Document:

Tax Separation Agreement, dated as of December 19, 2005

 Exhibit 10.1 
  

  
  
  
 TAX SEPARATION AGREEMENT 
  
 between 
  
 ALLOY, INC. 
  
 and 
  
 dELiA*S, INC. 
  
 Dated as of December 19, 2005 
  
  
  

 TAX SEPARATION AGREEMENT 
  
 TAX SEPARATION AGREEMENT, dated as of December 19, 2005, by and between Alloy, Inc., a Delaware corporation
(“Alloy”), and dELiA*s, Inc., a Delaware corporation and wholly-owned subsidiary of Alloy. 
  
  
 W  I  T  N  E  S  S  E  T  H

  
 WHEREAS, dELiA*s is currently a member of the Alloy
Consolidated Group (as defined herein); 
  
 WHEREAS, pursuant to
the Distribution Agreement entered into between Alloy and dELiA*s dated December 9, 2005 (the “Distribution Agreement”), (a) Alloy shall effect a restructuring of certain of its assets, liabilities, subsidiaries and businesses, as a
result of which dELiA*s shall own, directly and indirectly, the Merchandising Business (as defined in the Distribution Agreement) (the “Reorganization”) and (b) Alloy shall distribute all of the outstanding capital stock of dELiA*s to
its stockholders (the “Distribution”); 
  
 WHEREAS, the
parties intend that for United States federal income tax purposes the Reorganization and the Distribution shall qualify as tax-free transactions pursuant to Sections 332, 368(a) and 355 of the Code (as defined herein); 
  
 WHEREAS, the parties wish to (a) provide for the payment of tax
liabilities and entitlement to refunds thereof, allocate responsibility for, and cooperation in, the filing of tax returns and provide for certain other matters relating to Taxes and (b) set forth certain covenants and indemnities relating to
the preservation of the tax-free status of the Reorganization and the Distribution. 
  
 NOW, THEREFORE, in consideration of the mutual promises and undertakings contained herein and in any other document executed in connection with this Agreement, the parties agree as follows: 
  
  
 ARTICLE I 
  
 DEFINITIONS; CERTAIN OPERATING CONVENTIONS

  
 1.1 For the purposes of this Agreement, the following terms
shall have the meanings set forth below: 
  
 Adjustments
shall mean any proposed or final change in the Tax Liability of a taxpayer. 
  
 Alloy Consolidated Group shall mean the affiliated group of corporations. within the meaning of Section 1504(a) of the Code, of which Alloy is the common parent corporation, and any member of such group.

  

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 Alloy Group shall mean, individually and collectively, as the case may be, each member of the
Alloy Consolidated Group, other than any member of the dELiA*s Group. 
  
 Closing Agreement shall mean a closing agreement between Alloy and the IRS, dated [                    ], 2005 with respect to
certain Tax aspects of the Distribution. 
  
 Closing Agreement
Request shall mean the request and application to the IRS by Alloy for the Closing Agreement. 
  
 Code shall mean the Internal Revenue Code of 1986, as amended. 
  
 Combined Return shall mean any State Tax Return or federal Tax Return (other than a Federal Income Tax Return) that
includes at least one asset or activity that is allocable pursuant to this Agreement to the Alloy Group and at least one asset or activity that is allocable to the dELiA*s Group. 
  
 Contributed Subsidiaries shall mean each of dELiA*s Corp., Old Glory Boutique Distributing, Inc., and GFLA, Inc., and
each of their respective subsidiaries. 
  
 Counsel means
Weil, Gotshal & Manges LLP. 
  
 dELiA*s Group
shall mean, individually and collectively, as the case may be, dELiA*s and its present and future direct and indirect subsidiaries. 
  
 Disqualifying Action shall mean any action by a member of the Alloy Group or the dELiA*s Group within its control (including entering into any
agreement, understanding or arrangement or any negotiations with respect to any transaction or series of transactions) that, or the failure to take any action within its control which, would negate the Tax-Free Status of the Distribution;
provided, however, that with respect to any member of the dELiA*s Group, the term “Disqualifying Action” shall not include (x) any action, or failure to act, that is contemplated by the terms of the Spinoff
Documents or (y) any failure to take action to mitigate the effects of a breach by a member of the dELiA*s Group, occurring prior to the time of the Distribution, of a representation, warranty or covenant contained in the Spinoff Documents,
regardless of whether such breach or its effects continue after the time of the Distribution. 
  
 Distribution Date shall mean the date and time as of which the Distribution shall be effected. 
  
 Federal Income Tax shall mean federal Taxes determined on the basis of net income or profits (including, but not limited to, any alternative
minimum tax, capital gains and any Tax on items of Tax preferences) but excluding non-income Taxes such as federal payroll and excise Taxes. 
  
 Indemnifying Party shall mean any Person from which an Indemnified Party is seeking indemnification pursuant to the provisions of this Agreement.

  

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 Indemnified Party shall mean any Person which is seeking indemnification from an Indemnifying
Party pursuant to the provisions of this Agreement. 
  
 IRS
shall mean the United States Internal Revenue Service. 
  
 Opinion means the opinion of Counsel with respect to certain Tax aspects of the Reorganization and the Distribution. 
  
 Person shall mean and includes any individual, corporation, company, association, partnership. joint venture, limited liability company, joint
stock company, trust, unincorporated organization, or other entity. 
  
 Post-Distribution Taxable Period shall mean a taxable period that begins after the Distribution Date. 
  
 Pre-Distribution Taxable Period shall mean a taxable period that ends on or before the Distribution Date. 
  
 Present Value Benefit shall mean the present value (based on a
discount rate equal to the short-term applicable federal rate as determined under Section 1274(d) of the Code at the time of determination, and assuming that the Indemnified Party will be liable for Taxes at all relevant times at the maximum
marginal rates) of any income tax benefit. 
  
 Proceeding
shall mean any audit or other examination, or any judicial or administrative proceeding, relating to liability for or refunds or Adjustments with respect to Taxes. 
  
 Refund shall mean any refund of Taxes, including any reduction in liability for such Taxes by means of a credit,
offset or otherwise. 
  
 Separate Return shall mean any Tax
Return, including any consolidated, combined or unitary Tax Return, filed by either the Alloy Group or the dELiA*s Group that includes assets and activities allocable pursuant to this Agreement to only one group, whether or not the Person charged by
law to file such Tax Return is a member of the group to which the assets and activities are allocated pursuant to this Agreement. 
  
 State Tax shall mean any state or local jurisdiction Taxes. 
  
 Straddle Period shall mean a taxable period that includes, but does not end on, the Distribution Date. 
  
 Tax or Taxes shall mean all taxes, charges, fees, imposts, levies or
other assessments, including, without limitation, all net income, gross receipts, capital, sales, use, gains, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social
security, unemployment, excise, severance, stamp, occupation. property and estimated taxes, custom duties, fees, assessments and charges of any kind whatsoever, together with any interest and any penalties, fines, additions to tax or additional

  

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amounts imposed by any taxing authority (domestic or foreign) and shall include any transferee liability in respect of Taxes. 
  
 Tax Authority shall mean the IRS and any other domestic or foreign
governmental authority responsible for the administration and collection of Taxes. 
  
 Tax-Free Status of the Distribution shall mean the qualification of the Distribution as a distribution of dELiA*s stock to Alloy stockholders with respect to which gain or loss is not recognized by Alloy,
dELiA*s or their respective stockholders pursuant to Section 355 of the Code and related Code provisions. 
  
 Tax Liabilities shall mean all liabilities for Taxes. 
  
 Tax Returns shall mean all reports, returns, declaration forms and statements filed or required to be filed with respect to Taxes. 
  
 Tax-timing Adjustment shall mean any Adjustment in one Taxable Year
which will result in an offsetting Adjustment or Adjustments (including an Adjustment to the basis of an asset not eligible for depreciation or amortization) in another Taxable Year. 
  
 Taxable Year shall mean the year on the basis of which taxable income is computed. 
  
 Treasury Regulations shall mean the regulations under the Code
promulgated by the United States Department of the Treasury. 
  
 1.2 Other Definitional Provisions. (a) Capitalized terms not otherwise defined in this Agreement shall have the meaning ascribed to them in the Distribution Agreement. 
  

	 	(b)	The words “hereof, “herein”, and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to
any particular provision of this Agreement. 

  

	 	(c)	The terms defined in the singular shall have a comparable meaning when used in the plural, and vice versa. 

  
 1.3 Termination of Taxable Years. For Federal Income Tax purposes, the
Taxable Year of each member of the dELiA*s Group (including the Contributed Subsidiaries) shall end as of the close of the Distribution Date. Alloy and dELiA*s shall, unless prohibited by applicable law, take all action necessary or appropriate to
close the taxable period of each member of the dELiA*s Group for all Tax purposes as of the close of the Distribution Date. 
  

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 ARTICLE II 
  
 ALLOCATION AND PAYMENT 
  
 2.1 Allocation of Taxes. Alloy and dELiA*s each agrees, on its own behalf and on behalf of the Alloy Group and the dELiA*s Group, respectively, to
allocate and pay its respective share of Taxes as provided in this Agreement. 
  

