Document:

Patent License Agreement

 Exhibit 10.6 
  
 PATENT LICENSE AGREEMENT 
  
 UNITHER PHARMA, INC. 
  
 and 
  
 Real
Health Laboratories, Inc. 
  
 May 1, 2002 

 PATENT LICENSE AGREEMENT 
  
 This PATENT LICENSE AGREEMENT (this “License Agreement”) is made as of May 1, 2002 between Unither Pharma,
Inc. (formerly Cooke Pharma, Inc.) (“Unither”), located at 1110 Spring Street, Silver Spring, Maryland 20910 (“Licensor”), and Real Health Laboratories, Inc. (“Licensee”), located at 1424 30th Street #B1, San Diego, California 92154. 
  
 RECITALS 
  
 WHEREAS a dispute (“the Dispute”) has arisen between Licensor and Licensee over the alleged infringement of the patents identified in Exhibit A
attached hereto (the “Issued Patents”), which the parties desire to settle on terms which include Licensor granting to Licensee a nonexclusive license to the Issued Patents; 
  
 WHEREAS Licensor holds certain licenses to the Issued Patents granted by the Board of Trustees of the Leland Stanford Junior
University (“Stanford”) and New York Medical College (“NYMC”) (collectively “Patentees”), which Issued Patents claim L-Arginine and methods for administering the amino acid L-Arginine, and Licensor desires to grant a
nonexclusive license to Licensee; 
  
 WHEREAS Licensee sells
certain nutritional supplements containing the amino acid L-Arginine, Licensee admits that the sale of its L-Arginine containing products infringes certain claims contained in the Issued Patents (the “Infringed Claims”), Licensee admits
the validity and enforceability of the Issued Patents and Licensee desires to obtain a nonexclusive license to the Issued Patents so that it may continue selling products containing L-Arginine in accordance with this License Agreement; 

 
 NOW THEREFORE, for the consideration herein described and upon the
terms listed below, the parties hereby agree as follows: 
  
 ARTICLE I - DEFINITIONS 
  
 “Cardiovascular” means referring or relating to the human heart and circulatory system including veins, arteries, and capillaries, and further including references to diseases of the human cardiovascular system. 
  
 The “Field of Use” is enhancing human sexual performance,
specifically nutritional supplements that are offered, promoted and/or marketed as enhancing human sexual performance through products containing L-Arginine or oral administration of L-Arginine. Field of Use shall include and permit Cardiovascular
claims that are limited to human sexual performance as specifically permitted in Article VII of this License Agreement. 
  
 “Fiscal Year” means from November 1 through October 31, which is Licensee’s current fiscal year used for accounting purposes.

 “Infringed Claims” means those numbered claims of each of the Issued Patents identified as
Infringed Claims in Exhibit A attached hereto. 
  
 “L-Arginine-Based Products” means products intended for human consumption that contain the amino acid L-Arginine, including but not limited to salts and peptides or other compositions in which L-Arginine may be bonded to other
moieties, as an ingredient for enhancing nitric oxide, reducing vascular resistance, increasing blood flow, and/or enhancing physical performance. 
  
 “Licensed Patents” means the Issued Patents and any patents that hereafter issue in the United States from applications pending before the U.S.
Patent and Trademark Office as herein described, and any other patents issued or licensed to, or acquired by, Licensor in the United States or elsewhere in the world that relate to composition of L-Arginine Based Products, or to any method of orally
administering L-Arginine Based Products. Without limiting the generality of the foregoing, Licensed Patents shall include any patent issuing pursuant to U.S. Patent Application No. 10/060,252 entitled “Enhancement of Vascular Function by
Modulation of Endogenous Nitric Oxide Production or Activity” filed February 1, 2002 (the “Pending Application”), subject to the royalty obligations set forth in Paragraph 3.2, below. Licensed Patents does not include any other
Stanford-owned or managed patents or NYMC-owned or managed patents other than those specifically included within the license between Stanford and Licensor and NYMC and Licensor. 
  
 “Licensed Products” means any product within the Field of Use, including any L-Arginine Based Products, the
manufacture, importation, sale or marketing of which would infringe any claim of the Licensed Patents. 
  
 “Net Sales” means gross revenues from sales of Licensed Products in any country in which Licensed Patents are issued and outstanding, less sales
taxes, value added taxes, direct to consumer sales shipping costs (incurred in connection with sales for which shipping and handling costs are billed to consumers and included in gross sales), product returns, early payment and other discounts, and
slotting allowances directly attributed to Licensed Products. For the purposes of this License Agreement and for determining Net Sales, Licensed Products are considered sold on the date of the associated invoice or credit card payment processing,
and gross revenues from sales of Licensed Products shall be calculated on cash payments received by licensee pursuant to such invoices or credit card payment processing. 
  
 “Promotional Statements” means statements printed or displayed on or in product labels, product inserts, product
advertisements, books, brochures, product catalogs, Licensee’s web site, and public statements made by Licensee’s officers, agents, consultants and spokespersons, and any other public statements by or on behalf of Licensee, its officers,
agents, distributors and assigns that may have the effect of promoting, advertising or sustaining sales of Licensee’s Licensed Products. 
  
 “Related Company” means any corporation, partnership or other entity with respect to which more than fifty percent (50%) of the beneficial
ownership is held by Licensor. 
  

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 “Quarter” means three successive calendar months commencing November 1 through
January 31 (“First Quarter”), February 1 through April 30 (“Second Quarter”), May 1 through July 31 (“Third Quarter”) and August 1 through October 31 (“Fourth Quarter”).

  
 “Term” means for the duration of this License
Agreement as provided for in Article V. 
  
 “Third
Party” means any person, company or entity that manufactures or sells Licensed Products. 
  
 “Total Net Sales of Licensed Products within a Fiscal Year” means Licensee’s running total of the Net Sales of Licensed Products through all sales channels that are invoiced within the Fiscal Year of
the Quarter for which the Royalty Payment is being calculated. 
  
 ARTICLE II - LICENSE GRANT 
  
 2.1. License
Grant. Licensor hereby grants to Licensee a nonexclusive license under the Licensed Patents to make, have made, use, offer to sell, sell, and import Licensed Products within the Field of Use throughout the world for the Term of this License
Agreement. 
  
 2.2. Licensee agrees that Licensed Products sold in
the United States shall be manufactured substantially in the United States, although Licensee shall be entitled to import ingredients for use in the manufacture of Licensed Products. 
  
 2.3. No Other Rights Granted. The license granted hereunder shall not be construed to confer any rights upon Licensee
by implication, estoppel or otherwise to any technology not specifically claimed in the Licensed Patents. 
  
 2.4. Notice of Licensed Patents. Licensor shall give notice to Licensee of the issuance to or acquisition by Licensor of any patents included
within the definition of Licensed Patents, which notice shall be given within sixty (60) days after any such patent is issued to or acquired by Licensor. 
  

ARTICLE III - ROYALTIES, PAYMENTS AND REPORTS 
  
 3.1. Continuing Royalty Obligations - Initial Royalty Calculation. In consideration for the patent license granted in Paragraph 2.1, Licensee shall
pay Licensor a continuing royalty every Quarter of the Term as specified in this Article III. Royalty obligations will be calculated and paid quarterly based upon Licensee’s total Net Sales invoiced within the Fiscal Year associated with that
Quarter. Royalty Payments are due forty-five (45) days after the end of each Quarter. Royalty Payments shall be calculated for each Quarter as follows: 
  
 (a) For Total Net Sales of Licensed Products within a Fiscal Year up to Six Million Dollars ($6,000,000), the Royalty Payment is two
percent (2%) of the total Net Sales invoiced in the Quarter. 
  
 (b) During any Quarter in which Total Net Sales within a Fiscal Year exceeds Six Million Dollars ($6,000,000), but is less than Twenty-Five Million Dollars ($25,000,000), 

  

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the Royalty Payment is two percent (2%) of that portion of total Net Sales invoiced in the Quarter that brings the Fiscal Year total to Six Million
Dollars ($6,000,000), and five percent (5%) of the remaining additional Net Sales invoiced in the Quarter. 
  
 (c) During any Quarter in which Total Net Sales within a Fiscal Year exceeds Twenty-Five Million Dollars ($25,000,000), the Royalty
Payment is two percent (2%) of that portion of total Net Sales invoiced in the Quarter that brings the Fiscal Year total to Six Million Dollars ($6,000,000), five percent (5%) of that portion of the additional Net Sales invoiced in the
Quarter that brings the Fiscal Year total to Twenty-Five Million Dollars ($25,000,000), and ten percent (10%) of the remaining additional Net Sales invoiced in the Quarter. 
  
 3.2. Continuing Royalty Obligations - Provisional Royalty Calculation. Whereas the parties have agreed that the
Pending Application, if granted by the U.S. Patent Office, would cover the Licensed Products, and whereas Licensee desires that this License Agreement address such an eventuality, the parties agree to implement the Provisional Royalty Calculation
defined in this paragraph in consideration for including within the Licensed Patents any patent that issues from the Pending Application. This Provisional Royalty Calculation will automatically become effective in the Quarter following the Quarter
in which a U.S. Patent issues containing at least one claim that is substantially the same as or broader than the present claim number 22 in the Pending Application, a copy of which claim is attached hereto as Exhibit B. When the Provisional Royalty
Calculation is effective, royalty obligations will be paid quarterly based upon Licensee’s total Net Sales invoiced within the Fiscal Year associated with that Quarter, due forty-five (45) days after the end of each Quarter, and calculated
for each Quarter as follows: 
  
 (a) For Total
Net Sales of Licensed Products within a Fiscal Year up to Five Million Dollars ($5,000,000), the Royalty Payment is three percent (3%) of the total Net Sales invoiced in the Quarter. 
  
 (b) During any Quarter in which Total Net Sales within a
Fiscal Year exceeds Five Million Dollars ($5,000,000), but is less than Twenty-Five Million Dollars ($25,000,000), the Royalty Payment is three percent (3%) of that portion of total Net Sales invoiced in the Quarter that brings the Fiscal Year
total to Five Million Dollars ($5,000,000), and six percent (6%) on the remainder of total Net Sales invoiced in the Quarter. 
  
 (c) During any Quarter in which total Net Sales within a Fiscal Year exceeds Twenty-Five Million Dollars ($25,000,000), the Royalty
Payment is three percent (3%) of that portion of total Net Sales invoiced in the Quarter that brings the Fiscal Year total to Five Million Dollars ($5,000,000), six percent (6%) of that portion of the additional Net Sales invoiced in the
Quarter that brings the Fiscal Year total to Twenty-Five Million Dollars ($25,000,000), and ten percent (10%) of the remaining additional Net Sales invoiced in the Quarter. 
  
 3.3. Third Party Licenses: Most Favored Nations Option. If Licensor shall hereafter grant to a Third Party, other
than a Related Company, a license under any of the Issued Patents (a “Third Party License”) that permits such Third Party to make or sell Licensed Products within the Field of Use, then Licensor shall: 
  
 (a) Promptly notify Licensee of such Third Party License,
which notification shall contain a complete and accurate description of the royalties and other material terms contained in such Third Party License, and 
  

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 (b) Extend to Licensee an option to modify this License Agreement by incorporating into
this License Agreement as a whole all of the material terms contained in such Third Party License, including all royalty rates and financial terms, in substitution of the corresponding material terms of this License Agreement. Licensee may exercise
such option to modify this License Agreement by advising Licensor in a written notice that it accepts all offered terms of the Third Party License, provided Licensee’s notice is received by Licensor within sixty (60) days following
notification of such Third Party License. 
  
 3.4. Times and
Currencies of Payments. 
  
 (a) Payments
owing hereunder shall be payable in United States dollars. Payments may be made by check payable to “Unither Pharma, Inc.” mailed to Licensor at the address for notices set forth in this License Agreement. However, if the license between
Stanford and/or NYMC and Licensor is terminated, payments owing hereunder shall be paid directly to Stanford and/or NYMC as Stanford and NYMC jointly designate. 
  
 (b) Royalty Payments received after the due date specified herein shall accrue interest from the date such
amounts are due and payable at two percentage points above the prime lending rate as established by the Chase Manhattan Bank, N.A., in New York City, New York, or at such lower rate as may be required by law. 
  
 (c) Licensee shall, within one hundred twenty
(120) days after the end of each Fiscal Year of Licensee ending during the term of this License Agreement, submit an annual report (an “Annual Report”) showing total net sales of Licensed Products for each such Fiscal Year, based upon
the audited financial statements of Licensee for such Fiscal Year. To the extent that the aggregate Royalty Payments already made for the four (4) Quarters of such Fiscal Year are greater than the Royalty Payments owing as set forth in the
Annual Report, the excess shall be applied to the Royalty Payments owing for the first Quarter of the following Fiscal Year. To the extent that the aggregate Royalty Payments made for the four (4) Quarters of such Fiscal Year are less than the
Royalty Payments owing pursuant to the Annual Report, Licensee shall make payment of the deficit to Licensor within one hundred twenty (120) days after the end of such Fiscal Year, and, if such payment is timely made, Licensee shall not be
deemed to be in default of this License Agreement notwithstanding any shortfall for any individual Quarter in such Fiscal Year. 
  
 3.5. Record Keeping and Reports. 
  
 (a) Licensee shall keep good and accurate books of account sufficient to permit the calculation of the Royalty Payments and prepare the
written reports due hereunder. Licensee shall maintain the books of account for at least three (3) years following the end of the Fiscal Year to which they pertain for inspection and audit by Licensor as provided for in Paragraph 3.6.

  

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 (b) Within forty-five 45) days following the end of each Quarter, Licensee shall send to
Licensor, with a copy to Stanford, a written report setting forth the number and description of Licensed Products sold or otherwise disposed of by Licensee during the preceding Quarter and the associated aggregate Net Sales invoiced during the
Quarter. The quarterly report shall also identify all wholesale customers to whom Licensee delivered Licensed Products during each Quarter. A report shall be sent to Licensor even when no Licensed Products were sold or otherwise disposed of during
the Quarter. 
  
 3.6. Audit Rights. Licensee shall make its
books of account available for inspection by an independent accountant designated by Licensor. Such inspections shall be no more frequent than once each calendar year during the Term and once within six months after termination of this License
Agreement. The designated accountant shall retain in confidence the information in the books of account and shall report to Licensor only the accuracy or inaccuracies of the reports rendered pursuant to Paragraph 3.5(b) herein. Such inspections will
be at Licensor’s expense unless the designated accountant identifies underpayment of royalties due by five percent (5%) or more, in which event Licensee shall pay for such inspection. Licensor’s failure to inspect shall not constitute
a waiver of Licensor’s right to object to the accuracy of the reports rendered or payments made under this License Agreement; provided, however, that Licensor shall have no right to audit or object to the reports submitted by Licensee, and
royalties paid by Licensee, for any Fiscal Year, unless such audit or objection is made no later than two (2) years following the end of such Fiscal Year. Refusal of a Licensor’s request for an audit shall constitute a material breach of
this License Agreement. 
  
 ARTICLE IV - TRANSFERABILITY OF
RIGHTS AND OBLIGATIONS 
  
 4.1. No Right To Sublicense.
Licensee shall not sublicense the rights granted hereunder to any third party. Licensee may, however, contract with third parties for the manufacture of Licensed Products provided such Licensed Products are only sold or distributed by Licensee
pursuant to this License Agreement. 
  
 4.2. Assignment
Restrictions. The license granted by this License Agreement is personal to Licensee, and therefore may not, except as provided below, be assigned, conveyed or otherwise transferred to any third party without the prior express written consent of
Licensor. Licensor reserves the right to withhold consent for the assignment or transfer of this License Agreement to third parties for any reason whatsoever. Notwithstanding the foregoing, in the event of a transaction consisting of a sale by
Licensee of substantially all of its assets and business, or a transaction in which Licensee is acquired by, or merged or consolidated with, any other person and Licensee is not the surviving entity in such transaction, then the person acquiring all
of the assets and business of Licensee, or the person constituting the surviving entity in any such merger, acquisition or consolidation transaction (any such person being referred to herein as a “Succeeding Party”), shall acquire all of
the rights of Licensee under this License Agreement, without any requirement for consent of Licensor, but subject to the remaining provisions of this Paragraph 4.2. The Succeeding Party in any of the foregoing transactions shall be required to give
written notice to Licensor of the consummation of any transaction described in the preceding sentence within thirty (30) days following the closing of such transaction, which notice shall state that the Succeeding Party agrees to be bound by
all of the provisions of this License Agreement in consideration for acquiring all the rights of the 

  

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Licensee under this License Agreement. The Succeeding Party in any such transaction shall succeed to all of the rights of Licensee hereunder except, however,
if the Succeeding Party also has been granted a license to the Issued Patents at royalty rates greater than those specified in Article III of this License Agreement, then the license granted to the Succeeding Party shall take precedence and this
License Agreement shall terminate. 
  
 ARTICLE V - TERM AND
TERMINATION 
  
 5.1. Term. The “Term” of this
License Agreement is from the date of its execution until it is terminated as provided in Paragraphs 5.2 – 5.4 herein. 
  
 5.2. Termination Upon Expiration of Licensed Patents. This License Agreement shall terminate upon the expiration of the last to expire of the
Licensed Patents unless terminated earlier under a provision of this Article V. 
  
 5.3. Termination Upon Patent Invalidation. This License Agreement shall terminate in the same manner as if all of the Licensed Patents had expired in the event that every Infringed Claim, and every claim that
would be infringed by Licensed Products as contained in every Licensed Patent other than the Issued Patents, is rendered abandoned, invalid or unenforceable by an order of a court of law of competent jurisdiction, or by action of the United States
Patent and Trademark Office acting in an official capacity, provided said order or action is unappealable or the time for any appeal has expired. 
  
 5.4. Termination For Cause. This License Agreement may be terminated as provided for below if any of the following occur: 
  
 (a) Material Breach of License Agreement. In the event of a
material breach of this License Agreement, the nonbreaching party may terminate the License Agreement by providing written notice to the breaching party of the breach and intent to terminate this License Agreement. The License Agreement shall
terminate thirty (30) days following delivery of notice of breach unless the breaching party corrects the breach; provided, however, if such breach is capable of being cured, and such cure cannot be reasonably accomplished within said thirty
(30) days, this License Agreement shall not terminate if the breaching party diligently commences and continues its efforts to cure such breach until such breach is cured within a reasonable time. 
  
 (b) Failure to Make Timely Royalty Payments. If Licensee
fails to make timely Royalty Payments for two (2) successive Quarters or three (3) Quarters out of any successive six (6) Quarters, including any adjustments made pursuant to an audit under Paragraph 3.6, and provided that notices of
all such failures have previously been given pursuant to Paragraph 5.4(a), this License Agreement may be terminated by Licensor immediately upon delivery of a notice of termination pursuant to this Paragraph 5.4(b). 
  
 (c) Licensee Discontinues All Licensed Products. This
License Agreement shall terminate when Licensee stops selling Licensed Products. Licensee may initiate termination under this paragraph by noticing Licensor that it has suspended all sales of Licensed Products with the intention of not selling
Licensed Products during the remaining term of the 

  

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Licensed Patents. Licensor may initiate termination under this paragraph by notice to Licensee when Licensee has reported no Net Sales of Licensed Products
for two (2) successive Quarters. 
  
 (d)
Insolvency, Dissolution or Assignment. This License Agreement shall automatically terminate in the event of (a) Licensee becomes insolvent or files for bankruptcy (voluntary or involuntary); (b) Licensee is dissolved or the sale of all or
substantially all of its assets is made for the benefit of creditors, or (c) an attempt to assign this License Agreement is made contrary to the terms of this License Agreement; provided, however, notwithstanding the foregoing, if Licensee is
involved in a Chapter 11 bankruptcy reorganization proceeding, and Licensee continues to perform all of its obligations under this License Agreement during the course of such proceeding, and such proceeding concludes with the confirmation of a plan
of reorganization that provides for the affirmation and continuation of this License Agreement, this License Agreement shall not automatically terminate but shall continue in full force and effect so long as Licensee continues to perform all of its
obligations hereunder. 
  
 5.5. Termination by Mutual
Agreement. The parties may terminate this License Agreement at any time upon mutual agreement expressed in a writing signed by authorized representatives of both parties. 
  
 5.6. Obligations in the Event of Termination. 
  
 (a) Right to Complete Contracted Sales. In the event of termination of this License Agreement, Licensee
shall have the right to complete all contracts for the sale of Licensed Products under which Licensee is obligated on the date of termination, provided Licensee pays royalties on such sales as required herein and provided all such sales are
completed within three (3) months after the date of termination. 
  
 (b) Obligations to Make Royalty Payments. In the event of termination of this License Agreement, Licensee shall pay Licensor all outstanding royalty obligations which shall include Royalty Payments for sales of
Licensed Products since the last Quarter for which Royalty Payments have been made, including the sales of Licensed Products after termination permitted in Paragraph 5.6(a) herein. The final Royalty Payment is due on the latter of forty-five
(45) days after the date of termination, or forty-five (45) days after the last sale pursuant to Paragraph 5.6(a). 
  
 (c) Termination Report. In the event of termination of this License Agreement, Licensee shall send to Licensor a Termination Report
identifying the Net Sales of Licensed Product sales since the last quarterly report through termination, and the anticipated Net Sales of Licensed Products for which the deliveries will take place after termination as provided for in Paragraph
5.6(a). The Termination Report shall be transmitted to Licensor within forty-five (45) days following termination. 
  
