Document:

Exhibit 10.1

 

Execution Version

SEPARATION AGREEMENT AND RELEASE OF CLAIMS

 

This Separation Agreement and Release of Claims (this “Agreement”)
is entered into as of November 20, 2012 by and between Bluefly, Inc., a Delaware corporation (the “Company”), and Kara
Jenny (the “Executive”).

 

WHEREAS, the Executive is currently employed by the Company;
and

 

WHEREAS, the Executive and the Company have mutually
agreed to terminate the Executive’s employment relationship with the Company upon the terms set forth herein;

  

NOW, THEREFORE, in consideration
of the mutual covenants contained herein, and for other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, the Executive and the Company, intending to be legally bound, hereby agree as follows:

 

1.            Termination
of Employment. The Executive’s employment and position as an officer, director or manager with the Company and each
of its affiliates, including without limitation the Executive’s position as Chief Financial Officer of the Company, shall
terminate effective as of December 31, 2012 unless earlier terminated by the Company under Section 7(a) of the Third Amended and
Restated Employment Agreement dated as of May 3, 2011 by and between the Company and the Executive (such agreement, the “Employment
Agreement” and the date on which the Executive’s employment with the Company terminates, the “Separation Date”).
During the period commencing on the date first set forth above and ending on the Separation Date (the “Transition Period”),
the Executive shall continue to be employed by the Company on a full-time basis pursuant to the terms and conditions of the Employment
Agreement. Effective as of the Separation Date, all benefits and perquisites of employment, whether pursuant to the Employment
Agreement or otherwise, shall immediately cease except for the Executive’s rights to (i) base salary earned through the
Separation Date; (ii) unreimbursed business expenses incurred prior to the Separation Date that are otherwise reimbursable in
accordance with Company policy; (iii) any vested benefits earned by the Executive under any employee benefit plan of the Company
or its affiliates under which she was participating immediately prior to the Separation Date (including but not limited to continuation
of vesting of stock options and unpaid vacation/paid time off, in each case, through the Separation Date), with such benefits
to be provided in accordance with the terms of the applicable employee benefit plan; and (iv) any payments or benefits to which
the Executive may be entitled pursuant to Section 2 of this Agreement. The Executive acknowledges and agrees that, effective as
of the Separation Date, the Employment Agreement shall terminate, provided that Sections 6 and 8 of the Employment Agreement (together
with such other provisions as may be necessary to give effect thereto) shall survive the Separation Date in accordance with their
terms.

 

2.            Severance Benefits and Consulting Fee.
In consideration of the Executive’s release of claims set forth in Section 4 below and in Exhibit A, as well as the Executive’s
continuing employment by the Company during the Transition Period and the Executive’s provision of the consulting services
in accordance with Section 3 below, the Company shall provide to the

 

    	 

    	 	

    

 

Executive the two months of severance pay described in Section
2(a) below and the benefits described in 2(b) and 2(c) below (the “Severance Benefits”) and pay to the Executive the
four months of consulting fees described in Section 2(a) below (the “Consulting Fee”), subject to: (i) the Executive’s
execution and non-revocation of this Agreement; (ii) the Executive’s execution, after the Separation Date but by no later
than the 21st day after the Separation Date, of the general release of claims attached hereto as Exhibit A (the “Release”)
and the Executive’s non-revocation of the Release; and (iii) the Executive’s continued compliance with Sections 6
and 8 of the Employment Agreement and Section 3 below. Notwithstanding the foregoing, in the event that the Executive’s
employment is terminated by the Board of Directors for cause under Section 7(a)(v) of the Employment Agreement or by reason of
the Executive’s voluntary resignation (other than a Constructive Termination as defined in Section 7(a)(iii) of the Employment
Agreement) before December 31, 2012, the Executive shall immediately forfeit the Executive’s right to receive the Severance
Benefits and the Consulting Fee. Subject to the conditions set forth above, the Executive shall be entitled to:

 

a.          Severance pay equivalent to two months' base salary plus
consulting fees equivalent to four months' base salary, together totaling an aggregate amount of $150,000, payable through payroll
in six equal monthly installments of $25,000, less applicable withholdings, beginning on the first payroll date of the Company
practicable after the Separation Date;

 

b.          During the six month period following the Separation Date,
reimbursement for the Executive’s and her eligible dependents’ COBRA premiums; and

 

c.          Accelerated vesting as of the Separation Date of any unvested
stock options that, but for the termination of the Executive’s employment, would have vested within six months following
the Separation Date, with all stock options vested as of the Separation Date (whether pursuant to this provision or otherwise)
remaining exercisable for a period equal to the lesser of (x) one year following the Separation Date and (y) the remaining term
of the stock option.

