Document:

<PAGE>

                                                                    EXHIBIT 10.4

                                   ALLOY, INC.

                                      AND

                              JAMES K. JOHNSON, JR.

                              EMPLOYMENT AGREEMENT

         This Agreement (the "AGREEMENT"), by and between Alloy, Inc. (the
"COMPANY") and James K. Johnson, Jr. ("EXECUTIVE") is effective as of February
1, 2004 (the "EFFECTIVE DATE"). In consideration of the mutual promises and
covenants contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby mutually
acknowledged, the Company and Executive hereby agree as follows:

         1.       Employment. Subject to the terms and conditions of this
Agreement, the Company will employ Executive, and Executive agrees to serve the
Company, as Chief Operating Officer reporting to the Board of Directors of the
Company (the "BOARD"). Executive shall have the responsibilities, duty and
authority commensurate with the position of Chief Operating Officer customarily
exercised by a person holding such position in a company of the size and nature
of the Company. The principal location at which Executive will perform such
services will be the Company's corporate headquarters in New York, New York.
Executive shall also be nominated for appointment as a director during each
election held during the Term (as defined below) for directors of the class of
which Executive is a member.

         2.       Term of Employment. Subject to the terms of this Agreement,
Executive's employment will begin on February 1, 2004 (the "COMMENCEMENT DATE")
and will continue until the third anniversary date of the Commencement Date (the
"INITIAL TERM"), provided that on the third anniversary of the Commencement Date
and each subsequent anniversary of the Commencement Date, the term of
Executive's employment hereunder will be automatically extended for an
additional period of one year (each a "SUBSEQUENT TERM") unless either Executive
or the Company has given written notice at least 120 days prior to the effective
date of such automatic extension that such automatic extension will not occur (a
"NON-RENEWAL NOTICE"). The Initial Term and any Subsequent Term are referred to
herein as the "TERM."

         3.       Compensation.

                  (a)      Base Salary. While Executive is employed hereunder,
the Company will pay Executive a base salary at the annual rate of $400,000 (the
"BASE SALARY"). The Base Salary shall be reviewed by the Compensation Committee
of the Board of the Company (the "COMMITTEE") as soon as practicable after the
end of each fiscal year during the Term, beginning with the fiscal year ending
on January 31, 2005. Based upon such reviews, the Committee annually may
increase, but shall not decrease, the Base Salary by an amount not to exceed ten
percent (10%) of the Base Salary then in effect. Any increase in Base Salary
shall not serve to limit or reduce any other obligation to Executive under this
Agreement. The Base Salary will be payable in substantially equal installments
in accordance with the Company's payroll practices as in effect from time to
time. The Company shall deduct from each such installment all amounts required
to be deducted or withheld under applicable law or under any Executive benefit
plan in which Executive participate.

<PAGE>

                  (b)      Annual Cash Bonus. Beginning with the Company's
fiscal year ending on January 31, 2005, as soon as practicable after the end of
each fiscal year of the Company, the Committee shall review Executive's
performance under this Agreement as part of the Committee's annual review of
Executive's performance in order to determine the appropriate cash bonus
Executive should receive for such year. Executive's annual cash bonus shall be
at a target of no less than fifty percent (50%) of his then current Base Salary
(the "TARGET AMOUNT"), with a maximum annual cash bonus of one hundred percent
(100%) of his then current Base Salary. The actual amount of Executive's annual
bonus, if any, shall be based on the degree to which the Company met its annual
performance objectives (the "PERFORMANCE OBJECTIVES") in the prior fiscal year,
which Performance Objectives shall be established annually by the Committee in
consultation with Executive and the other senior executives of the Company
promptly after the Company's annual budget has been established by the Board;
provided, that such Performance Objectives may thereafter be adjusted to reflect
the actual or contemplated results of any significant corporate events occurring
during such fiscal year. It is the expectation of the Company and Executive that
Executive (i) shall be entitled to receive the Target Amount if the Company
meets the Performance Objectives within an acceptable range as determined by the
Committee, (ii) may receive less than the Target Amount if such Performance
Objectives are not met and (iii) may receive up to the maximum bonus if such
Performance Objectives are exceeded substantially. Executive shall be paid his
annual bonus no later than other senior executives of the Company are paid their
annual bonuses, and in any event not later than thirty (30) days after the
completion of the audit for such fiscal year.

                  (c)      Additional Compensation. Beginning with the Company's
fiscal year ending on January 31, 2005, Executive shall be eligible to receive a
long-term incentive award equal in value to one hundred fifty percent (150%) of
his then current Base Salary (the "LTI TARGET AMOUNT"), with a maximum award
equal in value to two hundred percent (200%) of his then current base salary, in
any event, in annual equity grant value under the appropriate bonus plan of the
Company then in effect, any such award to be made by the Committee within thirty
(30) days after the completion of the audit for the prior fiscal year. All such
awards shall, unless the Executive and Committee otherwise agree, be made so
that two-thirds (-2/3) in value of such grant is made in the form of restricted
stock awards with a three (3) year cliff vesting and one-third (-1/3) in value
shall be made in the form of stock options that shall vest in three equal
installments on each anniversary date of the grant thereof. The Executive shall
be granted awards in the LTI Target Amount at the start of each fiscal year of
the Term, with the actual amount of the long-term incentive awards granted to
Executive to be based on the degree to which the Company met the Performance
Objectives in such fiscal year. It is the expectation of the Company and
Executive that Executive (i) shall be entitled to receive the LTI Target Amount
if the Company meets the Performance Objectives within an acceptable range as
determined by the Committee, (ii) may receive less than the LTI Target Amount if
such Performance Objectives are not met and (iii) may receive up to the maximum
long-term incentive award if such Performance Objectives are exceeded
substantially. Provision shall be made in the restricted stock grants and option
agreements to require Executive to return to the Company the shares of
restricted stock in excess of the number of shares actually awarded and that the
options in excess of the number of options actually awarded shall be cancelled
if the Committee determines that Executive has not earned the full LTI Target
Amount. In making such equity grants, the value thereof shall be determined by
the Committee in good faith in accordance with such methodology or methodologies
as may be used by it to determine the equity grants to be made to

                                       2
<PAGE>

its senior executives generally; provided, that the stock price used in making
such determination shall be equal to the greater of (i) the Fair Market Value
per share of common stock of the Company (as such term is defined in the option
or incentive plan(s) under which such award is made) and (ii) the average of the
closing sales prices for the common stock of the Company on its primary trading
market in the twenty (20) trading days prior to the effective date of such
equity grant. The remaining terms of such equity grants, if any, shall be
determined by the Committee in accordance with the terms of the option or
incentive plan(s) under which such grants are made and on a basis consistent
with the restricted stock grants previously awarded to Executive.