	 	(a)	Except as provided in Section 2.1(b), the Tax Liabilities (including, without limitation, deficiencies) of the Alloy Consolidated Group, the Alloy Group and the dELiA*s Group
for any Pre-Distribution Taxable Period and any Straddle Period shall be allocated between the Alloy Group and the dELiA*s Group based on the following: (i) all assets and activities relating solely to the Alloy Business shall be allocated to,
and treated as assets and activities of, Alloy, (ii) all assets and activities relating solely to the Merchandising Business shall be allocated to, and treated as assets and activities of, dELiA*s and (iii) any assets and activities not
allocated under clauses (i) and (ii) of this Section 2.1(a) shall be allocated to, and treated as assets and activities of, Alloy and/or dELiA*s as reasonably determined by Alloy acting in good faith taking into account the extent to
which the particular asset or activity relates to the Alloy Business, on the one hand, and the Merchandising Business, on the other hand. 

  

	 	(b)	One-half of any Tax Liability arising out of or payable as a result of the Reorganization or the Distribution shall be allocated to Alloy, on the one hand, and one-half of any such
Tax Liability shall be allocated to dELiA*s, on the other hand; provided, however, that to the extent any such Tax Liability results from a Disqualifying Action on the part of a member of the Alloy Group or any event related to any
transaction with respect to Alloy stock, such Tax Liability shall be allocated to Alloy and to the extent any such Tax Liability results from a Disqualifying Action on the part of a member of the dELiA*s Group or any event related to any transaction
with respect to dELiA*s stock, such Tax Liability shall be allocated to dELiA*s; provided further, however, that any such Tax Liability resulting from any transaction with respect to Alloy stock after the Distribution where a member of
the dELiA*s Group, but no member of the Alloy Group, is a party to such transaction, shall be allocated to dELiA*s and any such Tax Liability resulting from any transaction with respect to dELiA*s stock after the Distribution where a member of the
Alloy Group, but no member of the dELiA*s Group, is a party to such transaction, shall be allocated to Alloy. 

  
 2.2 Tax Attributes. (a) Tax attributes for Pre-Distribution Taxable Periods and any Straddle Period shall be allocated to the Alloy Group and
the dELiA*s Group in accordance with the Code and Treasury Regulations (and any applicable state, local and foreign laws or regulations). Alloy and dELiA*s shall jointly determine the amounts of such attributes as of the Distribution Date, or shall
jointly estimate such amounts which are not determinable as of the Distribution Date, and hereby agree to compute all Tax Liabilities for Taxable Years ending after the Distribution Date consistently with that determination. 
  

	 	(b)	 If any member of the Alloy Group or the dELiA*s Group takes any Disqualifying Action that, or if any event related to any transaction with respect to Alloy stock or
dELiA*s stock, results in the recognition of income or gain (or the incurrence of a Tax) arising 

  

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out of the Reorganization or the Distribution that is offset by a loss or other Tax attribute (or credit) of a member of the other group, then Alloy or
dELiA*s, as the case may be, shall pay to the other party an amount equal to (i) the product of (x) the amount of income or gain that was offset by such loss or other Tax attribute, multiplied by (y) 35%, or (ii) the amount of
such credit. Any such payment shall be made within fifteen (15) days of a “determination,” within the meaning of Section 1313(a) of the Code, of such recognition of income or gain (or incurrence of Tax).

  
 2.3 Tax-Timing Adjustments. To the
extent that any portion of any Tax Liability (or Tax benefit) allocated under Section 2.1 relates to a Tax-timing Adjustment, that portion of such Tax Liability (or Tax benefit) shall be allocated to the entity that will receive the benefit (or
detriment) of that Tax-timing Adjustment. For purposes of this Agreement, the fact that the period or periods in which offsetting Adjustments will arise is unknown or not determinable shall not be taken into account. 
  
 2.4 Penalties, Additions to Tax and Interest. Penalties, additions to
Tax and interest on any Tax deficiencies or overpayments will be allocated as the underlying deficiencies or overpayments are allocated under this Agreement. 
  
 2.5 Payment of Taxes. Alloy and dELiA*s each agrees to pay or cause to be paid their respective shares of Taxes as allocated and provided in this
Agreement. 
  

	 	(a)	For any Straddle Period, dELiA*s shall pay to Alloy within fifteen (15) days of the filing of a Federal Income Tax Return by Alloy an amount equal to the allocable Federal
Income Tax liability of the dELiA*s Group determined under Section 2.1(a) and (b), including the dELiA*s Group’s share of estimated Federal Income Taxes. Alloy shall be responsible for the payment to the IRS of the Federal Income Tax
liability of the Alloy Consolidated Group for such Taxable Year. 

  

	 	(b)	For any taxable period for which a Tax Return has not been filed prior to the Distribution, Alloy and dELiA*s shall timely pay to the other party within fifteen (15) days of
the filing of a Tax Return an amount equal to the allocable State Tax liability and allocable federal Tax liability (except for Federal Income Tax liability) of the Alloy Group or the dELiA*s Group, respectively, determined under Section 2.1(a)
and (b), reflected on a Combined Return filed by a member of the other group, including the group’s share of estimated State Taxes. Alloy and dELiA*s shall each be responsible for the payment to the applicable Tax Authority of such Tax
Liabilities that are reflected on a Tax Return filed by a member of their respective groups. 

  
 2.6 Allocation of Estimated Tax Payments. Any payment of estimated Taxes prior to the Distribution shall be allocated to, and be deemed to have
been paid by, Alloy or dELiA*s, as the case may be, as reflected on the books and record of Alloy and its Affiliates. 
  
 2.7 Characterization of Payments. For all Tax purposes, the Alloy Group and the dELiA*s Group agree to treat (i) any payment required by this
Agreement as either a contribution by Alloy to dELiA*s or a distribution by dELiA*s to Alloy, as the case may be, 

  

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occurring immediately prior to the Distribution Date and (ii) any payment of interest or non-federal Taxes by or to a Tax Authority as taxable or
deductible, as the case may be, to the party entitled under this Agreement to retain such payment or required under this Agreement to make such payment, in either case except as otherwise mandated by applicable law. 
  
  
 ARTICLE III 
  
 INDEMNIFICATION 
  
 3.1 Indemnification by Alloy. Alloy shall pay, and shall indemnify and
hold the dELiA*s Group and their respective shareholders, directors, officers, employees, affiliates, agents and successors harmless from and against, without duplication, (i) all Tax Liabilities allocable to the Alloy Group under Article II,
(ii) all Tax Liabilities attributable to Tax Returns required to be filed by the Alloy Group for any Post-Distribution Taxable Period, (iii) all Tax Liabilities incurred by the dELiA*s Group by reason of the breach by Alloy of any of its
covenants hereunder, and (iv) any costs and expenses related to the foregoing (including, without limitation, reasonable attorneys’ fees and expenses). 
  
 3.2 Indemnification by dELiA*s. dELiA*s shall pay, and shall indemnify and hold the Alloy Group and their respective
shareholders, directors, officers, employees, affiliates, agents and successors harmless from and against, without duplication, (i) all Tax Liabilities allocable to the dELiA*s Group under Article II, (ii) all Tax Liabilities attributable
to Tax Returns required to be filed by the dELiA*s Group for any Post-Distribution Taxable Period, (iii) all Tax Liabilities incurred by the Alloy Group by reason of the breach by dELiA*s of any of its covenants hereunder, and (iv) any
costs and expenses related to the foregoing (including, without limitation, reasonable attorneys’ fees and expenses). 
  
 3.3 Payment. If the Indemnifying Party is required to indemnify the Indemnified Party pursuant to this Article III, the Indemnified Party shall
submit its calculations of the amount required to be paid pursuant to this Article III (which shall be net of the Present Value Benefit realized or realizable by the Indemnified Party), showing such calculations in sufficient detail so as to permit
the Indemnifying Party to understand the calculations. Subject to the following sentence, the Indemnifying Party shall pay to the Indemnified Party, no later than ten (10) business days after the Indemnifying Party receives the Indemnified
Party’s calculations, the amount that the Indemnifying Party is required to pay the Indemnified Party under this Article III. If the Indemnifying Party disagrees with such calculations, it must notify the Indemnified Party of its disagreement
in writing within ten (10) business days of receiving such calculations. Any dispute regarding such calculations shall be resolved in accordance with Section 7.12 of this Agreement. 
  
 3.4 Time Limits. Any claim under this Article III with respect to a
Tax Liability must be made no later than thirty (30) days after the expiration of the applicable statute of limitations for assessment of such Tax Liability. 
  