 

All reimbursements hereunder shall be made in accordance with
Section 409A of the Internal Revenue Code of 1986, as amended, and in all events such reimbursement shall be paid to the Executive
on or before the last day of the taxable year following the taxable year in which the expense is incurred and shall not be subject
to liquidation or exchange for any other benefit. All amounts payable hereunder shall be subject to applicable tax withholdings
and deductions.

 

3.            Transition
Consulting. Executive shall provide reasonable cooperation and assistance for a period up to four months after the Separation
Date, at the request of any member of the Compensation Committee, the Chairman of the Audit Committee or any other member of the
Board of Directors involved in appointing a successor chief financial officer or their respective designee(s), in connection with
the transition of Executive’s duties. It is understood and agreed such consulting engagement is not for a fixed or minimum
commitment of time by Executive. Such transition consulting shall be provided on a non-exclusive basis, and the amounts set forth

 

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in Section 2 shall be payable in full regardless of whether Executive accepts employment or performs services with any third party
employer or entity (subject to Executive’s continuing obligations under the Employment Agreement).

 

4.            Executive
Release. In consideration for the Severance Benefits and the Consulting Fee, which the Executive acknowledges she would
not otherwise be entitled to receive absent execution of this Agreement, and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the Executive on behalf of herself and her heirs, executors, administrators,
and assigns, releases and discharges the Company and its past, present and future subsidiaries, divisions, affiliates and parents,
and their respective current and former officers, directors and employees, and their respective successors and assigns, and any
other person or entity claimed to be jointly or severally liable with the Company or any of the aforementioned persons or entities
(the “Released Parties”) from any and all manner of actions and causes of action, suits, debts, dues, accounts, bonds,
covenants, contracts, agreements, judgments, charges, claims, and demands whatsoever (“Claims”) which the Executive
and her heirs, executors, administrators, and assigns have, had, or may hereafter have, against the Released Parties or any of
them arising at any time from the beginning of the world to the date hereof, including but not limited to any and all Claims arising
under any federal, state, or local statute, rule, or regulation, or principle of contract law or common law relating to the Executive’s
employment by the Company and the cessation thereof, including but not limited to claims under the Family and Medical Leave Act
of 1993, as amended, 29 U.S.C. §§ 2601 et seq., Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. §§
2000 et seq., the Age Discrimination in Employment Act of 1967, as amended, 29 U.S.C. §§ 621 et seq. (the “ADEA”),
the Americans with Disabilities Act of 1990, as amended, 42 U.S.C. §§ 12101 et seq., the Worker Adjustment and Retraining
Notification Act of 1988, as amended, 29 U.S.C. §§2101 et seq., the Employee Retirement Income Security Act of 1974,
as amended, 29 U.S.C. §§ 1001 et seq., the New York Human Rights Law, the New York City Human Rights Law and the New
York Whistleblower Protection Act, and any other equivalent or similar federal, state, or local statute. It is understood that
nothing in this general release is to be construed as an admission on behalf of the Released Parties of any wrongdoing with respect
to the Executive, any such wrongdoing being expressly denied. Notwithstanding the foregoing, the Claims released above shall not
include any Claims that the Executive may have with respect to (i) payment of the Severance Benefits and the Consulting Fee, (ii)
payment of any other amounts set forth under Section 1 above, (iii) any claims for enforcement of this Agreement or otherwise
arising after the date Executive signs this Agreement, or (iv) any continuing rights for indemnification under any indemnification
agreement, insurance policy or program of the Company or its affiliates, or charter or bylaws of the Company in effect as of the
Separation Date. The Executive represents and warrants that she fully understands the terms of this Agreement, and that she knowingly
and voluntarily, of her own free will, without any duress, being fully informed, and after due deliberation, accepts its terms
and signs below as her own free act. Except as otherwise provided herein, the Executive understands that as a result of executing
this Agreement, she will not have the right to assert that the Company or any other of the Released Parties unlawfully terminated
her employment or violated any of her rights in connection with her employment or otherwise.

 

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5.            Agreement not to File or Participate in Actions.
The Executive represents and warrants that she has not filed, and will not initiate, or cause to be initiated on her behalf, any
complaint, charge, claim, or proceeding against any of the Released Parties before any federal, state, or local agency, court,
or other body relating to any Claims barred or released in this Agreement by her, and will not voluntarily participate in such
a proceeding. However, nothing in this Agreement shall preclude or prevent the Executive from filing a claim which challenges
the validity of this Agreement solely with respect to the Executive’s waiver of any Claims arising under the ADEA, nor shall
this Agreement preclude or prevent the Executive from filing a charge of discrimination with the U.S. Equal Employment Opportunity
Commission or similar state or local agency. The Executive shall not accept any relief obtained on her behalf by any government
agency, private party, class, or otherwise with respect to any Claims covered by this Agreement.

