Exhibit 10.39

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Alloy, Inc.

Non-Competition and Confidentiality Agreement

February 20, 2006

Gary J. Yusko

9 Nottingham Road

Livingston, NJ 07039

Dear Gary:

In order to accept your offer of employment with Alloy Inc., a Delaware
corporation (the “Company”), you must sign and return this Non-Competition and
Confidentiality Agreement (the “Agreement”).

As you know, Alloy has by letter made you an offer of employment which sets
forth the terms and conditions of your proposed employment with Alloy, including
your initial pay and benefits.

In consideration of the employment currently offered to you by Alloy, you agree
to the following:

 

1. Confidentiality:

Alloy and each entity, directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control with Alloy
(each, an “Affiliate”), have developed, use and maintain trade secrets and other
confidential and proprietary information including, without limitation, training
materials, product information, personnel information relating to their
employees, operating procedures, marketing information, profit and loss and
other financial information, inventory strategy, product costs, gross profit
margins, selling strategies, client lists, supplier information, and customer
information (the “Confidential Information”), and Alloy and its Affiliates have
taken and shall continue to take, and expects you to take, all reasonable
measures to protect the confidentiality of such Confidential Information. It is
understood that for purposes of this Agreement, “Confidential Information” does
not include information that (i) is in the public domain at the time of your
receipt thereof, (ii) otherwise becomes public other than as a result of your
breach of your obligations hereunder, (iii) is rightfully received from a third
party without any obligation of confidentiality to Alloy or any Affiliate or
(iv) is independently developed by you.

151 W 26th Street • New York, New York 10001 • 212.244.4307 • 212.329.8444 [fax]
• www.alloymarketing.com

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You acknowledge that, during your employment with Alloy, you will have direct
access to and knowledge of the Confidential Information, and you acknowledge
that if you become employed or affiliated with any competitor of Alloy in
violation of your obligations in Section 2 of this Agreement, it is possible
that you would disclose the Confidential Information to such competitor. You
covenant and agree that all such Confidential Information is and shall remain
the sole property of Alloy and/or its Affiliates, as applicable, and that you
will hold in strictest confidence, and will not (except as required in the
course of your employment with Alloy) disclose to any business, firm, entity or
person, either directly or indirectly, any of the Confidential Information. You
further agree that you will return all such Confidential Information (regardless
of how it is maintained) and any copies thereof to Alloy within three days of
the termination of your employment, whether voluntary or involuntary and
regardless of the reason for termination. The terms of this paragraph are in
addition to, and not in lieu of any legal or other contractual obligations that
you may have relating to the protection of the Confidential Information. The
terms of this paragraph shall survive indefinitely the termination of this
Agreement and/or your employment with Alloy.

The Company recognizes that the existing severance agreement between you and
Westwood One through the end of calendar 2006 is not covered by this
noncompetition agreement. It is understood by both parties that this is the
continuance of a severance payout and does not interfere with your ability to
fulfill the CFO responsibilities.

 

2. Non-Competition.

You acknowledge that Alloy and its Affiliates have invested substantial time,
money and resources in the development and retention of their respective
customers, accounts and Confidential Information. You acknowledge and agree that
any and all “goodwill” associated with any customer or account of Alloy or any
of its Affiliates belongs exclusively to Alloy and/or its Affiliates, as the
case may be. You further acknowledge and agree that, during the course of your
performing services for Alloy will, and its Affiliates may, furnish, disclose or
make available to you confidential and proprietary information related to
Alloy’s and its Affiliates’ business(es) and that Alloy and/or one or more
Affiliates may provide you with unique and specialized training. You also
acknowledge that such confidential information and such training have been
developed and will be developed by Alloy and/or one or more Affiliates through
the expenditure by Alloy and/or one or more Affiliates of substantial time,
effort and money and that all such confidential information and training could
be used by you to compete with Alloy and/or one or more Affiliates.

151 W 26th Street • New York, New York 10001 • 212.244.4307 • 212.329.8444 [fax]
• www.alloymarketing.com

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In recognition of this, you covenant and agree as follows:

2.1 Definition of Competitive Business. You understand and acknowledge that
Alloy’s and its Affiliates’ business interests are world-wide because Alloy’s
and its Affiliates’ products and/or services are sold in countries around the
world and Alloy’s and its Affiliates’ competitors similarly operate from and
market their products and/or services in many locations around the world. As
used in this Agreement (i) the term “Company Business” means the nontraditional
media and marketing businesses primarily targeting the youth market engaged in
by Alloy or any of its Affiliates at any time anywhere in the world during your
employment by Alloy and (ii) the term “Competitive Business” means any Company
Business engaged in by any third party anywhere in the world.