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 ARTICLE IV 
  
 PREPARATION AND FILING OF TAX RETURNS, COOPERATION 
 AND RECORD RETENTION 
  
 4.1 Federal Tax Returns.
Alloy and dELiA*s hereby agree to cooperate fully with each other to meet filing requirements for the Alloy Consolidated Group Tax Returns for any Pre-Distribution Taxable Period and any Straddle Period. Alloy, as agent for the Alloy Consolidated
Group, will be responsible for the preparation and filing of such Tax Return for the Taxable Year ending January 31, 2006. For purposes of this Section 4.1, cooperation includes making available all instructions, workpapers, research, data
and notes of any kind required for the completion of the Tax Return, as well as making available personnel to assist in the consolidation effort. Alloy will be responsible for personnel requirements, including the use of third party contractors.
Interviewing and hiring of third-party contractors will be done by Alloy, and Alloy shall be responsible for paying any fees and expenses of these contractors. Alloy shall deliver a copy of all invoices for these contractors to dELiA*s and dELiA*s
shall pay to Alloy one-half of the fees and expenses of these contractors within fifteen (15) days of receipt by dELiA*s of a copy of any such invoice. Any software license costs specifically related to the Alloy Business or Merchandising
Business shall be borne by the Alloy Group or the dELiA*s Group, respectively. Where software license costs are not discernible as separate group costs, such software license costs will be shared equally. Due dates for information required for the
Alloy Consolidated Group Tax Return will be negotiated between Alloy and dELiA*s and good faith efforts will be made to meet those dates. If a portion of the Taxes shown due on any Alloy Consolidated Tax Return is payable by dELiA*s pursuant to
Section 2.5(a), Alloy shall deliver a copy of such Tax Return to dELiA*s for dELiA*s’ review and consent no later than twenty (20) days prior to the date that Alloy will file such Tax Return together with a statement calculating the
portion of the Taxes payable by dELiA*s. 
  
 4.2 Combined
Returns. Alloy and dELiA*s hereby agree to cooperate fully with each other to meet filing requirements for Combined Returns for any Pre-Distribution Taxable Period and any Straddle Period. Alloy or dELiA*s will be responsible for the preparation
and filing of the Combined Returns required to be filed by law by members of their respective groups for the taxable periods for which the Tax Return has not been filed prior to the Distribution. For purposes of this Section 4.2, cooperation
includes making available all instructions, workpapers, research, data and notes of any kind required for the completion of the Combined Return, as well as making available personnel to assist in the combination effort. The filing party will be
responsible for personnel requirements, including the use of third party contractors. Interviewing and hiring of third-party contractors will be done by the filing party, and the filing party shall be responsible for paying any fees and expenses of
these contractors. The filing party shall deliver a copy of all invoices for these contractors to the nonfiling party and the nonfiling party shall pay to the filing party one-half of the fees and expenses of these contractors within fifteen
(15) days of receipt by the nonfiling party of a copy of any such invoice. Any software license costs specifically related to the Alloy Business or Merchandising Business shall be borne by the Alloy Group or the dELiA*s Group, respectively.
Where software license costs are not discernible as separate group costs, such software license costs will be shared equally. Due dates for information required for the Combined Tax Returns will be 

  

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negotiated between Alloy and dELiA*s and good faith efforts will be made to meet those dates. If a portion of the Taxes shown due on any Combined Return is
payable by the nonfiling party pursuant to Section 2.5(b), the filing party shall deliver a copy of such Tax Return to the nonfiling party for the nonfiling party’s review and consent no later than twenty (20) days prior to the date
that the filing party will file such Tax Return together with a statement calculating the portion of the Taxes payable by the nonfiling party. 
  
 4.3 Separate Returns. Alloy shall prepare and file or cause to be filed any Separate Return that relates to the assets and activities allocable
pursuant to this Agreement to the Alloy Group. dELiA*s shall prepare and file or cause to be filed any Separate Return that relates to the assets and activities allocable pursuant to this Agreement to the dELiA*s Group. If the Person required by law
to file the Separate Return is not a member of the group to which the Separate Return relates, Alloy or dELiA*s, as the case may be, shall cause such Person that is a member of its group to fully cooperate with the group to which such Separate
Return relates in connection with the filing of any such Tax Return. Alloy and dELiA*s shall each deliver to the other a copy of any Separate Return filed by a member of its group within five (5) days of filing any such Separate Return if such
Separate Return may reasonably be required by the other party in connection with the filing of any Tax Return or in connection with the conduct of any Proceeding. 
  
 4.4 Cooperation; Maintenance and Retention of Records. Alloy and dELiA*s shall, and shall cause the Alloy Group and
the dELiA*s Group respectively to, provide the requesting party with such assistance and documents as may be reasonably requested by such party in connection with (i) the preparation of any Tax Return, (ii) the conduct of any Proceeding,
(iii) any matter relating to Taxes of any member of the Alloy Consolidated Group, the Alloy Group or the dELiA*s Group and (iv) any other matter that is a subject of this Agreement. Alloy and dELiA*s shall retain or cause to be retained
all Tax Returns, schedules and workpapers, and all material records or other documents relating thereto, until the expiration of the statute of limitations (including any waivers or extensions thereof) of the taxable periods to which such Tax
Returns and other documents relate or until the expiration of any additional period that any party reasonably requests, in writing, with respect to specific material records or documents. A party intending to destroy any material records or
documents shall provide the other party with reasonable advance notice and the opportunity to copy or take possession of such records and documents. The parties hereto will notify each other in writing of any waivers or extensions of the applicable
statute of limitations that may affect the period for which the foregoing records or other documents must be retained. 
  
 4.5 Exercise of dELiA*s Options by Alloy Employees. Following the Distribution, if any Alloy Employee exercises a dELiA*s Option, dELiA*s shall
promptly notify Alloy (or cause Alloy to be notified) in writing of such exercise. 
  

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 ARTICLE V 
  
 REFUNDS, AUDITS AND ADJUSTMENTS 
  
 5.1 Refunds of Taxes. Except as provided in Section 5.2 below, dELiA*s shall be entitled to all Refunds relating to Taxes (plus any interest
thereon received with respect thereto from the applicable Tax Authority) for which dELiA*s is or may be liable pursuant to Articles II and III of this Agreement, and Alloy shall be entitled to all Refunds relating to Taxes (plus any interest thereon
received with respect thereto from the applicable Tax Authority) for which Alloy is or may be liable pursuant to the provisions of Articles II and III of this Agreement. A party receiving a Refund to which another party is entitled pursuant to this
Agreement shall pay the amount to which such other party is entitled (plus any interest thereon received with respect thereto from the applicable Tax Authority less any Taxes payable by reason of the receipt of such Refund and interest) within ten
(10) days after the receipt of the Refund. 
  
 5.2
Carrybacks. (a) The carryback of any loss, credit or other Tax attribute in any Post-Distribution Taxable Period shall be in accordance with the provisions of the Code and Treasury Regulations (and any applicable state, local or foreign
laws or regulations). 
  

	 	(b)	In the event that the dELiA*s Group realizes any loss, credit or other Tax attribute in any Post-Distribution Taxable Period, such group may elect to carry back such loss, credit or
Tax attribute to a Pre-Distribution Taxable Period. Alloy shall cooperate with dELiA*s in seeking from the appropriate Tax Authority any Refund that reasonably would result from such carryback. dELiA*s shall be entitled to any Refund (or other Tax
benefit) realized by the Alloy Group (including any interest thereon received from such Tax Authority less any Taxes payable by reason of the receipt of such Refund and interest) attributable to such carryback if such Refund is allocable to the
dELiA*s Group under the principles of Section 5.1, within ten (10) business days after such Refund (or other Tax benefit) is received; provided, however, that Alloy shall be entitled to any Refund (or other Tax benefit) that
results from the carryback of a loss, credit or other Tax attribute by the Alloy Group from a Post-Distribution Taxable Period to a Pre-Distribution Taxable Period. 

  

	 	(c)	Except as otherwise provided by applicable law, if the Alloy Group and the dELiA*s Group both may carry back a loss, credit or other Tax attribute to the same Pre-Distribution
Taxable Period, any Refund (or other Tax benefit) resulting therefrom shall be allocated between Alloy and dELiA*s proportionately based on the relative amounts of the Refunds (or other Tax benefits) to which the Alloy Group and the dELiA*s Group,
respectively, would have been entitled had its carrybacks been the only carrybacks to such taxable period. 

  

	 	(d)	To the extent that the amount of a Refund to which a party is entitled under this Section 5.2 is reduced by the applicable Tax Authority as a result of the offset of such
amount against a Tax Liability of the other party, as allocated under this Agreement, the party which receives the benefit of such offset shall appropriately compensate the other party within ten (10) days of receipt of such benefit.

  

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 5.3 Federal Audits and Adjustments. 
  

	 	(a)	Notification of Audit. Each of Alloy and dELiA*s shall give written notice to the other party of any audit of the Alloy Consolidated Group Tax Return for any Pre-Distribution
Taxable Period or Straddle Period within ten (10) business days after receipt of written notification of such audit from the IRS. Such notice shall include a copy of the notification received from the IRS. 

  

	 	(b)	Statute of Limitations. Any extension of the statute of limitations for any Pre-Distribution Taxable Period or Straddle Period shall be with the mutual agreement of Alloy and
dELiA*s. Any dispute regarding the extension of the statute of limitations shall be resolved in accordance with Section 7.12 of this Agreement. 

  

	 	(c)	Audit Activity. Each of Alloy and dELiA*s will coordinate its respective efforts with respect to audits of any Pre-Distribution Taxable Period and any Straddle Period and
will furnish the other with all necessary workpapers and records to respond to audit inquiries. Alloy will be responsible as agent for the Alloy Consolidated Group for responding to information requests from the IRS agents assigned to such audits.
dELiA*s will be responsible for responding to information requests from the IRS regarding issues primarily affecting Tax Liabilities of the dELiA*s Group, but will act through Alloy rather than directly contacting the IRS. 