 

6.            Review and Revocation Period. THE EXECUTIVE
IS HEREBY ADVISED TO CONSULT WITH COUNSEL BEFORE EXECUTING THIS AGREEMENT. The Executive may take twenty-one (21) days following
the date first set forth above to consider whether to execute this Agreement. Upon the Executive’s execution of this Agreement,
the Executive will have seven (7) days after such execution in which she may revoke such execution. In the event of revocation,
the Executive must present written notice of such revocation to the office of the Company. If seven (7) days pass without receipt
of such notice of revocation, this Agreement shall become binding and effective on the eighth (8th) day after the execution hereof.
Any notice given hereunder shall be made in accordance with Section 12 of the Employment Agreement.

 

7.            Return of Company and Executive Property.
The Executive shall, within ten (10) days after the Separation Date, return all property of the Company and/or its affiliates
in her possession or control. The Company agrees that the Executive will be entitled to retain her personal papers, contact lists
and other personal materials to the extent that such items do not contain confidential information about the Company or its affiliates
and will make reasonable arrangements for the Executive to collect such materials from her office.

  

8.            Announcements; Non-Disparagement. There
will be an initial disclosure on Form 10-Q of the termination of the Executive’s employment and the terms of this Agreement,
which the Executive will have an opportunity to review in advance. Thereafter, the Company will not make any public announcement
or internal disclosure to its employees concerning the circumstances of the termination of the Executive’s employment inconsistent
with such initial disclosure. The Executive hereby agrees not to make any statements or announcements, whether oral or written,
including in any interview or social media channel, which are intended, or would reasonably be expected,
to harm the Company or any of its officers, directors or employees, or its or their reputation. The Company hereby agrees not
to make, or permit any officer or director of the Company to make, any statements or announcements, whether oral or written, including
in any interview or social media channel, which are intended, or would reasonably be expected, to harm the Executive or her reputation.
Notwithstanding the foregoing, nothing in this Section 8 or

  

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elsewhere in this Agreement shall prohibit any party from making any
statement or disclosure to the extent required under the federal securities laws or other applicable laws.

 

9.            Governing Law; Disputes; Other. This Agreement
shall be governed by and construed in accordance with the laws of the State of New York, irrespective of the principles of conflicts
of law applicable therein. Any dispute arising hereunder shall be subject to the exclusive jurisdiction of the federal and State
courts located in New York, New York, and each of the parties hereto hereby irrevocably submits to such jurisdiction and waives
any objection to such venue.

 

10.          Severability.
The terms and provisions of this Agreement are intended to be separate and divisible provisions and if, for any reason, any one
or more of them is held to be invalid or unenforceable, neither the validity nor the enforceability of any other provision of
this Agreement shall thereby be affected.

 

11.           Entire Agreement;
Counterparts. This Agreement (and the provisions of the Employment Agreement that survive the Separation Date) is the
entire agreement between the parties with respect to the subject matter hereof and supersedes all other prior agreements with
respect to the subject matter hereof. This Agreement may be signed in counterparts, each of which shall be an original, with the
same effect as if the signatures thereto and hereto were upon the same instrument.

  

 

*    *    *    *    *

 

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THE UNDERSIGNED, INTENDING TO BE LEGALLY BOUND BY THE FOREGOING
TERMS, HEREBY APPLIES HIS OR HER SIGNATURE VOLUNTARILY AND WITH FULL UNDERSTANDING OF THE TERMS OF THIS AGREEMENT AND EXECUTES
THIS AGREEMENT AS OF THE DATE FIRST SET FORTH ABOVE.

 

  

	BLUEFLY, INC.	 	KARA JENNY	 
	 	 	 	 
	/ s / Joseph C. Park	 	/ s / Kara Jenny	 
	 	 	 	 	 
	Name:	Joseph C. Park	 	 	 
	Title:	Chief Executive Officer	 	 	 

  

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Exhibit A

 

General Release of Claims 

 (“Release”)

 

