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                                                                     Exhibit 4.1

                                  DEMAND NOTE

                                                              September 28, 2001
                                                              New York, New York

     ON DEMAND as set forth herein, for value received, ALLOY, INC., a Delaware
corporation ("Maker"), promises to pay to the order of DANIEL E. DUCKWORTH (the
"Holder"), at the address of the Holder at One Competition Way, Mt. Vernon, IN
47620, or at such other place or places or to such other party or parties as the
Holder may from time to time designate, the Final Principal Amount, if any, as
determined below, without interest; provided, that if this Note is not paid in
full upon demand for payment thereof given in accordance with the provisions
hereof, interest on the unpaid balance shall thereafter be payable on demand at
an interest rate per annum equal to fifteen percent (15%) per annum.

     This Note is issued pursuant to the provisions of that certain Agreement
and Plan of Reorganization, dated as of September 28, 2001 (the "Reorganization
Agreement"), by and among Maker, Dan's Competition, Inc., an Indiana
corporation, Alloy Acquisition Sub, Inc., a Delaware corporation, Dianna J.
Duckworth ("Dianna") and the Holder, and is one of two demand notes issued
pursuant to the Reorganization Agreement, the other of which has been issued to
Dianna (Dianna and the Holder hereinafter referred to as the "Noteholders").
Pursuant to terms and conditions set forth in the Registration Rights Agreement
of even date herewith between Maker and the Noteholders (the "Registration
Rights Agreement"), Maker has agreed to use all commercially reasonable efforts
to file a Registration Statement on Form S-3 or any successor thereto for a
public offering of all of the Restricted Stock (as such term is defined in the
Registration Rights Agreement) within thirty (30) days of the consummation of
the transactions contemplated by the Reorganization Agreement, and to use all
commercially reasonable efforts to cause the same to be declared effective by
the Securities Exchange Commission (the "Commission").

     The Holder shall have the ability to demand payment of the Final Principal
Amount of this Note, if any, only during the period beginning on the date which
is exactly thirteen (13) months after the Closing Date (as defined in the
Reorganization Agreement) (the "Anniversary Date") and ending at 5:00 p.m. local
New York, New York time on the date which is exactly sixty (60) days after the
Anniversary Date (the "Expiration Date").

     The contingent principal amount of this Note at any time outstanding (the
"Contingent Principal Amount") shall be determined as follows:  On the date
hereof, this Note shall have a Contingent Principal Amount of $7,200,000.
Thereafter, on the date that is exactly two (2) months after the Closing Date
and on each subsequent monthly anniversary date thereafter up to and including
the Anniversary Date (the monthly period ending on such date that is two months
after the Closing Date and each monthly period thereafter, a "Monthly Period"),
Maker shall calculate a monthly balance (each, a "Monthly Balance"), which shall
be equal to the product of (x) the average closing sale price of one share of
common stock, par value $0.01 per share, of Maker (the "Common Stock") as quoted
on the NASDAQ National Market System for each of the trading days in such
Monthly Period (the "Average Closing Price") multiplied by (y)

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74,074.07 (the "Number of Monthly Shares"); provided, that if the Common Stock
is not listed for trading on the NASDAQ National Market System for all or any of
the days in such Monthly Period, the average closing sale price of the Common
Stock on any such day shall be equal to the average of the closing bid and asked
prices of the Common Stock on each such day as quoted in the Over-The-Counter
Market Summary or the last reported sale price of the Common Stock on each such
day on the principal exchange or market on which the Common Stock is then listed
for trading, whichever is applicable.