                  (d)      General Provisions. All shares of common stock or
other equity securities awarded to Executive pursuant to the preceding
provisions shall be registered on Form S-3, S-8 or any successor from or other
applicable form under the Securities Act of 1933, and the Company shall, subject
to the provisions of the appropriate equity plan or plans under which they are
granted, seek to keep such registration effective at all required times. All
unvested shares and options, if any, granted pursuant to the preceding
subsections shall vest automatically, and the Company's repurchase rights, if
any, shall, unless Executive and the Company otherwise shall agree as of the
date of the grant or award thereof, terminate automatically with respect to, and
without any action on the part of Executive or the Company on the date of a
Change of Control (as defined below).

                  (e)      Change of Control. For purposes of this Agreement, a
"CHANGE OF CONTROL" means that any of the following events has occurred:

                           (A)      Any person (as such term is used in Section
                  13(d) of the Securities Exchange Act of 1934 (the "EXCHANGE
                  ACT"), other than the Company, any Executive benefit plan of
                  the Company or any entity organized, appointed or established
                  by the Company for or pursuant to the terms of any such plan,
                  together with all "affiliates" and "associates" (as such terms
                  are defined in Rule 12b-2 under the Exchange Act) becomes the
                  beneficial owner or owners (as defined in Rule I 3d-3 and
                  13d-5 promulgated under the Exchange Act), directly or
                  indirectly, of more than 50% of the outstanding equity
                  securities of the Company, or otherwise becomes entitled,
                  directly or indirectly, to vote more than 50% of the voting
                  power entitled to be cast at elections for directors ("VOTING
                  POWER") of the Company;

                           (B)      A consolidation or merger (in one
                  transaction or a series of related transactions) of the
                  Company pursuant to which the holders of the Company's equity
                  securities immediately prior to such transaction or series of
                  related transactions would not be the holders, directly or
                  indirectly, immediately after such transaction or series of
                  related transactions of more than 50% of the Voting Power of
                  the entity surviving such transaction or series of related
                  transactions;

                           (C)      The sale, lease, exchange or other transfer
                  (in one transaction or a series of related transactions) of
                  all or substantially all of the assets of the Company; or

                                       3
<PAGE>

                           (D)      The liquidation or dissolution of the
                  Company or the Company ceasing to do business.

                  (f)      Vacation. Executive will be entitled to paid vacation
in each fiscal year and paid holidays and personal days in accordance with the
Company's policies for its senior executives as in effect from time to time, but
not less than 28 days paid vacation in each calendar year. Accrued unused
vacation may be carried over from year to year, but will be deemed forfeited if
not used within the first fiscal quarter of the succeeding year.

                  (g)      Fringe Benefits. Executive will be entitled to
participate in the same manner as other senior executives of the Company in any
Executive benefit plans which the Company provides or may establish for the
benefit of its senior executives generally (including, without limitation, group
life, disability, medical, dental and other insurance, tax benefit and planning
services, 401(k), retirement, pension, profit-sharing and similar plans)
(collectively, the "FRINGE BENEFITS"), provided that the Fringe Benefits will
not include any stock option or similar plans relating to the grant of equity
securities of the Company.

                  (h)      Reimbursement of Expenses. The Company will reimburse
Executive for all ordinary and reasonable out-of-pocket business expenses that
are incurred by Executive in furtherance of the Company's business in accordance
with the Company's policies with respect thereto as in effect from time to time.

                  (i)      Indemnification. The Company shall indemnify
Executive to the fullest extent permitted by its charter and by-laws and by
applicable law against all costs, charges and expenses, including, without
limitation, attorneys' fees, incurred or sustained by Executive in connection
with any action, suit or proceeding to which Executive may be made a party by
reason of being an officer, director or Executive of the Company. In connection
with the foregoing, Executive shall be covered under all liability insurance
policies that protect other officers of the Company.

                  (j)      Payment Of Professional Fees. The Company shall pay
on Executive's behalf all statements rendered to Executive by Executive's
attorneys, accountants and other advisors for reasonable fees and expenses, up
to a maximum of $10,000, in connection with the negotiation and preparation of
this Agreement. The Company shall pay Executive, on or prior to such date as
Executive shall be required to pay federal, state or local taxes with respect to
the Company's payment of such professional fees, an additional payment (the
"GROSS-UP PAYMENT") in an amount sufficient to fully reimburse Executive with
respect to all federal, state and local taxes with respect to the Company's
payment of such professional fees and with respect to receipt of the Gross-Up
Payment.

         4.       Termination.

                  (a)      Death Or Disability. This Agreement and the Term
shall terminate automatically upon Executive's death. If the Company determines
in good faith that the Disability of Executive has occurred (pursuant to the
definition of "Disability" set forth below), it may give to Executive written
notice of its intention to terminate Executive's employment. In such event,
Executive's employment with the Company shall terminate effective on the
thirtieth

                                       4
<PAGE>

day after receipt by Executive of such notice given at any time after a period
of one hundred twenty (120) consecutive days of Disability or a period of one
hundred eighty (180) days of Disability within any twelve (12) consecutive
months, and, in either case, while such Disability is continuing ("DISABILITY
EFFECTIVE DATE"); within the thirty (30) days after such receipt, Executive
shall not have returned to full-time performance of Executive's duties. For
purposes of this Agreement, "DISABILITY" means Executive's inability to
substantially perform his duties hereunder, with reasonable accommodation, as
evidenced by a certificate signed either by a physician mutually acceptable to
the Company and Executive or, if the Company and Executive cannot agree upon a
physician, by a physician selected by agreement of a physician designated by the
Company and a physician designated by Executive; provided, however, that if such
physicians cannot agree upon a third physician within thirty (30) days, such
third physician shall be designated by the American Arbitration Association.
Until the Disability Effective Date, Executive shall be entitled to all
compensation provided for under Section 3 hereof. It is understood that nothing
in this Section 4 shall serve to limit the Company's obligation sunder Section 5
hereof.