In consideration for the Severance Benefits and the Consulting
Fee (as defined in the Separation Agreement and Release of Claims by and between Bluefly, Inc., a Delaware corporation (the “Company”)
and Kara Jenny (the “Executive”), dated as of November 20, 2012 (the “Separation Agreement”)) and other
good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Executive on behalf of herself
and her heirs, executors, administrators, and assigns, releases and discharges the Company and its past, present and future subsidiaries,
divisions, affiliates and parents, and their respective current and former officers, directors and employees, and their respective
successors and assigns, and any other person or entity claimed to be jointly or severally liable with the Company or any of the
aforementioned persons or entities (the “Released Parties”) from any and all manner of actions and causes of action,
suits, debts, dues, accounts, bonds, covenants, contracts, agreements, judgments, charges, claims, and demands whatsoever (“Claims”)
which the Executive and her heirs, executors, administrators, and assigns have, had, or may hereafter have, against the Released
Parties or any of them arising at any time from the beginning of the world to the date hereof, including but not limited to any
and all Claims arising under any federal, state, or local statute, rule, or regulation, or principle of contract law or common
law relating to the Executive’s employment by the Company and the cessation thereof, including but not limited to claims
under the Family and Medical Leave Act of 1993, as amended, 29 U.S.C. §§ 2601 et seq., Title VII of the Civil Rights
Act of 1964, as amended, 42 U.S.C. §§ 2000 et seq., the Age Discrimination in Employment Act of 1967, as amended, 29
U.S.C. §§ 621 et seq. (the “ADEA”), the Americans with Disabilities Act of 1990, as amended, 42 U.S.C. §§
12101 et seq., the Worker Adjustment and Retraining Notification Act of 1988, as amended, 29 U.S.C. §§2101 et seq., the
Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. §§ 1001 et seq., the New York Human Rights Law,
the New York City Human Rights Law and the New York Whistleblower Protection Act, and any other equivalent or similar federal,
state, or local statute. It is understood that nothing in this general release is to be construed as an admission on behalf of
the Released Parties of any wrongdoing with respect to the Executive, any such wrongdoing being expressly denied. Notwithstanding
the foregoing, the Claims released above shall not include any Claims that the Executive may have with respect to (i) payment of
the Severance Benefits and the Consulting Fee (as defined in the Separation Agreement) or (ii) payment of any other amounts set
forth under Section 1 of the Separation Agreement. The Executive represents and warrants that she fully understands the terms of
this Release, and that she knowingly and voluntarily, of her own free will, without any duress, being fully informed, and after
due deliberation, accepts its terms and signs below as her own free act. Except as otherwise provided herein, the Executive understands
that as a result of executing this Release, she will not have the right to assert that the Company or any other of the Released
Parties unlawfully terminated her employment or violated any of her rights in connection with her employment or otherwise.

 

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The Executive represents and warrants that she has not filed,
and will not initiate, or cause to be initiated on her behalf, any complaint, charge, claim, or proceeding against any of the Released
Parties before any federal, state, or local agency, court, or other body relating to any Claims barred or released in this Release
by her, and will not voluntarily participate in such a proceeding. However, nothing in this Release shall preclude or prevent the
Executive from filing a claim which challenges the validity of this Release solely with respect to the Executive’s waiver
of any Claims arising under the ADEA, nor shall this Release preclude or prevent the Executive from filing a charge of discrimination
with the U.S. Equal Employment Opportunity Commission or similar state or local agency. The Executive shall not accept any relief
obtained on her behalf by any government agency, private party, class, or otherwise with respect to any Claims covered by this
Release.

  

THE EXECUTIVE IS HEREBY ADVISED TO CONSULT
WITH COUNSEL BEFORE EXECUTING THIS RELEASE. The Executive may take twenty-one (21) days following the Separation Date (as defined
in the Separation Agreement) to consider whether to execute this Release. Upon the Executive’s execution of this Release,
the Executive will have seven (7) days after such execution in which she may revoke such execution. In the event of revocation,
the Executive must present written notice of such revocation to the office of the Company. If seven (7) days pass without receipt
of such notice of revocation, this Release shall become binding and effective on the eighth (8th) day after the execution hereof.
Any notice given hereunder shall be made in accordance with Section 12 of the Employment Agreement (as defined in the Separation
Agreement).

 

INTENDING TO BE LEGALLY BOUND, I hereby set my hand below:

 

	/ s / Kara Jenny	 	 	11/20/2012	 
	Kara Jenny	 	Date	 	 

 

    	8Exhibit 10.2

 

AMENDED
AND RESTATED EMPLOYMENT AGREEMENT

 

This AMENDED AND RESTATED EMPLOYMENT AGREEMENT
(this “Agreement”) is entered into as of February 2, 2012 (the “Effective Date”) by and between
Bluefly, Inc., a Delaware corporation (the “Company”), and Joseph Park (“Park”).

 

RECITALS

 

WHEREAS, the Company and Park are parties
to an employment agreement dated as of May 3, 2011 (the “Previous Agreement”); and

 

WHEREAS, the parties wish to amend and restate
the Previous Agreement in its entirety pursuant to the terms hereof.

 

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

 

		1.	TERM

 

The Company hereby agrees to employ Park
as Chief Executive Officer of the Company, and Park hereby agrees to serve in such capacity, for a term commencing on the Effective
Date and continuing through June 30, 2014 (as the same may be earlier terminated pursuant to the terms of this Agreement, the “Employment
Term”), upon the terms and subject to the conditions contained in this Agreement.

 

		2.	DUTIES

 

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

 

The Company will use its best efforts to
nominate Park to the Board and recommend that the Company’s stockholders vote in favor of the election of Park to the Board
at the next meeting of stockholders and every annual meeting thereafter during the Employment Term.  Park will accept
any such nomination and continue to serve as a member of the Board if and when elected. Upon any termination of Park’s employment,
Park shall resign (and shall be deemed to have resigned) from the Board.

