Document:

Exhibit
10.3

      MANAGEMENT
SERVICES AGREEMENT

      

      This Management Services Agreement
(this “Agreement”), dated as
of January 4, 2011 (the “Effective Date”), is
entered into by and between Eyefly LLC, with offices at 42 West 39th Street,
New York, New York 10018 (the “Company”), and
Tworoger Associates, Ltd., with offices at 594 Broadway, New York, New York
10012 (the “Service
Provider”).

      

      WHEREAS,
the Service Provider has agreed to make available to the Company certain
facilities and perform certain services for the Company, and the Company desires
to obtain access to such facilities and services, on the terms provided
herein.

      

      NOW, THEREFORE, in consideration of the
mutual agreements hereinafter set forth, the parties hereto agree as
follows:

      

      1.           Facilities and
Services.  At all times during the term of this Agreement, the
Service Provider shall provide the Company with access to such office space,
office equipment and supplies, telecommunications and computer networks,
administrative personnel and other property and services as may be agreed to by
the parties from time to time (collectively, the “Facilities and
Services”).  The parties agree that the Facilities and Services
are intended to include (without limitation) the warehousing and procurement of
inventory (all of which will be sold to the Company by Service Provider at
cost), the fulfillment of customer orders and the provision of customer
service.

      

      2.           Term.  The
term of this Agreement shall commence as of the Effective Date and shall
continue until terminated by either party on thirty (30) days’ prior written
notice.  The provisions of Sections 3 – 13 shall
survive any termination of this Agreement indefinitely.

      

      3.           Compensation.  In
consideration for the provision of the Facilities and Services, the Company
shall pay the Service Provider a monthly fee (the “Service Provider
Fee”) equal to one hundred percent (100%) of the costs incurred by the
Service Provider in connection with its provision of the Facilities and
Services, including (without limitation) any allocable costs of personnel or
resources that are used partially to provide Services hereunder and partially
for other elements of the Service Provider’s business.  The Service
Provider Fees shall be invoiced on a monthly basis and paid within thirty (30)
days of receipt of invoice. The Service Provider
shall, for a period of five (5) years from incurrence, retain all records
reasonably necessary to support the calculation of fees due hereunder, and shall
make such records available to the Company as reasonably requested.

      

      4.           Relationship of the
Parties. The Service Provider is providing services hereunder as an
independent contractor, retaining control and responsibility for its operations
and personnel.  Nothing in this Agreement shall be deemed to
constitute the parties hereto joint venturers, partners or participants in an
unincorporated business or other separate entity, nor in any manner create any
employer-employee relationship between the Company on the one hand, and the
Service Provider or any of the Service Provider’s employees on the other
hand.

      

      5.           Indemnification. The
Company shall reimburse, defend, indemnify and hold the Service Provider and its
affiliates, members, partners, Service Providers, officers, employees
and

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      agents,
harmless from and against any damage, loss, liability, deficiency, diminution in
value, action, suit, claim, proceeding, investigation, audit, demand,
assessment, fine, judgment, cost and other expense (including, without
limitation, reasonable legal fees and expenses) arising out of, related to or in
connection with any act or omission of, or on behalf of, the Company or the
Service Provider, except to the extent determined by a court of competent
jurisdiction to result directly from the gross negligence or willful misconduct
of the person seeking indemnification.

      

      6.           Notices.  Any
notice, request, demand or other communication permitted or required to be given
hereunder shall be in writing, shall be sent by one of the following means to
the addressee at the address set forth in the preamble to this Agreement (or at
such other address as shall be designated hereunder by notice to the other party
hereto, effective upon actual receipt) and shall be deemed conclusively to have
been given: (a) on the first business day following the day timely deposited
with a nationally recognized overnight delivery service with an order for
next-day delivery, with the cost of delivery prepaid for the account of the
sender; (b) on the fifth business day following the day duly sent be certified
or registered United States mail, postage prepaid and return receipt requested;
or (c) if delivered by other means, when actually received by the addressee on a
business day (or on the next business day if received after the close of normal
business hours or on any non-business day).

      

      7.           Assignment; Successors and
Assigns.  This Agreement and the rights, duties and obligations
of the Company hereunder may not be assigned or delegated by either party
without the prior written consent of the other, except in connection with a
merger or sale of all or substantially all of the assets of the assigning
party.  All covenants, promises and agreements by or on behalf of the
parties contained in this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, legal representatives,
successors and assigns.

      

      8.           Amendments.  No
amendment, supplement or waiver of any provision of this Agreement shall be
effective unless the same shall be in writing and signed by the Service Provider
and the Company (in the case of an amendment or supplement) or by the waiving
party (in the case of a waiver).