 

	 	(d)	Notification. Alloy will provide timely reports to dELiA*s detailing significant activities, information requests, issues raised or resolved, and any other relevant
information, such reports to be no less frequent than quarterly. 

  

	 	(e)	Proposed Adjustments. Alloy shall notify dELiA*s of any Adjustment to the Alloy Consolidated Group Tax Returns that relates to dELiA*s within ten (10) business days
after receipt of notification of such Adjustment from the IRS. Alloy shall include in its notice to dELiA*s a copy of the notification received from the IRS. 

  

	 	(i)	Agreed Issues. Alloy will not enter into any agreement with the IRS as agent for the Alloy Consolidated Group with respect to any Adjustment without the written consent of
dELiA*s (not to be unreasonable withheld or delayed) in those cases where the dELiA*s Group would be liable for more than 50% of the proposed Tax Liability (as allocated under this Agreement) attributable to such Adjustment. For purposes of this
paragraph, all determinations shall be made separately for each Adjustment. 

  

	 	(ii)	Unagreed Issues. In the event dELiA*s and Alloy, as the case may be, do not agree to all Adjustments for a Taxable Year, decisions regarding the procedures and preferred
forum for contesting Adjustments on unagreed issues shall be made by whichever of the dELiA*s Group or the Alloy Group is responsible for more than 50% of the cumulative Tax Liability attributable to such Adjustments. The party making the decision
shall consult in good faith with the other party and shall promptly notify the other party of its decision. 

  

	 	(iii)	 Consent Not Required. Notwithstanding any other provision of this Agreement, if the IRS notifies dELiA*s that the IRS will deal directly with the dELiA*s

  

 11 

	 	 
Group with respect to its Tax Liability, dELiA*s shall have full authority to act for the dELiA*s Group and resolve any issue affecting its Tax Liability
without the consent of Alloy. dELiA*s will provide Alloy with a timely report summarizing any such audit activity, such report to be no less frequent than quarterly. 

  

	 	(f)	Federal Refund Claims. If the dELiA*s Group desires to file a claim for Refund with respect to a Taxable Year for which it was a member of the Alloy Consolidated Group, it
shall prepare and submit to Alloy the claim for Refund and a statement specifying the date on which the statute of limitations for filing the Refund claim will expire. Alloy will file the Refund claim prior to the date specified as the last day to
claim the Refund if such a filing is commercially reasonable, and will take any other appropriate action at dELiA*s’ request necessary to secure the Refund. 

  

	 	(g)	Proceedings. Subject to the balance of this Section 5.3(g), Alloy and dELiA*s jointly shall conduct all Proceedings relating to Adjustments of the Alloy Group and the
dELiA*s Group as allocated under this Agreement. Alloy shall have the ability to control the conduct of such Proceedings with respect to issues relating to an Adjustment for which the Alloy Group would be liable for more than 50% of the proposed Tax
Liability (as allocated under this Agreement) attributable to such Adjustment. dELiA*s shall have the ability to control the conduct of such Proceedings with respect to issues relating to an Adjustment for which the dELiA*s Group would be liable for
more than 50% of the proposed Tax Liability (as allocated under this Agreement) attributable to such Adjustment and Alloy shall execute and deliver to dELiA*s any necessary power of attorney. The party with the ability to control the conduct of all
or a portion of the Proceedings pursuant to this Section 5.3(g) shall consult in good faith with the other party, which other party shall be entitled to participate in all conferences, meetings, and other matters related to the resolution of
such Proceedings. 

  
 5.4 Audits and Adjustments
Related to Combined Returns. 
  

	 	(a)	Notification of Audit. Each of Alloy and dELiA*s shall give written notice to the other party of any audit of a Combined Return for any Pre-Distribution Taxable Period
or Straddle Period within ten (10) business days after receipt of written notification of such audit from a Tax Authority. Such notice shall include a copy of the notification received from the relevant Tax Authority. 

 

	 	(b)	Statute of Limitations. Any extension of the statute of limitations for any Pre-Distribution Taxable Period or Straddle Period shall be with the mutual agreement of Alloy and
dELiA*s. Any dispute regarding the extension of the statute of limitations shall be resolved in accordance with Section 7.12 of this Agreement. 

  

	 	(c)	 Audit Activity. Each of Alloy and dELiA*s will coordinate its respective efforts with respect to audits of Combined Returns of any Pre-Distribution Taxable
Period and any Straddle Period and will furnish the other with all necessary workpapers and records to respond to audit inquiries. Alloy and dELiA*s will each be responsible as agent for those Combined Return which are required by law to be filed by
a member of their respective groups (the “Responsible Party” and the other party the “Non-Responsible Party”) for responding to 

  

 12 

	 	 
information requests from the state Tax Authorities regarding such audits. The Non-Responsible Party will be responsible for responding to information
requests regarding issues primarily affecting Tax Liabilities of its group, but will act through the Responsible Party rather than directly contacting the appropriate Tax Authority. 

  

	 	(d)	Notification. With respect to a Combined Return, the Responsible Party will provide timely reports to the Non-Responsible Party detailing significant activities, information
requests, issues raised or resolved, and any other relevant information, such reports to be no less frequent than quarterly. 

  

	 	(e)	Proposed Adjustments. The Responsible Party shall notify the Non-Responsible Party of any Adjustment to a Combined Return that relates to the Non-Responsible Party within ten
(10) business days after receipt of notification of such Adjustment from the applicable state Tax Authority. The Responsible Party shall include in its notice to the Non-Responsible Party a copy of the notification received from such Tax
Authority. 

  

	 	(i)	Agreed Issues. The Responsible Party will not enter into any agreement with a state Tax Authority as agent for the Non-Responsible Party with respect to any Adjustment in
connection with a Combined Return without the written consent of the Non-Responsible Party (not to be unreasonable withheld or delayed) in such cases where the Non-Responsible Party’s group would be liable for more than 50% of the proposed Tax
Liability (as allocated under this Agreement) at issue. For purposes of this paragraph, all determinations shall be made separately for each Adjustment. 

  

	 	(ii)	Unagreed Issues. In the event Alloy and dELiA*s, as the case may be, do not agree to all Adjustments with respect to a Combined Return for a Taxable Year, decisions regarding
the procedures and preferred forum for contesting Adjustments on unagreed issues shall be made by whichever of the Alloy Group or the dELiA*s Group is responsible for more than 50% of the cumulative Tax Liability attributable to such Adjustments.
The party making the decision shall consult in good faith with the other party and shall promptly notify the other party of its decision. 

  

	 	(f)	State Refund Claims. If the Non-Responsible Party desires to file a claim for Refund with respect to a Taxable Year for which it filed a Combined Return, it shall prepare and
submit to the Responsible Party the claim for Refund and a statement specifying the date on which the statute of limitations for filing the Refund claim will expire. The Responsible Party will file the Refund claim prior to the date specified if
such filing is commercially reasonable and will take any other appropriate action at the Non-Responsible Party’s request necessary to secure the Refund. 

  

	 	(g)	 State Tax Proceedings. Subject to the balance of this Section 5.4(g), Alloy and dELiA*s jointly shall conduct all Proceedings relating to Adjustments of
the Alloy Group and the dELiA*s Group allocated under this Agreement in connection with a Combined Return. Alloy shall have the ability to control the conduct of such Proceedings with respect to issues relating to an Adjustment for which the Alloy
Group would be liable for more than 50% of the proposed Tax Liability (as allocated under this Agreement) attributable to such Adjustment and 

  

 13 

	 	 
dELiA*s shall execute and deliver to Alloy any necessary power of attorney. dELiA*s shall have the ability to control the conduct of such Proceedings with
respect to issues relating to an Adjustment for which the dELiA*s Group would be liable for more than 50% of the proposed Tax Liability (as allocated under this Agreement) attributable to such Adjustment and Alloy shall execute and deliver to
dELiA*s any necessary power of attorney. The party with the ability to control the conduct of all or a portion of the Proceedings pursuant to this Section 5.4(g) shall consult in good faith with the other party, which other party shall be
entitled to participate in all conferences, meetings, and other matters related to the resolution of such Proceedings. 

  
 5.5 Separate Return Matters. The Alloy Group and the dELiA*s Group will be responsible for and manage the Separate Return Proceedings which relate
to their group and the other party shall cause the members of its group to fully cooperate with the group to which the Separate Return relates in connection with any such Proceeding. 
  
 5.6 Payment of Costs. All costs incurred, whether external or internal (such as in-house tax and legal department
salaries and other personnel), with respect to a Proceeding shall be borne by the party with respect to which the costs relate. All other costs relating to Tax Returns or Proceedings not otherwise provided for in this Agreement shall be allocated
50% to the Alloy Group and 50% to the dELiA*s Group. 
  