                  (b)      By The Company For Cause. The Company may terminate
Executive's employment at any time during the Term immediately for "Cause." For
purposes of this Agreement, "CAUSE" shall mean (i) Executive's conviction of a
felony, either in connection with the performance of his obligations to the
Company or which otherwise materially and adversely affects his ability to
perform such obligations or materially and adversely affects the business
activities, reputation, goodwill or image of the Company, (ii) the willful gross
neglect or malfeasance by Executive in the performance of his duties hereunder
or (iii) Executive's breach in any material respect of any applicable
non-competition and confidentiality agreement between the Company and Executive,
which breach is not cured within any applicable cure period; provided, however,
that for the purposes of determining whether conduct constitutes willful gross
neglect or malfeasance, no act on Executive's part shall be considered "willful"
unless it is done by Executive in bad faith and without reasonable belief that
Executive's action was in the best interests of the Company. Notwithstanding the
foregoing, the Company may not terminate Executive's employment for Cause unless
(i) a determination that Cause exists is made and approved by a majority of the
Board, (ii) Executive is given at least thirty (30) days written notice of the
Board meeting called to make such determination, and (iii) Executive and his
legal counsel are given the opportunity to address such meeting.

                  (c)      By Executive For Good Reason. During the Period of
Employment, Executive's employment hereunder may be terminated by Executive for
Good Reason upon fifteen (15) days' written notice. For purposes of this
Agreement, "GOOD REASON" shall mean the occurrence of any of the following,
without Executive's prior written consent:

                           (i)      Assignment to Executive of any duties
inconsistent in any material respect with Executive's position (including
status, offices, titles and reporting relationships), authority, duties or
responsibilities as contemplated by Section 1 of this Agreement, or any other
action by the Company which results in a significant diminution in such
position, authority, duties or responsibilities, excluding any isolated and
inadvertent action not taken in bad faith and which is remedied by the Company
within ten (10) days after receipt of notice thereof given by Executive;
Executive; provided, that Executive's duties, authority or responsibilities
shall not be

                                       5
<PAGE>

deemed to have been reduced solely as a result of the sale, closure or spin-off
by the Company of one or more of its operating divisions or lines of business;
and provided further that Executive shall not be entitled to terminate this
Agreement for "Good Reason" if (i) Executive is employed as Chief Operating
Officer of the Company and maintains his position as Chief Operating Officer and
adds the position of Chief Financial Officer or is designated solely as Chief
Financial Officer of the Company instead of as Chief Operating Officer, or (ii)
Executive is employed solely as Chief Financial Officer and is removed from that
position but is offered a position with the Company with comparable authority,
duties and responsibilities, such as Chief Business Development Officer;

                           (ii)     Any failure by the Company to comply in any
material respect with any of the provisions of Section 3 of this Agreement other
than an isolated and inadvertent failure not committed in bad faith and which is
remedied by the Company within ten (10) days after receipt of notice thereof
given by Executive;

                           (iii)    Executive being required to relocate to a
principal place of employment more than fifty (50) miles from his principal
place of employment with the Company in New York, New York;

                           (iv)     Delivery by the Company of a Non-Renewal
Notice discontinuing the automatic extension provision of Section 2 of this
Agreement;

                           (v)      Failure by the Company to elect Executive to
the position(s), including Board membership, set forth in Section 1, in
compliance with the terms of Section 1;

                           (vi)     Any purported termination by the Company of
Executive's employment otherwise than as expressly permitted by this Agreement;
or

                           (vii)    Failure by the Company to obtain the
assumption of this Agreement by any successor to the Company or any entity that
acquires all or substantially all of the assets of the Company.

                  (d)      Other Than For Cause Or Good Reason. Executive or the
Company may terminate this Agreement for any reason other than for Good Reason
or Cause, respectively, upon thirty (30) days written Notice of Termination (as
defined below) to the Company or Executive, as the case may be. If Executive
terminates the Agreement for any reason, he shall have no liability to the
Company or its subsidiaries or affiliates as a result thereof. If the Company
terminates the Agreement, or if the Agreement terminates because of the death of
Executive, the obligations of the Company shall be as set forth in Section 5
hereof.

                  (e)      Notice Of Termination. Any termination by the Company
or by Executive shall be communicated by a Notice of Termination to the other
party hereto given in accordance with this Agreement. For purposes of this
Agreement, a "NOTICE OF TERMINATION" means a written notice which (i) indicates
the specific termination provision in this Agreement relied upon, (ii) sets
forth in reasonable detail, if necessary, the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated, and (iii) if the Date of Termination (as defined below) is other than
the date of receipt of such notice,

                                       6
<PAGE>

specifies the termination date. The failure by Executive or Company to set forth
in the Notice of Termination any fact or circumstance which contributes to a
showing of the basis for termination shall not waive any right of such party
hereunder or preclude such party from asserting such fact or circumstance in
enforcing his or its rights hereunder.

                  (f)      Date Of Termination. "DATE OF TERMINATION" means the
date specified in the Notice of Termination; provided, however, that if
Executive's employment is terminated by reason of death or Disability, the Date
of Termination shall be the date of death of Executive or the Disability
Effective Date, as the case may be.

         5.       Severance Compensation.

                  (a)      Definition of Accrued Obligations. For purposes of
this Agreement, "ACCRUED OBLIGATIONS" means (i) the portion of Executive's Base
Salary as has accrued prior to the Date of Termination and that has not yet been
paid, (ii) an amount equal to the value of Executive's accrued unused vacation
days (calculated at the Base Salary), (iii) the amount of any bonus earned and
accrued but not paid as of the Date of Termination, which amount shall include a
pro rata portion of any bonus which would have been earned if such termination
had not occurred and (iv) the amount of any expenses properly incurred by
Executive on behalf of the Company prior to the Date of Termination and not yet
reimbursed.

                  (b)      Death or Disability. If Executive's employment
hereunder is terminated as a result of Executive's death or Disability:

                           (i)      The Company will pay the Accrued Obligations
                  to Executive (or Executive's estate) promptly following such
                  termination.

                           (ii)     The Company will continue to pay Executive
                  (or Executive's estate) an amount equal to the Base Salary at
                  the rate in effect at the date of such termination in
                  accordance with Section 3(a) of this Agreement for the period
                  commencing on the date of such termination and ending three
                  (3) months from the date of termination.

                           (iii)    The Company will continue to provide
                  Executive or Executive's covered beneficiaries with the Fringe
                  Benefits for so long as it is obligated to continue payments
                  equal to the Base Salary pursuant to Section 5(b)(ii) above,
                  limited by and subject to applicable law and the terms of the
                  respective plans or policies.

                  (c)      Termination for Cause or in the Absence of a Good
Reason. If Executive's employment hereunder is terminated either by the Company
for Cause or by Executive in the absence of a Good Reason the Company will pay
the Accrued Obligations to Executive promptly following the Date of Termination.