 

    	 

    	 

    
 

 

The principal location of Park’s employment
shall be in the New York City vicinity (i.e., within a 20 mile radius), although Park understands and agrees that he will be required
to travel from time to time for business reasons. Park shall diligently and faithfully perform his obligations under the Agreement
and shall devote his full professional and business time to the performance of his duties as Chief Executive Officer of the Company
during the Employment Term. Park shall not, directly or indirectly, render business services to any other person or entity, without
the consent of the Board.

 

		3.	BASE SALARY

 

For services rendered by Park to the Company
during the Employment Term, the Company shall pay him a base salary of $375,000 per annum, payable in accordance with the standard
payroll practices of the Company, subject to annual increases in the sole discretion of the Compensation Committee of the Board
(the “Compensation Committee”), taking into account the financial and operating performance of the Company’s
business and divisions and a qualitative assessment of Park’s performance during such year. In addition, during the Employment
Term, the base salary shall be subject to an annual cost of living adjustment, commencing January 1, 2013, based on adjustments
to the United States Consumer Price Index.

 

		4.	BONUS/OPTIONS

 

(a)         For each fiscal year during the Employment
Term, provided that Park remains employed with the Company as of December 31 of such fiscal year, Park will be eligible to earn
the following bonuses: (i) a performance bonus targeted at fifty percent (50%) of Park’s then-current base salary, based
upon the achievement of one or more targets to be set for each fiscal year by the Compensation Committee in its sole discretion,
and subject to a pro rata adjustment for underachievement or overachievement of the targets within limits determined by the
Compensation Committee in its sole discretion; and (ii) such additional performance bonus for each fiscal year as may be determined
by the Compensation Committee in its sole discretion. Any bonus payable under this section shall be paid no later than March 15th
of the fiscal year following the fiscal year to which such bonus relates. Park acknowledges and agrees that Park’s bonus
for the 2011 fiscal year will be pro-rated based upon the number of days during the 2011 fiscal year in which he was employed by
the Company.

 

(b)         The Company hereby agrees to cause,
as soon as reasonably practicable after the Effective Date, the issuance to Park of options (“Options”) to purchase
450,000 shares (the “Shares”) of the Company’s common stock, $.01 par value (“Common Stock”),
which shall be in addition to the Options issued to Park under the Previous Agreement. The Options shall be issued pursuant to,
and in accordance with, the Company’s Amended and Restated 2005 Stock Incentive Plan (the “Plan”). The Options
shall be Incentive Stock Options (as defined in the Plan) to the extent allowed by law, and shall be exercisable at a price equal
to the Fair Market Value (as defined in the Plan) of the Common Stock on the date of grant. The Options shall vest and become exercisable
in equal monthly installments over the four year period commencing on the Effective Date, subject to Park’s continued employment
on the applicable vesting date. The term of each Option shall be 10 years from the date of grant. During the Employment Term, Park
shall be eligible to participate in the Company’s future stock option grants as determined appropriate by the Compensation
Committee in its sole discretion.

 

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(c)         In the event that a Change of Control
(as defined below) occurs during the Employment Term, one half of any unvested stock options granted to Park which are outstanding
as of the date of that Change of Control and have not yet vested (“Unvested Options”) shall be deemed to be fully vested
as of that date. Subject to paragraph 7(c), the remaining one half of the Unvested Options shall vest on the earliest to occur
of (x) the scheduled vesting date and (y) twelve (12) months from the date of such Change of Control, subject, in each case, to
Park’s continued employment with the Company on such dates.

 

(d)         For purposes of this Agreement, “Change
of Control” shall be deemed to occur upon:

 

(i)         the acquisition by any
individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of fifty percent (50%) or more (on a fully diluted basis) of either (A) the then outstanding
shares of common stock of the Company, taking into account as outstanding for this purpose such common stock issuable upon the
exercise of options or warrants, the conversion of convertible stock or debt, and the exercise of any similar right to acquire
such common stock (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting
Securities”); provided, however, that for purposes of this Agreement, the following acquisitions shall not constitute
a Change of Control: (I) any acquisition by the Company or any “Affiliate” (as defined below), (II) any acquisition
by any employee benefit plan sponsored or maintained by the Company or any Affiliate, (III) any acquisition by Quantum Industrial
Partners LDC, Soros Fund Management LLC, and/or SFM Domestic Investments LLC and/or any of their affiliates (collectively, “Soros”),
(IV) any acquisition by Rho Ventures VI, L.P. and/or any of its affiliates (collectively, “Rho”) or (V) any
acquisition which complies with clauses (A), (B) and (C) of sub-paragraph (d)(v) hereof ;

 

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

 

(iii)         the dissolution or liquidation
of the Company;

 

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

 

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

 

(e)         For purposes of this Agreement, the
term “Affiliate” shall mean any entity that directly or indirectly is controlled by, controls or is under common
control with the Company.