  
 ARTICLE VI 
  
 TAX-FREE STATUS OF THE DISTRIBUTION 
  
 6.1 Representations and Warranties. 
  

	 	(a)	dELiA*s. dELiA*s hereby represents and warrants that (i) it has examined (A) the Closing Agreement, (B) the Opinion, (C) each submission to the IRS in
connection with the Closing Agreement Request, (D) the representation letter from Alloy addressed to Weil, Gotshal & Manges LLP supporting the Opinion, (E) the representation letter from dELiA*s addressed to James K. Johnson, Jr.,
Chief Financial Officer of Alloy, supporting certain of the representations made in the letter referenced in clause (D) above (specifically representations III.16, 18, 19, 25, 26 and 34) and (F) any other materials delivered or deliverable
by Alloy in connection with the rendering by Counsel of the Opinion and the entering into by the IRS of the Closing Agreement (all of the foregoing, collectively, the “Tax Materials”) and (ii) the facts presented and the
representations made therein, to the extent descriptive of the dELiA*s Group (including the business purposes for the Distribution and the representations in the Tax Materials to the extent that they relate to the dELiA*s Group and the plans,
proposals, intentions and policies of the dELiA*s Group), are, or will be from the time presented or made through and including the time of the Distribution, true, correct and complete in all respects. 

  

	 	(b)	 Alloy. Alloy hereby represents and warrants that (i) it has examined the Tax Materials and (ii) the facts presented and the representations made
therein, to the extent descriptive of the Alloy Group (including the business purposes for the Distribution and the representations in the Tax Materials to the extent that they relate to the Alloy Group and the plans, proposals, intentions and
policies of Alloy), are, or will be from the time presented or 

  

 14 

	 	 
made through and including the time of the Distribution, true, correct and complete in all respects. 

  
 6.2 Restrictions Relating to the Distribution. 
  

	 	(a)	General. 

  

	 	(i)	dELiA*s shall not, nor shall dELiA*s permit any member of the dELiA*s Group to, take or fail to take, as applicable, any Disqualifying Action. 

  

	 	(ii)	Prior to the first day following the second anniversary of the Distribution and except as otherwise provided in this Agreement, dELiA*s shall not, nor shall dELiA*s permit any
member of the dELiA*s Group to, take any action (including entering into any agreement, understanding or arrangement or any negotiations with respect to any transaction or series of transactions) within its control that, or fail to take any action
within its control the failure of which, would result in a more than immaterial possibility that the Tax-Free Status of the Distribution would be jeopardized (any such action or failure to act, a “Potential Disqualifying Action”),
including an action or failure to act that would be reasonably likely to be inconsistent with any representation made in the Tax Materials, unless, prior to the taking of the Potential Disqualifying Action, dELiA*s delivers to Alloy either
(i) a ruling from the IRS (a “Ruling”) or (ii) an unqualified opinion reasonably acceptable to Alloy from a nationally recognized law firm reasonably acceptable to Alloy (a “Subsequent Opinion”), in either
case, to the effect that the Potential Disqualifying Action would not jeopardize the Tax-Free Status of the Distribution. 

  

	 	(b)	Continuation of the Alloy and Merchandising Business. Until the first day after the second anniversary of the Distribution, Alloy and dELiA*s shall, respectively, continue
the active conduct of the Alloy Business and the Merchandising Business as conducted immediately prior to the Distribution. 

  

	 	(c)	Continuity of Business. 

  

	 	(i)	Until the first day after the second anniversary of the Distribution, (A) dELiA*s shall not voluntarily dissolve or liquidate and (B) except in the ordinary course of
business, no member of the dELiA*s Group shall sell, transfer or otherwise dispose of or agree to dispose of assets (including, for this purpose, any shares of capital stock of such members) that, in the aggregate, constitute more than fifty percent
(50%) of the gross assets of any such member, unless, prior to the consummation of such transaction, dELiA*s delivers to Alloy either (i) a Ruling or (ii) a Subsequent Opinion, in either case, to the effect that consummating such
transaction would not jeopardize the Tax-Free Status of the Distribution. The amount of gross assets of the members of the dELiA*s Group shall be based on the fair market value of each such asset as of the Distribution. 

  

	 	(ii)	 Sales, transfers or other dispositions by a member of the dELiA*s Group to another member of the dELiA*s Group shall not be included in any 

  

 15 

	 	 
determination under this Section 6.2(c) as to whether more than fifty percent (50%) of the gross assets of the member has been sold, transferred or
otherwise disposed of. 

  

	 	(d)	Intercompany Indebtedness. Until the first day after the second anniversary of the Distribution, neither Alloy nor dELiA*s shall, nor shall they permit any member of their
respective groups to, create, incur, assume or allow to exist any indebtedness between a member of the Alloy Group, on the one hand, and any member of the dELiA*s Group, on the other hand, other than payables incurred in the ordinary course of
business. 

  

	 	(e)	Certain Presumptions. For the purposes of this Section 6.2, but without creating any implication that any of the following is true, it shall be presumed that
(i) the acquisitions by Mathew L. Feshbach and any of his Affiliates (including, but not limited to, MLF Investments, LLC, MLF Holdings, LLC, MLF Capital Management L.P., MLF Offshore Portfolio Company, L.P., and MLF Cayman GP, Ltd.) of shares
of Alloy stock prior to the Distribution Date; (ii) the acquisition by Robert E. Bernard and other members of senior management of dELiA*s stock immediately prior to the Distribution, (iii) the acquisition of dELiA*s Common Stock in the
Rights Offering, and (iv) the acquisition, if any, by MLF Investments, LLC of dELiA*s Common Stock pursuant to the exercise of warrants issued to MLF Investments, LLC in connection with the Backstop Agreement are acquisitions of stock that are
part of a plan or series of related transactions that includes the Distribution. 

  
 6.3 Cooperation and Other Covenants. 
  

	 	(a)	Notice of Subsequent Information. Each of Alloy, on the one hand, and dELiA*s, on the other hand, shall furnish the other with a copy of any document or information that
could be expected to have an impact on the Tax-Free Status of the Distribution. 

  

	 	(b)	Post-Closing Cooperation. 

  

	 	(i)	Alloy shall cooperate with dELiA*s and shall take (or refrain from taking) all such actions as dELiA*s may reasonably request in connection with obtaining any ruling or opinion
referred to in section 6.2. Such cooperation shall include providing any information, representations and/or covenants reasonably requested by dELiA*s (or counsel for dELiA*s) to enable dELiA*s to obtain and maintain either a Subsequent Opinion or a
Ruling. From and after any date on which Alloy or dELiA*s makes any representation or covenant to counsel for purposes of obtaining a Subsequent Opinion or to the IRS for the purpose of obtaining a Ruling and (with respect solely to any
representation given) until the first day after the second anniversary (or such later date as may be agreed upon at the time such representation is made) of the date of such Subsequent Opinion or Ruling, the party making such representation or
covenant shall take no action that would have caused such representation to be untrue or covenant to be breached unless both parties determine, in their reasonable discretion, which discretion shall be exercised in good faith solely to preserve the
Tax-Free status of the Distribution, that such action would not jeopardize the Tax-Free Status of the Distribution. Such representations and warranties, once made in writing, shall be considered Tax Materials subject to the provisions of
Section 6.1. 

  

 16 

	 	(ii)	dELiA*s shall not file any request for a Ruling without the prior written consent of Alloy, which consent shall not be unreasonably withheld or delayed, if a favorable Ruling would
be reasonably likely to have the effect of creating any actual or potential obligations of, or limitations on, any member of the Alloy Group. 

  

	 	(c)	Notice. 

  

	 	(i)	Until the first day after the second anniversary of the Distribution, dELiA*s shall give Alloy at least twenty (20) days prior written notice of its or any of its
Affiliates’ intention to effect any transaction with respect to its capital structure, whether through issuance, redemption or otherwise. Each such notice shall set forth the terms and conditions of the proposed transaction, including, as
applicable, the nature of any related action proposed to be taken, the approximate number of shares proposed to be issued, redeemed or transferred (directly or indirectly, in accordance with the provisions of Section 355(e) of the Code), the
timetable for such action or transaction, and the number of shares otherwise then owned by the other party to the action or transaction (directly or indirectly, in accordance with the provisions of Section 355(e) of the Code), all with
sufficient particularity to enable Alloy to review and comment on such transaction. All information provided by dELiA*s to Alloy pursuant to this Section 6.3 shall be kept confidential by Alloy to the same extent as that provided in
Section 6.6 of the Distribution Agreement. 

  

	 	(ii)	If dELiA*s receives a Subsequent Opinion or Ruling, dELiA*s shall notify Alloy (if Alloy is not otherwise provided with a copy of the Subsequent Opinion or Ruling), promptly, but in
any event within two (2) Business Days, after the receipt of the Subsequent Opinion or Ruling. 

  
  
 ARTICLE VII 
  
 MISCELLANEOUS 
  
 7.1 Termination of Prior Tax Separation Agreements. This Agreement shall take effect on the Distribution Date and shall replace all other
agreements, whether or not written, in respect of any Taxes between or among the Alloy Group on the one hand and the dELiA*s Group on the other. All such replaced agreements shall be canceled as of the Distribution to the extent they relate to the
dELiA*s Group, and any rights or obligations of the Alloy Group or the dELiA*s Group existing thereunder thereby shall be fully and finally settled without any payment by any party thereto. 
  
 7.2 Merger or Consolidation. Neither Alloy nor dELiA*s (in either
case, the “Transaction Party”) shall (i) consolidate with or merge into any Person or permit any Person to consolidate with or merge into the Transaction Party (other than a merger or consolidation in which the Transaction
Party is the surviving or continuing corporation) or (ii) sell, assign, transfer, lease or otherwise dispose of, in one transaction or a series of related transactions, all or substantially all of the assets of the Transaction Party, unless the
resulting, surviving or transferee Person shall expressly assume, by instrument in form and substance reasonably 

  

 17 

 
satisfactory to the other party, all of the obligations of the Transaction Party under this Agreement. 
  