                  (d)      Termination Without Cause or for a Good Reason. If
Executive's employment hereunder is terminated (1) by the Company without Cause,
(2) by Executive for a Good Reason, (3) by reason of a Non-Renewal Notice by the
Company for reasons that would not

                                       7
<PAGE>

constitute Cause or (4) by reason of a Non-Renewal Notice by Executive for
reasons that would constitute Good Reason:

                           (i)      The Company will pay the Accrued Obligations
                  to Executive promptly following the Date of Termination.

                           (ii)     The Company will continue to pay Executive
                  an amount equal to the Base Salary at the rate in effect at
                  such Date of Termination in accordance with Section 3(a) of
                  this Agreement for the period commencing on the date of such
                  termination and ending on the later of (A) the first
                  anniversary of the Date of Termination and (B) the date of the
                  end of the then current Term.

                           (iii)    The Company will continue to provide
                  Executive with the Fringe Benefits for so long as it is
                  obligated to continue payments equal to the Base Salary
                  pursuant to Section 4(d)(ii) above, limited by and subject to
                  applicable law and the terms of the respective plans and
                  policies.

                           (iv)     The Company will pay to Executive a cash
                  bonus equal to the prior year's annual cash bonus pursuant to
                  Section 3(b) above.

                           (v)      All options and other equity awards granted
                  or awarded to Executive hereunder or under any other agreement
                  or understanding between Executive and the Company or any
                  affiliate thereof, if any, will immediately vest, and all
                  repurchase rights granted hereunder or thereunder, immediately
                  will lapse.

                           (vi)     If Executive is subject to any excise tax
                  ("EXCISE TAX") on Executive's compensation by the Company
                  whether as a result of payment of any sum or provision of any
                  benefit hereunder or under any agreement between Executive and
                  the Company, the terms of any option agreement, restricted
                  stock grant or other equity compensation agreement or
                  otherwise (including but not limited to excise taxes imposed
                  under Section 4999 of the Code), the Company will then
                  "gross-up" Executive's compensation by making an additional
                  payment to Executive in an amount which, after reduction for
                  any income or excise taxes payable as a result of receiving
                  such additional payment, is equal to the Excise Tax.

                  (e)      No Duty to Mitigate. Notwithstanding any other
provision of this Agreement, (i) Executive will have no obligation to mitigate
Executive's damages for any breach of this Agreement by the Company or for any
termination of this Agreement, whether by seeking employment or otherwise and
(ii) the amount of any benefit due to Executive after the date of such
termination pursuant to this Agreement will not be reduced or offset by any
payment or benefit that Executive may receive from any other source.

                  (f)      Cobra Rights. It is understood that Executive's
rights under this Section 5 are in lieu of all other rights which Executive may
otherwise have had upon termination of employment under this Agreement;
provided, however, that no provision of this Agreement is intended to adversely
affect Executive's rights under the Consolidated Omnibus Budget

                                       8
<PAGE>

Reconciliation Act of 1985 or any successor thereto or any similar state or
local law, rule or regulation.

         6.       Records. Upon termination of Executive's employment hereunder
for any reason or for no reason, Executive will deliver to the Company any
property of the Company which may be in Executive's possession, including
products, materials, memoranda, notes, records, reports or other documents or
photocopies of the same.

         7.       Insurance. The Company, in its sole discretion, may apply for
and purchase key man life insurance on Executive's life in an amount determined
by the Company with the Company as beneficiary. Executive will submit to any
medical or other examinations and to execute and deliver any applications or
other instruments in writing that are reasonably necessary to effectuate such
insurance.

         8.       Confidentiality and Noncompetition Agreement. Executive
acknowledges and agrees that he has, as a condition of his employment by the
Company, previously executed and delivered to the Company a Confidentiality and
Noncompetition Agreement and further agrees that nothing contained in this
Agreement shall be deemed to modify or affect in any manner any of Executive's
duties or obligations set forth therein.

         9.       General.

                  (a)      Notices. All notices, requests, consents and other
communications hereunder will be in writing, will be addressed to the receiving
party's address set forth below or to such other address as a party may
designate by notice hereunder, and will be either (i) delivered by hand, (ii)
sent by overnight courier, or (iii) sent by registered or certified mail, return
receipt requested, postage prepaid. All notices, requests, consents and other
communications hereunder will be deemed to have been given either (i) if by
hand, at the time of the delivery thereof to the receiving party at the address
of such party set forth above, (ii) if sent by overnight courier, on the next
business day following the day such notice is delivered to the courier service,
or (iii) if sent by registered or certified mail, on the fifth business day
following the day such mailing is made;

         (A)   if to the Company, to:

                           Alloy, Inc.
                           151 West 26th Street, 11th Floor
                           New York, NY 10001
                           Attention:  General Counsel
                           Facsimile:  (212) 244-4311

         (B)   if to Executive, to the address set forth below his name on the
               signature page hereof.

                  (b)      Entire Agreement. This Agreement embodies the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersedes all prior oral or written agreements and
understandings relating to the subject matter hereof. No

                                       9
<PAGE>

statement, representation, warranty, covenant or agreement of any kind not
expressly set forth in this Agreement will affect, or be used to interpret,
change or restrict, the express terms and provisions of this Agreement.

                  (c)      Modifications and Amendments. The terms and
provisions of this Agreement may be modified or amended only by written
agreement executed by the parties hereto.

                  (d)      Waivers and Consents. The terms and provisions of
this Agreement may be waived, or consent for the departure therefrom granted,
only by written document executed by the party entitled to the benefits of such
terms or provisions. No such waiver or consent will be deemed to be or will
constitute a waiver or consent with respect to any other terms or provisions of
this Agreement, whether or not similar. Each such waiver or consent will be
effective only in the specific instance and for the purpose for which it was
given, and will not constitute a continuing waiver or consent.

                  (e)      Assignment. The Company may assign its rights and
obligations hereunder to any person or entity that succeeds to all or
substantially all of the Company's business or that aspect of the Company's
business in which Executive is principally involved. Executive may not assign
Executive's rights and obligations under this Agreement without the prior
written consent of the Company.

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

                  (g)      Governing Law. This Agreement and the rights and
obligations of the parties hereunder will be construed in accordance with and
governed by the law of the State of New York, without giving effect to the
conflict of law principles thereof.

                  (h)      Jurisdiction, Venue and Service of Process. Any legal
action or proceeding with respect to this Agreement that is not subject to
arbitration pursuant to Section 10(i) below will be brought in the courts of New
York State located in New York County, New York or of the United States of
America for the Southern District of New York. By execution and delivery of this
Agreement, each of the parties hereto accepts for itself and in respect of its
property, generally and unconditionally, the exclusive jurisdiction of the
aforesaid courts.