 (d) Surviving Provisions. The obligations on Licensee specified in Paragraphs 3.5, 3.6, 6.1, 9.1, 9.3, 11.1, 11.2, 11.3, 11.4, 12.2 and
12.3 herein shall survive termination of this License Agreement and remain enforceable in accordance with the provisions of Article XI. 
  

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 ARTICLE VI - INDEMNIFICATION 
  
 6.1. Indemnification of Licensor. Licensee shall defend, indemnify and hold harmless Licensor, its officers, Board of
Directors, stockholders, employees, and agents, and Patentees, their respective trustees, officers, employees, students and agents, for and against any and all claims, demands, damages, losses, and expenses of any nature (including attorneys, fees
and other litigation expenses), resulting from, but not limited to, death, personal injury, illness, economic loss, improper business practices or product liability arising from or in connection with any of the following: 
  
 (a) Any manufacture, use, sale or other disposition by
Licensee of its Licensed Products; 
  
 (b) The
direct or indirect use by any person of Licensed Products made, used, sold or otherwise distributed by Licensee or an agent of Licensee; or 
  
 (c) A material breach of this License Agreement by Licensee. 
  
 6.2. No Consequential Damages. Licensor and Patentees shall not be liable for any indirect, special, consequential,
or other damages whatsoever, whether grounded in tort (including negligence), strict liability, contract or otherwise. Licensor and Patentees shall not have any responsibilities or liabilities whatsoever with respect to Licensed Products.

  
 6.3. Worker’s Compensation and Employer’s
Liability Requirements. Licensee shall at all times comply, through insurance or self-insurance, with all statutory workers’ compensation and employers’ liability requirements covering any and all employees with respect to activities
performed under this License Agreement. 
  
 6.4. Liability
Insurance. In addition to the foregoing, Licensee shall maintain, during the term of this License Agreement, Comprehensive General Liability Insurance, including Products Liability Insurance, with reputable and financially secure insurance
carrier(s) reasonably acceptable to Licensor to cover the activities of Licensee and its sublicensee(s). Commencing with the introduction of Licensed Product(s) into humans for any purpose, including clinical trials, such insurance shall provide
minimum limits of liability of Five Million Dollars ($5,000,000) and shall include Licensee, NYMC, Stanford, Stanford University Hospital, their trustees, directors, officers, employees, students, and agents as additional insureds. Such insurance
shall be written to cover claims incurred, discovered, manifested, or made during or after the expiration of this License Agreement. At Licensor’s request, Licensee shall furnish a Certificate of Insurance evidencing primary coverage and
requiring thirty (30) days prior written notice of cancellation or material change to Licensor, NYMC and Stanford. Licensee shall advise Licensor, in writing, that it maintains excess liability coverage (following form) over primary insurance
for at least the minimum limits set forth above. All such insurance of Licensee shall be primary coverage; insurance of Licensor, NYMC, Stanford or Stanford Health Services shall be excess and noncontributory. Failure to purchase or maintain such
product liability insurance shall be considered a material breach of this License Agreement. 
  

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 ARTICLE VII - PROMOTION AND MARKING OF LICENSED PRODUCTS 
  
 7.1. Labeling and Advertising Limitations. 
  
 (a) The parties agree that this license is specifically
limited to the Field of Use defined herein, and specifically excludes the use and promotion by Licensee of Licensed Products for Cardiovascular health benefit purposes. Accordingly, Licensee shall refrain from making Cardiovascular claims on any of
its products containing L-Arginine, and shall restrict its labeling, advertising and promotional statements regarding Licensed Products to the Field of Use as provided for herein. 
  
 (b) Licensee shall not participate in or otherwise cooperate with any third party’s manufacture,
importation, sales or promotion of products containing L-Arginine and offered for its Cardiovascular health benefits not within the Field of Use. 
  
 (c) Licensee shall have the right to make product claims and promotional statements regarding Licensed Products promoting “sexual
function”, “sexual performance”, “erectile strength and endurance” and “sexual energy and vitality”. Further, Licensee shall have the right to describe and explain the role of L-Arginine in creating nitric oxide
within the body as it relates to vascular dilation and to improved or increased blood flow to the sex organs. Further in this regard, Licensee shall have the right to refer to the 1998 Nobel Prize for Medicine to explain that medical research
demonstrated the role of nitric oxide in increasing vascular blood flow, and that such increased blood flow improves and enhances sexual function. 
  
 7.2. Marking of Licensed Products. 
  
 Licensee agrees to mark all Licensed Products sold by it under this License Agreement with the words “Patent” or
“Patents” and the numbers of the issued Licensed Patents or pending patent applications applicable thereto. Notwithstanding the foregoing, Licensee and its retail customers and end users shall have the right to dispose of all inventory of
products labeled “The Vasorect Formula” existing on the effective date of this License Agreement even though such products are not marked in accordance with the preceding sentence. 
  
 ARTICLE VIII - ENFORCEMENT OF PATENTS 
  
 8.1. Notification of Infringement. Licensee shall notify Licensor of
any information obtained by Licensee relating to activities of any Third Party consisting of the marketing, promotion, advertising, sale or distribution or any products that contain L-Arginine and which are marketed with promotional claims and/or
promotional statements that promote “sexual function,” “sexual performance,” “erectile strength and endurance,” “sexual energy and vitality,” and/or other similar claims or statements (any such activities
being referred to herein as “Infringing Activities”). 
  
 8.2. No Right to Enforce. This License Agreement conveys no right to Licensee to enforce the Licensed Patents, nor does it obligate Licensor in any way to enforce the Licensed Patents on behalf of Licensee. Licensor reserves to
itself all rights to enforce or not enforce the 

  

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Licensed Patents, including the right to grant additional nonexclusive licenses or to sue for patent infringement and retain all damages collected therefrom.

  
 ARTICLE IX - CONFIDENTIALITY AND PUBLICITY 

 
 9.1. Confidentiality. All license discussions and terms shall be
kept confidential by both parties, and confidentiality is a material term of this License Agreement. Notwithstanding the foregoing, Unither shall have the right to disclose the terms of this License Agreement in order to enter into settlements
and/or licensing arrangements with Third Party infringers, and the parties to this License Agreement shall be entitled to disclose the terms hereof (a) to a party’s attorneys, financial institutions, accountants or other professional
advisors in the course of seeking professional advice, (b) to the extent required by a court or governmental agency, or by applicable law, order, rule or regulation, or (c) to entities with which a party is discussing a proposed sale of
its stock, a sale of all or substantially all of its assets, merger or consolidation, or obtaining financing or entering into a partnership, joint venture, or similar arrangement, provided that any such entity to whom such disclosure is made shall
have entered into a confidential agreement sufficient to preserve the obligations of confidentiality established under this License Agreement. Furthermore, the parties shall be entitled to disclose and make public the fact that they have settled all
prior disputes between them, and that they have entered into this License Agreement, and that Licensee is a licensee of Licensor with respect to the marketing, sale and distribution of Licensed Products. 
  
 9.2. Publicity. Either party may issue a press release announcing this
License Agreement provided the text of such press release is approved in writing by the other party prior to public release, such approval not to be unreasonably withheld or delayed. In preparing such press releases, the parties agree to keep the
royalty provisions of Article 3 confidential. 
  
 9.3. Non-Use
of Names. Except if required by applicable law, Licensee shall not use the names or trademarks of Licensor, NYMC or Stanford, nor any adaptation thereof, nor the names of any of their employees, in any advertising, promotional or sales
literature without prior written consent obtained from the respective party or its employee, in each case, except that Licensee may state that it is licensed by Licensor under one or more of the Licensed Patents. Nothing in the preceding sentence
shall preclude Licensee from referring to, distributing or otherwise publishing any articles, reports or studies that have previously been published by any person, including but not limited to NYMC or Stanford or persons affiliated with such
institutions. 
  
 ARTICLE X - COVENANT NOT TO CHALLENGE

  
 10.1. Covenant Not to Challenge. Licensee covenants
not to challenge the validity or enforceability of the Issued Patents during the term of this License Agreement. Licensee further agrees not to aid any third party seeking to challenge the validity or enforceability of the Issued Patents in any way.
Licensee further covenants not to comment on the allowability of Licensor’s pending patent application with the U.S. Patent and Trademark Office. 
  
 10.2. Covenant Not to Aid. Licensee shall refrain from making any release or disclosure to any party or into the public domain of any of its
findings, prior art or expert reports, 

  

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or other documents or testimony arising out the litigation or any preparation for the litigation. Licensee further agrees to refrain from aiding in any way
any party engaged in litigation with Licensor regarding enforcement or challenges to validity or enforceability of the Licensed Patents. 
  
 ARTICLE XI - DISPUTE RESOLUTION 
  
 11.1. Dispute Resolution Procedure. The parties agree that any disputes that may arise under this License Agreement, including suitability of
Promotional Statements regarding Licensed Products, should be resolved by the parties without resorting to litigation. Accordingly, the parties agree to the following dispute resolution procedure. 
  
 (a) In the event either party feels the other party has
failed to comply with the provisions of this License Agreement, that party shall notice the other party of the nature of the dispute and the requested corrective action. Following such notice, the parties shall meet to confer in an attempt to
resolve the dispute on mutually acceptable business terms. If, after meeting and conferring regarding the dispute, either party considers that the dispute requires arbitration, that party shall notice the other party of its intent to initiate the
Arbitration Procedure defined in Paragraph 11.1 (b). 
  
 (b) Within ninety (90) days after receipt of written notice by one party of the existence of a dispute requiring arbitration, the parties shall initiate arbitration in accordance with the rules of the American Arbitration Association,
as modified by this Article. Such arbitration shall take place in English in San Diego, California, before a single Arbitrator appointed by the American Arbitration Association. The Arbitrator shall apply the laws of the State of California and
shall render a written decision with the reasons therefor within six (6) months from the date the matter is submitted to arbitration. 
  
 (c) The initiation of any arbitration hereunder shall not (a) relieve Licensee of its obligations to make Royalty Payments to
Licensor as required by the terms of this License Agreement during the continuance of the Arbitration Proceeding, or (b) prevent Licensor from applying for and obtaining from a Court a temporary restraining order and/or preliminary injunction
injunctive relief pending the outcome of the arbitration. 
  
 (d) The decision of the Arbitrator shall be binding and conclusive on the parties, and they shall comply with such decision in good faith. 
  
 11.2. Enforcement Of Arbitration. Each party hereby submits itself to the jurisdiction of the District Court of the
Southern District of California, but only for the entry of judgment with respect to the decision of the arbitrator hereunder, including injunctive relief if appropriate to render effective the arbitrator’s decision. Notwithstanding the
foregoing, judgment on the award of the arbitrator may be entered in any court having jurisdiction. If judicial enforcement or review of the arbitrator’s decision is sought, the prevailing party shall be entitled to its costs and reasonable
attorneys’ fees in addition to any amount of recovery ordered by the court. 
  
 11.3. Litigation. In the event that any party hereto shall bring any arbitration, legal action or other proceeding with respect to the breach, interpretation, or enforcement of this 

  

 12 

 
License Agreement, or with respect to any dispute relating to any transaction covered by this License Agreement, the losing party or parties in such
arbitration, action or proceeding shall reimburse the prevailing party or parties therein for all reasonable costs of arbitration or litigation, including reasonable attorneys’ fees, in such amount as may be determined by the arbitrator, court
or other tribunal having jurisdiction, including matters on appeal. 
  
 11.4. Applicable Law. This License Agreement shall be governed by and construed in accordance with the laws of the State of California, without regard to conflicts of laws principles thereof. 
  
 11.5. Choice of Forum. Any judicial action under this License
Agreement must be brought in the District Court of the Southern District of California. 
  
 ARTICLE XII - REPRESENTATIONS AND WARRANTIES 
  
 12.1. Licensor warrants that (i) it holds valid exclusive licenses (the “Basic Licenses”) to the Issued Patents and the Pending Application, (ii) it has the authority to grant the licenses provided
hereunder, (iii) the execution of this License Agreement will not create a cause of action against Licensee by Stanford, NYMC or any other party, and (iv) Licensee shall be entitled to retain all rights under this License Agreement subject
to the provisions of the Basic Licenses notwithstanding any termination of the Basic Licenses or any default or alleged default by Licensor under the Basic Licenses. 
  
 12.2. Excluding the limited warranty set forth in Paragraph 12.1, nothing in this License Agreement is or shall be construed
as: 
  
 (a) A warranty or representation by
Licensor or Patentees as to the validity or scope of any Licensed Patent(s); 
  
 (b) A warranty or representation that anything made, used, sold, or otherwise disposed of under any license granted in this License Agreement is or will be free from infringement of patents, copyrights, and other
rights of third parties; 
  
 (c) An obligation to
bring or prosecute actions or suits against third parties for infringement, except to the extent and in the circumstances described in Article 8; 
  
 (d) Granting by implication, estoppel, or otherwise any licenses or rights under patents or other rights of Stanford and NYMC other than
the Licensed Patents, regardless of whether such patents or other rights are dominant or subordinate to any Licensed Patents; or 
  
 (e) An obligation to furnish any technology or technological information. 
  
 12.3. Disclaimer of Warranties. Except as expressly set forth in this License Agreement, LICENSOR AND PATENTEES MAKE NO
REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED. THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS 

  

 13 

 
FOR A PARTICULAR PURPOSE, OR THAT THE MANUFACTURE, SALE OR USE OF THE LICENSED PRODUCT(S) WILL NOT INFRINGE ANY PATENT, COPYRIGHT, TRADEMARK, OR OTHER RIGHTS
OR ANY OTHER EXPRESS OR IMPLIED WARRANTIES. 
  
 ARTICLE XIII -
MISCELLANEOUS 
  
 13.1. Severability. In the event that
any term, provision, or covenant of this License Agreement shall be determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, that term will be curtailed, limited or deleted, but only to the extent necessary to remove
such invalidity, illegality or unenforceability, and the remaining terms, provisions and covenants shall not in any way be affected or impaired thereby. 
  
 13.2. Notices. All notices, demands or other communications required or permitted to be given in connection with this License Agreement, or the
transactions contemplated hereby, shall be in writing, and shall be deemed delivered when (i) personally delivered to a party (by personal delivery to an officer of a corporate party, a partner of a partnership, or other authorized
representative of a party), (ii) if mailed, three (3) business days after deposit in the United States mail, postage prepaid, certified or registered mail, return receipt requested, (iii) if delivered by a reputable nationally
recognized overnight carrier, one (1) business day after delivery to such carrier, or (iv) if delivered by facsimile, on the date facsimile transmission is confirmed, provided that, on such date, a separate copy is also delivered to a
reputable nationally recognized overnight carrier for delivery on the next business day. Delivery by mail, overnight carrier, or facsimile shall be addressed to the parties as follows: 
  

			
	To Licensor:	  	Unither Pharma, Inc.
	 	  	 1110 Spring Street

	 	  	 Silver Spring, MD 20910

	 	  	 Attn: President

	 	  	 Facsimile: 202-483-4005

		
	 with copy to:
	  	 Foley and Lardner

	 	  	 3000 K Street N.W., Suite 500

	 	  	 Washington, D.C. 20007

	 	  	 Attn: Stephen B. Maebius

	 	  	 Facsimile: (202) 672-5399

		
	To Licensee:	  	 Real Health Laboratories, Inc.

	 	  	 1424 30th
Street #B1

	 	  	 San Diego, CA 921547300

	 	  	 Attn: President

	 	  	 Facsimile: 619-213-1203

  

 14 

			
	 with copy to:
	  	Sonnenschein Nath & Rosenthal
	 	  	601 S. Figueroa St., Suite 1500
	 	  	Los Angeles, CA 90017
	 	  	Attn: J. A. Shafran, Esq.
	 	  	Facsimile: 213-623-9924

  
 Any party may change its address
for notice by written notice given in accordance with the foregoing provisions. Notwithstanding the manner of delivery, whether or not in compliance with the foregoing provisions, any notice, demand or other communication actually received by a
party shall be deemed delivered when so received. 
  
 13.3.
Waiver. No waiver by either party of any breach of this License Agreement, no matter how long continuing or how often repeated, shall be deemed a waiver of any subsequent breach thereof, nor shall any delay or omission on the part of either
party to exercise any right, power, or privilege hereunder be deemed a waiver of such right, power or privilege. 
  
 13.4. Article Headings. The article headings herein are for purposes of convenient reference only and shall not be used to construe or modify the
terms written in the text of this License Agreement. 
  
 13.5.
No Agency Relationship. The relationship between the parties is that of independent contractor and contractee. Neither party shall be deemed to be an agent of the other in connection with the exercise of any rights hereunder, and neither
shall have any right or authority to assume or create any obligation or responsibility on behalf of the other. 
  
 13.6. Force Majeure. Neither party hereto shall be deemed to be in default of any provision of this License Agreement, or for any failure in
performance, resulting from acts or events beyond the reasonable control of such party, such as Acts of God, acts of civil or military authority, civil disturbance, war, strikes, fires, power failures, natural catastrophes or other “force
majeure” events. 
  
 13.7. Final Agreement of the
Parties. This License Agreement contains the entire understanding of the parties with respect to the matters contained herein. The parties may, from time to time during the continuance of this License Agreement, modify, vary or alter any of the
provisions of this License Agreement, but only by a written instrument duly executed by authorized officials of both parties hereto. 
  
 13.8. Authority to Bind. Each of the persons executing this License Agreement on behalf of Licensor, Licensee and/or Patentees, respectively,
hereby represents and warrants that he or she is duly authorized to bind the party on whose behalf he or she is executing this License Agreement. 
  
 13.9. Construction of License Agreement. The parties acknowledge and agree that this License Agreement has been diligently and Extensively
negotiated, and is the final product of multiple drafts and revisions prepared after Review and discussion. In consideration of such negotiations, it is agreed that prior drafts of this License Agreement shall not be considered in the interpretation
of this License Agreement or any provisions contained herein, and, without 

  

 15 

 
limiting the generality of the foregoing, it is agreed that no inferences, conclusions, or interpretations are to be made based upon the fact (i) that a
particular provision contained in an earlier draft is not included in the executed version of this License Agreement, (ii) that a particular provision that is included in the executed version of this License Agreement was not contained in a
prior draft, or (iii) that a particular provision has been modified from a version contained in a prior draft. The language contained herein shall in all events be construed simply in accordance with its fair meaning, and, for purposes of
California Civil Code Section 1654, or any similar law or rule of construction, this License Agreement, and each of the provisions contained herein, shall not be deemed to have been drafted by any particular party, and shall not be construed
for or against any particular party on the basis of which party drafted this License Agreement or any particular provision herein. 
  
 13.10. Binding Effect. This License Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs,
estates, personal representatives, successors, and assigns. 
  
 13.11. Illegality. In the event that any provision of this License Agreement shall be adjudicated to be void, illegal, invalid, or unenforceable, the remaining terms and provisions of this License Agreement shall not be affected
thereby, and each of such remaining terms and provisions of this License Agreement shall be valid and enforceable to the fullest extent permitted by law. 
  
 13.12. Counterpart Copies. This License Agreement may be executed in one or more counterpart copies, and each of which so executed, irrespective of
the date of execution and delivery, shall be deemed to be an original, and all such counterparts together shall constitute one and the same instrument. The signature pages of one or more of the counterpart copies may be removed from such counterpart
copies and all attached to the same copy of this License Agreement which, with all attached signature pages, shall be deemed to be an original License Agreement. 
  
 -----Signatures on Next Page----- 
  

 16 

 IN WITNESS WHEREOF, the undersigned have executed this agreement effective the date first stated
above. 
  

									
	 Unither Pharma, Inc.
	 	 	 	 	 	 
				
	 	 	/s/ Illegible	 	 	 	Dated: 5/23/02
	 By:
	 	Illegible	 	 	 	 	 	 
	 Its:
	 	Illegible	 	 	 	 	 	 

  

									
	 Real Health Laboratories, Inc.
	 	 	 	 
				
	 	 	/s/    JOHN F. DULLEA        	 	 	 	Date: 5/1/02
	 By:
	 	John F. Dullea	 	 	 	 	 	 
	 Its:
	 	President/CEO	 	 	 	 	 	 

  

 17 

 ACKNOWLEDGMENT 
  
 The undersigned owners of the Issued Patents and the Pending Application hereby acknowledge the existence of this License
Agreement, and hereby confirm and agree that (i) Licensor has the rights to the Licensed Patents as referred to in this License Agreement, and (ii) provided Licensee has not breached the License Agreement and Licensee continues to perform
its obligations under the License Agreement and tenders such performance to Stanford and/or NYMC following any such termination, Licensee may continue to exercise its rights under the License Agreement if there is a termination of any or all of the
underlying license agreements that allow Licensor to grant licensee those rights provided for in this License Agreement. 
  