 7.3 Subsidiaries. Each of the parties hereto shall cause to be
performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Subsidiary (as defined in the Distribution Agreement) of such party or by any entity that is contemplated to be a
Subsidiary of such party on or after the Distribution Date. 
  
 7.4 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of New York, without reference to choice of law principles, including matters of construction, validity and performance. 

 
 7.5 Amendment. This Agreement may be amended, modified or
supplemented only by a written Agreement signed by all of the parties hereto. 
  
 7.6 Notices. Notices, requests, permissions, waivers, referrals and all other communications hereunder shall be in writing and shall be deemed to have been duly given if signed by the respective persons giving
them (in the case of any corporation, the signature shall be by an officer thereof) and delivered by hand or by telecopy or on the date of receipt indicated on the return receipt if mailed (registered or certified, return receipt requested, properly
addressed and postage prepaid): 
  
 If to Alloy, to: 

 
 Alloy, Inc. 
 151 West 26th Street 
 New York, NY 10001 
 Attention: General Counsel 
 Fax: 212-244-4311 
  
 If to dELiA*s, to: 
  
 dELiA*s, Inc. 
 435 Hudson Street 
 New York, NY 10014 
 Attention: Chief Executive Officer 
 Fax: (212) 590-6226 
  
 Such names and addresses may be changed by notice given in accordance with this Section 7.6 
  
 7.7 Entire Agreement. This Agreement contains the entire understanding of the parties hereto with respect to the subject matter contained herein,
and supersedes and cancels all prior agreements, negotiations, correspondence, undertakings and communications of the parties, oral or written, respecting such subject matter. 
  

 18 

 7.8 Headings; References. The article. section and paragraph headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. All references herein to “Articles” or “Sections” shall be deemed to be references to Articles or Sections hereof
unless otherwise indicated. 
  
 7.9 Counterparts. This
Agreement may be executed in one or more counterparts and each counterpart shall be deemed to be an original, but all of which shall constitute one and the same original. 
  
 7.10 Parties in Interest; Assignment; Successor. Neither this Agreement nor any of the rights, interest or
obligations hereunder shall be assigned by any of the parties hereto without the prior written consent of the other parties. Subject to the preceding sentence, this Agreement shall inure to the benefit of and be binding upon Alloy and dELiA*s and
their respective successors and permitted assigns. Nothing in this Agreement, express or implied, is intended to confer upon any other Person any rights or remedies under or by reason of this Agreement. 
  
 7.11 Confidentiality. Each of Alloy and dELiA*s shall hold, and each
of the Alloy Group and the dELiA*s Group shall use its reasonable best efforts to hold, in strict confidence all information concerning the other party obtained by it prior to the Distribution Date or furnished to it by such other party pursuant to
this Agreement pursuant to and in accordance with the terms of Section 6.6 of the Distribution Agreement. 
  
 7.12 Arbitration. Resolution of any and all disputes arising from or in connection with this Agreement, whether based on contract, tort, statute or
otherwise, including, but not limited to, disputes over arbitrability and disputes in connection with claims by third parties shall be exclusively governed by and settled in accordance with the provisions of Article X of the Distribution Agreement,
provided, however, that nothing contained in Section 10.4 of the Distribution Agreement shall preclude either party from seeking or obtaining injunctive relief or equitable or other judicial relief to enforce such Section 10.4, or, pending
resolution of disputes under such Section, to preserve the status quo or to enforce an arbitral award rendered pursuant to such Section. 
  
 7.13 Severability; Enforcement. The invalidity of any portion hereof shall not affect the validity, force or effect of the remaining portions
hereof. If it is ever held that any restriction hereunder is too broad to permit enforcement of such restriction to its fullest extent, each party agrees that a court of competent jurisdiction may enforce such restriction to the maximum extent
permitted by law, and each party hereby consents and agrees that such scope may be judicially modified accordingly in any proceeding brought to enforce such restriction. 
  
 7.14 Effective Date. This Agreement shall become effective only upon the occurrence of the Distribution. 

 

 19 

 IN WITNESS WHEREOF, each of the parties has caused this Tax Separation Agreement to be executed on its
behalf by its officers thereunto duly authorized, all as of the day and year first written above. 
  
  

			
	 ALLOY, INC.

		
	 By:
	 	/s/ James K. Johnson, Jr.
	 Name:
	 	James K. Johnson, Jr.
	 Title:
	 	Chief Operating Officer and Chief Financial Officer

  
  
  

			
	 dELiA*s, INC.

		
	 By:
	 	/s/ Robert E. Bernard
	 Name:
	 	Robert E. Bernard
	 Title:
	 	Chief Executive Officer

  

 20Managed Services Agreement, dated as of December 19, 2005

 Exhibit 10.2 
  
 MANAGED SERVICES AGREEMENT 
  
 This Managed Services Agreement (#2005-292) is entered into as of December 19, 2005 (the “Execution Date”) by and between Alloy Inc., a Delaware
corporation having an office at 151 W. 26th Street, 11th Floor, New York, NY 10001 (“ALLOY”), and dELiA*s, Inc. having an office at 435 Hudson Street, New York, NY 100114 (“dELiA*s”). 

 
 In the event of a conflict among this Managed Services Agreement,
Statement(s) of Work and/or Change Order(s), the order of precedence among the provisions of them shall be: first, this Managed Services Agreement, second, Change Order(s), and third, Statement(s) of Work. 
  
 The parties hereby agree as follows: 
  

	1.	DEFINITIONS 

  
 (a) “Agreement” means this Managed Services Agreement together with each Statement of Work and each Change Order, attached to this Managed
Services Agreement and executed by both parties’ duly authorized representatives. 
  
 (b) “Change Order” means a document in either paper or electronic form (e.g., e-mail that can be reasonably dated, traced and/or otherwise identified) that originates from a representative of dELiA*s,
and is accepted by ALLOY, authorizing additional services or changes to services under a Statement of Work. 
  
 (c) “Data” means data, software, content and other information including, but not limited to, writings, designs, specifications, reproductions,
pictures, drawings, or other graphical representations, and any works of a similar nature. 
  
 (d) “Effective Date” means the date that Alloy completes a spin off of dELiA*s. 
  
 (e) “Managed Services” means recurring services for which a monthly fee is charged as set forth in each Statement of Work or Change Order.

  
 (f) “Statement of Work” means a document attached to
this Agreement that describes Services to be provided by ALLOY (and any additional related terms and conditions) under this Agreement. 
  
 (g) “Services” means Managed Services or other services to be provided by ALLOY in accordance with this Agreement, as specified in Statement(s)
of Work and Change Orders. 
  
 (h) “Tools” means
ALLOY’s proprietary information and know-how used at any time by ALLOY in the conduct of its business, including without limitation, technical information, designs, templates, software modules, software code, processes, methodologies, systems
used to create computer programs or software, procedures, code books, computer programs, plans, or any other similar information including improvements, modifications or developments thereto. 

	2.	SERVICES, FEES, TERM AND GENERAL PAYMENT TERMS 

  
 (a) dELiA*s, on behalf of itself and its subsidiaries, hereby retains ALLOY to provide the Services in accordance with this Agreement, as specified on the
Statement(s) of Work or Change Order(s). 
  
 (b) Upon termination
of this Agreement for any reason whatsoever by dELiA*s (other than a termination pursuant to the provisions of Section 7 hereof), dELiA*s shall pay to Alloy a decommissioning fee in an amount equal to all fees for Managed Services that would be
due, but for the expiration or termination, during the two (2) months after the date of such expiration or termination, provided, however, in the event that this Managed Services Agreement terminates on the End Date (as defined below) no
decommissioning fee shall be owed. Additional termination or decommissioning fees may be detailed in a Statement of Work or Change Order. 
  
 (c) Unless otherwise provided for in a Statement of Work, services to be provided under a Statement of Work for Managed Services shall have an initial
term of one (1) year from the Effective Date, which term shall renew automatically for one (1) year periods unless either party provides written notice to the other party of at least one year . Notwithstanding anything contained herein to
the contrary, this Managed Services Agreement and any Statement of Work or Change Order shall terminate no later than the fifth annual anniversary of the Effective Date (the “End Date”). 
  
 (d) Except as otherwise provided in a Statement of Work or Change Order,
dELiA*s shall pay ALLOY its then-current published rates for Services provided, as such rates may be adjusted from time to time. All ALLOY rates are exclusive of any applicable sales, use, value-added, or other federal, state or local taxes, or any
import duties or tariffs imposed on the subject matter or transactions under this Agreement, and dELiA*s shall be responsible for all such taxes, duties and tariffs, except that ALLOY shall be responsible for any corporate franchise taxes imposed on
ALLOY by law and for any taxes based on its net income or gross receipts. 
  
 (e) Except as otherwise provided above or in a Statement of Work, ALLOY shall invoice dELiA*s for payments due under this Agreement on a monthly basis, with the understanding that Managed Services shall be billed in
advance. Each ALLOY invoice shall be due net thirty (30) days from the date of invoice. dELiA*s acknowledges and agrees that under the terms of this Agreement, no dELiA*s purchase order (“PO”) is required for the payment of ALLOY
invoices by dELiA*s. 
  