     Notwithstanding the foregoing, if any registration statement covering all
of the Registrable Securities (as such term is defined in the Registration
Rights Agreement) has been filed pursuant to the Registration Rights Agreement
and (A) has not been declared effective by the Commission within thirty (30)
days after the date on which it is filed, or (B) has been declared effective by
the Commission but (i) the ability of the Noteholders to sell shares of Common
Stock pursuant to such registration statement has been suspended as contemplated
by the provisions of Sections 4(c) or 4(e) of the Registration Rights Agreement,
or (ii) the Company has withdrawn such registration statement for any reason
other than one for which one or more of the Noteholders is required to indemnify
the Company pursuant to the provisions of Section 7(b) of the Registration
Rights Agreement and a new registration statement covering all of the
Registrable Securities has not yet been declared effective by the Commission
(the period following the date thirty (30) days after the date on which the
initial registration statement is filed and prior to the date that such
registration statement has been declared effective shall be the "Initial
Suspension Period" and the period during which the Noteholders' ability to sell
shares pursuant to such registration statement has been suspended or during
which such registration statement has been withdrawn and a new registration has
not been declared effective shall be the "Suspension Period"), there shall be no
Average Closing Price calculated for the Initial Suspension Period or Suspension
Period, as applicable, and the Average Closing Price for any Monthly Period
during which the Initial Suspension Period or Suspension Period, as applicable,
has occurred shall equal the greater of (i) the average price per share of
Common Stock obtained by the Noteholders upon all Sales of shares of Common
Stock during such Monthly Period, if any such Sales shall have been effected by
either Noteholder, and (ii) the average closing sale price of one share of
Common Stock for each of the trading days in such Monthly Period other than the
trading days during the Initial Suspension Period or Suspension Period, as
applicable, occurring during such Monthly Period. If (i) there have not been at
least ten (10) trading days in a Monthly Period during which the Initial
Suspension Period or Suspension Period, as applicable, has not been in effect
and (ii) the Noteholders have not otherwise effected any Sales during such
Monthly Period, then a Monthly Balance for such Monthly Period shall not be
calculated, the Contingent Principal Amount of this Note shall not be adjusted
with respect to such Monthly Period, and the Number of Monthly Shares that would
have been subject to the calculation of the Monthly Balance for such Monthly
Period shall be added to the Number of Monthly Shares for purposes of
calculating the Monthly Balances hereunder for each of the remaining Monthly
Periods through the Monthly Period ending on the Anniversary Date on a pro rata
basis based upon the number of remaining Monthly Periods with respect to which a
calculation of a Monthly Balance is scheduled to be made. The foregoing
provisions of this paragraph shall not apply if the affected Monthly Period is
the Monthly Period ending on the Anniversary Date (provided that the Number of
Monthly Shares for purposes of the calculation
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of the Monthly Balance for such Monthly Period may be adjusted in accordance
with the terms of this paragraph).

     At the same time as it calculates each Monthly Balance, Maker shall
calculate the then current Contingent Principal Amount of this Note, which shall
be equal, as of any date, to $7,200,000 less the sum of the Monthly Balances
determined through such date, and shall provide a copy of such calculations to
the Holder. Maker's calculation of the Monthly Balances and the Contingent
Principal Amounts shall be final and binding on Maker and the Holder absent
manifest error.

     Unless this Note earlier shall have been deemed satisfied and cancelled in
accordance with the provisions set forth below, on the Anniversary Date, the
final principal amount of this Note shall become fixed (the "Final Principal
Amount") at an amount equal to the lesser of (i) the then current Contingent
Principal Amount and (ii) an amount equal to (A) $7,200,000 minus (B) an amount
equal to 60 % of the aggregate gross proceeds received (or deemed to have been
received pursuant to the provisions set forth below) by the Noteholders from
Sales (as defined below) by the Noteholders of Common Stock issued by Maker
pursuant to the provisions of the Reorganization Agreement less any brokerage
commissions incurred in connection with such Sales ("Sale Proceeds") during the
period from the Closing Date through and including the Anniversary Date.

     This Note shall be deemed to have been satisfied in full and shall have no
further force or effect after the first to occur of  (A) the Expiration Date, if
the Holder shall not have previously made a demand for payment hereunder, (B)
the date on which the then current Contingent Principal Amount is less than or
equal to zero ($0), (C) on the Anniversary Date if the Final Principal Amount is
less than or equal to zero ($0) and (D) the first date prior to the Anniversary
Date on which the Noteholders shall have received aggregate Sale Proceeds of
$12,000,000 or more.  Upon the satisfaction of this Note pursuant to the
provisions of this paragraph, the Holder shall, at the request of Maker, deliver
this Note to Maker for cancellation.