 The Board of Trustees of the Leland Stanford Junior University 
  

									
				
	 	 	/s/    KATHARINE KU        	 	 	 	Dated: May 16, 2002
	 By:
	 	Katharine KU	 	 	 	 	 	 
	 Its:
	 	 Director
 Technology Licensing
	 	 	 	 	 	 

  

									
	 New York Medical College
	 	 	 	 
				
	 	 	/s/    CATHARINE CREA        	 	 	 	Dated: 5/30/02
	 By:
	 	Catharine Crea	 	 	 	 	 	 
	 Its:
	 	 Associate Dean,
 Research Administration
	 	 	 	 	 	 

 EXHIBIT A 
  

ISSUED PATENTS 
  
 1. U.S. Patent No. 5,217,997 entitled “Use of L-Arginine in the Treatment of Hypertension and Other Vascular Disorders” issued June 8, 1993. The
Infringed Claims in the foregoing patent consist of claims 1, 11 and 12. 
  
 2.
U.S. Patent No. 5,428,070 entitled “Treatment of Vascular Degenerative Diseases by Modulation of Endogenous Nitric Oxide Production of Activity” issued June 27, 1995. None of the claims in the foregoing patent constitute
Infringed Claims for purposes of this License Agreement, but Licensee acknowledges and admits having infringed claims 1 and 3 thereof in its prior sale, advertising and marketing of “The CardioFitness Formula,” which Licensee has now
discontinued, and in various statements contained in past advertising and promotion of “The VasoRect Formula,” which Licensee shall in the future avoid by complying with the provisions of Paragraph 7.1 of this License Agreement.

  
 3. U.S. Patent No. 5,891,459 entitled “Enhancement of Vascular
Function by Modulation of Endogenous Nitric Oxide Production or Activity” issued April 6, 1999. The Infringed Claims in the foregoing patent consist of claims 1,19, 20 and 21. 
  
 4. U.S. Patent No. 6,117,872 entitled “Enhancement of Exercise Performance by Augmenting Endogenous Nitric Oxide Production or
Activity” issued September 12, 2000. The Infringed Claims in the foregoing patent consist of claims 1, 2, 3, 4, 5, 12, 13 and 14. 

 EXHIBIT B 
  

CLAIM NO. 22 OF PENDING PATENT APPLICATION NO. 10/060,252 
  
 22. A composition comprising L-arginine or a physiologically acceptable salt thereof in an amount sufficient to enhance
nitric oxide production and at least one additional ingredient that enhances production of nitric oxide or that inhibits degradation of nitric oxide, wherein said composition is in a form suitable for oral administration selected from the group
consisting of a pill, tablet, powder, and capsule.Form of Distribution Agreement between Alloy, Inc. and dELiA*s, Inc.

 Exhibit 10.14 
  
 DISTRIBUTION AGREEMENT 
  
 BY AND BETWEEN 
  
 ALLOY, INC. 
  
 AND 
  
 dELiA*s, INC. 
  
 DATED AS OF 
  
 DECEMBER     , 2005 

 TABLE OF CONTENTS 
  

					
	 	  	 	  	Page

	ARTICLE I.    DEFINITIONS	  	2
	 SECTION 1.1.
	  	 Certain Definitions
	  	2
	 SECTION 1.2.
	  	 Other Defined Terms
	  	10
		
	ARTICLE II.     PRELIMINARY TRANSACTIONS	  	11
	 SECTION 2.1.
	  	 Regulatory Filings and Related Actions
	  	11
	 SECTION 2.2.
	  	 Nasdaq National Market Application
	  	11
	 SECTION 2.3.
	  	 Business Separation
	  	11
	 SECTION 2.4.
	  	 Resignations
	  	13
	 SECTION 2.5.
	  	 Ancillary Agreements
	  	13
	 SECTION 2.6.
	  	 dELiA*s Charter and dELiA*s Bylaws
	  	13
	 SECTION 2.7.
	  	 Election of Directors of dELiA*s
	  	14
	 SECTION 2.8.
	  	 Election of Officers
	  	14
	 SECTION 2.9.
	  	 Employee Benefit Plans
	  	14
	 SECTION 2.10.
	  	 dELiA*s Databases
	  	14
	 SECTION 2.11.
	  	 Jointly Owned Trademarks
	  	14
	 SECTION 2.12.
	  	 Other Transactions
	  	14
	 SECTION 2.13.
	  	 State Securities Laws
	  	14
		
	ARTICLE III.     THE SPINOFF	  	14
	 SECTION 3.1.
	  	 Spinoff Record Date and Distribution Date
	  	14
	 SECTION 3.2.
	  	 Distribution Agent
	  	14
	 SECTION 3.3.
	  	 Delivery of Certificates
	  	15
	 SECTION 3.4.
	  	 The Spinoff
	  	15
	 SECTION 3.5.
	  	 Fractional Shares
	  	15
	 SECTION 3.6.
	  	 Existing Alloy Convertible Instruments
	  	15
		
	ARTICLE IV.      THE RIGHTS OFFERING	  	16
	 SECTION 4.1.
	  	 Conduct of the Rights Offering
	  	16
	 SECTION 4.2.
	  	 Backstop Agreement
	  	16
	 SECTION 4.3.
	  	 Backstop Fee
	  	16
	 SECTION 4.4.
	  	 Rights Agent
	  	17
	 SECTION 4.5.
	  	 The Rights Offering
	  	17
	 SECTION 4.6.
	  	 Fractional Shares
	  	17
		
	ARTICLE V.     EMPLOYEE MATTERS	  	17
	 SECTION 5.1.
	  	 Certain Employee and Employee Benefits Matters
	  	17
	 SECTION 5.2.
	  	 Treatment of Outstanding Alloy Options
	  	20
		
	ARTICLE VI.    ACCESS TO INFORMATION	  	22
	 SECTION 6.1.
	  	 Provision of Corporate Records
	  	22

  

 -i- 

					
	 	  	 	  	Page

	 SECTION 6.2.
	  	 Access to Information
	  	23
	 SECTION 6.3.
	  	 Litigation Cooperation
	  	23
	 SECTION 6.4.
	  	 Reimbursement
	  	24
	 SECTION 6.5.
	  	 Treatment of Records
	  	24
	 SECTION 6.6.
	  	 Confidentiality
	  	24
		
	ARTICLE VII.    CERTAIN OTHER AGREEMENTS	  	24
	 SECTION 7.1.
	  	 Intercompany Accounts
	  	24
	 SECTION 7.2.
	  	 Further Assurances and Consents
	  	24
	 SECTION 7.3.
	  	 Certain Business Matters
	  	25
	 SECTION 7.4.
	  	 Delivery of Property
	  	25
	 SECTION 7.5.
	  	 Existing Arrangements
	  	25
	 SECTION 7.6.
	  	 Insurance Policies
	  	27
	 SECTION 7.7.
	  	 Non-Competition; Non-Solicitation
	  	28
		
	ARTICLE VIII.     INDEMNIFICATION AND OTHER MATTERS	  	30
	 SECTION 8.1.
	  	 Assumed Liabilities, Exculpation and Indemnification by dELiA*s
	  	30
	 SECTION 8.2.
	  	 Exculpation and Indemnification by Alloy
	  	31
	 SECTION 8.3.
	  	 Specific Indemnification Issues
	  	32
	 SECTION 8.4.
	  	 Notice and Payment of Claims
	  	32
	 SECTION 8.5.
	  	 Defense of Third-Party Claims
	  	33
	 SECTION 8.6.
	  	 Insurance; Third Party Obligations; Tax Benefits
	  	33
	 SECTION 8.7.
	  	 Release of Pre-Spinoff Claims
	  	34
		
	ARTICLE IX.    CONDITIONS	  	36
	 SECTION 9.1.
	  	 Conditions
	  	36
		
	ARTICLE X.    DISPUTE RESOLUTION	  	38
	 SECTION 10.1.
	  	 Application
	  	38
	 SECTION 10.2.
	  	 Initial Discussions
	  	38
	 SECTION 10.3.
	  	 Appeal to Higher Management
	  	38
	 SECTION 10.4.
	  	 Arbitration
	  	38
		
	ARTICLE XI.    MISCELLANEOUS	  	40
	 SECTION 11.1.
	  	 Notices
	  	40
	 SECTION 11.2.
	  	 Interpretation
	  	40
	 SECTION 11.3.
	  	 Amendments; No Waivers
	  	41
	 SECTION 11.4.
	  	 Successors and Assigns
	  	41
	 SECTION 11.5.
	  	 Governing Law
	  	41
	 SECTION 11.6.
	  	 Counterparts; Effectiveness
	  	41
	 SECTION 11.7.
	  	 Entire Agreement
	  	41
	 SECTION 11.8.
	  	 Severability
	  	41
	 SECTION 11.9.
	  	 Termination
	  	42
	 SECTION 11.10.
	  	 Survival
	  	42
	 SECTION 11.11.
	  	 Expenses
	  	42
	 SECTION 11.12.
	  	 Set-Offs
	  	42

  

 -ii- 

 EXHIBITS AND SCHEDULES 
  

					
	Schedule 1	  	—	    	Corporate Restructuring Transactions
	Schedule 2	  	—	    	List of dELiA*s Parties
	Schedule 2.3(a)	  	—	    	List of Transferred Intellectual Property
	Schedule 2.3(b)	  	—	    	List of dELiA*s Subsidiaries
	Schedule 2.3(c)	  	—	    	List of Alloy Guaranteed Leases
	Schedule 3	  	—	    	List of Outstanding Alloy Convertible Instruments
	Schedule 4	  	—	    	List of Ongoing Litigation Matters
	Schedule 5 .1(e)	  	—	    	List of dELiA*s employees receiving Alloy Group COBRA benefits
	Schedule 5 .1(f)	  	—	    	List of dELiA*s employees participating in Alloy Group 401(k) plans
	Schedule 5.2	  	—	    	List of Outstanding Alloy Options
	Exhibit A	  	—	    	Form of Application Software License Agreement
	Exhibit B	  	—	    	Form of Managed Services Agreement
	Exhibit C	  	—	    	Form of Media Services Agreement
	Exhibit D	  	—	    	Form of OCM Call Center Agreement
	Exhibit E	  	—	    	Form of Professional Services Agreement
	Exhibit F	  	—	    	Form of Database Transfer Agreement
	Exhibit G	  	—	    	Form of Tax Separation Agreement
	Exhibit H	  	—	    	Form of Trademark Coexistence Agreement

  

 -iii- 

 DISTRIBUTION AGREEMENT 
  
 This DISTRIBUTION AGREEMENT, dated as of December     , 2005 (this “Agreement”) is
entered into by and among Alloy, Inc., a Delaware corporation (“Alloy”), and dELiA*s, Inc., a Delaware corporation (“dELiA*s”) and an indirect, wholly-owned subsidiary of Alloy. Terms with initial capital letters
used herein without definition shall have the meanings given in Article I. 
  
 WITNESSETH: 
  
 WHEREAS, the Board of Directors of Alloy has determined that it is in the best interests of Alloy and its shareholders to separate the Merchandising Business from the other businesses conducted by Alloy and its Subsidiaries;

  
 WHEREAS, in furtherance of the foregoing, Alloy intends
to effect a series of transactions, including, without limitation, the contribution by Alloy and various of its Subsidiaries, on the one hand, to dELiA*s and various of its Subsidiaries, on the other hand, of certain assets relating to the
Merchandising Business in exchange for shares of dELiA*s common stock, par value $0.001 per share (the “dELiA*s Common Stock”), a possible cash payment pursuant to Section 7.7 and the assumption of certain Liabilities
associated with the Merchandising Business, the end result of which transactions will be that dELiA*s will hold, directly and indirectly, substantially all of the assets relating to the Merchandising Business and Alloy will hold all of the
outstanding shares of dELiA*s Common Stock (without giving effect to the sale of shares of dELiA*s Common Stock proposed to be made by dELiA*s to certain of its certain senior executive officers in connection with the transactions contemplated
hereby); 
  
 WHEREAS, upon the consummation of the
transactions described above and subject to the fulfillment of the conditions set forth herein, Alloy intends to effect the distribution of all of the outstanding shares of dELiA*s Common Stock owned by Alloy as of the Spinoff Record Date on a pro
rata basis to the holders of shares of Alloy common stock, par value $.01 per share (the “Alloy Common Stock”) as of the Spinoff Record Date (the “Spinoff”); 
  
 WHEREAS, Alloy and dELiA*s intend for the Spinoff to qualify as a
tax-free transaction under Section 355 of the Internal Revenue Code of 1986, as amended (the “Code”); 
  
 WHEREAS, Alloy and dELiA*s intend for this Agreement to constitute a “plan of reorganization” within the meaning of Treasury Regulation
Section 1.368-2(g); 
  
 WHEREAS, Alloy and dELiA*s
wish to set forth herein certain terms and provisions governing the principal transactions to be effected in connection with the Spinoff; and 
  
 WHEREAS, Alloy and dELiA*s propose to enter into the Ancillary Agreements in order to set forth certain terms and provisions governing the
relationship between Alloy and dELiA*s and their Affiliates in connection with and after the Spinoff; 
  
 NOW, THEREFORE, in consideration of the premises, the terms and conditions set forth herein, the mutual benefits to be gained from the performance
thereof, and other good and 

 
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 
  
 ARTICLE I. 
  
 DEFINITIONS 
  
 SECTION 1.1. Certain Definitions. The following terms, as used herein, have the
following meanings: 
  
 “Action” means any suit,
action, arbitration, inquiry, investigation or other proceeding of any nature (whether criminal, civil, legislative, administrative, regulatory, prosecutorial or otherwise) by or before any arbitrator or Governmental Entity or similar Person or
body. 
  
 “Affiliate” has the meaning assigned to
such term in Rule 12b-2 of the Exchange Act; provided, however, that Alloy and dELiA*s shall not be deemed to be Affiliates of each other for purposes of this Agreement. 
  
 “Alloy Business” means (i) the businesses of providing targeted media and promotional programs for
advertisers who want primarily to market to Generation Y through the use of, among other methods, print media, display media boards, database marketing, websites, promotional events, and on-campus marketing programs to reach Generation Y consumers,
among others, and all other businesses conducted by the Alloy Group as of the date hereof, other than the Merchandising Business, (ii) the business of providing retail or merchandising services on behalf of third parties to the extent such
services are offered as a component of a targeted media or promotional program of a type described in clause (i) above, and (iii) any business or entity acquired or established by or for Alloy or dELiA*s or any of their respective
Subsidiaries between the date of this Agreement and the close of business on the Distribution Date that is engaged in, or intends to engage in, any business that is of a type or nature that would have resulted in such business being a Subsidiary
included in, or an asset of, the Alloy Group. 
  
 “Alloy
Group” means Alloy and its Subsidiaries and their respective successors, excluding all members of the dELiA*s Group. 
  
 “Alloy Group Liabilities” means all Liabilities of Alloy or any other member of the Alloy Group (including Liabilities arising out of any
litigation), except for the dELiA*s Group Liabilities. Notwithstanding the foregoing, “Alloy Group Liabilities” shall exclude all Liabilities for Taxes (as such Liabilities shall be governed exclusively by the provisions of the Tax
Separation Agreement). 
  
 “Alloy Stock Incentive
Plans” means, collectively, (i) the Alloy, Inc. Amended and Restated 1997 Employee, Director and Consultant Stock Option and Stock Incentive Plan, as amended, (ii) the Alloy, Inc. Amended and Restated 2002 Stock Incentive and
Non-Qualified Stock Option Plan, as amended, (iii) the iTurf Inc. Amended and Restated Stock Incentive Plan, as amended, (iv) the dELiA*s Inc. (now known as dELiA*s Group, Inc.) Amended and Restated 1996 Stock Incentive Plan, as amended,
and (v) the dELiA*s Inc. (now known as dELiA*s Group Inc.) 1998 Stock Incentive Plan, as amended. 
  

 -2- 

 “Ancillary Agreements” means all agreements, certificates, deeds, instruments,
assignments and other written arrangements (other than this Agreement) entered into between Alloy and dELiA*s in connection with the transactions contemplated hereby, including, without limitation, the Contribution Agreements, the Managed Services
Agreement, the Application Software License Agreement, the Database Transfer Agreement, the Professional Services Agreement, the Media Services Agreement, the Tax Separation Agreement, the Trademark Coexistence Agreement and the OCM Call Center
Agreement. 
  
 “Application Software License
Agreement” means the Application Software License Agreement, in substantially the form of Exhibit A hereto, to be entered into between Alloy and dELiA*s on or prior to the Distribution Date, providing for the license to dELiA*s of certain
Alloy-owned proprietary software, all as specified therein. 
  
 “Backstop Agreement” means the Standby Purchase Agreement, dated as of September 7, 2005, between Alloy, dELiA*s and MLF pursuant to which MLF has agreed to backstop the Rights Offering on the terms and conditions set
forth therein. 
  
 “Business Day” means any day
other than a Saturday, Sunday or one on which banks are authorized or required by law to close in New York, New York. 
  
 “Cash and Cash Equivalents” means cash and other liquid assets, including, but not limited to, bank deposits, paper currency and coins,
negotiable money orders and checks, U.S. Treasury bills and money-market fund shares. 
  
 “Contribution Agreements” means, collectively: 
  
 (i) the Certificate of Merger merging Canal Park Trust, a Massachusetts business trust with and into Canal Park Trust II, LLC, a Delaware
limited liability company (“Canal Park II”), and each of the documents and instruments related thereto; 
  
 (ii) the Certificate of Conversion pursuant to which Triple Rewards, Inc., a Delaware corporation, is to convert into a Delaware limited
liability company named Triple Rewards, LLC (“Triple Rewards”), and each of the documents and instruments related thereto; 
  
 (iii) the trademark assignments, partial trademark assignments, domain name transfer agreements and the Database Transfer Agreement
pursuant to which (a) Alloy Merchandise, LLC is to transfer the trademark “Dig or Dis” to 360 Youth, LLC (“360 Youth”), (b) dELiA*s Corp. is to transfer the URL delias.com to 360 Youth, (c) Skate Direct, LLC is to
transfer the URL ccs.com to 360 Youth, LLC, and (d) each of GFLA, Inc. (“GFLA”), OG Restructuring, Inc. (“OGR”), Alloy Merchandise, LLC, Skate Direct, LLC, dELiA*s Retail Company, and dELiA*s Operating Company, Inc. is to
transfer Joint Ownership in their respective data bases to 360 Youth; 
  
 (iv) the Contribution Agreement, dated as of December     , 2005, between dELiA*s and Canal Park II providing for the contribution by Canal Park II to dELiA*s of all of the assets used by Canal
Park II exclusively in the operation of the Merchandising Business, including the intangible assets relating to the Merchandising Business, as well 

  

 -3- 

 
as certain assets used in both the operation of the Merchandising Business and the operation of the Alloy Business, and the assumption by dELiA*s of certain
related liabilities; 
  
 (v) the Contribution
Agreement, dated as of December     , 2005, between Triple Rewards and dELiA*s providing for the contribution by Triple Rewards to dELiA*s of all of the assets used by Triple Rewards exclusively in the operation of the
Merchandising Business, including the intangible assets relating to the Merchandising Business such as goodwill and the capital stock of GFLA and OGR, as well as certain assets used in both the operation of the Merchandising Business and the
operation of the Alloy Business, and the assumption by dELiA*s of certain related liabilities; and 
  
 (vi) the Contribution and Exchange Agreement, dated as of December     , 2005 by and between Alloy and dELiA*s
providing for the contribution by Alloy to dELiA*s all of the assets used by Alloy exclusively in the operation of the Merchandising Business, including the intangible assets relating to the Merchandising Business such as goodwill, as well as
certain assets used in both the operation of the Merchandising Business and the operation of the Alloy Business, in exchange for the issuance by dELiA*s to Alloy of 23,336,532 shares of dELiA*s Common Stock and the assumption by dELiA*s of certain
related liabilities. 
  
 “Commission” means the
Securities and Exchange Commission. 
  
 “Contract” means any agreement, lease, license, contract, treaty, note, mortgage, indenture, franchise, permit, concession, arrangement or other obligation. 
  
 “Corporate Restructuring Transactions” means, collectively, the distributions, transfers, conveyances,
contributions, assignments and other transactions described and set forth on Schedule 1 hereto. 
  
 “Damages” means, with respect to any Person, any and all damages (including punitive and consequential damages if not otherwise expressly
excluded), losses, Liabilities, fines, costs and expenses incurred or suffered by such Person (including all expenses of investigation, all reasonable attorneys’ and expert witnesses’ fees and all other out-of-pocket expenses incurred in
connection with any Action or threatened Action). 
  
 “Databases” means the computerized databases of information regarding, with respect to dELiA*s and its Affiliates, demographic and order data (other than credit card information) collected through their online or offline
activities and, with respect to Alloy, demographic and other information collected through its media acquisition channels. 
  
 “Database Transfer Agreement” means the Database Transfer Agreement, in substantially the form of Exhibit F hereto, to be entered into
between 360 Youth, which is a wholly-owned subsidiary of Alloy, and each of GFLA, OGR, Skate Direct, LLC, dELiA*S Retail Corp. and dELiA*s Operating Company, Inc., each of which is a wholly-owned subsidiary of dELiA*s, on or prior to the
Distribution Date, providing for the transfer by the dELiA*s Subsidiary to 360 Youth of certain information on individual customers or prospective customers and may include navigational information, transactional information, including billing and
credit 

  

 -4- 

 
information, and internet/email addresses and/or other identifying information, all as specified therein. 
  
 “dELiA*s Bylaws” means the Amended and Restated Bylaws of
dELiA*s filed as an Exhibit to the Form S-1, with such changes thereto as the Board of Directors of dELiA*s may reasonably determine to make with the approval of Alloy. 
  