 (f) dELiA*s shall pay in full all
reasonable travel expenses incurred by ALLOY that result from providing the Services to dELiA*s under this Agreement. 
  
 (g) dELiA*s shall notify ALLOY of any dispute regarding an invoice within sixty (60) days of the date of invoice. If dELiA*s fails to notify ALLOY of
any dispute with respect to an invoice within such sixty day period, dELiA*s shall be deemed to have accepted the invoice in its entirety. The parties agree to work in good faith to resolve any dispute in a timely manner. dELiA*s shall not have any
right to withhold or setoff any amounts due ALLOY that are not disputed in good faith. 
  
 (h) Notwithstanding any other provision of this Agreement, if dELiA*s fails to pay any ALLOY invoice in full by the due date, ALLOY may, in its sole discretion, suspend all or any part of the Services to dELiA*s upon
thirty (30) days written notice until payment is received or, if such failure remains uncured for an additional ten (10) days after such notice to dELiA*s, terminate Services in whole or part. ALLOY also reserves the right to charge
interest at the maximum rate allowed by law on all amounts past due, and to assert appropriate liens to ensure payment. The rights and remedies set forth herein are in 

  

 Page 2 of 9 

 
addition to any other rights or remedies ALLOY may have against dELiA*s in connection with any non-payment. 
  
 (i) In the event that Alloy is substantially the prevailing party in an
action to collect any sum due under this Agreement, ALLOY shall be entitled to recover its related costs and expenses (including without limitation reasonable attorneys’ fees and court costs) from dELiA*s. 
  

	3.	CONFIDENTIAL INFORMATION 

  
 (a) Each party acknowledges that it may be the recipient of confidential information (“Confidential Information”) of the other party including,
without limitation, software, computer programs, object code, source code, database schemas, specifications, flow charts, marketing plans, financial information, business plans and procedures, the terms of this Agreement, employee information, and
other information that the receiving party may reasonably understand, from legends, the nature of such information or the circumstances of its disclosure, to be confidential. Confidential Information does not include (i) information
independently developed by the recipient without reference to the other party’s Confidential Information; (ii) information in the public domain through no wrongful act of the recipient, or (iii) information received by the recipient
from a third party who was rightfully in possession of such information and had no obligation to refrain from disclosing it. 
  
 (b) Except as expressly authorized in this Agreement, or as required by law, the party that is the recipient of Confidential Information of the other
party agrees that during the term hereof, and at all times thereafter, it shall not use, commercialize or disclose such Confidential Information to any person or entity, except to its own employees having a need to know and to such other recipients
as the other party may approve in writing. Each party shall use at least the same degree of care in safeguarding the other party’s Confidential Information as it uses in safeguarding its own Confidential Information, but in no event shall less
than reasonable care be exercised. 
  
 (c) All Confidential
Information of ALLOY disclosed to dELiA*s shall remain the exclusive property of ALLOY. All Confidential Information of dELiA*s disclosed to ALLOY shall remain the exclusive property of dELiA*s. 
  
 (d) Each party agrees that it will not remove any proprietary, trademark,
copyright, confidentiality, patent or other intellectual property notice or marking from an original or any copy of any software, documentation, display, media or other materials or Confidential Information, delivered or disclosed to such party, by
the other party or under this Agreement. 
  
 (e) dELiA*s agrees
that it shall not (nor shall it permit anyone else to) decompile, disassemble, or modify any software delivered or disclosed to dELiA*s by ALLOY or separate any such software into components or its component files, or recreate, or attempt to
determine the makeup of any such software. dELiA*s agrees that all information discovered through any failure to comply with the preceding sentence is and shall at all times remain the exclusive property and Confidential Information of ALLOY.

  
 (f) In the event that a party is required by law or judicial
or administrative process to disclose Confidential Information of the other party, such party shall use all reasonable efforts to promptly notify the other party and allow the party a reasonable opportunity to oppose disclosure. In addition, a party
shall furnish only the portion of the Confidential Information that it is legally required to disclose and shall use all reasonable efforts to obtain reliable assurances that confidential treatment will be accorded the Confidential Information.

  

 Page 3 of 9 

	4.	INTELLECTUAL PROPERTY 

  
 (a) Nothing in this Agreement shall be deemed to authorize dELiA*s to use any copyright, name, trademark, service mark, or patent or other intellectual
property right of ALLOY. 
  
 (b) dELiA*s acknowledges and agrees
that, except and unless certain discrete and identifiable work product has been developed specifically and uniquely for dELiA*s under a Statement of Work (or pursuant to another, separately negotiated agreement with its own terms and conditions,
signed by both parties), and such work product has been mutually agreed to and identified by the parties in such a Statement of Work (or other, separate agreement) as work product, ALLOY is and shall at all times remain the exclusive owner of all
hardware and software (including without limitation all Tools) upon which, and from which, all ALLOY Managed Services are provided hereunder. 
  
 (c) dELiA*s represents and warrants that (A) all materials and information delivered to ALLOY by dELiA*s, and ALLOY’s use thereof in connection
with transactions contemplated under this Agreement, does not and shall not, infringe any copyright, trademark, trade secret, patent or other intellectual property right, (B) that dELiA*s has the right to use, disclose, publish, translate,
reproduce, and deliver all such materials and information, and (C) ALLOY has the right to use, disclose, publish, translate, reproduce and deliver all such materials and information in accordance with this Agreement. dELiA*s shall indemnify and
hold harmless ALLOY, its directors, officers, employees and agents, against any and all losses, liabilities, costs and expenses (including reasonable attorneys’ fees and court costs), arising out of or related to any claim that the materials or
information, or use, disclosure, publication, translation or reproduction thereof, infringes a copyright, trademark, trade secret, patent or other intellectual property right. 
  
 (d) With respect to any materials or other information supplied by dELiA*s, ALLOY is hereby granted the nonexclusive
irrevocable right and license, without the right of sublicense, to use the same solely in connection with providing Services hereunder. Except as specified in the preceding sentence, ALLOY is acquiring no rights in, or title to, the materials or
information supplied by dELiA*s hereunder. 
  

	5.	DISCLAIMER OF WARRANTY AND LIMITATIONS ON LIABILITY 

  
 (A) EXCEPT AS SET FORTH IN THIS AGREEMENT, ALLOY MAKES NO WARRANTY EXPRESS OR IMPLIED AND EXPRESSLY DISCLAIMS ALL WARRANTIES EXPRESS OR IMPLIED, WITH
RESPECT TO SERVICES OR THE RESULTS OBTAINED FROM ALLOY’S WORK, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. 
  
 (B) EXCEPT AS SET FORTH IN A STATEMENT OF WORK, UNDER NO CIRCUMSTANCES SHALL ALLOY BE LIABLE FOR ANY DIRECT, SPECIAL,
INCIDENTAL, INDIRECT, STATUTORY, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OF ANY KIND WHATSOEVER, OR FOR ANY LOST PROFITS, BUSINESS OR REVENUE, LOSS OF USE OR GOODWILL, OR OTHER LOST ECONOMIC ADVANTAGE, ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE BREACH HEREOF, OR THE SERVICES TO BE PROVIDED HEREUNDER, WHETHER SUCH CLAIMS ARE BASED ON BREACH OF CONTRACT, STRICT LIABILITY, TORT, ANY FEDERAL OR STATE STATUTORY CLAIM, OR ANY OTHER LEGAL THEORY, EVEN IF ALLOY KNEW, SHOULD HAVE
KNOWN, OR HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, UNLESS SUCH DAMAGES RESULTED FROM ALLOY’S FRAUDULENT OR INTENTIONAL MISCONDUCT. THE FOREGOING LIMITATION SHALL SURVIVE AND 

  

 Page 4 of 9 

 
APPLY EVEN IF ANY LIMITED REMEDY SPECIFIED IN THIS AGREEMENT IS DETERMINED TO HAVE FAILED OF ITS ESSENTIAL PURPOSE. 
  
 (c) dELiA*s EXPRESSLY ACKNOWLEDGES AND AGREES THAT EXCEPT AS SPECIFICALLY
SET FORTH IN THIS AGREEMENT OR IN A STATEMENT OF WORK, IN NO EVENT SHALL ALLOY BE HELD LIABLE TO, OR BE REQUIRED TO INDEMNIFY, dELiA*s FOR ANY DAMAGES dELiA*s INCURS OR ALLEGES TO INCUR IN CONNECTION WITH THE SERVICES, THIS AGREEMENT OR ANY BREACH
OF ANY REPRESENTATION, WARRANTY OR COVENANT HEREIN CONTAINED UNLESS SUCH DAMAGE IS DIRECTLY ATTRIBUTABLE TO ALLOY’S FRAUDULENT OR INTENTIONAL MISCONDUCT. TO THE EXTENT THAT dELiA*s SUFFERS DAMAGES RELATED TO ALLOY’S FAILURE TO MEET A
SERVICE LEVEL COMMITMENT SET FORTH IN A STATEMENT OF WORK, dELiA*s SHALL BE ENTITLED TO THE REMEDIES EXPRESSLY SET FORTH IN SUCH STATEMENT OF WORK. 
  