     In order that Maker may maintain an accurate record of the proceeds
received by the Noteholders from Sales of Common Stock, the Holder covenants to
deliver to Maker written notice of the date, number of shares and gross Sales
proceeds received upon any Sales of Common Stock by the Holder (together with a
statement of brokerage commissions incurred in connection with such Sales) on or
prior to the Anniversary Date within five (5) business days after consummation
of any such Sale. For purposes hereof, a "Sale" shall mean (A) completion of any
agreement to sell any Common Stock, (B) entrance into any contract to sell any
Common Stock prior to the Anniversary Date which has a closing date with respect
to all or any portion of the Common Stock covered thereby after the Anniversary
Date, or (C) a pledge or other disposition of, or the entrance into any
agreement or transaction which is designed to, or might reasonably be expected
to, result in the disposition (whether by actual disposition or effective
economic disposition due to cash settlement or otherwise) of, shares of Common
Stock, including, without limitation, by means of a gift or other transaction
for no consideration; provided, however, that any such gift or conveyance by the
Holder to a family member of the Holder or to an estate planning vehicle of any
sort shall not be deemed a "Sale" for purposes of this Note; provided further,
however, that any sale, transfer, pledge or other disposition by such

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family member or estate planning vehicle that would otherwise constitute a
"Sale" hereunder shall be deemed to constitute a "Sale" for the purposes of this
Note. Notwithstanding the foregoing, if any Sale shall occur (i) in a manner
other than pursuant to an arms' length transaction with a party that is
unrelated to and otherwise unaffiliated with either of the Noteholders and (ii)
at a price that is less than the average closing sale price of the Common Stock
as quoted on the NASDAQ National Market System for each of the five (5) trading
days preceding the date of such Sale (the "Average Sales Price"), then, for
purposes of the provisions of this Note, such Sale shall be deemed to have
occurred at the Average Sales Price.

     Maker will pay on demand, without limitation, all reasonable attorneys'
fees, out-of-pocket expenses reasonably incurred by the Holder's attorneys and
all costs reasonably incurred by the Holder, including, without limitation costs
and expenses associated with travel on behalf of the Holder, which costs and
expenses are directly or indirectly related to the protection or enforcement of
any of the Holder's rights against Maker or any endorser or guarantor of this
Note (whether or not suit is instituted by or against the Holder) following a
breach by Maker of any of its obligations hereunder.

     No delay or omission on the part of the Holder in exercising any right
hereunder shall operate as a waiver of such right or of any other right of the
Holder, nor shall any delay, omission or waiver on any one occasion be deemed a
bar to or waiver of the same or any other right on any future occasion.  Maker
and every endorser or guarantor of this Note, regardless of the time, order or
place of signing, waive presentment, demand, protest and notices of every kind
and assents to any extension or postponement of the time or terms of payment
hereunder or any other indulgence, to any substitution, exchange or release of
collateral, and to the addition or release of any other party or person
primarily or secondarily liable.

     None of the terms or provisions of this Note may be excluded, modified, or
amended except by a written instrument duly executed on behalf of the Holder and
Maker expressly referring hereto and setting forth the provisions so excluded,
modified or amended.

     The term "Holder" as used in this Note includes the Holder's heirs,
personal representatives, executors and permitted assigns, provided that, the
Holder may not assign this Note without the prior written consent of Maker. This
Note shall be binding upon Maker and its successors and assigns.

     This Note, together with the Reorganization Agreement and Registration
Rights Agreement, contain the entire agreement among the Holder and Maker with
respect to the matters covered hereby, and supersedes every course of dealing,
other conduct, oral agreement and representation previously made by the Holder.
Each provision of this Note shall be interpreted as consistent with existing
law, and shall be deemed amended to the extent necessary to comply with any
conflicting law. If a Court deems any provision invalid, the remainder of this
Note shall remain in full force and effect.

     ALL RIGHTS AND OBLIGATIONS HEREUNDER SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO ITS CONFLICTS OF LAWS PROVISIONS.

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     MAKER AND THE HOLDER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE ALL
RIGHTS TO TRIAL BY JURY IN ANY LEGAL ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT
BY THE HOLDER AGAINST MAKER ON ANY MATTER WHATSOEVER ARISING OUT OF, IN
CONNECTION WITH OR RELATED TO THIS NOTE.

                 [Remainder of Page Intentionally Left Blank]

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     IN WITNESS WHEREOF, the undersigned has caused this Note to be executed by
its duly authorized officer as of the date first above written.

                                     ALLOY, INC.

                                      /s/ Matthew C. Diamond
                                     -------------------------------------------
                                     (Signature)

                                     By: Matthew C. Diamond
                                         ---------------------------------------
                                     (Print or type name)

                                     Its: Chairman/CEO
                                          --------------------------------------
                                     (Title or Capacity)

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