 “dELiA*s Charter” means the Amended and Restated Certificate of Incorporation of dELiA*s filed as an
Exhibit to the Form S-1, with such changes thereto as the Board of Directors of dELiA*s may reasonably determine to make with the approval of Alloy. 
  
 “dELiA*s Group” means dELiA*s and its Subsidiaries and their respective successors, as the same are constituted immediately following the
effective time of the Spinoff. 
  
 “dELiA*s Group
Liabilities” means the following Liabilities (including Liabilities arising out of any litigation): (a) the Liabilities arising from or related to the ownership, operation or conduct of the Merchandising Business or the use, possession
or enjoyment of the assets used in connection therewith at any time prior to or on the Distribution Date, including, without limitation, all such Liabilities arising under or relating to Environmental Laws, (b) all other Liabilities of one or
more members of the dELiA*s Group expressly contemplated by the Spinoff Documents as Liabilities of or to be assumed by dELiA*s or any member of the dELiA*s Group, and (c) all other Liabilities that are reflected as liabilities or obligations
on dELiA*s unaudited balance sheet included as part of the financial statements filed as part of the Form S-1, together with all Liabilities arising in connection with the Merchandising Business after the date of such unaudited balance sheet and
which would ordinarily be reflected in a balance sheet prepared as of the Distribution Date. Notwithstanding the foregoing, “dELiA*s Group Liabilities” shall exclude (x) all Liabilities for Taxes (because allocation of such
Liabilities shall be governed exclusively by the provisions of the Tax Separation Agreement) and (y) all Liabilities specifically retained or assumed by Alloy pursuant to this Agreement. 
  
 “dELiA*s Parties” means those Persons listed on Schedule 2
hereto. 
  
 “Distribution Agent” means American
Stock Transfer and Trust Company, or such other party as may be appointed as Distribution Agent hereunder by agreement of Alloy and dELiA*s. 
  
 “Distribution Date” means the date and time as of which the Spinoff is to be effected, which shall be determined by, or under the
authority of, the Board of Directors of Alloy. 
  
 “Distribution Ratio” means one share of dELiA*s Common Stock for every two shares of Alloy Common Stock outstanding as of the Spinoff Record Date. 
  
 “Effective Date” means the date on which the Form S-1 is declared effective by the Commission. 

 
 “Environmental Laws” means any and all federal, state,
local and foreign statutes, laws, judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, codes, plans, permits, licenses and governmental restrictions, whether now or hereafter in effect, relating to the environment, the
effect of the environment on human health or to emissions, discharges, 

  

 -5- 

 
releases, manufacturing, storage, processing, distribution, use, treatment, disposal, transportation or handling of pollutants, contaminants, petroleum or
petroleum products, chemicals or industrial, toxic, radioactive or hazardous substances or wastes or the clean-up or other remediation thereof. 
  
 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. 

 
 “Finally Determined” means, with respect to any Action,
threatened Action or other matter, that the outcome or resolution of that Action, threatened Action or other matter either (i) has been decided through binding arbitration or by a Governmental Entity of competent jurisdiction by judgment,
order, award or other ruling or (ii) has been settled or voluntarily dismissed by the parties pursuant to the dispute resolution procedure set forth in Article X or otherwise and, in the case of each of clauses (i) and (ii), the
claimants’ rights to maintain that Action, threatened Action or other matter have been finally adjudicated, waived, released, discharged, barred or extinguished or the judgment, order, ruling, award, settlement or dismissal (whether mandatory
or voluntary, but if voluntary the dismissal must be final, binding and with prejudice as to all claims specifically pleaded in that Action, threatened Action or other matter) resolving the same is subject to no further appeal, vacatur proceeding or
discretionary review. 
  
 “Form S-1” means the
registration statement on Form S-1, File No. 333-128153, filed by dELiA*s with the Commission on September 7, 2005 and amended by Amendment No. 1 to such Registration Statement filed on October 26, 2005, Amendment No. 2 to
such Registration Statement filed on November 16, 2005, Amendment No. 3 to such Registration Statement filed on December 6, 2005, and Amendment No. 4 to such Registration Statement filed on December 9, 2005, all in order to
effect the registration of dELiA*s Common Stock pursuant to Securities Act in connection with the Spinoff and the Rights Offering, as the same may be supplemented and amended from time to time including pursuant to any form of prospectus contained
therein filed pursuant to Rule 424(b) under the Securities Act. 
  
 “Governmental Entity” means any federal, state, local or foreign government or any court, tribunal, administrative agency or commission or other governmental or regulatory authority or agency, domestic, foreign or
supranational. 
  
 “Group” means the dELiA*s
Group or the Alloy Group, as the context requires. 
  
 “Intellectual Property” means (a) inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents (including utility and design patents, industrial
designs and utility models), patent applications, patent and invention disclosures and all other rights of inventorship, worldwide, together with all reissuances, continuations, continuations-in-part, divisions, revisions, supplementary protection
certificates, extensions and re-examinations thereof; (b) copyrights in copyrightable works and all other rights of authorship, worldwide, and all applications (including the right to file applications), registrations and renewals in connection
therewith; (c) trade secrets and confidential business and technical information (including ideas, research and development, know-how, formulas, technology, compositions, manufacturing and production processes and techniques, technical data,
engineering, production and other designs, drawings, engineering 

  

 -6- 

 
notebooks, industrial models, software and specifications and any other information meeting the definition of a trade secret under the Uniform Trade Secrets
Act); (d) computer and electronic data processing programs and software, both source code and object code (including data and related documentation, flow charts, diagrams, descriptive texts and programs, computer print-outs, underlying tapes,
computer databases and similar items), computer applications and operating programs; (e) all trademarks, service marks, trade dress, logos, trade names, and corporate names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith; (f) rights to sue for and remedies against past, present and future infringements of any or all of
the foregoing and rights of priority and protection of interests therein under the laws of any jurisdiction worldwide; (g) all copies and tangible embodiments of any or all of the foregoing (in whatever form or medium, including electronic
media); (h) all other proprietary and intellectual property rights and interests; and (i) all other rights relating to any or all of the foregoing, but specifically excludes the Databases that are referenced in the Database Transfer
Agreement. 
  
 “IRS” means the Internal Revenue
Service. 
  
 “Law” means any applicable federal,
state, local or foreign law, statute, ordinance, directive, rule, regulation, judgment, order, injunction, decree, arbitration award, agency requirement, license or permit of any Governmental Entity. 
  
 “Liability” or “Liabilities” means any and
all claims, debts, liabilities, assessments, costs, deficiencies, charges, demands, fines, penalties, damages, losses, disgorgements and obligations of any kind, character or description (whether absolute, contingent, matured, not matured,
liquidated, unliquidated, accrued, known, unknown, direct, indirect, derivative or otherwise) whenever arising, including all costs, interest and expenses relating thereto (including all expenses of investigation, all reasonable attorneys’ and
expert witnesses’ fees and all other out-of-pocket expenses in connection with any Action or threatened Action) and expressly including any of the foregoing arising from the negligence or other misconduct of an Indemnified Party. 
  
 “Managed Services Agreement” means the Managed Services
Agreement, in substantially the form of Exhibit B hereto, to be entered into between Alloy and dELiA*s on or prior to the Distribution Date, providing for the provision by Alloy to dELiA*s of certain agreed upon website hosting, database management,
data communication management, security and other managed services in support of the dELiA*s e-commerce webpages and applications, all as specified therein. 
  
 “Media Services Agreement” means the Media Services Agreement, in substantially the form of Exhibit C hereto, to be entered into between
Alloy and dELiA*s on or prior to the Distribution Date, pursuant to which Alloy will provide dELiA*s with certain media and marketing services following consummation of the Spinoff, all as set forth therein. 
  
 “Merchandising Business” means (i) the direct
merchandising (via catalogs and e-commerce websites) and retail store business as conducted by Alloy and its Subsidiaries prior to the date hereof as the same is to be conducted by dELiA*s and its Subsidiaries after the date 

  

 -7- 

 
hereof, and all other businesses conducted by the dELiA*s Group as of the date hereof, other than the Alloy Business, and (ii) any business or entity
acquired or established by or for Alloy or dELiA*s or any of their respective Subsidiaries between the date of this Agreement and the close of business on the Distribution Date that is engaged in, or intends to engage in, any business that is of a
type or nature that would have resulted in such business being a Subsidiary included in, or an asset of, the dELiA*s Group; provided, however, that the Merchandising Business shall not be deemed to include retail or merchandising
services conducted on behalf of a third party to the extent such services are offered as a component of a targeted media or promotional program otherwise conducted by a member of the Alloy Group as part of the Alloy Business. 
  
 “MLF” means MLF Investments LLC, a Delaware limited
liability company. 
  
 “OCM Call Center
Agreement” means the OCM Call Center Agreement, in substantially the form of Exhibit D hereto, to be entered into on or prior to the Distribution Date between AMG Direct LLC and On Campus Marketing, LLC, (“OCM”), providing for the
provision by AMG Direct LLC to OCM and certain of its subsidiaries of certain agreed upon call center services, all as specified therein. 
  
 “Person” means any individual, corporation, general or limited partnership, limited liability company, joint venture, estate, trust,
association, organization, Governmental Entity or other entity of any kind or nature. 
  
 “Professional Services Agreement” means the Professional Services Agreement, in substantially the form of Exhibit E hereto, to be entered into between Alloy and dELiA*s on or prior to the Distribution
Date, providing for the provision by Alloy to dELiA*s of certain agreed upon technology related professional services in three primary functional areas: software license support, database and list support services and other database services, all as
specified therein. 
  
 “Prospectus” means the
prospectus filed as part of the Form S-1 relating to the dELiA*s Common Stock that is to be mailed to each holder of record of Alloy Common Stock as of the Spinoff Record Date in connection with the Spinoff and to each holder of dELiA*s Common Stock
as of the Rights Offering Record Date in connection with the Rights Offerings. 
  
 “Rights” means the rights to purchase shares of dELiA*s Common Stock to be issued to the holders of shares of dELiA*s Common Stock as of the Rights Offering Record Date. Each whole right shall entitle
the holder thereof to purchase one share of dELiA*s Common Stock, 
  
 “Rights Agent” means American Stock Transfer and Trust Company, or such other party as may be appointed as Rights Agent hereunder by agreement of Alloy and dELiA*s. 
  
 “Rights Offering” means the offering of Rights to be
effected beginning approximately ten days after the effective date of the Spinoff. 
  
 “Rights Offering Record Date” means the close of business on the date determined by the Board of Directors of dELiA*s (or by a committee of such Board of Directors or any other Person acting under
authority duly delegated to that committee or Person by the Board of Directors of dELiA*s or a committee of such Board of Directors) as the record date for determining the holders of record of dELiA*s Common Stock entitled to receive rights to

  

 -8- 

 
purchase shares of dELiA*s Common Stock in the Rights Offering, which date shall be approximately one week after the effective date of the Spinoff.

  
 “Securities Act” means the Securities Act of
1933, as amended. 
  
 “Spinoff Documents” means
all of the agreements and other documents entered into in connection with the Spinoff as contemplated hereby, including, without limitation, this Agreement and the Ancillary Agreements. 
  
 “Spinoff Record Date” means the close of business on the date determined by the Board of Directors of Alloy
(or by a committee of such Board of Directors or any other Person acting under authority duly delegated to that committee or Person by the Board of Directors of Alloy or a committee of such Board of Directors) as the record date for determining the
holders of record of Alloy Common Stock entitled to receive shares of dELiA*s Common Stock in the Spinoff. 
  
 “Subsidiary” means, with respect to any Person, (i) any corporation of which at least a majority of the securities or other
ownership interests having by their terms ordinary voting power to elect a majority of the board of directors are directly or indirectly owned or controlled by such Person and its Subsidiaries, (ii) any partnership of which such Person or one
of its Subsidiaries is a general partner or as to which such Person and its Subsidiaries are entitled to receive at least a majority of the assets upon the liquidation thereof, (iii) any limited liability company of which such Person or one of
its Subsidiaries is a manager (or is entitled as a member to exercise management rights over the conduct of the business of such limited liability company) or as to which such Person and its Subsidiaries are entitled to receive at least a majority
of the assets upon the liquidation thereof and (iv) any business or other trust in which a majority of the trust interests or other beneficial ownership interests are directly or indirectly owned or controlled by such Person and its
Subsidiaries; provided, however, that Alloy and its Affiliates and dELiA*s and its Affiliates shall not be deemed to be Subsidiaries of each other for purposes of this Agreement. 
  
 “Tax Returns” has the meaning set forth in the Tax
Separation Agreement. 
  
 “Tax Separation
Agreement” means the Tax Separation Agreement, in substantially the form of Exhibit G hereto, to be entered into on or prior to the Distribution Date between Alloy and dELiA*s, providing for the allocation of responsibilities for Taxes for
periods ending on or prior to the Distribution Date and certain other matters related to Taxes, all as specified therein. 
  
 “Taxes” has the meaning set forth in the Tax Separation Agreement. 
  
 “Trademark Coexistence Agreement” means the Trademark Coexistence Agreement, in substantially the form of
Exhibit H hereto, to be entered into on or prior to the Distribution Date between Alloy and dELiA*s, providing for the agreement of the parties to amicably confirm and acknowledge their respective rights to use and register the trademarks set forth
on Exhibit A thereto and any colorable imitations, variations or derivations thereof, all as specified therein. 
  

 -9- 

 “Transaction Agreements” means the Spinoff Documents, the agreements between Alloy and
the Distribution Agent, the agreements between dELiA*s and the Rights Agent and the other documents entered into in connection with the Rights Offering as contemplated hereby. 
  
 SECTION 1.2. Other Defined Terms. Each of the terms set forth below has the meaning set forth in the provision set forth opposite
such term: 
  

			
	 TERM

	  	 SECTION

		
	 AAA
	  	 Section 10.4

		
	 Agreement
	  	 Preamble

		
	 Alloy
	  	 Preamble

		
	 Alloy 401(k) Plan
	  	 Section 5.1(a)

		
	 Alloy Common Stock
	  	 Recitals

		
	 Alloy Damages
	  	 Section 8.1(b)

		
	 Alloy Fraction
	  	 Section 5.2(c)

		
	 Alloy Indemnifiable Liabilities
	  	 Section 8.2(a)

		
	 Alloy Indemnitees
	  	 Section 8.1(a)

		
	 Alloy-Insured dELiA*s Liabilities
	  	 Section 7.6(c)

		
	 Alloy Options
	  	 Section 5.2(b)

		
	 COBRA
	  	 Section 5.1(a)

		
	 Code
	  	 Recitals

		
	 Competitive Business
	  	 Section 7.6(b)

		
	 Contemplated Offering Amount
	  	 Section 4.1(b)

		
	 Convertible Securities
	  	 Section 3.6

		
	 Corporate Records
	  	 Section 6.1

		
	 dELiA*s
	  	 Recitals

		
	 dELiA*s 401(k) Plan
	  	 Section 5.1(a)

		
	 dELiA*s Common Stock
	  	 Recitals

		
	 dELiA*s Damages
	  	 Section 8.1(b)

		
	 dELiA*s Employee Group Plan
	  	 Section 5.1(a)

		
	 dELiA*s Fraction
	  	 Section 5.2(b)

		
	 dELiA*s Indemnifiable Liabilities
	  	 Section 8.1(a)

		
	 dELiA*s Indemnitees
	  	 Section 8.2(a)

		
	 dELiA*s Licenses
	  	 Section 2.3(e)

		
	 dELiA*s Options
	  	 Section 5.2(b)

		
	 dELiA*s Stock Incentive Plan
	  	 Section 5.2(a)

		
	 ERISA
	  	 Section 5.1(a)

		
	 Incentive Stock Option
	  	 Section 5.2(b)

		
	 Indemnified Party
	  	 Section 8.4(a)

		
	 Indemnifying Party
	  	 Section 8.4(a)

		
	 MLF Rights
	  	 Section 4.2

		
	 Protected Party
	  	 Section 7.6(c)

		
	 Spinoff
	  	 Recitals

		
	 Subscription Price
	  	 Section 4.1(a)

		
	 Transferred Intellectual Property
	  	 Section 2.3(a)

		
	 Unexercised Rights
	  	 Section 4.2

  

 -10- 

 ARTICLE II. 
  
 PRELIMINARY TRANSACTIONS 
  
 SECTION 2.1. Regulatory Filings and Related Actions. 
  
 (a) Alloy and dELiA*s have prepared, and on September 7, 2005 dELiA*s filed with the Commission, the Form S-1, which includes the Prospectus.
Subsequently, dELiA*s and Alloy prepared and filed amendments to the Form S-1 on October 26, 2005, November 16, 2005, December 6, 2005 and December 9, 2005. Each of Alloy and dELiA*s shall use all commercially
reasonable efforts to cause the Form S-1 to become effective under the Securities Act as promptly as reasonably practicable after the date hereof. 
  
 (b) As promptly as practicable after the Form S-1 has become effective, Alloy shall mail the Prospectus to the holders of record of Alloy Common Stock as
of the Spinoff Record Date. 
  
 (c) As promptly as practicable
after the Rights Offering Record Date, dELiA*s shall mail the Prospectus to the holders of record of dELiA*s Common Stock as of the Rights Offering Record Date. 
  

(d) Each of Alloy and dELiA*s shall take all such actions as may be necessary or appropriate under the securities or blue sky laws of states or other
jurisdictions within the United States in connection with the Spinoff and the Rights Offering and the other transactions contemplated hereby and by the other Transaction Documents. 
  
 SECTION 2.2. Nasdaq National Market Application. dELiA*s has prepared, and on November 4, 2005 filed with the National
Association of Securities Dealers, Inc., an application for the dELiA*s Common Stock and Rights to be admitted for quotation on the Nasdaq National Market in connection with the Spinoff and Rights Offering, respectively. Such application was
approved by Nasdaq on December 6, 2005 as to the dELiA*s Common Stock, and the dELiA*s Common Stock has been admitted for quotation on the Nasdaq National Market subject to official notice of listing and payment of the listing fees. From and
after the date hereof, the parties shall file such additional applications and take all such other actions as reasonably may be required so that the Rights are admitted for quotation on the Nasdaq National Market on or prior to the Rights Offering
Record Date. 
  
 SECTION 2.3. Business Separation. 
  
 (a) In connection with the transactions contemplated hereby, the parties
shall, and shall cause each of their respective Subsidiaries to, as applicable, take all such actions as are necessary to cause, effect and consummate the transactions contemplated by the Contribution Agreements. 
  
 (b) On or prior to the Distribution Date, Alloy and dELiA*s shall, and shall
cause each of their respective Subsidiaries to, as applicable, take such actions as are necessary to cause, effect and consummate the Corporate Restructuring Transactions. Alloy and dELiA*s hereby 

  

 -11- 

 
agree that any one or more of the Corporate Restructuring Transactions may be modified, supplemented or eliminated, provided such modification, supplement or
elimination (i) is necessary or appropriate to divide the existing businesses of Alloy so that the Merchandising Business shall be owned, directly or indirectly, by dELiA*s, and (ii) does not, individually or in the aggregate, adversely
affect the Alloy Business (other than to a de minimis extent). After the completion of the Corporate Restructuring Transactions, the Subsidiaries listed on Schedule 2.3(b) (other than any such Subsidiary that is liquidated or merged into or
consolidated with another entity in connection with the Corporate Restructuring Transactions) shall be direct or indirect Subsidiaries of dELiA*s. 
  
 (c) Alloy and the dELiA*s Parties shall use all commercially reasonable efforts to have Alloy and all other members of the Alloy Group released, on or
prior to the Distribution Date or as soon as practicable thereafter, as a guarantor in respect of all guarantees of any dELiA*s Group Liabilities, including, without limitation, under all existing retail store leases which Alloy has guaranteed,
including those listed on Schedule 2.3(c) hereto, and under the existing mortgage on dELiA*’s Hanover, Pennsylvania facilities. 
  
 (d) It is the intention of the parties that all material transactions contemplated by this Section 2.3 shall be consummated prior to or on the
Distribution Date; provided, however, that, if any such transactions shall not have been consummated prior to or on the Distribution Date, Alloy and dELiA*s shall cooperate to effect such transactions as promptly as practicable after
Distribution Date. Nothing contained in this Agreement shall be deemed to require the transfer of any properties, assets, rights or entitlements, the assumption of any Liabilities or the release of guarantees which, by their terms or by operation of
Law, cannot be transferred, assumed or released; provided, however, that Alloy and the dELiA*s Parties shall cooperate to seek to obtain any necessary consent or approval for any transfer, assumption or release contemplated by this
Section 2.3. If any such transfer, assumption or release has not been consummated as of the Distribution Date, then, from and after the Distribution Date, the party who retains the applicable asset or Liability or who is not able to obtain a
release of the applicable guarantee shall hold such asset in trust for the use and benefit of the party entitled thereto (at the expense of the party entitled thereto), shall retain such Liability for the account of the party by whom such Liability
is to be assumed or shall hold the other parties harmless against the guarantee to be released, as the case may be, and take such other action as may be reasonably requested by the party to whom such asset is to be transferred, from whom such
liability is to be assumed or for the benefit of whom such guarantee is to be released, as the case may be, in order to place such party, insofar as is reasonably possible, in the same position as would have existed had such asset been transferred,
such liability assumed or such guarantee released as contemplated hereby. As and when any such asset becomes transferable, such liability becomes assumable or such release is obtainable, the transfer, assumption or release thereof shall be effected
forthwith by the parties hereto. 
  