	6.	AUDIT 

  
 dELiA*s and ALLOY agree to use commercially reasonable efforts to maintain complete and accurate records containing all data reasonably required for
verification of its compliance with the terms of this Agreement. 
  

	7.	TERMINATION 

  
 (a) Except as otherwise provided in this Agreement, either party may terminate this Agreement or any Statement of Work, and/or any related licenses
granted hereunder or thereunder, by giving the other party written notice to that effect, effective on the date of receipt of such notice, if: 
  

	 	(i)	the other party enters into liquidation, whether or not voluntarily, or a receiver is appointed to all or any material part of its assets, or the other party becomes bankrupt or
insolvent or enters into any arrangement with its creditors, or takes or suffers any similar action in consequence of debt or becomes unable to pay its debts as they become due; or 

  

	 	(ii)	the other party materially breaches this Agreement and fails to cure such breach within thirty (30) days of delivery to the breaching party of written notice of such breach or
if breach is unable to be cured within thirty (30) days, but the breaching party diligently commences curing such breach within thirty (30) days and expects to cure such breach within a reasonable time thereafter. 

 
 (b) If a license granted by ALLOY to dELiA*s is terminated for any reason,
dELiA*s shall, on the effective date of such termination, cease using any and all of the subject matter of the license and dELiA*s shall promptly deliver to ALLOY all originals and all copies of any and all of such subject matter and any related
documentation. 
  

	8.	FORCE MAJEURE 

  
 A party shall be relieved from an obligation (other than the obligation to make payments or an obligation under Section 3 or 9(b)) while a cause,
outside of its reasonable control, and that it cannot reasonably circumvent, prevents the performance of such obligation. 
  

	9.	RELATIONSHIP OF THE PARTIES; CONTENT 

  

 Page 5 of 9 

 (a) Nothing in this Agreement shall be construed as making either party an agent of the other party, and
neither party shall have the power to bind the other party or to contract in the name of, or create a liability against, the other party. Neither party shall be responsible for the acts or defaults of the other party or any of the other party’s
employees or agents. The parties are independent contractors with respect to all matters arising under this Agreement. Nothing in this Agreement shall be deemed to establish a partnership, joint venture, association or employment relationship
between the parties. With respect to its employees, a party shall remain responsible, and shall indemnify and hold harmless the other party, for the withholding and payment of all federal, state and local personal income, wage, earnings, occupation,
social security, worker’s compensation, unemployment, sickness and disability insurance taxes, payroll levies, or employee benefit obligations. 
  
 (b) To the extent ALLOY has actual control over systems or facilities; ALLOY agrees to use commercially reasonable security consistent with its business
practices and facilities. The parties acknowledge that the Internet is neither owned nor controlled by any one entity and that one or more third parties may gain access to ALLOY systems. Electronic mail and other transmissions passing through ALLOY
systems or over the Internet are not secure, and ALLOY cannot guarantee the security or privacy of any of the information or communications passing through ALLOY systems. NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, ALLOY SHALL NOT
BE LIABLE FOR ANY LOSS OR DAMAGE CAUSED BY A BREACH OF SECURITY UNLESS SUCH LOSS OR DAMAGE WAS DIRECTLY ATTRIBUTABLE TO ALLOY’S FRAUDULENT OR INTENTIONAL MISCONDUCT. ALLOY will not intentionally monitor or disclose any private electronic
communications, except to the extent necessary to identify or resolve system problems or as otherwise permitted or required by law. ALLOY does, however, reserve the right to monitor transmissions, other than private electronic communications, as
necessary to provide the services hereunder and otherwise to protect the rights and property of ALLOY. Notwithstanding the foregoing, ALLOY does not assume any liability for any action or inaction with respect to such communication or content posted
or provided by an authorized or unauthorized third party. ALLOY is a distributor and not a publisher of dELiA*s’ data or any other content provided by dELiA*s or others (including end users). Because communication of data and other content over
the Internet occurs in real time, ALLOY cannot, and does not intend to, screen, police, edit, or monitor communications and content. IN NO EVENT WILL ALLOY BE LIABLE FOR ANY LOSS OR DAMAGE CAUSED BY A USER’S RELIANCE ON ANY THIRD PARTY DATA
OR OTHER CONTENT OBTAINED THROUGH OR FROM dELiA*s. 
  

	10.	FURTHER ASSURANCES 

  
 The parties agree to do all such things and to execute such further documents as may reasonably be required to give full effect to this Agreement.

  

	11.	WAIVER 

  
 No waiver of any part of this Agreement shall be effective unless made in writing by the waiving party. No waiver of any breach of this Agreement shall
constitute a waiver of any other breach of the same, or any other provision, of this Agreement. 
  

 Page 6 of 9 

	12.	ENTIRE AGREEMENT AND CONSTRUCTION 

  
 This Agreement constitutes the entire agreement between the parties with respect to the subject matter thereof and supersedes all prior oral and written
understandings, arrangements and agreements between the parties relating to such subject matter. The parties agree that there are no other representations or warranties relating to the subject matter of this Agreement. Headings are included in this
Agreement for convenience only and shall not affect the meaning or construction of this Agreement’s provisions. 
  

	13.	AMENDMENT 

  
 This Agreement may be modified or amended only by means of a writing executed by both parties. 
  

	14.	ASSIGNIBILITY AND RESALE 

  
 Neither party may assign, transfer, sublicense, resell or encumber by security interest or otherwise this Agreement without obtaining the prior written
consent of the other party, which consent shall not be unreasonably withheld or delayed. Alloy shall have the right to terminate this Agreement immediately if dELiA*s withholds its consent. If dELiA*s unreasonably withholds its consent then the
decommissioning fee owed shall be increased from two (2) to six (6) months and if dELiA*s reasonably withholds its consent then no decommissioning fee shall be owed. Notwithstanding anything contained herein to the contrary, dELiA*s hereby
acknowledges and agrees that ALLOY shall in its sole discretion work with third parties to provide any or all of the Services. Alloy shall remain liable for the actions of any such third party but only to the extent Alloy would be liable under the
terms and conditions of this Agreement if it had committed such actions. 
  

	15.	COMPLIANCE WITH LAWS 

  
 Each party shall carry out the obligations contemplated by this Agreement and shall otherwise deal with the subject matter hereof in compliance with all
applicable laws, rules and regulations, of all governmental authorities, including, without limitation, any applicable legal restrictions on exports, and shall, at its own expense, obtain all permits and licenses required in connection with the
subject matter hereof. Without limiting the foregoing, each party agrees that it shall comply fully with all applicable export and import laws, rules and regulations of the United States and other jurisdictions so that nothing provided by it under
this Agreement is either (a) exported or imported, whether directly or indirectly, in violation of such laws, rules or regulations; or (b) used for any illegal purpose, including without limitation the proliferation of nuclear, chemical or
biological weapons. 
  

	16.	SUCCESSORS AND ASSIGNS 

  
 This Agreement shall inure to the benefit of, and be binding upon the parties, their successors and permitted assigns. 
  

	17.	SEVERABILITY 

  
 If any provision of this Agreement is held to be unenforceable, all remaining provisions shall remain in full force and effect. 
  

 Page 7 of 9 

	18.	SURVIVAL 

  
 Sections 2(b), 2(g), 3, 5, 9, 10, 12, 14, 16, 17, 19 and 20 shall survive the expiration or termination of this Agreement. 
  

	19.	ENFORCEMENT 

  
 (a) This Agreement shall be governed by and construed in accordance with the law of the State of New York, applied without regard to its law of conflicts.

  

	20.	NOTICES 

  
 (a) Any notice or other communication to the parties shall be sent to the contact points identified below or at such other places as they may from time to
time specify by notice in writing to the other party. Any such notice or other communication shall be in writing and shall be given by delivery to the designated party of the addressee by pre-paid courier or facsimile with confirmation. Any such
notice or other communication shall be deemed to have been given when the designated party of the addressee receives such notice. 
  
 (b) Point of Contact addresses are as follows: 
  
 For ALLOY: (Technical) 
  
 Alloy, Inc. 
 151 West 26th St. 
 New York, NY
10001 
 Attn: CTO 
  
 For ALLOY: (Contract and Admin.) 
  
 Alloy, Inc. 
 151 West 26th Street 
 11th Floor 
 New York, NY 10001 
 Attn: General Counsel 
  
 For dELiA*s: (Technical) 
  
 dELiA*s, Inc. 
 435 Hudson Street 

New York, NY 10014 
 Attn: Chief Operating
Officer 
  
 For dELiA*s: (Contractual and Admin.) 
  

 Page 8 of 9 

 dELiA*s, Inc. 
 435 Hudson Street 
 New York, NY 10014 
 Attn: General Counsel 
  
 IN WITNESS WHEREOF, the parties have caused this Services Agreement to be executed by their duly authorized representatives as of the date first written
above. 
  

							
	Alloy, Inc.	    	dELiA*s, Inc.
				
	By:	 	 /s/ James K. Johnson, Jr.
	    	By:	 	 /s/ Robert E. Bernard

	 	 	
	    	 	 	

	Name:	 	 James K. Johnson, Jr.
	    	Name:	 	Robert E. Bernard
	Title:	 	 Chief Operating Officer and Chief Financial Officer
	    	Title:	 	Chief Executive Officer

  

 Page 9 of 9

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