                  (i)      Arbitration. Any controversy, dispute or claim
arising out of or in connection with this Agreement will be settled by final and
binding arbitration to be conducted in New York, New York pursuant to the
national rules for the resolution of employment disputes of the American
Arbitration Association then in effect. The decision or award in any such
arbitration will be final and binding upon the parties and judgment upon such
decision or award may be entered in any court of competent jurisdiction or
application may be made to any such court for judicial acceptance of such
decision or award and an order of enforcement. If any procedural matter is not
covered by the aforesaid rules, the procedural law of the State of New York will
govern.

                                       10
<PAGE>

                  (j)      Reimbursement Of Legal Expenses. If Executive is
successful, whether in arbitration or litigation, in pursuing any claim or
dispute involving Executive's employment with the Company, including any claim
or dispute relating to (a) this Agreement, (b) termination of Executive's
employment with the Company or (c) the failure or refusal of the Company to
perform fully in accordance with the terms hereof, the Company shall promptly
reimburse Executive for all costs and expenses (including, without limitation,
attorneys' fees) relating solely, or allocable, to such successful claim. In any
other case, Executive and the Company shall each bear all their own respective
costs and attorneys' fees.

                  (k)      Severability. The parties intend this Agreement to be
enforced as written. However, (i) if any portion or provision of this Agreement
is to any extent be declared illegal or unenforceable by a duly authorized court
having jurisdiction, then the remainder of this Agreement, or the application of
such portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, will not be affected thereby, and each
portion and provision of this Agreement will be valid arid enforceable to the
fullest extent permitted by law and (ii) if any provision, or part thereof, is
held to be unenforceable because of the duration of such provision, the
geographic area covered thereby, or other aspect of the scope of such provision,
the court making such determination will have the power to reduce the duration,
geographic area of such provision, or other aspect of the scope of such
provision, and/or to delete specific words and phrases ("blue-penciling"), and
in its reduced or blue-penciled form, such provision will then be enforceable
and will be enforced.

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

                  (m)      No Waiver of Rights, Powers and Remedies. No failure
or delay by a party hereto in exercising any right, power or remedy under this
Agreement, and no course of dealing between the parties hereto, will operate as
a waiver of any such right, power or remedy of the party. No single or partial
exercise of any right, power or remedy under this Agreement by a party hereto,
nor any abandonment or discontinuance of steps to enforce any such right, power
or remedy, will preclude such party from any other or further exercise thereof
or the exercise of any other right, power or remedy hereunder. The election of
any remedy by a party hereto will not constitute a waiver of the right of such
party to pursue other available remedies. No notice to or demand on a party not
expressly required under this Agreement will entitle the party receiving such
notice or demand to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the party giving such
notice or demand to any other or further action in any circumstances without
such notice or demand.

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

                   REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

                                       11
<PAGE>

         IN WITNESS THEREOF, Executive has hereunto set his hand and the Company
has caused these presents to be executed in its name and on its behalf as of the
day and year first above written.

                                           Alloy, Inc.

                                           By:   /s/ Peter Graham
                                              ----------------------------------
                                              Peter Graham
                                              Director

                                           Executive

                                                 /s/ James K. Johnson, Jr.
                                           -------------------------------------
                                           James K. Johnson, Jr.
                                           Address:-----------------------------
                                           -------------------------------------
                                           -------------------------------------

                                       12<PAGE>

                                                                   Exhibit 10.30

                                   ALLOY, INC

                Convertible Senior Debentures due August 1, 2023

                               PURCHASE AGREEMENT

                                                              July 17, 2003

LEHMAN BROTHERS INC.
CIBC WORLD MARKETS CORP.
J.P. MORGAN SECURITIES INC.
SG COWEN SECURITIES CORPORATION

c/o Lehman Brothers Inc.
745 Seventh Avenue
New York, New York  10019

Ladies and Gentlemen:

                  Alloy, Inc., a Delaware corporation (the "COMPANY"), proposes
to offer and sell to Lehman Brothers Inc., CIBC World Markets Corp., J.P. Morgan
Securities Inc., and SG Cowen Securities Corporation (the "INITIAL PURCHASERS")
$65,000,000 principal amount of the Company's Convertible Senior Debentures due
August 1, 2023 (the "FIRM OFFERED SECURITIES") to be issued pursuant to the
provisions of an Indenture to be dated as of July 23, 2003 (the "INDENTURE")
between the Company and Deutsche Bank Trust Company Americas, as trustee (the
"TRUSTEE"). In addition, the Company proposes to grant to the Initial Purchasers
an option to purchase up to an additional $13,000,000 principal amount of its
Convertible Senior Debentures due August 1, 2023 (the "ADDITIONAL OFFERED
SECURITIES") on the terms and for the purposes set forth in Section 2(b) hereof.
The Firm Offered Securities and any Additional Offered Securities purchased
pursuant to this Agreement (the "AGREEMENT") are herein called the "OFFERED
SECURITIES." The Offered Securities will be convertible into shares (the
"CONVERSION SHARES") of common stock, par value $0.01 per share, of the Company
(the "COMMON STOCK").

                  It is understood that the Initial Purchasers will resell the
Offered Securities only inside the United States to qualified institutional
buyers (each, a "QUALIFIED INSTITUTIONAL BUYER") in reliance on Rule 144A under
the U.S. Securities Act of 1933, as amended (the "SECURITIES ACT").

                  1.       Representations, Warranties and Agreements of the
Company. The Company represents and warrants to each Initial Purchaser that:

<PAGE>

                  (a)      The Company has prepared an Offering Memorandum dated
         the date hereof (the "OFFERING MEMORANDUM") relating to the Offered
         Securities. All references to the Offering Memorandum include documents
         incorporated therein by reference. Copies of the Offering Memorandum
         have been delivered by the Company to the Initial Purchasers and the
         Company authorizes the Initial Purchasers to distribute copies thereof
         in connection with the offering and resale of the Offered Securities as
         provided herein. All documents filed by the Company under the U.S.
         Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), on or
         prior to the date of the Offering Memorandum and any documents filed by
         the Company under the Exchange Act after the date of the Offering
         Memorandum, in each case, that are incorporated or deemed incorporated
         by reference therein, when they were or are filed with the U.S.
         Securities and Exchange Commission (the "COMMISSION"), conformed or
         will conform, as the case may be, as to form in all material respects
         to the applicable requirements of the Exchange Act and the applicable
         rules and regulations of the Commission thereunder. The Preliminary
         Offering Memorandum and the Offering Memorandum as of their respective
         dates did not, and the Offering Memorandum as of the Closing Dates will
         not, contain any untrue statement of a material fact or omit to state
         any material fact (except, in the case of the Preliminary Offering
         Memorandum, for pricing terms and other financial terms intentionally
         left blank) necessary in order to make the statements therein, in light
         of the circumstances under which they were made, not misleading;
         provided that the Company makes no representation or warranty as to
         information contained in or omitted from the Offering Memorandum in
         reliance upon and in conformity with written information furnished to
         the Company by or on behalf of the Initial Purchasers specifically for
         inclusion therein.