 (e) Alloy and the dELiA*s
Parties shall, as part of the Corporate Restructuring Transactions, use commercially reasonable efforts to cooperate in transferring to dELiA*s all licenses, permits and authorizations that relate to the Merchandising Business (the “dELiA*s
Licenses”) but that are held in the name of Alloy or any other member of the Alloy Group or any of their respective employees, officers, directors, stockholders, agents or otherwise (or, in the case of any dELiA*s Licenses that are held in
the name of Alloy or any other member of the 

  

 -12- 

 
Alloy Group or any of their respective employees, officers, directors, stockholders, agents or otherwise that are not transferable under applicable Law,
obtaining new licenses, permits and authorizations from the relevant Governmental Entities in the name of dELiA*s to replace such dELiA*s Licenses). If any such transfer of the dELiA*s Licenses (or the grant of any new licenses, permits and
authorizations to replace such dELiA*s Licenses) cannot be effected prior to the Distribution Date, Alloy shall, except as prohibited by applicable Law, allow dELiA*s to operate the Merchandising Business under such dELiA*s Licenses until such
transfer can be effected (or new licenses, permits and authorizations are granted by the relevant Governmental Entities). 
  
 SECTION 2.4. Resignations. Alloy shall cause all of its directors, officers and employees who will be officers or employees of the Alloy Group from and after the
Distribution Date (as designated by Alloy) to resign, effective as of the Distribution Date, from all positions as directors, officers or employees of dELiA*s or any its Subsidiaries; provided, however, that Matthew L. Feshbach, who is
a director of Alloy, shall not be required to resign his position as a Chairman of the Board and member of the Board of Directors of dELiA*s. dELiA*s shall cause all of its directors, managers, officers and employees who will be officers and
employees of dELiA*s or any of its Subsidiaries after the Distribution Date (as jointly designated by Alloy and dELiA*s) to resign, effective as of the Distribution Date, from all positions as officers or employees of Alloy or any member of the
Alloy Group in which they serve; provided, however, that Matthew L. Feshbach, who is Chairman of the Board and a director of dELiA*s, shall not be required to resign his position as a member of the Board of Directors of Alloy and John
H. Holowko, who has accepted appointment as dELiA*s’ Chief Financial Officer shall not be required to resign his position as an Alloy employee unless and until he begins his employment as dELiA*s’ Chief Financial Officer. Notwithstanding
the foregoing, however, Mr. Feshbach shall agree, in a writing in form and substance reasonably satisfactory to Alloy in its sole discretion, that he shall be recommended for reelection to Alloy’s board of directors for one additional term
of up to three (3) years when his current term expires in 2006, but that he shall not be nominated for, or reelected by the Alloy board of directors at any time thereafter for, any additional term on the Alloy board. Notwithstanding the
foregoing, Matthew L. Feshbach may resign from the Alloy board at any time. 
  
 SECTION 2.5. Ancillary Agreements. Prior to or on the Distribution Date, Alloy and dELiA*s shall, and shall cause each of the other members of their respective Groups who are parties to any thereof, to enter into each of the
Ancillary Agreements required to be executed and delivered by the Distribution Date. 
  
 SECTION 2.6. dELiA*s Charter and dELiA*s Bylaws. On or prior to the Distribution Date, (i) dELiA*s and Alloy shall take such action as is required to adopt the dELiA*s Charter and (ii) dELiA*s shall take such action as is
required to adopt the dELiA*s Bylaws. On or prior to the Distribution Date, dELiA*s shall, in connection with consummation of the transactions contemplated by the Contribution Agreements, issue to Alloy such number of shares of dELiA*s Common Stock
as shall be required to cause the total number of outstanding shares of dELiA*s Common Stock as of such date to equal the product of the Distribution Ratio and the number of shares of Alloy Common Stock outstanding on the Spinoff Record Date.

  

 -13- 

 SECTION 2.7. Election of Directors of dELiA*s. On or prior to the Distribution Date, Alloy, as the sole
stockholder of dELiA*s, shall take all necessary action so that as of the Distribution Date the directors of dELiA*s will be as set forth in the Prospectus. 
  
 SECTION 2.8. Election of Officers. On or prior to the Distribution Date, Alloy and dELiA*s shall, as applicable, take all actions necessary and desirable so that
as of the Distribution Date the officers of dELiA*s will be as set forth in the Prospectus. 
  
 SECTION 2.9. Employee Benefit Plans. Alloy and dELiA*s shall cooperate in preparing, filing with the Commission and causing to become effective all registration statements or amendments thereto that are
appropriate to reflect the establishment of or amendments to any employee benefit plans contemplated by this Agreement, as set forth in Article V. 
  
 SECTION 2.10. dELiA*s Databases. On or prior to the Distribution Date, Alloy and dELiA*s shall take all such actions as shall be required to consummate the
transactions contemplated by the Database Transfer Agreement. 
  
 SECTION 2.11.
Jointly Owned Trademarks. On or prior to the Distribution Date, Alloy and dELiA*s shall take all such actions as shall be required to consummate the transactions contemplated by the Trademark Coexistense Agreement. 
  
 SECTION 2.12. Other Transactions. On or prior to the Distribution Date, Alloy and
dELiA*s shall have consummated those other transactions in connection with the Corporate Restructuring Transactions and the Spinoff that are contemplated by the Prospectus and not specifically referred to in Sections 2.1 through 2.6 and Sections
2.10 and 2.11 above or in the Ancillary Agreements; provided, however, that such other transactions do not, individually or in the aggregate, adversely affect the Alloy Business (other than to a de minimis extent). 
  
 SECTION 2.13. State Securities Laws. Prior to the Distribution Date, Alloy and dELiA*s
shall take all such action, if any, as may be necessary or appropriate under the securities or blue sky laws of states or other political subdivisions of the United States (and any comparable laws of any foreign jurisdiction) in connection with the
transactions contemplated by this Agreement. 
  
 ARTICLE III.

  
 THE SPINOFF 
  
 SECTION 3.1. Spinoff Record Date and Distribution Date. Subject to the fulfillment of
the conditions set forth in Section 9.1, the Board of Directors of Alloy shall, if they deem appropriate, in the manner provided for under applicable Law declare the Spinoff and establish the Spinoff Record Date and the Distribution Date and
all appropriate procedures in connection with the Spinoff. 
  
 SECTION 3.2.
Distribution Agent. Prior to or on the Distribution Date, Alloy shall enter into an agreement with the Distribution Agent providing for, among other things, the delivery of certificates evidencing the shares of dELiA*s Common Stock included
in the Spinoff to the holders of Alloy Common Stock as of the Spinoff Record Date. 
  

 -14- 

 SECTION 3.3. Delivery of Certificates. Prior to the Distribution Date, Alloy shall deliver to the Distribution
Agent, for the benefit of the holders of Alloy Common Stock as of the Spinoff Record Date, a stock certificate or certificates, representing all of the outstanding shares of dELiA*s Common Stock owned by Alloy as of the Distribution Date. After the
Distribution Date, dELiA*s shall, upon request of the Distribution Agent, provide to the Distribution Agent all additional certificates representing shares of dELiA*s Common Stock that the Distribution Agent shall require to effect the Spinoff.

  
 SECTION 3.4. The Spinoff. Subject to the terms and conditions hereof,
Alloy shall instruct the Distribution Agent to distribute, on or as soon as practicable after the Distribution Date, to each holder of record of Alloy Common Stock as of the Record Date a number of shares of dELiA*s Common Stock equal to the result
obtained by multiplying the Distribution Ratio by the number of shares of Alloy Common Stock held by such holder as of the Record Date. Such distribution shall be effected by the mailing of stock certificates to such holders or, if practicable, by
book-entry transfer. All of the shares of dELiA*s Common Stock issued in the Spinoff shall have been duly authorized and shall be fully paid and nonassessable. 
  

SECTION 3.5. Fractional Shares. Notwithstanding anything to the contrary contained in this Article III, no fractional shares of dELiA*s Common Stock shall be
distributed in the Spinoff. The parties shall direct the Distribution Agent to determine the number of fractional shares of dELiA*s Common Stock allocable to each holder of record of Alloy Common Stock as of the Spinoff Record Date. After the
Distribution Date, upon the determination by the Distribution Agent of such number of fractional shares, the Distribution Agent, acting on behalf of the holders thereof, shall sell such fractional shares for cash on the open market at the
then-prevailing market prices and shall disburse to each holder entitled thereto, in lieu of any fractional share, without interest, that holder’s ratable share of the net proceeds of that sale, after making appropriate deductions of the
amounts required, if any, to be withheld for tax purposes, and to repay expenses of the Distribution Agent incurred in connection with such sales. 
  
 SECTION 3.6. Existing Alloy Convertible Instruments. Schedule 3 hereto lists all the convertible debentures, warrants, options (not including, however, the Alloy
Options, which are to be treated as set forth in Section 5.2) and other instruments of Alloy that are outstanding on the date hereof and which, following the Spinoff, may be convertible into or exchangeable for a combination of Alloy Common
Stock and dELiA*s Common Stock (the “Convertible Securities”). dELiA*s hereby covenants and agrees that it shall, as soon as practicable, and in any event within 10 business days of receipt of notice from Alloy that one or more of
such Convertible Securities has been converted or exercised, as applicable, issue for and on behalf of Alloy such number of shares of dELiA*s Common Stock as may be required to be issued pursuant to the terms of such Convertible Securities. dELiA*s
hereby covenants that each of such shares of dELiA*s Common Stock shall be, when issued, duly authorized, fully paid and non-assessable and issued without conflict with any applicable pre-emptive or similar rights. Alloy hereby covenants and agrees
that if and to the extent it receives any payment in respect of any such Convertible Securities, it shall, within such 5 business day period, deliver to dELiA*s one-half of such payment. 
  

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 ARTICLE IV. 
  
 THE RIGHTS OFFERING 
  
 SECTION 4.1. Conduct of the Rights Offering. 
  
 (a) dELiA*s shall effect a rights offering with respect to the dELiA*s Common Stock promptly after, but in no event prior to one week after, the
distribution of shares of dELiA*s Common Stock in the Spinoff, pursuant to which persons holding shares of dELiA*s Common Stock on the Rights Offering Record Date would receive, at no cost, Rights which shall entitle them to purchase shares of
dELiA*s Common Stock at a specified subscription price. It currently is contemplated that the subscription price per share of dELiA*s Common Stock in the Rights Offering (the “Subscription Price”) will be based on an implied
pre-money equity market valuation of dELiA*s of $175 million, as adjusted to account for the dilutive impact of options, warrants and other convertible instruments that will be outstanding immediately following the Spinoff pursuant to the treasury
stock method; provided, that nothing contained in this Agreement shall be deemed to limit in any respect the ability of Alloy’s Board of Directors to authorize a different Subscription Price prior to the Effective Date or dELiA*s’ Board of
Directors to authorize a different Subscription Price after the Distribution Date. 
  
 (b) As currently contemplated, the Rights Offering would result in aggregate gross proceeds of $20,000,000 (the “Contemplated Offering Amount”). Notwithstanding the foregoing, Alloy’s Board of
Directors shall have the right, in its sole discretion, to terminate the Rights Offering, or reduce or increase the Contemplated Offering Amount prior to the Effective Date by whatever amount such Board deems advisable, and the dELiA*s’ Board
of Directors shall have the right, in its sole discretion, to terminate the Rights Offering or to reduce or increase the Contemplated Offering Amount after the Distribution Date by whatever amount such Board deems advisable. 
  
 SECTION 4.2. Backstop Agreement. In connection with the conduct of the Rights
Offering, Alloy and dELiA*s have entered into the Backstop Agreement with MLF, pursuant to which MLF has agreed to cause its Affiliates to exercise all of the Rights distributed to them in the Rights Offering (the “MLF Rights”) and
to purchase all shares of dELiA*s Common Stock underlying the MLF Rights at the Subscription Price. Additionally, MLF has agreed that if, at the end of the exercise period for the Rights, there are Rights of other dELiA*s stockholders that remain
unexercised (the “Unexercised Rights”), MLF shall, at the request of dELiA*s and subject to the provisions of the Backstop Agreement, purchase, or cause certain of its Affiliates to purchase, all of the shares of dELiA*s Common
Stock underlying all Unexercised Rights at the Subscription Price. There will be no rights of oversubscription offered to any of dELiA*s stockholders other than those provided to MLF pursuant to the Backstop Agreement. 
  
 SECTION 4.3. Backstop Fee. If the Rights Offering is effected, MLF shall be entitled
to receive a non-refundable fee upon the consummation of the Rights Offering of ten-year warrants to purchase a number of shares of dELiA*s Common Stock equal to 8% multiplied by the number of shares of dELiA*s Common Stock to be issued pursuant to
the Rights Offering at the Subscription Price, and dELiA*s shall deliver such warrants to MLF as and when required pursuant to the provisions of the Backstop Agreement. 
  

 -16- 

 SECTION 4.4. Rights Agent. Prior to or on the Distribution Date, dELiA*s shall enter into an agreement with the
Rights Agent providing for, among other things, the delivery to the holders of dELiA*s Common Stock as of the Rights Offering Record Date of certificates evidencing the Rights distributed in the Rights Offering. 
  
 SECTION 4.5. The Rights Offering. Subject to the terms and conditions hereof and the
agreement executed pursuant to Section 4.4, dELiA*s shall instruct the Rights Agent to distribute, on or as soon as practicable after the Rights Offering Record Date, to each holder of record of dELiA*s Common Stock as of the Rights Offering
Record Date, such fractional number of Rights as shall be set forth in the Prospectus for each share of dELiA*s Common Stock held by such holder as of the Rights Offering Record Date. Such distribution shall be effected by the mailing of Rights
certificates to such holders or, if practicable, by book-entry transfer. All of the shares of dELiA*s Common Stock issued in the Rights Offering upon exercise of the Rights shall be duly authorized and shall be fully paid and nonassessable.

  
 SECTION 4.6. Fractional Shares. Notwithstanding anything to the
contrary contained in this Article III, no fractional shares of dELiA*s Common Stock shall be distributed upon exercise of the Rights. Rather, all such rights to purchase fractional shares shall be cancelled as of the expiration date of the Rights
Offering, and each dELiA*s stockholder as of the Rights Offering Record Date shall be entitled to purchase only whole shares of dELiA*s Common Stock. Notwithstanding the foregoing, provisions shall be made in the agreement between dELiA*s and the
Rights Agent pursuant to which the Rights Agent will, upon the request of a Rights holder, attempt to sell all or any part of such holders Rights 
  
 ARTICLE V. 
  
 EMPLOYEE MATTERS 
  
 SECTION 5.1. Certain Employee and Employee Benefits Matters. 
  
 (a) Definitions. The following terms, as used in this Section 5. 1, have the following meanings: 
  
 (i) “Alloy 401(k) Plan” means the Alloy, Inc. 401(k) Plan. 
  
 (ii) “dELiA*s Employees” means all employees whose employment relates primarily to the
Merchandising Business, whether directly as an employee of the dELiA*s Group or indirectly as an employee of the Alloy Group, as determined by Alloy, in its sole discretion, including, for this purpose, any such employee who is not actively
performing services on the Distribution Date because of (A) leave of absence, whether paid or unpaid, within a job protection period, or (B) disability within a job protection period. 
  
 (iii) “dELiA*s 401(k) Plan” means the
dELiA*s 401(k) Plan previously established by Alloy Merchandise Group, LLC, which was dELiA*s’ predecessor. 
  
 (iv) “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended. 
  

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 (v) “dELiA*s Group Employee Plans” means the “employee benefit
plans” (within the meaning of Section 3(3) of ERISA) of the dELiA*s Group and any other severance, bonus, incentive or other compensatory plans or arrangements covering one or more current or former dELiA*s Employees or their dependents or
beneficiaries. 
  
 (vi) “ERISA”
means the Employee Retirement Income Security Act of 1974, as amended. 
  
 (b) Employment of dELiA*s Employees. Prior to the Distribution Date, the Alloy Group shall transfer to such member(s) of the dELiA*s Group as dELiA*s may specify in writing prior to the Distribution Date all dELiA*s Employees, if
any, who are employed by Alloy or any member of the Alloy Group so that no such employee who becomes employed by any member of the dELiA*s Group experiences any termination or other interruption in employment. Immediately after the Distribution
Date, members of the dELiA*s Group will continue to employ all dELiA*s Employees on substantially the same terms and conditions (including compensation and benefits, other than equity compensation) as in effect immediately prior to the Spinoff;
provided that nothing contained in this Section 5.1(b) shall be construed to limit the right of any member of the dELiA*s Group following the Spinoff to prospectively terminate the employment of any dELiA*s Employee or to prospectively change
the position, responsibilities, compensation or benefits of any dELiA*s Employee whether or not they were employed by any member of the Alloy Group prior to the Distribution Date. 
  
 (c) Assumption of Liabilities. From and after the Distribution Date, the dELiA*s Group will assume, pay, perform and
discharge any and all outstanding Liabilities or other obligations to or with respect to all current and former dELiA*s employees, consultants or independent contractors and their dependents and beneficiaries (other than Liabilities associated with
Alloy Options) arising out of or in connection with their employment or association with the Alloy Group. Except as otherwise provided in the last paragraph of Section 8.7(c), the dELiA*s Group will indemnify the members of the Alloy Group and
hold them harmless from and against any and all claims or expenses made or incurred against or by the Alloy Group on account of, or in connection with, any such Liabilities and other obligations. Without limiting the generality of the previous
sentence, if the transfer of employment to the dELiA*s Group immediately prior to the Distribution Date of those dELiA*s Employees who are then employed by the Alloy Group, as provided in Section 5.1(b) above, is deemed to be a termination or
severance of employment of any such dELiA*s Employee for purposes of any policy, plan, program, employment agreement or other arrangement of the Alloy Group that provides for the payment of severance, salary continuation, stay, retention or other
bonuses, forgiveness of indebtedness or similar benefits to such dELiA*s Employee or would otherwise trigger any expense or charge or impose any other Liability on any member of the Alloy Group, the dELiA*s Group shall pay all such benefits to such
dELiA*s Employee in accordance with the terms of the applicable policy, plan, program, employment agreement or other arrangement and assume, pay, perform and discharge any and all such expenses, charges and other Liabilities. 
  
 (d) dELiA*s Group Employee Plans. On or prior to the Distribution
Date, dELiA*s shall establish the dELiA*s Group Employee Plans. Any current or former dELiA*s Employee (or beneficiary or dependent thereof) will, to the extent not already a participant, automatically become a participant in the corresponding
dELiA*s Group Employee Plan on the Distribution 

  

 -18- 

 
Date, with full credit for contributions, deductibles, co-payments, service and other attributes of his or her participation in any employee plan maintained
by any member of the Alloy Group. Consistent with the foregoing, the participation by any member of the dELiA*s Group or by any current or former dELiA*s Employee (or beneficiary or dependent thereof) in any employee plan maintained by any member of
the Alloy Group will be discontinued as of the Distribution Date. 
  
 (e) COBRA. The dELiA*s Group will assume responsibility for administering and providing health care continuation coverage under COBRA and other applicable law to all former dELiA*s Employees and the “qualified
beneficiaries” of all current and former dELiA*s Employees with respect to whom a “qualifying event” occurred prior to the Distribution Date, and to all current and future dELiA*s Employees and their “qualified
beneficiaries” with respect to whom a “qualifying event” occurs on or after the Distribution Date. All such employees are listed on Schedule 5.1(e) hereto. 
  
 (f) 401(k) Plan Transfer. Promptly after the Distribution Date, the parties shall take such actions as are necessary,
if any, to cause the orderly transfer from the Alloy 401(k) Plan to the dELiA*s 401(k) Plan of the account balances held for the benefit of current and former dELiA*s Employees and their beneficiaries in a plan-to-plan transfer of assets and
liabilities that satisfies the requirements of applicable law (including Sections 411(d) and 414(l) of the Code, Section 306 of the Sarbanes-Oxley Act of 2002, Regulation 2520.101-3 and any related applicable regulations promulgated by the
United States Department of Labor and Regulation BTR promulgated by the Commission). All of such employees are listed on Schedule 5.1(f) hereto. Pending the plan-to-plan transfer as contemplated hereby, the dELiA*s Group will withhold from the pay
of dELiA*s Employees’ who are participants in the Alloy 401(k) Plan and remit to the Alloy 401(k) Plan all required loan payments due on such dELiA*s Employees’ participant loans from their Alloy 401(k) Plan accounts, and the Alloy 401(k)
Plan will process distributions of terminated employees following their termination from the dELiA*s Group in the normal course, subject to notification or confirmation of such termination by the dELiA*s Group. All of such employees are listed on
Schedule 5.1(f) hereto. 
  
 (g) Administration of Welfare
Benefit Claims. Effective as of the Distribution Date, dELiA*s shall assume sole responsibility for administering all claims made by current or former dELiA*s Employees (and their beneficiaries and dependents) on or after the Distribution Date
(including claims for expenses incurred or events occurring before the Distribution Date). dELiA*s shall have sole and absolute discretionary authority to make any necessary determinations with respect to such claims, including entering into
settlements with respect to such claims. 
  