      

      9.           Applicable
Law.  This Agreement shall be governed by, and construed and
enforced in accordance with, the internal laws of the State of New York, without
giving effect to principles of conflicts of law or choice of law that would
compel the application of the substantive laws of any other
jurisdiction.  Any disputes arising hereunder shall be subject to the
exclusive jurisdiction of the State and federal courts located in New York, New
York.

      

      10.           Section
Headings.  The headings of each section are contained herein
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.

      

      11.           Entire
Agreement.  This Agreement sets forth the entire agreement of
the parties hereto with regard to the subject matter hereof and supersedes and
replaces all prior agreements, understandings and representations, oral or
written, with regard to such matters.

      

      12.           Severability. If any
provision of this Agreement or application thereof under any circumstances is
adjudicated to be invalid or unenforceable in any jurisdiction, such invalidity
or

      
        
           

        

        
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      unenforceability
shall not affect any other provision or application of this Agreement which can
be given effect without the invalid or unenforceable provision or application
and shall not invalidate or render unenforceable such provision or application
in any other jurisdiction.  If any provision is held void, invalid or
unenforceable with respect to particular circumstances, it shall nevertheless
remain in full force and effect in all other circumstances.

      

      13.           Counterparts.  This
Agreement may be executed in counterparts, each of which shall be an original,
and both of which together shall constitute one and the same
document.

      

      14.           Confidentiality;
Non-Competition; Non-Solicitation.  The Service Provider shall
be deemed to be bound by the provisions of Section 20.1 and 20.2 of the
Operating Agreement (as hereinafter defined) as if were a Member (as defined
therein) of the Company.  The Service Provider’s obligations under
Section 20.1 of the Operating Agreement shall survive indefinitely and its
obligations under Section 20.2 of the Operating Agreement shall survive for as
long as it or any of its Affiliates (as defined therein) is a Member and for a
period of three (3) years thereafter.  The provisions of Section 20.3
and Article XXI of the Operating Agreement shall apply to the Service Provider’s
obligations under this Section 14 as of the
same were included herein.  For purposes hereof the term “Operating Agreement”
shall mean that certain Operating Agreement of the Company, dated on or about
the date hereof, as the same may be amended from time to time.

      

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

      

      
        
          
            
              	 
      	
                      EYEFLY
      LLC

                    
	 
      	 
      	 
      
	 
      	
                      By:

                    	
                      / s / Melissa Payner

                    
	 
      	
                      Name: 

                    	
                      Melissa
      Payner

                    
	 
      	
                      Title:

                    	
                      Manager

                    
	 
      	 
      	 
      
	 
      	
                      TWO
      RODGER ASSOCIATES, LTD.

                    
	 
      	 
      	 
      
	 
      	
                      By:

                    	
                      / s / Alessandro Lanaro

                    
	 
      	
                      Name:

                    	
                      Alessandro
      Lanaro

                    
	 
      	
                      Title:

                    	
                      PresidentExhibit
10.4

      EIGHTH
AMENDMENT TO LOAN AND SECURITY AGREEMENT

       

      THIS
CONSENT AND EIGHTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”), dated as
of January 4, 2011, is made with respect to the LOAN AND SECURITY AGREEMENT,
dated as of July 26, 2005 (as amended, modified, supplemented or restated and in
effect from time to time, the “Loan Agreement”),
between WELLS FARGO BANK, NATIONAL ASSOCIATION (successor by merger to Wells
Fargo Retail Finance, LLC) (herein, the “Lender”), with
offices at One Boston Place, 19th Floor, Boston, Massachusetts 02109, and
BLUEFLY, INC. (the “Borrower”), a
Delaware corporation with its principal executive offices at 42 West 39th
Street, New York, New York  10018.

       

      BACKGROUND:

       

      The
Borrower has informed the Lender that the Borrower intends to enter into a
certain Operating Agreement of Eyefly, LLC (the “Operating Agreement”)
with A+D Labs LLC (“Modo”) pursuant which
the Borrower and Modo will form Eyefly, LLC (“Eyefly”) (the “Specified
Transaction”);

       

      The
Borrower has informed the Lender that in connection with the Specified
Transaction it intends to invest the sum of up to $676,000 (“Eyefly Investment”)
into Eyefly and as a result will own fifty two percent of issued and outstanding
equity interest of Eyefly.

       

      The
Borrowers have requested that the Lender (i) consent to the Specified
Transaction to the extent necessary to prevent the occurrence of an Event of
Default under the Loan Agreement as a result of the Specified Transaction, (ii)
consent to the Borrower making the Eyefly Investment; and (iii) amend certain
terms and conditions of the Loan Agreement, and the Lender is willing to do so
on the terms and conditions set forth in this Eighth Amendment.