                  For purposes of this Agreement, "PRELIMINARY OFFERING
         MEMORANDUM" means the preliminary offering memorandum dated July 14,
         2003 relating to the Offered Securities; "rules and regulations" means
         the rules and regulations of the Commission under the Exchange Act, as
         the context requires. Reference made herein to the Offering Memorandum
         shall be deemed to refer to and include any documents incorporated by
         reference therein as of their respective dates of filing with the
         Commission and any reference to any amendment or supplement to the
         Offering Memorandum shall be deemed to refer to and include any
         documents filed under the Exchange Act after the date of the Offering
         Memorandum, as amended by subsequently dated documents, and
         incorporated by reference therein.

                  (b)      The Company and each of its subsidiaries (as defined
         in Section 12) have been duly incorporated or organized, as applicable,
         and are validly existing as corporations, limited liability companies,
         trusts or other entities, in good standing under the laws of their
         respective jurisdictions of incorporation or organization, are duly
         qualified to do business and are in good standing as foreign
         corporations or other entities in each jurisdiction in which their
         respective

                                       2
<PAGE>

         ownership or lease of property or the conduct of their respective
         businesses requires such qualification, and have all power and
         authority necessary to own or hold their respective properties and to
         conduct the businesses in which they are engaged, in each such case,
         except where the failure to be so qualified to be in good standing or
         have such power and authority would not reasonably be expected to have
         a material adverse effect on the financial condition, business,
         prospects or results of operations of the Company and its subsidiaries
         taken as a whole (a "MATERIAL ADVERSE EFFECT").

                  (c)      The Company has the authorized capitalization as set
         forth in the Offering Memorandum; all the issued shares of capital
         stock of the Company have been duly and validly authorized and validly
         issued, are fully paid and non-assessable and conform to the
         description thereof contained in the Offering Memorandum; all the
         shares of capital stock or other equity interests of each subsidiary of
         the Company have been duly and validly authorized and issued and are
         fully paid and non-assessable and all shares of capital stock, all
         limited liability interests and all trust shares of its subsidiaries
         are owned directly or indirectly by the Company, free and clear of all
         liens, encumbrances, equities or claims. The Conversion Shares have
         been duly authorized and validly reserved for issuance upon conversion
         of the Offered Securities and are free of preemptive rights, and all
         Conversion Shares, when so issued and delivered upon such conversion in
         accordance with the terms of the Indenture and the Offered Securities,
         will be duly and validly authorized and issued, fully paid and
         non-assessable and free and clear of all liens, encumbrances, equities
         or claims other than liens created by a holder of the Debentures.

                  (d)      The Offered Securities have been duly authorized by
         the Company and, when executed, authenticated and delivered in
         accordance with this Agreement and the Indenture, will be valid and
         legally binding obligations of the Company enforceable against the
         Company in accordance with their terms, except as the enforceability
         thereof may be limited by bankruptcy, insolvency, fraudulent
         conveyance, reorganization, moratorium and other similar laws now or
         hereafter in effect relating to or affecting rights of creditors and
         other obligees generally, by general equitable principles (regardless
         of whether such enforceability is considered in a proceeding in equity
         or at law) or by an implied covenant of good faith and fair dealing,
         and will be entitled to the benefits of the Indenture.

                  (e)      The Company has full right, power and authority to
         execute and deliver this Agreement and perform its obligations
         hereunder; and this Agreement has been duly authorized, executed and
         delivered by the Company and (assuming the due execution and delivery
         thereof by the Initial Purchasers) constitutes a valid and legally
         binding agreement of the Company enforceable against the Company in
         accordance with its terms, except as the enforceability hereof and
         thereof may be limited by bankruptcy, insolvency, fraudulent
         conveyance, reorganization, moratorium and other similar laws now or
         hereafter in effect relating to or affecting rights of creditors' and
         other obligees generally, by general

                                       3
<PAGE>

         equitable principles (regardless of whether such enforceability is
         considered in a proceeding in equity or at law) or by an implied
         covenant of good faith and fair dealing, and except, further, as
         enforceability of the indemnification and contribution provisions
         hereof and thereof may be limited by considerations of public policy.

                  (f)      The Company has full right, power and authority to
         execute and deliver the Indenture and the Resale Registration Rights
         Agreement between the Company and the Initial Purchasers (the
         "REGISTRATION RIGHTS AGREEMENT") and perform its obligations
         thereunder; each of the Indenture and the Registration Rights Agreement
         has been duly authorized and, when duly executed and delivered by the
         Company (assuming the due execution and delivery thereof by the Trustee
         and the Initial Purchasers, respectively), will constitute a valid and
         legally binding agreement of the Company enforceable against the
         Company in accordance with its terms, except as the enforceability
         thereof may be limited by bankruptcy, insolvency, fraudulent
         conveyance, reorganization, moratorium and other similar laws now or
         hereafter in effect relating to or affecting rights of creditors and
         other obligees generally, by general equitable principles (regardless
         of whether such enforceability is considered in a proceeding in equity
         or at law) or by an implied covenant of good faith and fair dealing,
         and except further, as enforceability of the indemnification and
         contribution provisions thereof may be limited by considerations of
         public policy. The Offered Securities, when executed, authenticated and
         delivered pursuant to the Indenture, and the Indenture, when executed
         and delivered, will conform in all material respects to the respective
         statements relating thereto contained in the Offering Memorandum.

