Company business by
soliciting, contacting or communicating with any customer or supplier of the
Company's products or services with whom I had contact during the year preceding
termination of my employment.

         I acknowledge that all documents and tangible things embodying or
containing the Company's Confidential Information are the Company's exclusive
property. I have access to them solely for performing the duties of my
employment for the Company. I will protect the confidentiality of their content
and I will return all of them and all copies, facsimiles and specimens of them
(including excerpts or portion thereof) and any other forms of the Company's
Confidential Information in my possession, custody or control to the Company
before leaving the employment of the Company.

         I recognize that irreparable and incalculable injury will result to the
Company, its business and property, in the event of a breach by me of the
restrictions imposed by this Agreement. I therefore agree that in the event of
any such breach, the Company shall be entitled, in addition to any other
remedies and damages, to an injunction restraining further violation of such
restrictions by me and/or by any other person for whom I may be acting or who is
acting for me or in concert with me. If the Company is awarded an injunction or
other remedy in connection with the enforcement of such restrictions, I further
agree to pay all costs and expenses (including attorney's fees) reasonably
incurred by the Company in such enforcement effort. I waive any requirement for
security or the posing of any bond or other surety and proof of damages in
connection with any temporary or permanent award of injunctive, mandatory or
other equitable relief and I further agree to waive the defense in any action
for specific performance that a remedy at law would be adequate. I WAIVE THE
RIGHT TO A JURY TRIAL OF ANY SUCH ACTION.

         In the event that any of the provisions of this Paragraph 6 should ever
be adjudicated to exceed the time, geographic, product or service, or other
limitations permitted by applicable law in any jurisdiction, then the court
shall have the power and shall reform the provisions of this Paragraph 6 in such
jurisdiction to the maximum time, geographic, product or service, or other
limitation permitted by applicable law.

         By entering into this Agreement, I acknowledge that: (i) I am familiar
with the nature of the Company's business; (ii) I have read and understand the
nature and scope of the restrictions set forth in this Agreement; and (iii) that
the Company has invested and will continue to invest substantial effort and sums
of money to develop and promote the Company products, services and goodwill
together with Confidential Information. I THEREFORE ACKNOWLEDGE AND REPRESENT
THAT THE SCOPE OF SUCH RESTRICTIONS ARE APPROPRIATE, NECESSARY AND REASONABLE
FOR THE PROTECTION OF THE BUSINESS, GOODWILL AND PROPERTY RIGHTS OF THE COMPANY
AND WILL NOT PREVENT OR HINDER ME FROM EARNING A LIVING IN THE EVENT OF, AND
AFTER, TERMINATION OF MY EMPLOYMENT WITH THE COMPANY.

         7. CONFIDENTIAL INFORMATION FROM PREVIOUS EMPLOYMENT. I certify that I
have not, and will not, disclose or use during my employment with the Company,
any confidential

                                       3
<PAGE>

information which I acquired as a result of any previous employment or under a
contractual obligation of confidentiality before my employment by the Company
except as may be otherwise consented to by the owner thereof in writing.

         8. PRIOR RESTRICTIVE OBLIGATIONS. On Schedule B (an integral part of
this Agreement on page 6) I have completely identified all prior obligations
(written and oral), such as confidentiality agreements or covenants restricting
future employment, that I have entered into which restrict my ability to perform
the duties of my employment for the Company. I agree to indemnify and hold the
Company harmless from all liabilities and expenses resulting from my failure to
identify all my prior obligations.

         9. NOTICE TO FUTURE EMPLOYERS. During the Restricted Period I will
inform each new employer, prior to my employment, of the existence of this
Agreement and provide the new employer with a copy of this Agreement. I further
agree that the Company may, if it so desires, send a copy of this Agreement to,
or otherwise make the provisions hereof known to, any such new employer.

         10. MISCELLANEOUS. This Agreement binds my heirs, executors,
administrators, legal representatives and assigns and inures to the benefit of
the Company and its successors and assigns.