 

		5.	EXPENSE REIMBURSEMENT AND PERQUISITES

 

(a)         During the Employment Term, Park
shall be entitled to reimbursement of all reasonable and actual out-of-pocket expenses incurred by him in the performance of his
services to the Company consistent with corporate policies, if any, provided that the expenses are properly accounted for. Any
such reimbursement will be made to Park as soon as administratively feasible following submission of such documentation of such
expense, but shall be made no later than the calendar year following the calendar year in which such expense is incurred by Park.
In the event that any such reimbursement is taxable to Park, such reimbursement shall be made as soon as practical upon Park’s
submission of a request to be reimbursed, but in all events such reimbursement will be made prior to the end of the calendar year
next following the calendar year in which the applicable expense was incurred.

 

(b)         During each calendar year of the
Employment Term, Park shall be entitled to 20 days vacation with full pay in accordance with the Company’s then-current vacation
policies; provided, however, that Park shall schedule such vacations at times convenient to the Company.

 

(c)         During the Employment Term, the Company
shall provide an annual allowance of ten thousand dollars ($10,000) for the purchase of term life insurance by the Company for
the

 

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benefit of Park (which shall be in lieu of any other life insurance benefit) and/or the purchase of a supplemental disability
insurance policy. In addition, during the Employment Term, Park shall be entitled to participate in all health insurance, dental
insurance, long-term disability insurance and other employee benefit plans instituted by the Company from time to time on the same
terms and conditions as other similarly situated employees of the Company, to the extent permitted by law.

 

		6.	NON-COMPETITION; NON-SOLICITATION

 

(a)         In consideration of Park’s
employment with the Company, the severance benefits and the Options to be granted to Park hereunder, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, during the Non-Competition Term (as defined below),
Park shall not, without the prior written consent of the Company, anywhere in the world, directly or indirectly, (i) enter into
the employ of or render any services to any Competitive Business; (ii) engage in any Competitive Business for his own account;
(iii) become associated with or interested in any Competitive Business as an individual, partner, shareholder, creditor, director,
officer, principal, agent, employee, trustee, consultant, advisor or in any other relationship or capacity; (iv) employ or retain,
or have or cause any other person or entity to employ or retain, any person who was employed or retained by the Company while Park
was employed by the Company; or (v) solicit, interfere with, or endeavor to entice away from the Company, for the benefit of a
Competitive Business, any of its customers or other persons with whom the Company has a contractual relationship. For purposes
of this Agreement, a “Competitive Business” shall mean any person, corporation, partnership, firm or other entity
which sells or has plans to sell ten (10) or more brands of luxury or high-end designer apparel and/or fashion accessories at prices
that are consistently discounted to manufacturer’s suggested retail prices. However, nothing in this Agreement shall preclude
Park from investing his personal assets in the securities of any corporation or other business entity which is engaged in a Competitive
Business if such securities are traded on a national stock exchange or in the over-the-counter market and if such investment does
not result in him beneficially owning, at any time, more than three percent (3%) of the publicly-traded equity securities of such
Competitive Business. For purposes of this Agreement, the “Non-Competition Term” shall mean a period beginning
upon the commencement of the Employment Term and ending on the one (1) year anniversary of the termination of Park’s employment
for any reason.

 

(b)         Park and the Company agree that the
covenants of non-competition and non-solicitation contained in this paragraph 6 are reasonable covenants under the circumstances,
and further agree that if, in the opinion of any court of competent jurisdiction, such covenants are not enforceable in any respect,
such court shall modify such provision or provisions so as to be enforceable to the maximum extent permitted under applicable law.
Park agrees that any breach of the covenants contained in this paragraph 6 would irreparably injure the Company. Accordingly, Park
agrees that the Company, in addition to pursuing any other remedies it may have in law or in equity, may obtain an injunction against
Park from any court having jurisdiction over the matter, restraining any further violation of this paragraph 6.

 

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		7.	TERMINATION

 

(a)         Park’s employment with the
Company, the Employment Term, Park’s position as Chief Executive Officer of the Company and Park’s service on the Board
shall terminate upon the first to occur of:

 

(i)         his death;

 

(ii)         his “permanent
disability,” due to injury or sickness for a continuous period of four (4) months, or a total of eight months in a twenty-four
month period (vacation time excluded), during which time Park is unable in substantial part to attend to his ordinary and regular
duties, provided that the Company shall give Park thirty (30) days’ written notice prior to any such termination;

 

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

 

(iv)         the termination of Park’s
employment with the Company and the Employment Term at any time without Cause (as defined below) by the Company;

 