2.2 Non-Competition. From the date hereof until the date that is the first
anniversary date of the termination of your employment with Alloy (or any
Affiliate, as applicable and whichever is later) (the “Restricted Period”), you
shall not, directly or indirectly, without the prior written consent of Alloy,
individually or in partnership with, as part of a joint venture with, or
otherwise in conjunction in any other manner with any other entity:

 

  (a) be engaged in any manner whatsoever, including, without limitation, as an
employee, employer, owner, partner, consultant, adviser, principal, agent,
stockholder, member or proprietor, in any Competitive Business;

 

  (b) either individually or on behalf of or through any third party, solicit,
divert or appropriate or attempt to solicit, divert or appropriate, for the
purpose of competing with any Company Business, any customers or patrons of any
Company Business, or any prospective customers or patrons with respect to which
Alloy or any Affiliate has developed or made a sales presentation (or similar
offering of services); or

 

  (c) advise, invest in, lend money to, guarantee the debts or obligations of,
or otherwise have any other financial interest in any Competitive Business.
Notwithstanding the foregoing, you shall be permitted to make wholly passive
investments in any publicly held Competitive Business, provided that my direct
and indirect ownership shall not exceed 1 % (by voting power) of the aggregate
ownership interests in the entity conducting such Competitive Business.

151 W 26th Street • New York, New York 10001 • 212.244.4307 • 212.329.8444 [fax]
• www.alloymarketing.com

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3. No Solicitation.

3.1. No Solicitation of Employees. You acknowledge the importance to the
business carried on by Alloy and its Affiliates of the human resources engaged
and developed by such entities. Accordingly, during the Restricted Period, you
covenant and agree that you shall not, directly or indirectly, induce or solicit
or assist any third party in inducing or soliciting any employee or consultant
of Alloy or any Affiliate to leave Alloy or any Affiliate or to accept
employment or engagement elsewhere. Alloy acknowledges that placing
advertisements soliciting employees of the type then employed by Alloy or its
Affiliates in newspapers, Internet job sites and similar media generally
accessible to the public shall not be deemed to be a breach of this Section.

3.2. No Solicitation of Clients and Suppliers. You acknowledge the importance to
the business carried on by Alloy and its Affiliates of the client and supplier
relationships developed by it and them and the unique opportunity that your
employment or engagement and your access to the Confidential Information offers
to interfere with these relationships. Accordingly, you covenant and agree that
you shall not after the termination of your employment or engagement with Alloy,
directly or indirectly, contact or solicit any person who you know to be a
prospective, current or former client or supplier of Alloy or any Affiliate for
the purpose of selling to such client or buying from such supplier any Company
Business products or services.

 

4. Provisions Necessary and Reasonable:

You agree that (i) the provisions of Sections 1, 2 and 3 are necessary and
reasonable to protect Alloy’s and its Affiliates’ Confidential Information and
goodwill; (ii) the specific time, geography and scope provisions set forth in
Section 2 are reasonable and necessary to protect Alloy’s and its Affiliates’
business interests; and (iii) in the event of your breach of any of your
agreements set forth in Sections 1, 2 and 3, Alloy and its Affiliates would
suffer substantial irreparable harm and that such corporations would not have an
adequate remedy at law for such breach. In recognition of the foregoing, you
agree that in the event of a breach or threatened breach of any of these
covenants, in addition to such other remedies as Alloy or any Affiliate may have
at law, without posting any bond or security, Alloy or any Affiliate shall be
entitled to seek and obtain equitable relief, in the form of specific
performance, or temporary, preliminary or permanent injunctive relief, or any
other equitable remedy which then may be available. The seeking of such
injunction or order shall not affect Alloy’s or any Affiliate’s right to seek
and obtain damages or other equitable relief on account of any such actual or
threatened breach.

151 W 26th Street • New York, New York 10001 • 212.244.4307 • 212.329.8444 [fax]
• www.alloymarketing.com

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5. Choice of Law; Enforceability; Waiver of Jury Trial:

You acknowledge that a substantial portion of Alloy’s business is based out of
and directed from the State of New York, where Alloy maintains its principal
offices and administer all employee compensation and benefits. You also
acknowledge that during the course of your employment with Alloy you will have
substantial contacts with New York.