 (h) Workers’
Compensation. dELiA*s shall be responsible for all workers’ compensation obligations related to claim events occurring on or after the Distribution Date with respect to any dELiA*s Employee. Alloy shall be responsible for all workers
compensation obligations related to claim events occurring prior to the Distribution Date with respect to any dELiA*s Employee. 
  
 (i) Confidentiality and Proprietary Information. No provision of any Spinoff Document shall be deemed to release any current or former dELiA*s
Employee for any violation of any applicable employee confidentiality and non-solicitation agreement or other agreement entered into by such Person in favor of any member of the Alloy Group or any other applicable policy 

  

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pertaining to confidential or proprietary information of any member of the Alloy Group, or otherwise relieve any such Person of his or her obligations under
any such agreement or policy. 
  
 (j) Miscellaneous.

  
 (i) No current or former dELiA*s Employee (or
any beneficiary or dependent thereof) shall be entitled to enforce the provisions of this Section 5.1 against the respective parties or any of their Affiliates as third party beneficiaries hereof. 
  
 (ii) Each party shall bear all costs and expenses, including
but not limited to legal and consulting fees, incurred from and after the Distribution Date in the design, drafting and implementation of any and all plans and compensation structures which it establishes or creates and the amendment of its existing
plans or compensation structures. 
  
 (iii) From
and after the Distribution Date, Alloy and dELiA*s shall share, and shall cause each member of their respective Groups to share, with each other and with their respective agents and vendors all participant information necessary and appropriate for
the efficient and accurate administration of each party’s respective employee benefit plans and performance of their respective obligations under this Section 5.1. Alloy and dELiA*s shall, subject to all applicable laws concerning
confidentiality, be given reasonable and timely access to, and may make copies of, all information relating to the subjects of this Section 5.1 in the custody of another party, to the extent necessary and appropriate for such administration and
performance. 
  
 SECTION 5.2. Treatment of Outstanding Alloy Options.

  
 (a) dELiA*s Stock Incentive Plan. On or prior to the
Distribution Date, dELiA*s shall establish an equity-based incentive plan for the benefit of dELiA*s and Alloy’s employees, consultants and directors (“dELiA*s Stock Incentive Plan”), with such terms as dELiA*s determines with
the consent of Alloy. 
  
 (b) Conversion of Alloy Options Held
by dELiA*s Employees. Employees and consultants who have received options (whether vested or unvested) under the Alloy Stock Incentive Plans before the Distribution Date that remain unexercised as of the Distribution Date (“Alloy
Options”) (all of whom and all of which shall be listed on a schedule of holders of Alloy Options as of the Distribution Date, which shall be delivered to dELiA*s as soon as practicable after the Distribution Date, and in any event within 5
business days thereafter), and who are or become dELiA*s Employees or consultants of dELiA*s on the Distribution Date, will have each of their unexercised Alloy Options converted into options to purchase dELiA*s Common Stock (“dELiA*s
Options”) under the dELiA*s Stock Incentive Plan as of the Distribution Date, subject to the following terms and conditions: 
  

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 (i) Each such Alloy Option shall be amended and converted into an dELiA*s Option to
purchase a number of dELiA*s Shares (rounded to the nearest whole share) determined as follows: 
  
 (A) The number of shares of dELiA*s Common Stock subject to a new dELiA*s Option will equal the number of shares of Alloy Common Stock
subject to the existing Alloy Option multiplied by .5 and divided by the following fraction (the “dELiA*s Fraction”): 
  

					
	 	 	dELiA*s Market Price	 	 
	 	 	(2 x Alloy Market Price) + dELiA*s Market Price	 	 

  
 (B)
The exercise price of the new dELiA*s Option will equal the exercise price of the existing Alloy Option multiplied by 2 with the result multiplied by the dELiA*s Fraction. 
  
 (C) Notwithstanding the foregoing, in the case of any Alloy Option to which Section 421 of the Code
applies by reason of its qualification under Section 422 of the Code (an “Incentive Stock Option”), the conversion formula shall be adjusted, if necessary, to comply with Section 424(a) of the Code. 
  
 (ii) Except as otherwise provided herein, the dELiA*s
Options resulting from such conversion shall be subject to the same terms and conditions (including expiration date, vesting and exercise provisions) as were applicable to the corresponding Alloy Options immediately prior to the Distribution Date.
Additionally, each dELiA*s Option issued in respect of an outstanding Alloy Option that was an Incentive Stock Option shall be issued as an Incentive Stock Option. 
  
 (c) Treatment of Alloy Options Held by Alloy Employees. Each outstanding Alloy Option (whether vested or unvested)
granted prior to the Distribution Date and which, as of the Distribution Date is (a) unexercised and (b) held by a Person who is not an dELiA*s Employee (which shall, for purposes of this section, include Matthew L. Feshbach), will be
converted into both an adjusted Alloy Option and a new dELiA*s Option. These Alloy Options will be converted in a manner that preserves the aggregate exercise price of each Alloy Option, which will be allocated between the adjusted Alloy Option and
the new dELiA*s Option based on a comparison of the Market Price of the Alloy Common Stock and one-half the Market Price of the dELiA*s Common Stock after the Distribution Date. Both Options, when combined, will preserve as nearly as practicable the
intrinsic value of the existing Alloy Option, and each will preserve as nearly as practicable the ratio of the exercise price to the fair market value of the stock subject to the Option. 
  
 (i) In order to effect such conversion, the number of shares of Alloy Common Stock subject to an adjusted
Alloy Option will be the same as the number of shares subject to the existing Alloy Option, and the current exercise price will be multiplied by the following fraction (the “Alloy Fraction”): 
  

					
	 	 	Alloy Market Price	 	 
	 	 	Alloy Market Price + (dELiA*s Market Price x 0.5)	 	 

  

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 (ii) The number of shares of dELiA*s Common Stock subject to a new dELiA*s Option will
equal the number of shares of Alloy common stock subject to the existing Alloy Option multiplied by the Distribution Ratio. The exercise price of the new dELiA*s Option will equal the exercise price of the existing Alloy option divided by the
Distribution Ratio and then multiplied by the dELiA*s Fraction. 
  
 (iii) Except as otherwise provided herein, the new dELiA*s Options resulting from such conversion shall be subject to the same terms and conditions (including expiration date, vesting and exercise provisions) as were
applicable to the corresponding Alloy Options immediately prior to the Distribution Date. Additionally, each dELiA*s Option issued in respect of an outstanding Alloy Option that was an Incentive Stock Option shall be issued as an Incentive Stock
Option; provided, that each such new dELiA*s Option that is issued as an Incentive Stock Option shall, and without any action on the part of Alloy, dELiA*s or the holder thereof, automatically convert into a non-qualified stock option on the date
that is 91 days after the Distribution Date unless earlier exercised in accordance with the terms of such new dELiA*s Option. 
  
 (iv) In order to determine Alloy or dELiA*s Market Price for purposes of this Section, such Market Price will equal the average of the
closing sale prices of such securities on the principal securities market on which such securities are traded for the five consecutive trading days commencing on and including the Distribution Date. Employment with Alloy will be taken into account
in determining when each new dELiA*s Option becomes exercisable and when it terminates, and in all other respects the terms of each new dELiA*s Option will be substantially the same as the existing related Alloy Option. 
  
 (d) Treatment of Restricted Stock. Holders of shares of Alloy Common
Stock that are subject to lapsing repurchase rights will receive shares of dELiA*s Common Stock equal to the number of such shares of Alloy Common Stock multiplied by the Distribution Ratio. All such shares of dELiA*s Common Stock shall be subject
to the same vesting schedules and lapsing repurchase rights as the shares of Alloy Common Stock to which they related, except that dELiA*s will be entitled to repurchase the shares of dELiA*s Common Stock issued to such holders from such holders on
the same terms, and at the same times, as Alloy may repurchase the shares of Alloy Common Stock from such holders. 
  
 ARTICLE VI. 
  
 ACCESS TO INFORMATION 
  
 SECTION 6.1. Provision of Corporate
Records. Except as otherwise specifically set forth in the Transaction Agreements, from and after the Distribution Date, each Group shall deliver to the other Group all documents, Contracts, books, records and data (including minute books, stock
registers, stock certificates and documents of title) (collectively, “Corporate Records”) in its possession relating primarily to the other Group or its business, assets and affairs which may be requested from time to time by the
other Group; provided, however, that if any such documents, Contracts, books, records or data relate to both Groups or their businesses, assets and affairs, each such Group shall provide to the other Group true and complete copies of such documents,
Contracts, books, records or data. Data stored in electronic form shall be provided in the format 

  

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in which it existed at the Distribution Date, except as otherwise specifically set forth in the Transaction Agreements. 
  
 SECTION 6.2. Access to Information. From and after the Distribution Date, each Group
shall afford to the other Group and its accountants, counsel and other designated representatives reasonable access during normal business hours to all personnel, documents, Contracts, books, records, computer data and other data in such
Group’s possession relating to the other Group or the business and affairs of such other Group (other than data and information subject to an attorney-client or other privilege that is not specifically subject to the provisions of this Article
V), insofar as such access is reasonably required by such other Group for a reasonable and appropriate purpose, including for audit, accounting, regulatory compliance and disclosure and reporting purposes. 
  
 SECTION 6.3. Litigation Cooperation. From and after
the Distribution Date: 
  
 (a) Each Group shall use all reasonable
efforts to make available to the other Group and its accountants, counsel and other designated representatives, upon written request, its current and former directors, officers, employees and representatives as witnesses, and shall otherwise
cooperate with the other Group, to the extent reasonably required in connection with any Action or threatened Action arising out of either Group’s business and operations in which the requesting party may from time to time be involved, except
for any action in which one Group is asserting a claim against or seeking relief from the other Group and except to the extent that there is a conflict of interest in the Action or threatened Action between the requesting Group and itself.

  
 (b) Each Group shall promptly notify the other Group, upon its
receipt or the receipt by any of its members, of a request or requirement (by written questions, interrogatories, requests for information or documents, subpoenas, civil investigative demands or other similar processes) that relates to the business
and operations of the other Group that could reasonably be regarded as calling for the inspection or production of any documents or other information in its possession, custody or control. Each Group shall assert and maintain, or cause its members
to assert and maintain, all applicable claims to privilege, immunity, confidentiality and/or protection in order to protect such documents and other information from disclosure, and shall seek to condition any disclosure that may be required on such
protective terms as may be appropriate. No Group may voluntarily waive, undermine or fail to take any action reasonably necessary to preserve an applicable privilege without the prior written consent of the affected party (or any affected Group
member or Affiliates of any such party) except, in the opinion of such party’s counsel, as required by law. 
  
 (c) Each Group shall enter into such joint defense agreements with the other Group, in customary form, as Alloy and dELiA*s reasonably shall determine are
necessary, appropriate or advisable. 
  
 (d) With respect to those
ongoing litigation matters identified on Schedule 4 hereto as to which a member of the Alloy Group and a member of the dELiA*s Group are party or otherwise have an interest, the parties shall take the actions specified therein. 
  

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 SECTION 6.4. Reimbursement. Except to the extent that any member of one Group is obligated to indemnify any member
of the other Group under Article VIII for such cost or expense, each Group providing information or witnesses to the other Group, or otherwise incurring any expense in connection with cooperating, under Sections 6.1, 6.2 or 6.3, shall be entitled to
receive from the recipient thereof, upon the presentation of reasonably detailed invoices therefor, payment for all out-of-pocket costs and expenses, including, without limitation, reasonable attorney’s fees that may reasonably be incurred in
providing such information, witnesses or cooperation. 
  
 SECTION 6.5.
Treatment of Records. Except as otherwise required by law or agreed to in writing, each of Alloy and dELiA*s may offer to the other in writing any Corporate Records relating solely or primarily to the other and the members of the other’s
Group, and shall make such Records available for pickup at the other’s expenses during customary business hours. If any such Corporate Records remain unclaimed for a period of 30 days after first offered, then the offering party may, or may
cause the members of its respective Group to, destroy or otherwise dispose of all such Corporate Records. Any Corporate Records received by any member of one Group after the Distribution Date and relating primarily to the other Group or its
business, assets or affairs shall promptly be delivered or offered to such other Group in accordance with the procedures set forth in Section 6.1 and this Section 6.5. Notwithstanding the foregoing, there shall be no requirement for Alloy
or dELiA*s, or any members of their respective Groups, to destroy or otherwise dispose of any Corporate Records (or photocopies or similar reproductions thereof) to the extent that such Corporate Records relate to its business, assets and affairs.

  
 SECTION 6.6. Confidentiality. Except as may be more specifically
addressed in any Transaction Agreement, each party shall hold, and shall cause its consultants and advisors to hold, in strict confidence, unless compelled to disclose by judicial or administrative process or, in the opinion of its counsel, by other
requirements of Law, all confidential or proprietary information concerning the other party hereto furnished it by such other party or its representatives pursuant to this Agreement (except to the extent that such information can be shown to have
been (i) previously known by the party to which it was furnished, (ii) in the public domain through no fault of the party to which it was furnished or (iii) independently developed by the receiving party), and each party shall not
release or disclose such information to any other Person, except its auditors, attorneys, financial advisors, bankers and other consultants and advisors who shall be advised of the provisions of this Section 6.6. 
  
 ARTICLE VII. 
  
 CERTAIN OTHER AGREEMENTS 
  
 SECTION 7.1. Intercompany Accounts. Except as otherwise specifically set forth in any
of the Transaction Agreements, all intercompany loan balances, accounts receivable and accounts payable between any member of Group and any member of another Group in existence at the Distribution Date shall be cancelled on the Distribution Date.
If, at any time after the Distribution Date, either party receives payments belonging to the other party, the recipient shall promptly account for and remit said payment to the other party. 
  
 SECTION 7.2. Further Assurances and Consents. In addition to the actions specifically
provided for elsewhere in the Spinoff Documents, each of Alloy and dELiA*s shall use all 

  

 -24- 

 
commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things, reasonably necessary, proper or
advisable under applicable Laws, regulations and agreements or otherwise to consummate and make effective the transactions contemplated by this Agreement, including using its reasonable efforts to obtain any consents and approvals and to make any
filings and applications necessary or desirable in order to consummate the transactions contemplated by this Agreement. Alloy and dELiA*s agree to enter into and execute such additional documents as may be reasonably necessary, proper or advisable
to effect the transactions contemplated by the Transaction Agreements. 
  
 SECTION
7.3. Certain Business Matters. Following the Spinoff, except as expressly set forth in Section 7.6 hereof, no member of a Group shall have any duty to refrain from (i) engaging in the same or similar activities or lines of business
as any member of the other Group, (ii) doing business with any potential or actual supplier or customer of any member of the other Group, or (iii) engaging in, or refraining from, any other activities whatsoever relating to any of the
potential or actual suppliers or customers of any member of the other Group, but nothing in this Section 7.3 shall give the members of any Group any rights to any Intellectual Property of the Other Group except as expressly set forth herein or
in one or the Ancillary Agreements. 
  
 SECTION 7.4. Delivery of Property.
Alloy agrees that it will transfer or make available to dELiA*s, promptly after the receipt thereof, all property that any member of the Alloy Group receives after the Distribution Date intended to be property of dELiA*s or any member of the dELiA*s
Group under this Agreement, and dELiA*s agrees that it will transfer or make available to Alloy, promptly after the receipt thereof, all property that any member of the dELiA*s Group receives after the Distribution Date intended to be property of
Alloy or any member of the Alloy Group under this Agreement. 
  
 SECTION 7.5.
Insurance Policies. With respect to matters relating to insurance coverage from and after the Distribution Date, the parties hereto agree as follows: 
  
 (a) dELiA*s Insurance Coverage After the Distribution Date. From and after the Distribution Date, dELiA*s shall be responsible for obtaining and
maintaining insurance programs for its risk of loss and such insurance arrangements shall be separate and apart from Alloy’s insurance programs. Notwithstanding the foregoing, Alloy, shall upon the reasonable request of dELiA*s, use its
commercially reasonable efforts to assist dELiA*s in the transition to its own separate insurance programs from prior to or after the Distribution Date, as dELiA*s may request, and shall provide dELiA*s with any information that is in the possession
of Alloy and would in any way facilitate dELiA*s’ ability to either obtain insurance coverage for dELiA*s or to assist dELiA*s in preventing unintended self-insurance, in whatever form. 
  
 (b) Cooperation and Agreement Not to Release Carriers. Each of Alloy
and dELiA*s will share such information as is reasonably necessary in order to permit the other to manage and conduct its insurance matters in an orderly fashion. Each of Alloy and dELiA*s, at the request of the other, shall cooperate with and use
commercially reasonable efforts to assist the other in recoveries for claims made under any insurance policy for the benefit of any insured party, and neither Alloy nor dELiA*s, nor any of their Subsidiaries shall take any action which would
intentionally jeopardize or otherwise interfere with either party’s ability to collect any proceeds payable pursuant to any insurance policy. Except as otherwise contemplated by this Distribution 

  

 -25- 

 
Agreement or any other Spinoff Document, after the Distribution Date neither Alloy nor dELiA*s shall (and shall ensure that no member of their respective
Groups shall), without the consent of the other, provide any insurance carrier with a release, or amend, modify or waive any rights under any such policy or agreement, if such release, amendment, modification or waiver would adversely affect any
rights or potential rights of any member of the other Group thereunder. However, nothing in this Section 7.6(b) shall (i) preclude any member of any Group from presenting any claim or from exhausting any policy limit, (ii) require any
member of any Group to pay any premium or other amount or to incur any Liability, or (iii) require any member of any Group to renew, extend or continue any policy in force. 
  
 (c) Procedures With Respect to Alloy-Insured dELiA*s Liabilities. 
  
 (i) Insurance Pursuit. Alloy shall obtain dELiA*s
prior approval, which approval shall not be unreasonably withheld, conditioned or delayed, prior to pursuing insurance recoveries from insurance policies for any dELiA*s Liability covered under the terms of Alloy’s insurance policies
(“Alloy-Insured dELiA*s Liabilities”); provided, however, that dELiA*s’s consent shall not be required in respect of any Alloy-Insured dELiA*s Liability for which dELiA*s is seeking indemnification from Alloy
hereunder. Alloy will bill dELiA*s and dELiA*s will reimburse Alloy on a monthly basis for all such amounts incurred to pursue insurance recoveries from insurance policies for Alloy-Insured dELiA*s Liabilities, and dELiA*s shall be entitled to the
net proceeds of any such insurance recoveries. 
  
 (ii) Management of Claims. Except as otherwise inconsistent with the provisions of any applicable insurance policy and except for claims for which dELiA*s is seeking indemnification from Alloy hereunder, the defense of claims, suits
or actions giving rise to potential or actual Alloy-Insured dELiA*s Liabilities will be managed (in conjunction with Alloy’s insurers, as appropriate) by the representative of dELiA*s that would have had responsibility for managing such claims,
suits or actions had such Alloy-Insured dELiA*s Liabilities been dELiA*s Liabilities not covered under the terms of Alloy’s insurance policies, subject, however, to the ability of Alloy to impose reasonable controls and oversight on the
management of such claims process. 
  
 (d) Cooperation.
Alloy and dELiA*s will cooperate with each other in all respects, and they shall execute any additional documents which are reasonably necessary, to effectuate the provisions of this Section 7.6. 
  
 (e) No Assignment or Waiver. The provisions of this Section 7.6
shall not be considered as an attempted assignment of any policy of insurance or as a contract of insurance and shall not be construed to waive any right or remedy of any member of the Alloy Group or the dELiA*s Group in respect of any insurance
policy or any other contract or policy of insurance. 
  
 (f) No
Liability. dELiA*s does hereby, for itself and as agent for each other member of the dELiA*s Group, agree that no member of the Alloy Group shall have any Liability whatsoever as a result of the insurance policies and practices of Alloy and its
Subsidiaries as in effect at any time after the Distribution Date, including without limitation as a result of the level or scope of any such insurance, the creditworthiness of any insurance carrier, the terms and 

  

 -26- 

 
conditions of any policy, the adequacy or timeliness of any notice to any insurance carrier with respect to any claim or potential claim or otherwise.

  
 (g) D&O Insurance. For a period of six
(6) years from the Distribution Date, Alloy shall, at its sole cost and expense, provide that portion of directors’ and officers’ liability insurance that serves to reimburse the present and former officers and directors of dELiA*s
and its Seller Subsidiaries with respect to claims against such officers and directors arising from facts or events which occurred before the Distribution Date, on terms no less favorable than those in effect on the date hereof. 
  
 SECTION 7.6. Non-Competition; Non-Solicitation. 
  
 (a) Non-Competition. From the date hereof until the date on which the
Media Services Agreement expires according to its terms or is earlier terminated, each of Alloy and dELiA*s shall not, and each shall cause each of its Affiliates not to, directly or indirectly, without the prior written consent of the other,
individually or in partnership with, as part of a joint venture with, or otherwise in conjunction in any other manner with any Person: 
  
 (i) be engaged in any manner whatsoever, including, without limitation, as an employer, owner, partner, consultant, adviser, principal,
agent, stockholder, member or proprietor, in any Competitive Business; or 
  
 (ii) advise, invest in, lend money to, guarantee the debts or obligations of, or otherwise have any other financial interest in any Competitive Business. 
  