       

      In
consideration of the mutual covenants contained herein and benefits to be
derived herefrom, the parties hereto agree as follows:

       

      Section
1.         Capitalized
Terms.  All capitalized
terms used herein and not otherwise defined shall have the same meaning herein
as in the Loan Agreement.

       

      Section
2.         Consent
to Specified Transaction.  Subject to
satisfaction of each and all of the preconditions to effectiveness set forth in
Section 5 below, the Lender hereby consents to the consummation by the Borrower
of the Specified Transaction.

       

      Section
3.         Limited
Scope of Consent.  The consent to
the Specified Transaction contained in Section 2 above (i) is a limited,
one-time consent, (ii) shall not be deemed to constitute to any similar
transaction or any other event which is prohibited by the terms of the Loan
Agreement, and (iii) is granted by the Lender in reliance upon the Borrower’s
representations, warranties and agreements set forth herein.

       

      Section
4.         Amendment
to Loan Agreement.  Subject to the
satisfaction of the Conditions Precedent set forth in Section 5, the provisions of the
Loan Agreement are hereby amended as follows:

       

      4.1         Article
1 of the Loan Agreement is hereby amended as follows:

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      (a)         The
following definitions are added to Article 1 in alphabetical order:

       

      “Eighth Amendment Effective
Date”: Means the date that the Conditions Precedent set forth in Section
5, hereof are satisfied as determined by the Lender in its
discretion.

       

      “Eyefly”: Means Eyefly, LLC a
Delaware Limited Liability Company

       

      “Eyefly Operating Agreement”:
Means that certain Operating Agreement of Eyefly, LLC dated as of January 4,
2011, as the same may be amended from time to time.

       

      “Initial Eyefly Investment”:
Means the portion of the initial capital contribution made by the Borrower to
Eyefly in accordance with the Eyefly Operating Agreement, in an amount not to
exceed $364,000.

       

      “Pledge Agreement”: Means the
Pledge Agreement dated as of the Eighth Amendment Effective Date by the Borrower
in favor of the Lender pledging the Borrowers equity interest in
Eyefly.

       

      “Subsequent Eyefly Investment”:
Means capital contributions made by the Borrower to Eyefly after the Eighth
Amendment Effective Date in accordance with the Eyefly Operating Agreement, in
an amount not to exceed $312,000 in the aggregate.  The parties
acknowledge and agree that the Subsequent Eyefly Investment may be made in one
or more tranches, provided that the aggregate amount of such tranches does not
exceed $312,000.

       

      (b)         The
following definitions in Article 1 are amended as follows:

       

      (i)         The
definition of “Permitted
Affiliate Transaction” contained therein is deleted in its entirety and
replaced with the following:

       

      "Permitted Affiliate
Transactions":  (a) the incurrence of any Indebtedness to the
Subordinated Entities, so long as such Indebtedness is subject to the terms and
conditions of the Subordination Agreement, (b) the sale of capital stock of the
Borrower to an Affiliate, (c) the grant of options or warrants to an Affiliate,
(d) the Initial Eyefly Investment on the Eighth Amendment Effective Date, and
(e) provided no Event of Default exist or would arise as a result of making such
Investment, the Subsequent Eyefly Investment.

       

      (ii)         The
definition of “Loan
Documents” contained therein is deleted in its entirety and replaced with
the following:

       

      "Loan
Documents":  This Agreement, the Pledge Agreement and each
other instrument or document from time to time executed and/or delivered in
connection with the arrangements contemplated hereby or in connection with any
transaction with the Lender or any Affiliate of the Lender, including, without
limitation, any transaction which arises out of any cash management, depository,
investment, letter of credit, interest rate protection, or equipment leasing
services provided by the Lender or any Affiliate of the Lender, including any
Bank Product Agreements, as each may be amended from time to time.

       

      
        
           

        

        
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      4.2         Article
4 of the Loan Agreement is hereby amended as follows:

       

      (a)         Section
4.19(g) of the Loan Agreement is hereby deleted in its entirety and replaced
with the following:

       

      (g)
Organize or create any Affiliate, other than Eyefly.  For the
avoidance of doubt, this covenant shall not apply to Affiliates of the
Subordinated Entities.

       

      Section
5.         Conditions
Precedent.  This Amendment
shall not be effective until each of the following conditions have been
satisfied, as determined by the Lender in its discretion:

       

      5.1         The
Lender shall have received counterparts of this Amendment duly executed by each
of the parties hereto.

       

      5.2         The
Lender shall have received a fully executed copy of the Pledge
Agreement.

       

      5.3         All
corporate and shareholder action on the part of the Borrower necessary for the
valid execution, delivery and performance by the Borrower of this Amendment
shall have been duly and effectively taken and evidence thereof reasonably
satisfactory to the Lender shall have been provided to the Lender.