This Agreement shall be deemed to have been made in the State of New York, shall
take effect as an instrument under seal within New York, and the validity,
interpretation and performance of this Agreement shall be governed by, and
construed in accordance with, the internal law of New York, without giving
effect to conflict of law principles. The parties further acknowledge that the
last act necessary to render this Agreement enforceable is its execution by
Alloy in New York, and that the Agreement thereafter shall be maintained in New
York. The parties agree that any action, demand, claim or counterclaim relating
to the terms and provisions of this Agreement, or to its breach, shall be
commenced in New York in a court of competent jurisdiction. The parties further
acknowledge that venue shall exclusively lie in New York and that material
witnesses and documents would be located in New York. The parties further agree
that any action, demand, claim or counterclaim shall be resolved by a judge
alone, and the parties hereby waive and forever renounce the right to a trial
before a civil jury.

 

6. Miscellaneous:

(a) You acknowledge and agree that should you transfer between or among any
Affiliates of Alloy or Alloy, wherever situated, or otherwise become employed by
any Affiliate of Alloy or Alloy, or be promoted or reassigned to functions other
than your present functions, the terms of this Agreement including, but not
limited to, Sections 1, 2 and 3 hereof, shall continue to apply with full force.
Alloy may also assign its rights and obligations hereunder to any person or
entity who succeeds to all or substantially all of Alloy’s business or that
aspect of Alloy’s business in which you are principally involved. Your rights
and obligations under this Agreement may not be assigned by you without the
prior written consent of Alloy.

(b) If any provision of this Agreement is held by a court of law to be illegal,
overly broad or otherwise unenforceable in duration, geographical coverage,
substantive scope, or otherwise, that provision will be narrowed to the broadest
term permitted by applicable law and enforced as so narrowed, and such court is
hereby given express authority by the undersigned to modify the offending
provisions hereof and/or to delete specific words and phrases (“blue-
pencilling”) without the signature or prior consent of the undersigned to the
extent necessary to make them enforceable to the fullest extent permitted under
applicable law, and in its reduced or blue-pencilled form such provision shall
then be enforced. Additionally, each provision of this Agreement restricting
your activities in any way is intended to be separate from and enforceable
separately from each such other provision.

151 W 26th Street • New York, New York 10001 • 212.244.4307 • 212.329.8444 [fax]
• www.alloymarketing.com

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(c) No amendment, waiver or revocation of this Agreement of any kind shall be
effective unless supported by a written instrument executed by you and an
authorized officer of Alloy. No failure or delay by a party hereto in exercising
any right, power or remedy under this Agreement, and no course of dealing
between the parties hereto, shall operate as a waiver of any such right, power
or remedy of the party. No single or partial exercise of any right, power or
remedy under this Agreement by a party hereto, nor any abandonment or
discontinuance of steps to enforce any such right, power or remedy, shall
preclude such party from any other or further exercise thereof or the exercise
of any other right, power or remedy hereunder. The election of any remedy by a
party hereto shall not constitute a waiver of the right of such party to pursue
other available remedies. No notice to or demand on a party not expressly
required under this Agreement shall entitle the party receiving such notice or
demand to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the party giving such
notice or demand to any other or further action in any circumstances without
such notice or demand.

(d) You hereby acknowledge that you have had adequate opportunity to review
these terms and conditions and to reflect upon and consider the terms and
conditions of this Agreement. You further acknowledge that you fully understand
its terms and have voluntarily executed this Agreement and that the restrictions
placed on you by this Agreement are reasonably necessary to protect Alloy’s and
any Affiliate’s interests and will not preclude you from being gainfully
employed in a suitable capacity following the termination of your employment
given your general knowledge and experience.

(e) The headings and captions of the various subdivisions of this Agreement are
for convenience of reference only and shall in no way modify, or affect the
meaning or construction of any of the terms or provisions hereof.

(f) This Agreement may be executed in one or more counterparts, and by different
parties hereto on separate counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.

(g) All statements, representations, warranties, covenants and agreements in
this Agreement shall be binding on the parties hereto and shall inure to the
benefit of the respective successors and permitted assigns of each party hereto.
Nothing in this Agreement shall be construed to create any rights or obligations
except among the parties hereto, and no person or entity shall be regarded as a
third-party beneficiary of this Agreement.

151 W 26th Street • New York, New York 10001 • 212.244.4307 • 212.329.8444 [fax]
• www.alloymarketing.com

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Kindly acknowledge your acceptance of this Agreement by signing both copies of
this letter where indicated.

 

ALLOY, INC.   /s/ James Johnson By:   James Johnson Title:   COO

Dated: 3/1/06

 

ACCEPTED AND AGREED: /s/ Gary J. Yusko Print Name:    Gary J. Yusko

Dated: 3/1/06

151 W 25th Street • New York, New York 10001 • 212.244.4307 • 212.329.8444 [fax]
• www.alloymarketing.com