 (iii) Notwithstanding the foregoing, the foregoing will not be deemed to prohibit Alloy, dELiA*s or their
respective Affiliates from owning, as a passive investment, not more than 4.99% of the outstanding stock of any publicly-held company then engaged in a Competitive Business. 
  
 (b) Definitions. As used in this Section, the term “Competitive Business” means, with respect to
Alloy, the Merchandising Business, and means, with respect to dELiA*s, the Alloy Business. 
  
 (c) Non-Solicitation of Employees. Each party acknowledges the importance to the businesses carried on by it and its Affiliates of the human resources engaged by and developed by such party. Accordingly, except
as otherwise agreement to by the parties, each party covenants and agrees that, for a period of one (1) year from the date hereof, such party shall not, and shall cause each of its Affiliates not to, directly or indirectly, induce or solicit or
assist any third party in inducing or soliciting any employee or consultant of the other thereof (each a “Protected Party”) to terminate or materially alter any employment or consultancy arrangement with the other Protected Party.
The parties acknowledge that placing advertisements soliciting employees of the type then employed by the Protected Parties in newspapers, on Internet job sites or similar media generally accessible to the public shall not be deemed to be a breach
of this Section. 
  

 -27- 

 SECTION 7.7. Year-End Cash True Up. 
  
 (a) Cash Balance. dELiA*s cash balance on January 31, 2006 will be established in the following manner: dELiA*s
shall have $30,000,000 of Cash and Cash Equivalents, including the $20,000,000 raised via the Rights Offering, plus all monies raised from the private placement of shares of Common Stock to certain senior executive officers described in the
Form S-1 (approximately $1,200,000), minus any capital expenditures in excess of $10.3 million for the year ending January 31, 2006. The $30,000,000 amount will then be subject to an adjustment, either plus or minus for Working Capital as
described below in subsection (b). The resultant amount will be the Cash and Cash Equivalents to which dELiA*s will be entitled on January 31, 2006. 
  
 (b) Working Capital Determination. dELiA*s shall, as soon as reasonably practical after January 31, 2006 and in any event not later than
March 15 , 2006, determine the amount of Cash and Cash Equivalents on its balance sheet as of January 31, 2006 in accordance with generally accepted accounting principles consistently applied (“GAAP”), assuming for
purposes of such calculation that the full amount of the $20,000,000 to be raised via the Rights Offering has actually been received by dELiA*s as of such date, regardless of the actual amount, if any, as shall have actually been received, and shall
deliver a copy of such determination (the “Determination”) to Alloy. In addition, dELiA*s shall, determine the amount of Working Capital on its balance sheet as of January 31, 2006 in accordance GAAP and applied on a consistent
basis, and shall deliver a copy of such determination (the “Working Capital Determination”) to Alloy along with a “Working Capital Statement” setting forth in reasonable detail its good faith calculation of the Working
Capital. To the extent the Working Capital Determination exceeds or is less than the Working Capital Target ($5,600,000), the Year-End Cash True Up shall be adjusted by the amount by which the Working Capital Determination exceeds or is less than
the Working Capital Target. If the amount of Working Capital shown on the Working Capital Statement is in excess of negative $5,600,000, such amount will be subtracted from the $30,000, 000 in order to calculate the amount of the Year-End Cash True
Up. Should the Working Capital Determination be less than negative $5,600,000, however, such amount will be added to the $30,000, 000 in order to calculate the amount of the Year-End Cash True Up. The Year-End Cash True Up shall be made as follows:
based on the calculations as set forth in this paragraph should any amount of cash be required to be adjusted, such adjustment and the related transfer of funds shall be done within 15 days of the Determinations being received by Alloy, and in any
event not later than March 30, 2006 (i.e., if the actual Cash and Cash Equivalents on the dELiA*s balance sheet, as so adjusted, is less than the targeted amount, Alloy shall pay dELiA*s the full amount of such shortfall, while if the actual
Cash and Cash Equivalents on the dELiA*s balance sheet, as so adjusted, is greater than the targeted amount, dELiA*s shall pay Alloy the full amount of such excess). 
  
 (c) Working Capital Adjustment. 
  
 For purposes of this Section 7.7, the following terms shall have the following meanings: 
  
 (i) “Current Assets” shall mean the current
assets of dELiA*s, exclusive of cash and cash equivalents, as of January 31, 2006, determined in accordance with GAAP and applied on a consistent basis. 
  

(ii) “Current Liabilities” shall mean the current liabilities of dELiA*s as of January 31, 2006, determined in
accordance with GAAP and applied on a consistent basis. 
  
 (iii) “Working Capital” shall mean Current Assets less Current Liabilities. 
  
 (iv) “Working Capital Target” shall mean a negative five million six hundred thousand Dollars ($5,600,000). 

 

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 (d) Annual Audit. dELiA*s shall, in connection with annual audit for the fiscal year ending
January 31 2006, cause its then independent auditing firm to opine on its consolidated financial statements which will include a determination in accordance with GAAP of the amount of Cash and Cash Equivalents, Working Capital and capital
expenditures as of and for year ending January 31, 2006, and shall deliver a copy of such audited statements to Alloy. If Alloy objects to such determination or as a result objects to the Year-End Cash True Up previously determined, it shall notify
dELiA*s in writing within 15 days after its receipt thereof (a “Dispute Notice”), and shall, in such Dispute Notice, set forth to the best of its ability its determination of the Year-End Cash True Up. If Alloy does not timely
deliver a Dispute Notice, dELiA*s audited financial statements will serve as the final source of determining the Cash and Cash Equivalents, Working Capital and capital expenditures as of and for the year ending January 31, 2006. Should Alloy
timely deliver a Dispute Notice, Alloy and dELiA*s shall meet within 15 days after dELiA*s receipt of such Dispute Notice in order to attempt to resolve any dispute referenced therein. If such dispute is resolved, the agreed upon amount shall be
final for purposes of this subsection 7.9(b). If any dispute is not able to be resolved within 15 days after dELiA*s receipt of a Dispute Notice, then each of Alloy and dELiA*s may request BDO Seidman LLP or another independent certified
accountant (the “Independent Auditor”) make an independent determination within twenty (20) days thereafter of the amount of Cash and Cash Equivalents, working capital and capital expenditures and the resultant Year-End Cash
True Up as of and for the year ending January 31, 2006. The Independent Auditor determination thereof shall be final and binding on all parties, absent manifest error. The costs of the Independent Auditor shall be borne by whichever
party’s determination (for dELiA*s, as set forth in its initial determination and for Alloy, as set forth in its Dispute Notice) is furthest from the Independent Auditor’s determination. If, after final determination of the Year–End
Cash True Up, the amount paid by dELiA*s to Alloy, or vice versa, pursuant to the provisions of subsection 7.9(a) was inaccurate, then, if one party has paid the other more than is required pursuant to such formula, such party shall, within five
(5) Business Days, refund the excess by wire transfer or certified check. If, however, one party has paid the other less than is required pursuant to such formula, such party shall, within five (5) Business Days, pay such shortfall by wire
transfer or certified check. Notwithstanding anything to the contrary contained herein, there shall be no adjustment made as a result of any shortfall in the amount of proceeds actually received by dELiA*s in the rights offerings, and all
calculations made pursuant to this Section 7.7 shall assume that dELiA*s has received the full $20 million sought in the rights offerings as of the date of such calculation. 
  
 (e) Operate in Ordinary Course. From and after the Distribution Date until February 1, 2006, dELiA*s shall
operate in the usual and ordinary course of business consistent with past practices and shall use its best efforts to continue normal purchasing, payables, leasing, financing, marketing, advertising, promotional and maintenance expenditures in order
that the Cash and Cash Equivalents, working capital and capital expenditures as of and for the year ending January 31, 2006 reflect the results of its operations in the usual and ordinary course of business consistent with past practices. In
addition, dELiA*s shall not accelerate or cause a decrease in long term indebtedness or other long term liabilities, determined in accordance with GAAP and applied on a consistent basis, from the date of distribution to January 31, 2006 outside
the ordinary course of business and consistent with past practices or on a one time basis. If dELiA*s causes such a decrease in long term liabilities, the amount by which long term liabilities were reduced will be subtracted from the $30,000,000
mentioned in section (a). 
  
 (f) All amounts received by Alloy
under this Section 7.7 shall be deposited in a separate account dedicated exclusively for the receipt of such amounts, and Alloy shall transfer all such amounts received to creditors of Alloy in existence on the Distribution Date in repayment
of indebtedness outstanding on such date. 
  

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 SECTION 7.8. Domain Name License. Alloy does hereby grant dELiA*s a royalty-free license, without the right of
sublicense, to use the domain name www.delias.com for email address purposes only in connection with the operation of the Merchandising Business for a period of 6 months from and after the Distribution Date. 
  
 SECTION 7.9. Mail and other Communications. All mail and other communications,
including, without limitation faxes, emails and other forms of electronic communication (not including instant messages) received by dELiA*s or any member of the dELiA*s Group after the Distribution Date which relates solely to the Alloy Business
shall be delivered daily by overnight delivery to Alloy. All mail and other communications received by Alloy or any member of the Alloy Group after the Distribution Date which relates solely to the Merchandising Business shall be delivered daily by
overnight delivery to dELiA*s. Additionally, each Party agrees that it shall make copies of all mail and other communications received by it or any member of the its Group after the Distribution Date which relates partially its Business and
partially to the business of the other Party and shall deliver such copies daily by overnight delivery to the other Party, except that such Party may redact information relating to such Party’s Business to the extent reasonably required to
maintain the confidentiality or competitive sensitivity of any information contained therein. 
  
 SECTION 7.10. Existing Arrangements. All prior agreements and arrangements, including those relating to goods, rights or services provided or licensed, between the dELiA*s Group and the Alloy Group shall be
terminated by Alloy and dELiA*s, and, to the extent such agreements or arrangements are between Subsidiaries of Alloy or dELiA*s, Alloy and dELiA*s shall cause their respective Subsidiaries to terminate such agreements and arrangements effective as
of the Distribution Date, if not theretofore terminated. No such agreements or arrangements shall be in effect after the Distribution Date unless embodied in or otherwise are part of the Spinoff Documents. 
  
 ARTICLE VIII. 
  
 INDEMNIFICATION AND OTHER MATTERS 
  
 SECTION 8.1. Assumed Liabilities, Exculpation and Indemnification by dELiA*s.

  
 (a) From and after the Distribution Date, dELiA*s shall,
without any further responsibility or liability of, or recourse to, Alloy or any Affiliate of Alloy or any of their respective directors, stockholders, officers, employees, agents, consultants, representatives, successors, transferees or assignees
(collectively, the “Alloy Indemnitees”), absolutely and irrevocably assume and be solely liable and responsible for the dELiA*s Group Liabilities. Neither Alloy nor any of the Alloy Indemnitees shall be liable to dELiA*s or any
Affiliate of dELiA*s or any of their respective directors, stockholders, officers, employees, agents, consultants, customers, representatives, successors, transferees or assignees for any reason whatsoever on account of (i) any dELiA*s Group
Liabilities or (ii) any Liabilities arising from the breach by dELiA*s of any of its obligations under this Agreement; provided that Alloy shall remain liable to dELiA*s for any breach by Alloy of any of its obligations under this Agreement.

  

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The matters with respect to which dELiA*s assumes liability pursuant to clauses (i) and (ii) above are referred to herein as the “dELiA*s
Indemnifiable Liabilities.” 
  
 (b) dELiA*s shall
indemnify, save and hold harmless each of the Alloy Indemnitees from and against (i) all dELiA*s Indemnifiable Liabilities and (ii) except as otherwise provided in the Transaction Agreements, all Liabilities that are or are alleged to be
related to, arising from, or associated with the ownership, operation or conduct of the Merchandising Business or the use, possession or enjoyment of the assets used in connection therewith at any time after the Distribution Date other than the
Alloy Indemnifiable Liabilities (all of which are collectively called the “Alloy Damages”). In addition, if Alloy so elects in its sole discretion, dELiA*s shall defend any or all of the Alloy Indemnities in any Action in which any
Alloy Damages are asserted against any Alloy Indemnitees. 
  
 (c)
Alloy Damages with respect to which, but only to the extent that, any proceeds are received by or on behalf of Alloy, or by or on behalf any of its Affiliates, from any third party insurance policy (and are non-reimbursable by Alloy under any self
insurance policy), shall not be the subject of indemnification under this Agreement. 
  
 SECTION 8.2. Retained Liabilities; Exculpation and Indemnification by Alloy. 
  
 (a) Alloy shall, without any further responsibility or liability of, or recourse to, dELiA*s or any Affiliate of dELiA*s or any of their respective directors, stockholders, officers, employees, agents, consultants,
representatives, successors, transferees or assignees (collectively, the “dELiA*s Indemnitees”), absolutely and irrevocably be solely liable and responsible for the Alloy Group Liabilities. Neither dELiA*s nor any of the other
dELiA*s Indemnitees shall be liable to Alloy or any Affiliate of Alloy or any of their respective directors, stockholders, officers, employees, agents, consultants, customers, representatives, successors, transferees or assignees for any reason
whatsoever on account of (i) any Alloy Group Liabilities or (ii) any Liabilities arising from the breach by Alloy of any of its obligations under this Agreement; provided that dELiA*s shall remain liable to Alloy for any breach by dELiA*s
of any of its obligations under this Agreement. The matters with respect to which Alloy retains liability pursuant to clauses (i) and (ii) above are referred to herein as the “Alloy Indemnifiable Liabilities.” 

 
 (b) Alloy shall indemnify, save and hold harmless each of the dELiA*s
Indemnitees from and against (i) all Alloy Indemnifiable Liabilities and (ii) except as otherwise provided in the Transaction Agreements, all Liabilities that are or are alleged to be related to, arising from, or associated with the
ownership, operation or conduct of the Alloy Businesses or the use, possession or enjoyment of the assets used in connection therewith at any time after the Distribution Date, other than the dELiA*s Indemnifiable Liabilities (all of which are
collectively called the “dELiA*s Damages”). In addition, if dELiA*s so elects in its sole discretion, Alloy shall defend any or all of the dELiA*s Indemnities in any Action in which any dELiA*s Damages are asserted against any
dELiA*s Indemnitees. 
  
 (c) dELiA*s Damages with respect to
which, but only to the extent that, any proceeds are received by, or on behalf of, dELiA*s or by any of its Affiliates, from any third party insurance 

  

 -31- 

 
policy (and are non-reimbursable under any self insurance policy), shall not be the subject of indemnification under this Agreement. 
  
 SECTION 8.3. Specific Indemnification Issues. 
  
 (a) It is the express intention of the parties hereto that each party to be
indemnified pursuant to this Article VIII shall be indemnified and held harmless from and against all Damages as to which indemnity is provided for hereunder, NOTWITHSTANDING THAT ANY SUCH DAMAGES ARISE OUT OF OR RESULT FROM THE ORDINARY, STRICT,
SOLE, OR CONTRIBUTORY NEGLIGENCE, OR THE STRICT LIABILITY (OR OTHER LIABILITY WITHOUT FAULT) OF SUCH PARTY AND REGARDLESS OF WHETHER ANY OTHER PARTY (INCLUDING THE OTHER PARTY TO THIS AGREEMENT) IS OR IS NOT ALSO NEGLIGENT OR OTHERWISE LIABLE WITH
RESPECT TO THE MATTER IN QUESTION. 
  
 (b) It is acknowledged that
after the Distribution Date the parties will have negotiated business relationships, which relationships will be described in the Contracts, agreements and other documents entered into in the normal course of business, including, without limitation,
each of the Ancillary Agreements. Such documents may include agreements by the parties and their Affiliates and Subsidiaries to supply, after the Distribution Date, materials, products and services and to lease facilities, tangible and intangible
property. Such business relationships shall not be subject to the indemnity provisions hereof, unless the parties expressly agree to the contrary in the agreements governing such relationships. 
  
 (c) Except as otherwise provided herein, if an Action is brought by a third
party in which the liability as between Alloy and dELiA*s is Finally Determined to be joint or in which the entitlement to indemnification hereunder is not determinable, the parties shall negotiate in good faith in an effort to agree, as between
Alloy and dELiA*s, on the proper allocation of liability or entitlement to indemnification, as well as the proper allocation of the costs of any joint defense or settlement pursuant to Section 8.5, all in accordance with the provisions of, and
the principles set forth in, this Agreement. In the absence of any such agreement, such allocation of liability or entitlement to indemnification, and such allocation of costs, shall be subject to ultimate resolution between Alloy and dELiA*s
pursuant to Article IX. 
  
 SECTION 8.4. Notice and Payment of Claims.

  
 (a) If any party to this Agreement or a person entitled to
indemnification under this Agreement (an “Indemnified Party”) determines that it is or may be entitled to a defense or indemnification by Alloy or dELiA*s, as the case may be (the “Indemnifying Party”), under this
Agreement, the Indemnified Party shall deliver promptly to the Indemnifying Party a written notice and demand for indemnification, specifying the basis for the claim for indemnification, the nature of the claim, and, if known, the amount for which
the Indemnified Party reasonably believes it is entitled to be indemnified. The Indemnifying Party shall have 30 days from receipt of such notice in which to: (w) assume the defense of such litigation or claim; (x) pay the claim in
immediately available funds; (y) reserve its rights pending negotiations under Section 8.5 or (z) object in accordance with Section 8.4(b). This 30-day period may be extended by express agreement of the parties. 
  

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 (b) An Indemnifying Party may object to, or reserve its rights with respect to, the claim for
indemnification set forth in any notice delivered by the Indemnified Party pursuant to Section 8.4(a) so long as it acts in good faith and with a reasonable basis for its belief that it is not obligated to indemnify the Indemnified Party.

  
 SECTION 8.5. Defense of Third-Party Claims. 
  
 (a) If the Indemnified Party’s claim for Indemnification is based, under
this Agreement, on an Action, judicial or otherwise, brought by a third party, and the Indemnifying Party does not object under Section 8.4(b), the Indemnifying Party may, participate in the defense of such Action and may assume the defense of
such Action with counsel satisfactory to the Indemnified Party if (i) the Indemnified Party agrees to assumption thereof by the Indemnifying Party or (ii) the Indemnifying Party shall have confirmed in writing (without reservation or
qualification) its obligation to provide indemnification for the liability asserted in such action. If the Indemnified Party shall reasonably conclude that its interests in such Action are materially different from those of the Indemnifying Party or
that it may have defenses that are different from or in addition to those available to the Indemnifying Party, the Indemnified Party may use separate counsel to protect such interests and assert such defenses and otherwise participate in the defense
of such Action. If the Indemnifying Party shall assume the defense with counsel satisfactory to the Indemnified Party, the Indemnifying Party shall not be liable for any legal expenses (other than investigation expenses) subsequently incurred by the
Indemnified Party, unless the Indemnified Party shall have employed separate counsel in accordance with the preceding sentence. 
  
 (b) The right to indemnification conferred in this Article VIII shall include the right to be paid by the Indemnifying Party the expenses incurred in
defending any proceeding for which such right to indemnification is applicable in advance of its final disposition (hereinafter an “advancement of expenses”); provided, however, that, if, but only if, a court or arbitration
panel of competent jurisdiction requires, all amounts paid as an advancement of expenses shall be repaid to the Indemnifying Party if it shall be Finally Determined that the Indemnified Party is not entitled to be indemnified for such expenses under
this Agreement or otherwise. 
  
 (c) If an Action is brought by a
third party in which the liability as between Alloy and dELiA*s is alleged to be joint or in which the entitlement to indemnification hereunder is not determinable or as to which there has been a reservation of rights, the parties shall cooperate in
a joint defense. Such joint defense shall be under the general management and supervision of the party which is expected to bear the greater share of the liability; provided, however, that neither party shall settle or compromise any such joint
defense matter without the consent of the other. The costs of such joint defense shall be borne as the parties may agree, or in the absence of such agreement, such costs shall be borne by the party incurring such costs, subject to ultimate
resolution pursuant to Article X hereof. 
  
 SECTION 8.6. Insurance; Third
Party Obligations; Tax Benefits. The parties intend that any Liability subject to indemnification pursuant to this Article VIII shall be paid net of the amount of any insurance or other amounts that actually reduce the amount of the Liability
(“Proceeds”). Accordingly, the amount which the Indemnifying Party is required to pay to any Indemnified Party will be reduced by any Proceeds actually recovered by or on behalf of the Indemnified Party in reduction of the related
Liability. If an Indemnified Party receives an indemnity 

  

 -33- 

 
payment required by this Agreement from an Indemnifying Party in respect of any Liability and subsequently receives Proceeds, then the Indemnified Party will
pay to the Indemnifying Party an amount equal to the excess of such indemnity payment received over the amount of the indemnity payment that would have been due if the Proceeds had been received, realized or recovered before the indemnity payment
was made. Any indemnification pursuant to this Article VII shall also be paid net of all tax benefits to the Indemnified Party attributable to the relevant payment or Liability. Such indemnification shall be increased to reflect any tax liability of
the Indemnified Party so that the Indemnified Party receives 100% of the after-tax amount of any payment or liability. It is expressly agreed that no insurer or any other third party shall be (i) entitled to a benefit it would not be entitled
to receive in the absence of the foregoing indemnification provisions, (ii) relieved of the responsibility to pay any claims to which it is obligated or (iii) entitled to any subrogation rights with respect to any obligation hereunder.