(v)         the termination of Park’s
employment with the Company and the Employment Term for “Cause,” which, for purposes of this Agreement, shall
mean that (1) Park has been convicted of a felony or any serious crime involving moral turpitude, or engaged in materially fraudulent
or materially dishonest actions in connection with the performance of his duties hereunder, or (2) Park has willfully and materially
failed to perform his duties hereunder, or (3) Park has willfully or negligently breached the terms and provisions of this Agreement
in any material respect, or (4) Park has failed to comply in any material respect with the Company’s policies of conduct
that have been communicated to him, including with respect to trading in securities, provided that the Company shall provide Park
with at least five (5) business days’ prior written notice of any such failure to comply and an opportunity to cure such
failure, to the extent curable; or

 

(vi)         the termination of Park’s
employment with the Company and the Employment Term by Park other than due to a Constructive Termination, which shall occur on
not less than 30 days’ prior written notice from Park.

 

(b)         In the event that Park’s employment
with the Company is terminated during the Employment Term pursuant to paragraphs 7(a)(i), 7(a)(ii), 7(a)(v) or 7(a)(vi), the Company
shall pay Park his base salary only through the date of termination. In the event that Park’s

 

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employment with the Company
is terminated during the Employment Term pursuant to paragraphs 7(a)(iii) or 7(a)(iv), then (i) the Company shall pay Park, contingent
upon his continued performance of his obligations under Section 6, the then-current base salary for a period of twelve (12) months
(the “Severance Payments”) and (ii) any stock options granted to Park by the Company that are outstanding and
unvested as of the date of such termination that would have vested during the twelve (12) month period following the date of Park’s
termination had no such termination occurred shall vest as of the date of such termination, provided that any other outstanding
and unvested stock options granted to Park by the Company shall be forfeited for no consideration, unless otherwise provided in
the applicable award agreement (the “Accelerated Vesting”). The Severance Payments shall be payable in periodic
installments in accordance with the Company’s standard payroll practices and will be subject to any applicable withholding.
The Severance Payments and the Accelerated Vesting shall be conditioned upon Park executing an effective release of any claims
against the Company, in a form reasonably satisfactory to the Company, which becomes effective within 60 days after such termination.
The Severance Payments will commence (and the Accelerated Vesting will occur) when such release becomes effective; notwithstanding
the foregoing, to the extent required by Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”),
if such 60 day period begins in one calendar year and ends in a subsequent calendar year, the Severance Payments will not commence
until the second calendar year. Except as provided in this paragraph, upon any termination of employment, all other rights Park
may have to base salary, perquisites or other compensation as set forth in paragraphs 3, 4, and/or 5, including, without limitation,
bonus payments and unvested Option grants, but excluding any vested Option or any option grant that vests upon such termination
pursuant to Section 4(c) or otherwise, shall be forfeited.

 

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

 

		8.	CONFIDENTIALITY

 

(a)         Park recognizes that the services
to be performed by him are special, unique and extraordinary in that, by reason of his employment under this Agreement, he may
acquire or has acquired confidential information (as defined below) and trade secrets concerning the operation of the Company,
its predecessors, and/or its affiliates, the use or disclosure of which could cause the Company, or its affiliates substantial
loss and damages which could not be readily calculated and for which no remedy at law would be adequate. Accordingly, Park covenants
and agrees with the Company that he will not at any time during the Employment Term or thereafter, except in the performance of
his obligations to the Company or with the prior written consent of the Board or as otherwise required by court order, subpoena
or other government process, directly or indirectly, disclose any secret or confidential information that he may learn or has learned
by reason of his association with the Company. If Park shall be required to make such disclosure pursuant to court order, subpoena
or other government process, he shall notify the Company of the same, by personal delivery or electronic means, confirmed by mail,
within twenty-four (24)

 

    	7

    	 

    
 

 

hours of learning of such court order, subpoena or other government process and, at the Company’s
expense (such expenses to be advanced by the Company as reasonably required by Park), shall (i) take all necessary and lawful steps
reasonably required by the Company to defend against the enforcement of such subpoena, court order or government process, and (ii)
permit the Company to intervene and participate with counsel of its choice in any proceeding relating to the enforcement thereof.
The term “confidential information” includes, without limitation, information not in the public domain and not
previously disclosed to the public or to the trade by the Company’s management with respect to the Company’s or its
affiliates’ facilities and methods, trade secrets and other intellectual property, designs, manuals, confidential reports,
supplier names and pricing, customer names and prices paid, financial information or business plans.

 

(b)         Park confirms that all confidential
information is and shall remain the exclusive property of the Company. All memoranda, notes, reports, software, sketches, photographs,
drawings, plans, business records, papers or other documents or computer-stored or disk-stored information kept or made by Park
relating to the business of the Company shall be and will remain the sole and exclusive property of the Company and all such materials
containing confidential information shall be promptly delivered and returned to the Company immediately upon the termination of
his employment with the Company.