                  (g)      The execution, delivery and performance by the
         Company of this Agreement, the Registration Rights Agreement and the
         Indenture and the issuance of the Offered Securities and the Conversion
         Shares and the consummation of the transactions contemplated hereby and
         thereby will not conflict with, or result in a breach or violation of
         any of the terms or provisions of, or (including with the giving of
         notice or the lapse of time or both) constitute a default under, any
         indenture, mortgage, deed of trust, loan agreement or other agreement
         or instrument to which the Company or any of its subsidiaries is a
         party or by which the Company or any of its subsidiaries is bound or to
         which any of the properties or assets of the Company or any of its
         subsidiaries is subject except for such conflicts, breaches, violations
         or defaults that do not have a Material Adverse Effect, nor will such
         actions result in any violation of (i) the provisions of the charter,
         by-laws or other constitutive documents of the Company or any of its
         subsidiaries or (ii) any statute or any order, rule or regulation of
         any court or governmental agency or body having jurisdiction over the
         Company or any of its subsidiaries or any of their respective
         properties or assets; and except for the registration of the Offered
         Securities and the Conversion Shares under the Securities Act pursuant
         to the provisions of the Registration Rights Agreement, no consent,
         approval, authorization or order of, or filing or registration with,
         any

                                       4
<PAGE>

         court or governmental agency or body is required for the execution,
         delivery and performance of this Agreement, the Registration Rights
         Agreement and the Indenture and the issuance of the Offered Securities
         and the Conversion Shares and the consummation of the transactions
         contemplated hereby and thereby other than such consents, approvals,
         authorizations, orders, filings or registrations the failure to make or
         obtain would have a Material Adverse Effect.

                  (h)      Except as otherwise described or referred to in the
         Offering Memorandum, there are no outstanding warrants or options
         issued by the Company to purchase any shares of the capital stock of
         the Company or any security convertible into or exchangeable for
         capital stock of the Company except for stock options issued to
         employees of the Company and its subsidiaries pursuant to the Company's
         stock option plans and arrangements and stock purchase plans, and there
         are no preemptive or other rights to subscribe for or to purchase from
         the Company, and no restrictions upon the voting or transfer of, any
         shares of Common Stock pursuant to the Company's charter, by-laws or
         other constitutive documents or any agreement or other instrument to
         which the Company is a party or by which it is bound, and except for
         the Registration Rights Agreement, dated as of November 1, 2001, by and
         between Alloy, Target Marketing & Promotions, Inc. and the other
         parties named therein, there are no contracts, agreements or
         understandings between the Company and any person granting such person
         the right to require the Company to file a registration statement under
         the Securities Act with respect to any securities of the Company owned
         or to be owned by such person or to require the Company to include such
         securities in any securities being registered pursuant to any
         registration statement filed by the Company under the Securities Act as
         to which such registration obligations have not been satisfied
         initially by the registration for resale of shares of common stock
         previously issued by the Company.

                  (i)      Neither the Company nor any of its subsidiaries has
         sustained, since the date of the latest audited consolidated financial
         statements included or incorporated by reference in the Offering
         Memorandum, any material loss or interference with its business from
         fire, explosion, flood or other calamity, whether or not covered by
         insurance, or any labor dispute or court or governmental action, order
         or decree, in any event which reasonably could be expected to have a
         Material Adverse Effect, otherwise than as set forth or contemplated in
         the Offering Memorandum; and, since the respective dates as of which
         information is given in the Offering Memorandum, there has not been any
         change in the capital stock or long-term debt of the Company or any
         event which has had or reasonably could be expected to have a Material
         Adverse Effect, otherwise than as set forth or contemplated in the
         Offering Memorandum.

                  (j)      The consolidated financial statements (including the
         related notes and supporting schedules) included or incorporated by
         reference in the Offering Memorandum present fairly the financial
         condition and results of operations of the entities purported to be
         shown thereby at the dates and for the periods

                                       5
<PAGE>

         indicated, and have been prepared in conformity with U.S. generally
         accepted accounting principles ("U.S. GAAP") applied on a consistent
         basis throughout the periods involved, subject in the case of the
         interim financial statements incorporated by reference to the Company's
         Quarterly Report on Form 10-Q, to the absence of complete footnote
         disclosure as required by GAAP and subject to changes resulting from
         normal year-end audit adjustments which adjustments shall not in any
         event result in a material and adverse change thereto.

                  (k)      KPMG LLP, whose report is included or incorporated by
         reference in the Offering Memorandum, are independent public
         accountants within the meaning of the Exchange Act and the Rules and
         Regulations.

                  (l)      The Company and each of its subsidiaries own or
         possess adequate rights to use all material patents, patent
         applications, trademarks, service marks, trade names, trademark
         registrations, service mark registrations, copyrights, licenses
         necessary for the conduct of their respective businesses and have no
         reason to believe that the conduct of their respective businesses will
         conflict with and have not received any notice of any claim of conflict
         with, any such rights of others in each such case except as have not
         had and would not reasonably be expected to have a Material Adverse
         Effect.

                  (m)      Except as described in the Offering Memorandum, there
         are no legal or governmental proceedings pending to which the Company
         or any of its subsidiaries is a party or of which any property or
         assets of the Company or any of its subsidiaries is the subject which,
         if determined adversely to the Company or any of its subsidiaries,
         would have or could reasonably be expected to have a Material Adverse
         Effect and to the best of the Company's knowledge, no such proceedings
         are threatened or contemplated by governmental authorities or
         threatened by others.

                  (n)      No labor disturbance by the employees of the Company
         or any of its subsidiaries exists or, to the knowledge of the Company,
         is imminent.

                  (o)      The Company is in compliance in all material respects
         with all presently applicable provisions of the Employee Retirement
         Income Security Act of 1974, as amended, including the regulations and
         published interpretations thereunder ("ERISA"); no "reportable event"
         (as defined in ERISA) has occurred with respect to any "pension plan"
         (as defined in ERISA) for which the Company would have any liability;
         the Company has not incurred and does not expect to incur liability
         under (i) Title IV of ERISA with respect to termination of, or
         withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the
         Internal Revenue Code of 1986, as amended, including the regulations
         and published interpretations thereunder (the "CODE"); and each
         "pension plan" for which the Company would have any liability that is
         intended to be qualified under Section 401(a) of the Code is so
         qualified in all material respects and nothing has occurred, whether by
         action or by failure to act, which, in each case, would cause

                                       6
<PAGE>

         the loss of such qualification, except as would not reasonably be
         expected to have a Material Adverse Effect.

                  (p)      The Company and its subsidiaries have filed all
         federal, state and local income and franchise tax returns required to
         be filed through the date hereof and has paid all taxes due thereon
         which were required to have been paid prior to the date hereof, and no
         tax deficiency has been determined adversely to the Company or to any
         of its subsidiaries, which deficiency in the case of its subsidiaries
         would be reasonably expected to have a Material Adverse Effect.

                  (q)      Since the date as of which information is given in
         the Offering Memorandum through the date hereof, and except as may
         otherwise be disclosed in the Offering Memorandum, the Company has not
         (i) issued or granted any securities other than shares issued pursuant
         to employee benefit plans, qualified stock options or other employee
         compensation plans pursuant to outstanding options and warrants, (ii)
         incurred any liability or obligation, direct or contingent, other than
         liabilities and obligations which were incurred in the ordinary course
         of business, (iii) entered into any transaction not in the ordinary
         course of business or (iv) declared or paid any dividend on its capital
         stock.