       

      5.4         After
giving effect to this Amendment, the representations and warranties in the Loan
Agreement and the other Loan Documents shall be true and correct in all material
respects on and as of the date hereof, as though made on such date (except to
the extent that such representations and warranties relate solely to an earlier
date, in which case they shall be true and correct as of such earlier
date).

       

      5.5         After
giving effect to this Amendment and the Initial Eyefly Investment, no Default or
Event of Default shall have occurred and be continuing on the date hereof, nor
shall result from the consummation of the transactions contemplated
herein.

       

      5.6         The
Lender shall have received the Eyefly Operating Agreement duly executed by each
of the parties hereto.

       

      5.7         Assuming
the entire Eyefly Investment were made on the Eighth Amendment Effective Date,
immediately before and after giving effect to the Eyefly Investment and on a pro
forma basis for each of the twelve months thereafter Availability is greater
than $3,000,000. The Borrower shall deliver to the Lender evidence of
satisfaction of the conditions set forth above on a basis (including, without
limitation, giving due consideration to results for prior periods) reasonably
satisfactory to the Lender.

       

      5.8         The
Borrower shall have paid in full all reasonable costs and expenses of the Lender
(including, without limitation, reasonable attorneys’ fees) in connection with
the preparation, negotiation, execution and delivery of this
Amendment.

       

      Section
6.         Conditions
Subsequent.  On or before five
(5) Business Days after the Eighth Amendment Effective Date, the Specified
Transaction shall have been consummated and Modo shall have funded to its
initial capital contribution of not less than $336,000 as required by the Eyefly
Operating Agreement.

       

      
        
           

        

        
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      Section
7.         Amendment
Fee. The Borrower
will pay to the Lender an amendment fee (the “Amendment Fee”) in an
amount equal to $10,000 in consideration for the amendment contained
herein.  The Amendment Fee shall be fully earned upon the date hereof
and payable in full by the Borrower to the Lender upon the earlier of and Event
of Default or January 31, 2011. Once paid the Amendment fee shall not be subject
to refund or rebate under any circumstances.

       

      Section
8.         Waiver of
Claims.

       

      8.1         The
Borrower, for itself and on behalf of its officers, directors, employees,
attorneys, representatives, administrators, successors, and assigns hereby
acknowledges and agrees that it has no offsets, defenses, claims, or
counterclaims against the Lender, or its officers, directors, employees,
attorneys, representatives, parent, affiliates, participants, successors, or
assigns (collectively, “Credit Parties”) with
respect to the Liabilities, or otherwise, and that if the Borrower now has, or
ever did have, any offsets, defenses, claims, or counterclaims against any
Credit Party, whether known or unknown, at law or in equity, from the beginning
of the world through this date and through the time of execution of this
Amendment, all of them are hereby expressly WAIVED, and the Borrower
hereby RELEASES the
Credit Parties from any liability therefor.

       

      
        
           

        

        
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      Section
9.         Miscellaneous.

       

      9.1         Except
as provided herein, all of the terms and conditions of the Loan Agreement and
the other Loan Documents remain in full force and effect.

       

      9.2         This
Amendment may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which shall be deemed to be an
original, but all of which taken together shall constitute one and the same
agreement.  Delivery of an executed counterpart of this Amendment by
telefacsimile or electronic mail shall be equally as effective as delivery of an
original executed counterpart of this Amendment.  Any party delivering
an executed counterpart of this Amendment by telefacsimile or electronic mail
also shall deliver an original executed counterpart of this Amendment but the
failure to deliver an original executed counterpart shall not affect the
validity, enforceability, and binding effect of this Amendment.

       

      9.3         This
Amendment expresses the entire understanding of the parties with respect to the
transactions contemplated hereby.  No prior negotiations or
discussions shall limit, modify, or otherwise affect the provisions
hereof.

       

      9.4         THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE COMMONWEALTH OF
MASSACHUSETTS.

       

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

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      	
                                              BORROWER:

                                            	 
	 
      	 
      	 
	
                                              BLUEFLY,
      INC.

                                            	 
	 
      	 
      	 
	
                                              By:

                                            	
                                              / s / Kara B. Jenny

                                            	 
	
                                              Name: 

                                            	
                                                     Kara B.
      Jenny

                                            	 
	
                                              Title:

                                            	
                                                    
      CFO

                                            	 
	 
      	 
      	 
	
                                              LENDER:

                                            	 
	 
      	 
      	 
	
                                              WELLS
      FARGO BANK, NATIONAL ASSOCIATION

                                            	 
	 
      	 
      	 
	
                                              By:

                                            	
                                              / s / Michele L. Ayou

                                            	 
	
                                              Name: 

                                            	
                                                     Michele L.
      Ayou

                                            	 
	
                                              Authorized
      Signatory

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