  
 SECTION 8.7. Release of Pre-Spinoff Claims. 
  
 (a) Except as provided in Section 8.7(c), effective as of the
Distribution Date, dELiA*s does hereby, for itself and each other member of the dELiA*s Group, their respective Affiliates (other than any member of the Alloy Group), successors and assigns, remise, release and forever discharge each of Alloy, the
members of the Alloy Group, their Affiliates (other than any member of the dELiA*s Group), successors and assigns, and all Persons who at any time prior to the Distribution Date have been stockholders, directors, officers, agents or employees of any
member of the Alloy Group (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns, from any and all Liabilities whatsoever, whether at law or in equity (including any
right of contribution), whether arising under any contract or agreement, by operation of law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any
conditions existing or alleged to have existed on or before the Distribution Date, including in connection with the Corporate Restructuring Transactions and all other activities to implement the Spinoff. 
  
 (b) Except as provided in Section 8.7(c), effective as of the
Distribution Date, Alloy does hereby, for itself and each other member of the Alloy Group, its Affiliates (other than any member of the dELiA*s Group), successors and assigns, remise, release and forever discharge dELiA*s, the members of the dELiA*s
Group, their Affiliates (other than any member of the Alloy Group), successors and assigns, and all Persons who at any time prior to the Distribution Date have been stockholders, directors, officers, agents or employees of any member of the dELiA*s
Group (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns, from any and all Liabilities whatsoever, whether at law or in equity (including any right of contribution),
whether arising under any contract or agreement, by operation of law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged
to have existed on or before the Distribution Date, including in connection with the Corporate Restructuring Transactions and all other activities to implement the Spinoff. 
  
 (c) Nothing contained in Section 8.7(a) or (b) shall impair any right of any Person to enforce this Agreement, any
Ancillary Agreement or any agreements, arrangements, 

  

 -34- 

 
commitments or understandings that are specified in Schedule 7.5 not to terminate as of the Distribution Date, in each case in accordance with its terms.
Nothing contained in Section 8.7(a) or (b) shall release any Person from: 
  
 (i) any Liability provided in or resulting from any agreement among any members of the Alloy Group or the dELiA*s Group that is specified
in Schedule 7.5 as not to terminate as of the Distribution Date; 
  
 (ii) any Liability assumed, transferred, assigned or allocated to the Group of which such Person is a member in accordance with, or any other Liability of any member of any Group under, this Agreement or any
Transaction Document; 
  
 (iii) any Liability for
the sale, lease or receipt of goods, property or services purchased, obtained or used in the ordinary course of business by a member of one Group from a member of any other Group prior to the Distribution Date; 
  
 (iv) any Liability for Taxes to the extent set forth in the
Tax Separation Agreement; 
  
 (v) any Liability
that the parties may have with respect to indemnification or contribution pursuant to this Agreement for claims brought against the parties by third Persons, which Liability shall be governed by the provisions of this Article VIII and, if
applicable, the appropriate provisions of the Ancillary Agreements; or 
  
 (vi) any Liability the release of which would result in the release of any Person other than a Person released pursuant to this Section 8.7. 
  
 In addition, nothing contained in Section 8.7(a) shall release Alloy from honoring its existing obligations to
indemnify any director, officer or employee of dELiA*s who was a director, officer or employee of Alloy or any of its Subsidiaries (including, without limitation, dELiA*s) on or prior to the Distribution Date, to the extent such director, officer or
employee becomes a named defendant in any litigation involving Alloy or any such Subsidiary and was entitled to such indemnification pursuant to then existing obligations or provisions of the governing instruments of any such Person. 
  
 (d) dELiA*s shall not make, and shall not permit any member of the dELiA*s
Group to make, any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification, against Alloy or any member of the Alloy Group or any other Person released pursuant to
Section 8.7(a), with respect to any Liabilities released pursuant to Section 8.7(a). Alloy shall not make, and shall not permit any member of the Alloy Group to make, any claim or demand, or commence any Action asserting any claim or
demand, including any claim of contribution or any indemnification against dELiA*s or any member of the dELiA*s Group, or any other Person released pursuant to Section 8.7(b), with respect to any Liabilities released pursuant to
Section 8.7(b). 
  
 (e) It is the intent of Alloy and dELiA*s
by virtue of the provisions of this Section 8.7 to provide for a full and complete release and discharge of all Liabilities existing or arising from all acts and events occurring or failing to occur or alleged to have occurred or to have failed
to occur 

  

 -35- 

 
and all conditions existing or alleged to have existed on or before the Distribution Date, between or among dELiA*s or any member of the dELiA*s Group on the
one hand, and Alloy or any member of the Alloy Group on the other hand (including any contractual agreements or arrangements existing or alleged to exist between or among any such members on or before the Distribution Date), except as expressly set
forth in Section 8.7(c). At any time, at the request of any other party, each party shall cause each member of its respective Group to execute and deliver releases reflecting the provisions hereof. 
  
 SECTION 8.8. Characterization of Payments. For all Tax purposes, the Alloy Group and
the dELiA*s Group agree to treat any payment required by this Agreement, other than a payment made by dEliA*s under Section 7.7, as either a contribution by Alloy to dELiA*s or a distribution by dELiA*s to Alloy, as the case may be, occurring
immediately prior to the Distribution Date. 
  
 ARTICLE IX.

  
 CONDITIONS 
  
 SECTION 9.1. Conditions. The obligations of Alloy to consummate the Spinoff shall be
subject to the fulfillment (or, if permissible under applicable law, the waiver by Alloy) of the following conditions at or prior to the Distribution Date: 
  
 (a) The Form S-1 shall have become effective under the Securities Act, and no stop order with respect thereto shall be in effect; 
  
 (b) The Prospectus shall have been mailed to the holders of record of Alloy
Common Stock as of the Record Date; 
  
 (c) The shares of dELiA*s
Common Stock to be delivered in the Spinoff and the Rights Offering shall have been approved for quotation on the Nasdaq National Market; 
  
 (d) The transactions contemplated by Section 2.3, including, without limitation, the Corporate Restructuring Transactions, shall have been
consummated on terms satisfactory to Alloy in its sole discretion; 
  
 (e) Alloy’s Board of Directors shall be satisfied that the Spinoff will be made out of surplus within the meaning of Section 170 of the General Corporation Law of the State of Delaware; 
  
 (f) Each of the Ancillary Agreements shall have been executed and delivered
by the Persons who are proposed to become parties thereto; 
  
 (g)
The dELiA*s Charter and dELiA*s Bylaws shall be in effect; 
  
 (h)
All consents, approvals and authorizations of any Governmental Entity required for the consummation of the Spinoff and the Rights Offering and the other transactions contemplated hereby and by the Ancillary Agreements shall have been obtained and
shall be in full force and effect, and such consents, approvals and authorizations shall be in form and substance satisfactory to Alloy in its sole discretion; 
  

 -36- 

 (i) No order, preliminary or permanent injunction or decree shall have been issued by any court or agency
of competent jurisdiction or any other Governmental Entity and no other legal restraint or prohibition shall be in effect that prevents or makes unlawful the Spinoff or the Rights Offering; 
  
 (j) The Alloy Board of Directors shall have received an opinion from Peter J.
Solomon Company or another nationally recognized valuation firm, which opinion shall be in form and substance satisfactory to Alloy in its sole discretion, and Alloy shall otherwise be reasonably satisfied that, after giving effect to the Spinoff,
(i) the present fair saleable value and the fair value of the assets of Alloy and dELiA*s will exceed their respective liabilities; (ii) dELiA*s and Alloy will be able to pay their debts as such debts mature during the normal course of
business; (iii) dELiA*s will not have unreasonably small capital for the business in which it is and will be engaged; and (iv) the total assets of Alloy will exceed its total liabilities, plus the amount that would be needed, if Alloy were
dissolved at the time of the distribution, to satisfy any preferential rights of stockholders whose preferential rights are superior to those receiving the distribution; 
  
 (k) Alloy shall have received an opinion from Weil, Gotshal & Manges LLP, or other nationally recognized law firm,
to the effect that the Spinoff should be a tax-free transaction for federal income tax purposes under Section 355 of the Code, and such opinion shall be in form and substance satisfactory to Alloy in its sole discretion; 
  
 (l) Alloy’s Board of Directors shall have determined, in its sole
discretion, that the Spinoff will not cause acceleration of an amount of taxes attributable to gains, if any, that were required to be deferred in connection with a fiscal 2002 internal reorganization that would have a material adverse effect on
Alloy or dELiA*s; 
  
 (m) The Make Whole Agreement, dated as of
October 14, 2004, by Alloy in favor of Wells Fargo Retail Finance II, LLC (“Wells Fargo”) shall have been terminated, and dELiA*s shall have obtained the consent of Wells Fargo for the completion of the Spinoff; and 

 
 (n) The Backstop Agreement shall continue to be in full force and effect,
and no event shall have occurred that shall have given MLF the right, with the passage of time or giving of notice, or both, the right to terminate the Backstop Agreement; the Rights Offering shall have been finalized and ready to be effected
promptly after the Rights Offering Record Date with respect to a Contemplated Offering Amount of not less than $20 million; and the Subscription Price will be based on an implied pre-money equity market valuation of dELiA*s of not less than $175
million, determined on a fully diluted basis calculated pursuant to the treasury stock method. 
  
 The foregoing conditions are for the sole benefit of Alloy and shall not give rise to or create any duty on the part of Alloy or Alloy’s Board of Directors to waive or not waive such conditions or in any way to
limit Alloy’s rights to terminate this Agreement pursuant to 11.9 hereof. Any determination made by the Alloy’s Board of Directors prior to the Distribution Date concerning the satisfaction or waiver of any or all of the conditions set
forth in this Section 9.1 shall be conclusive. 
  

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 ARTICLE X. 
  

DISPUTE RESOLUTION 
  
 SECTION 10.1. Application. Any dispute arising out of or relating to this Agreement, including the breach or termination hereof, shall be resolved in accordance
with the procedures specified in this Article X, which shall be the sole and exclusive procedure for the resolution of any such disputes; provided, however, that a party may file a complaint to seek a preliminary injunction or other provisional
judicial relief, if in its sole judgment such action is necessary. Despite such action the parties will continue to participate in good faith in the procedures set forth in this Article X and each party is required to continue to perform its
obligations under this Agreement pending final resolution of any dispute arising out of or relating to this Agreement, unless to do so would be impossible or impracticable under the circumstances. All negotiations between the parties pursuant to
this Article X are confidential and shall be treated as compromise and settlement negotiations for purposes of applicable rules of evidence. The requirements of this Article X shall not be deemed a waiver of any right of termination under this
Agreement. 
  
 SECTION 10.2. Initial Discussions. Any dispute shall be
first discussed by an appropriate senior executive officer of each of the parties or his or her designee. Any party may initiate such discussions by giving the other party written notice specifying in detail the nature of the dispute. Within 15
Business Days after delivery of the notice, the receiving party shall submit to the other a written response, including a statement of such party’s position and a summary of arguments supporting such position. Within 10 Business Days (or such
other period as agreed upon by the parties) after receipt of such response, the executives of both parties shall meet at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary, to attempt to resolve the
dispute. All reasonable requests for information made by one party to the other shall be honored. 
  
 SECTION 10.3. Appeal to Higher Management. If, in spite of such discussions, no mutually acceptable solution is reached within 30 Business Days after the delivery of one party’s written request to the
other party to discuss such dispute, any such dispute shall be referred to the Chief Executive Officer of Alloy and the Chief Executive Officer of dELiA*s (to the extent that such persons were not the senior executive officers to which the matter
initially was referred pursuant to Section 10.2). 
  
 SECTION 10.4.
Arbitration. The parties hereto agree that, if and to the extent that the procedures set forth in Sections 10.2 and 10.3 do not result in a resolution of any disputes between the parties, all disputes, controversies or claims that may arise
out of the transactions contemplated by this Agreement, or the breach, termination or invalidity thereof, shall be submitted to, and determined by, binding arbitration in accordance with the following procedures: 
  
 (a) Either Alloy or dELiA*s may submit a dispute, controversy or claim to
arbitration by giving the other party written notice to such effect, which notice shall describe, in reasonable detail, the facts and legal grounds forming the basis for the filing party’s request for relief. The arbitration shall be held
before one neutral arbitrator in New York, New York. 
  

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 (b) Within 30 days after the other party’s receipt of such demand, Alloy and dELiA*s shall mutually
determine who the arbitrator will be. If the parties are unable to agree on the arbitrator within that time period, the arbitrator shall be selected by the American Arbitration Association (“AAA”) or another organization mutually
agreed to in writing by the parties. In any event, the arbitrator shall have a background in, and knowledge of, the areas to which the dispute outlined in such demand relates, and shall otherwise be an appropriate person based on the nature of the
dispute. If a person with experience in such matters is not available, the arbitrator shall be chosen from the retired federal judges pool. 
  
 (c) The arbitration shall be governed by the Commercial Arbitration Rules of the AAA, or the applicable rules of any other organization mutually agreed to
in writing by the parties to handle such arbitration, except as otherwise expressly provided in this Section 10.4. If the parties are unable to agree on the organization to administer the arbitration, it shall be administered by the AAA. In
such event, the parties may, by written agreement, agree to use the then applicable expedited arbitration provisions of the AAA. 
  
 (d) Discovery shall be limited to the request for and production of documents, depositions and interrogatories. Interrogatories shall be allowed only as
to the names, last known addresses and telephone numbers of all persons having knowledge of facts relevant to the dispute and a brief description of that person’s knowledge and the names, addresses and telephone numbers of any experts who may
be called as an expert witness or who have been used for consultation. All discovery shall be guided by the Federal Rules of Civil Procedure. All issues concerning discovery upon which the parties cannot agree shall be submitted to the arbitrator
for determination. 
  
 (e) In rendering an award, the arbitrator
shall determine the rights and obligations of the parties according to the substantive and procedural laws of the State of New York without regards to the conflict of laws rules thereof. 
  
 (f) The decision of, and award rendered by, the arbitrator shall be determined no more than 30 days after the selection of
the arbitrator and shall be final and binding on the parties and shall not be subject to appeal, absent manifest error. Judgment on the award may be entered in and enforced by any court of competent jurisdiction. 
  
 (g) Each party shall bear its own costs and expenses (including filing fees)
with respect to the arbitration, including one-half of the fees and expenses of the arbitrator. 
  
 ARTICLE XI. 
 MISCELLANEOUS 
  
 SECTION 11.1. Notices. Any and all notices or other communications required or permitted to be given under any of the provisions of
this Agreement shall be in writing and may be delivered by hand, by certified mail, return receipt requested, postage prepaid, or by nationally recognized overnight courier service, or by facsimile transmission addressed as follows: 
  

					
	 	  	If to Alloy:	  	 Alloy, Inc.
 151 W. 26th Street
 11th Floor

  

 -39- 

					
	 	  	 	  	 New York, NY 10001
 Attn: General Counsel
 Fax: (212) 244-4311

			
	 	  	If to dELiA*s:	  	 dELiA*s, Inc.
 435 Hudson Street
 New York, NY 10014
 Attn: Chief Executive Officer
 Fax: (212) 590-6226

			
	 	  	with a copy to:	  	 dELiA*s, Inc.
 435 Hudson Street
 New York, NY 10014
 Attn: General Counsel
 Fax: (212) 590-6310

  
 SECTION 11.2. Interpretation.

  
 (a) The article, section and paragraph headings contained
herein are for the purposes of convenience only and are not intended to define or limit the contents of said articles, sections or paragraphs. Whenever the words “include,” “includes” and “including” are used in this
Agreement, they shall be deemed followed by the words “without limitation.” Whenever a reference is made in this Agreement to a “party” or “parties,” such reference shall be to a party or parties to this Agreement
unless otherwise indicated. Whenever the context requires, the use of any gender herein shall be deemed to be or include the other genders and the use of the singular herein shall be deemed to include the plural (and vice versa). The use of the
words “hereof” and “herein” and words of similar import shall refer to this entire Agreement and not to any particular article, section, subsection, clause, paragraph or other subdivision of this Agreement, unless the context
otherwise requires. 
  
 (b) Each party hereto stipulates and
agrees that the rule of construction to the effect that if any ambiguities are to be or any be resolved against the drafting party shall not be employed in the interpretation of this Agreement to favor any party against the other, and that no party,
including any drafting party, shall have the benefit of any legal presumption (including “meaning of the authors”) or the detriment of any burden of proof by reason of any ambiguity or uncertain meaning contained in this Agreement.

  
 (c) If this Agreement contains any terms and provisions
(including, but not limited to, the provisions of Article VIII) that govern or otherwise apply, or could be construed to govern or otherwise apply, to the preparation or filing of Tax Returns, the allocation of liability for Taxes or any other
matter relating to the obligations of the parties with respect to Taxes or any Action arising in connection therewith, to the extent that any such terms and provisions are inconsistent in any respect with the terms and provisions of the Tax
Separation Agreement, the terms and conditions of the Tax Separation Agreement shall control and shall be deemed to supersede the terms and provisions hereof. 
  

 -40- 

 SECTION 11.3. Amendments; No Waivers. Any provision of this Agreement may be amended or waived if, and only if,
such amendment or waiver is in writing and signed, in the case of an amendment, by each party, or in the case of a waiver, by the party against whom the waiver is to be effective. No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law. 
  
 SECTION 11.4. Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Nothing contained in this Agreement is
intended to confer upon any Person other than the parties hereto and their respective successors and permitted assigns, any benefit, right or remedies under or by reason of this Agreement, except that the provisions of Article VII shall inure to the
benefit of the Alloy Indemnitees and the dELiA*s Indemnitees. Neither party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the prior written consent of the other party hereto, which shall not
be unreasonably withheld. Notwithstanding the foregoing, if a Party or any of its successors or assigns (i) consolidates with or merges into any other Person and is not the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers, by means of a distribution, sale, assignment or other transaction, all or substantially all of its assets, to any other person, then, and in each such case, such Party shall cause proper provision to be made so that
its successors and assigns assumes and agrees to perform all of the obligations of such Party set forth in this Agreement. 
  
 SECTION 11.5. Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of New York, without regard to the conflict
of laws rules thereof. 
  
 SECTION 11.6. Counterparts; Effectiveness. This
Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when each party hereto shall
have received a counterpart hereof signed by the other party hereto. 
  
 SECTION
11.7. Entire Agreement. This Agreement and other Transaction Documents constitute the entire understanding of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements, understandings and
negotiations, both written and oral, between the parties with respect to the subject matter hereof and thereof. No representation, inducement, promise, understanding, condition or warranty not set forth in the Transaction Documents has been made or
relied upon by any party hereto. 
  
 SECTION 11.8. Severability. If any one
or more of the provisions contained in this Agreement should be declared invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained in this Agreement shall not in any way be
affected or impaired thereby so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such a declaration, the parties shall modify this Agreement so as to
effect the original intent of the 

  

 -41- 

 
parties as closely as possible in an acceptable manner so that the transactions contemplated hereby are consummated as originally contemplated to the fullest
extent possible. 
  
 SECTION 11.9. Termination. Notwithstanding any
provision in this Agreement to the contrary, this Agreement may be terminated by Alloy and the Spinoff amended, modified or abandoned at any time prior to the Spinoff, without penalty or liability, by and in the sole discretion of Alloy and without
the approval of dELiA*s or of Alloy’s stockholders. 
  
 SECTION 11.10.
Survival. All covenants and agreements of the parties contained in this Agreement shall survive the Distribution Date. 
  
 SECTION 11.11. Expenses. Except as otherwise set forth in the Transaction Agreements, all costs and expenses incurred prior to or on the Distribution Date in
connection with the preparation, execution and delivery of the Transaction Agreements, the preparation of the Prospectus (including any registration statement on Form S-1 of which such Prospectus may be a part) and the consummation of the Spinoff
and the other transactions contemplated thereby shall be charged to and paid by Alloy and all costs and expenses incurred in connection with the consummation of the Rights Offering shall be charged to and paid by dELiA*s. 
  
 SECTION 11.12. Set-Offs. If, at the time dELiA*s is required to make any payment to
Alloy under this Agreement, and Alloy owes dELiA*s any amount under this Agreement or any Ancillary Agreement, then such amounts shall be offset and the excess shall be paid by the party liable for such excess. Similarly, if at the time Alloy is
required to make any payment to dELiA*s under this Agreement, dELiA*s owes Alloy any amount under this Agreement or any Ancillary Agreement, then such amounts shall be offset and the excess shall be paid by the party liable for such excess.

  
 SECTION 11.13. Actions by Subsidiaries. Each of the parties covenants
that, if and to the extent that consummation of the transactions contemplated hereby requires that any one or more of such party’s Subsidiaries take any action or execute any documents or instruments, that it shall take all such action as may
be required to cause each such Subsidiary to take such action and execute all such documents and instruments. 
  
 [Signature page follows] 
  

 -42- 

 IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly executed by their
respective authorized officers as of the date first above written. 
  

			
	ALLOY, INC.
		
	 By:
	 	 
	 Name:
	 	 
	 Title:
	 	 
	
	dELiA*s, INC.
		
	 By:
	 	 
	 Name:
	 	 
	 Title:
	 	 

  

 -43-

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