         Only a written amendment executed by both myself and the Company can
constitute a waiver or modification of any provision of this Agreement.

         This Agreement becomes effective when I sign it, my obligations under
it continue throughout the entire period of time I am employed by the Company,
without regard to the business organization within the Company with which I am
associated, and these obligations will continue after, and survive, the end of
my employment by the Company. I acknowledge that the foregoing obligations of
mine and the rights and remedies of the Company hereunder shall be in addition
to and not in derogation of any obligations to the Company which I may have and
the rights and remedies which the Company may have by reason of the operation of
law or by reason of any other agreements between me and the Company whether
executed prior to, or on or after the date hereof.

         If a court of competent jurisdiction determines that any portion of
this Agreement is illegal, invalid or unenforceable, then, subject to the
provisions regarding reformation set forth in paragraph 6 hereof, that portion
shall be considered to be removed from this Agreement and it shall not affect
the legality, validity or enforceability of the remainder of this Agreement and
the remainder of this Agreement shall continue in full force and effect. This
Agreement shall be governed by, and construed under, the laws of the State of
New York without regard to its conflicts of law rules.

         11.      DEFINITIONS.

                  a. "The Company" refers collectively to RDF Acquisition Corp.,
a Delaware corporation, having a place of business at 28 Jacome Way, Middletown,
Rhode Island 02842, Lillian Vernon Corporation and its subsidiaries and
affiliates and their respective predecessors, designees and successors and their
past, present and future operating companies, divisions, parents, subsidiaries,
affiliates and other business units;

                  b. "The Company Confidential Information" is any information
used in the

                                       4
<PAGE>

Company's business which gives the Company an advantage over competitors who do
not know or use such information (for example, a formula, manufacturing process,
manufacturing equipment, proprietary compound, customer list, marketing plans,
financial data, business data, etc.) and includes not only information
designated by the Company as confidential information but also the Company's
other trade secrets and other confidential or proprietary information, or
confidential information entrusted to it;

                  c. "Inventions" or "Works of Authorship" include not only
inventions (whether or not patentable) or works of authorship (whether or not
copyrightable), but also innovations, improvements, discoveries, ideas and all
other forms of intellectual property - whether or not any of the foregoing
constitutes trade secrets or other confidential or proprietary information; and

                  d. "Make" or "Made", used in relating to Inventions or Works
of Authorship includes any one or any combination of (i) conception; (ii)
reduction to practice, or (iii) development of, any Invention or Work of
Authorship and is without regard to whether I am sole or joint inventor or
author.

                                    Employee:

Dated: As of March 31, 2000
                                    ------------------------------------------
                                    (Identified throughout this Agreement by the
                                    use of the first person singular)

                                     Printed

                                     Name:    PAMELA F. KELLEY

                                     RDF ACQUISITION CORP.

Dated: As of March 31, 2000          By:
                                        ---------------------------------------
                                              Kevin A. Green, President

                                       5
<PAGE>

                                   SCHEDULE A

                PRE-EMPLOYMENT INVENTIONS AND WORKS OF AUTHORSHIP

          Note: Please describe each such Invention and Work of Authorship you
          made prior to your employment by the Company in which you have an
          ownership interest and which is not the subject matter of an issued
          patent or printed publication at the time you sign this Agreement. DO
          NOT DISCLOSE CONFIDENTIAL INFORMATION.

                                     N O N E

------------------------------------------------------------------------------

                                   SCHEDULE B

                          PRIOR RESTRICTIVE OBLIGATIONS

         Please identify all prior restrictive obligations (written and oral),
         such as confidentiality agreements or covenants restricting future
         employment that are in effect and which restrict your ability to
         perform the duties of employment for the Company.

                                     N O N E

                                       6
<PAGE>

             EXHIBIT A - INTELLECTUAL PROPERTY PROTECTION AGREEMENT

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