 

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

 

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

 

(e)         Park agrees that any breach of this
paragraph 8 will cause irreparable damage to the Company and that, in the event of such breach, the Company will have, in addition
to any and all remedies of law, including rights which the Company may have to damages, the right to equitable relief including,
as appropriate, all injunctive relief or specific performance or other equitable relief. Park understands and agrees that the rights
and obligations set forth in this paragraph 8 shall survive the termination or expiration of this Agreement and the Employment
Term.

 

    	8

    	 

    
 

 

		9.	REPRESENTATIONS AND WARRANTIES

 

(a)         Park represents and warrants to the
Company that he was advised to consult with an attorney of Park’s own choosing concerning this Agreement.

 

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

 

		10.	INDEMNIFICATION

 

The Company shall indemnify and hold Park
harmless to the fullest extent permitted by law from and against any and all claims, losses, liabilities, damages and expenses
including, but not limited to, reasonable attorneys’ fees incurred by, imposed upon or asserted against Park as a result
of or arising out of any acts or omission by Park in his capacity as an officer, director, employee or consultant of the Company.

 

		11.	GOVERNING LAW; ARBITRATION

 

This Agreement shall be deemed a contract
made under, and for all purposes shall be construed in accordance with, the internal laws of the State of New York, without giving
effect to its conflict of law provisions. Except as set forth below, any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be resolved by arbitration in accordance with the rules of the American Arbitration Association
(the “AAA”) then pertaining in the City of New York, New York, by a single arbitrator to be mutual agreed upon by the
parties or, if they are unable to so agree, by an arbitrator selected by the AAA. The parties shall be entitled to a minimal level
of discovery as determined by the arbitrator. The arbitrator shall be empowered to award attorney’s fees and costs if he
or she deems such award appropriate. Judgment upon any award rendered by the arbitrator may be entered in any court having jurisdiction
thereof. Nothing contained in this paragraph 11 or the remainder of this Agreement shall be construed so as to deny the Company
the right and power to seek and obtain injunctive relief in a court of equity for any breach or threatened breach by Park of the
covenants contained in paragraphs 6 and 8 of this Agreement.

 

		12.	ENTIRE AGREEMENT

 

This Agreement contains all of the understandings
between Park and the Company pertaining to Park’s employment with the Company, and it supersedes all undertakings and agreements,
whether oral or in writing, previously entered into between them, including, without limitation, the Previous Agreement.

 

		13.	AMENDMENT OR MODIFICATION; WAIVER

 

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

 

    	9

    	 

    
 

 

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

 

		14.	NOTICES

 

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

 

If to the Company, to:

 

Bluefly, Inc.

42 West 39th Street

New York, NY 10018

Attn: Chairman of Compensation Committee

 

With a copy (which copy

shall not constitute notice) to:

 

Dechert LLP

1095 Avenue of the Americas

New York, New York 10036

Fax: (212) 698-3599

Attention: Richard Goldberg

 

If to Park, to:

 

at the address then on file in the Company’s payroll
system

 

Any such notice shall be deemed given upon receipt.

 

		15.	SEVERABILITY

 

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

 

		16.	TITLES

 

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

 

    	10

    	 

    
 

 

		17.	COUNTERPARTS

 

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

 

		18.	409A

 

This Agreement is intended to comply with
Code Section 409A (to the extent applicable) and the parties hereto agree to interpret, apply and administer this Agreement in
the least restrictive manner necessary to comply therewith and without resulting in any increase in the amounts owed hereunder
by the Company. If Park’s termination of employment hereunder does not constitute a "separation from service" within
the meaning of Code Section 409A, then any amounts payable hereunder on account of a termination of Park’s employment and
which are subject to Code Section 409A shall not be paid until Park has experienced a "separation from service" within
the meaning of Code Section 409A. In addition, no reimbursement or in-kind benefit shall be subject to liquidation or exchange
for another benefit and the amount available for reimbursement, or in-kind benefits provided, during any calendar year shall not
affect the amount available for reimbursement, or in-kind benefits to be provided, in a subsequent calendar year. Notwithstanding
anything herein to the contrary, neither the Company nor any of its affiliates shall have any liability to Park
or to any other person if the payments and benefits provided in this Agreement that are
intended to be exempt from or compliant with Code Section 409A are not so exempt or compliant.

 

         *         *         *         *         *

 

    	11

    	 

    

 

 

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

 

 

	 	BLUEFLY, INC.
	 	 
	 	 
	 	By:	/s/ David Wassong	 
	 	 	David Wassong	 
	 	 	Chairman of the Board	 
	 	 	 	 
	 	 	 	 
	 	EMPLOYEE	 
	 	 	 
	 	 	 
	 	/s/ Joseph Park	
	 	Joseph Park	 

 

 

 

 

 

 

 

 

 

 

 

 

    	12

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