                  (r)      The Company and its subsidiaries (i) make and keep
         accurate books and records and (ii) maintain a system of internal
         accounting controls sufficient to provide reasonable assurance that (A)
         transactions are executed in accordance with management's general or
         specific authorizations; (B) transactions are recorded as necessary to
         permit preparation of financial statements in conformity with generally
         accepted accounting principles and to maintain asset accountability;
         (C) access to assets is permitted only in accordance with management's
         general or specific authorization; and (D) the recorded accounting for
         assets is compared with the existing assets at reasonable intervals and
         appropriate action is taken with respect to any differences.

                  (s)      The Company and each of its subsidiaries have good
         and marketable title in fee simple to all real property and good and
         marketable title to all personal property owned by them, in each case
         free and clear of all liens, encumbrances and defects, except such as
         are described in the Offering Memorandum or would not reasonably be
         expected to have a Material Adverse Effect; and all real property and
         buildings held under lease by the Company and its subsidiaries are held
         by them under valid, subsisting and enforceable leases, except for such
         failures to be in full force and effect that individually or in the
         aggregate could not reasonably be expected to have a Material Adverse
         Effect.

                  (u)      The Company and each of its subsidiaries carry, or
         are covered by insurance in such amounts and covering such risks as the
         Company believes is adequate for the conduct of their respective
         businesses and the value of their respective properties.

                                       7
<PAGE>

                  (v)      None of the Company or any of its subsidiaries (i) is
         in violation of its charter, by-laws or other constitutive documents,
         (ii) is in default in any material respect, and no event has occurred
         which, with notice or lapse of time or both, would constitute such a
         default, in the due performance or observance of any term, covenant or
         condition contained in any indenture, mortgage, deed of trust, loan
         agreement or other agreement or instrument to which it is a party or by
         which it is bound or to which any of its properties or assets is
         subject that would individually or in the aggregate have a Material
         Adverse Effect, or (iii) is in violation of any law, ordinance,
         governmental rule, regulation or court decree to which it or its
         property may be subject or has failed to obtain any material license,
         permit, certificate, franchise or other governmental authorization or
         permit necessary to the ownership of its property or to the conduct of
         its business, that would individually or in the aggregate have a
         Material Adverse Effect.

                  (w)      No securities of the same class (within the meaning
         of Rule 144A(d)(3) under the Securities Act) as the Offered Securities
         are, or, as of the date of issuance of the Offered Securities, will be,
         listed on any national securities exchange registered under Section 6
         of the Exchange Act or quoted in an automated inter-dealer quotation
         system.

                  (x)      No registration of the Offered Securities or the
         Conversion Shares under the Securities Act and no qualification of an
         indenture under the U.S. Trust Indenture Act of 1939, as amended, is
         required in connection with the offer, sale and delivery of the Offered
         Securities or in connection with the conversion of the Offered
         Securities into Conversion Shares, in each case, in the manner
         contemplated by the Offering Memorandum, this Agreement and the
         Indenture.

                  (y)      Neither the Company nor to its knowledge, any of its
         subsidiaries, nor any director, officer, agent, employee or other
         person associated with or acting on behalf of the Company or to its
         knowledge, any of its subsidiaries, has used any corporate funds for
         any unlawful contribution, gift, entertainment or other unlawful
         expense relating to political activity; made any direct or indirect
         unlawful payment to any foreign or domestic government official or
         employee from corporate funds; violated or is in violation of any
         provision of the Foreign Corrupt Practices Act of 1977; or made any
         bribe, rebate, payoff, influence payment, kickback or other unlawful
         payment.

                  (z)      There has been no storage, disposal, generation,
         manufacture, refinement, transportation, handling or treatment of toxic
         wastes, medical wastes, hazardous wastes or hazardous substances by the
         Company or to its knowledge, any of its subsidiaries (or, to the
         knowledge of the Company, any of their predecessors in interest) at,
         upon or from any of the property now or previously owned or leased by
         the Company or its subsidiaries in violation of any applicable law,
         ordinance, rule, regulation, order, judgment, decree or permit or which
         would require remedial action under any applicable law, ordinance,
         rule, regulation, order, judgment, decree or permit; there has been no
         material spill, discharge,

                                       8
<PAGE>

         leak, emission, injection, escape, dumping or release of any kind onto
         such property or into the environment surrounding such property of any
         toxic wastes, medical wastes, solid wastes, hazardous wastes or
         hazardous substances due to or caused by the Company or any of its
         subsidiaries or with respect to which the Company or any of its
         subsidiaries have knowledge; and the terms "HAZARDOUS WASTES", "TOXIC
         WASTES", "HAZARDOUS SUBSTANCES" and "MEDICAL WASTES" shall have the
         meanings specified in any applicable local, state, federal and foreign
         laws or regulations with respect to environmental protection.

                  (aa)     Neither the Company nor any subsidiary is, or, after
         giving effect to the offering and sale of the Offered Securities and
         the application of the net proceeds therefrom will be, an "investment
         company" within the meaning of such term under the Investment Company
         Act of 1940, as amended.

                  (bb)     The Company understands that the Initial Purchasers
         and, for purposes of the opinions to be delivered to the Initial
         Purchasers pursuant hereto, counsel to the Company and counsel to the
         Initial Purchasers will rely upon the accuracy and truth as to factual
         matters of the foregoing representations and the Company hereby
         consents to such reliance.

                  2.       Purchase, Sale and Delivery of the Offered
Securities.

                  (a)      On the basis of the representations, warranties and
         agreements herein contained, but subject to the terms and conditions
         herein set forth, the Company agrees to sell to the Initial Purchasers,
         and the Initial Purchasers agree to purchase from the Company, at a
         purchase price of 96.75% of the principal amount thereof, $65,000,000
         principal amount of Firm Offered Securities.

                  (b)      The Company hereby grants to the Initial Purchasers
         an option to purchase from the Company, solely for the purpose of
         covering over-allotments in the sale of Firm Offered Securities, all or
         any portion of the Additional Offered Securities. The option granted
         hereunder may be exercised at any time within thirty (30) days from the
         date hereof at a purchase price of 96.75% of the principal amount
         thereof.

                  (c)      Payment for the Firm Offered Securities shall be made
         against delivery of the Firm Offered Securities at a closing to be held
         at the offices of Weil, Gotshal & Manges LLP at 10:00 A.M., local time,
         on July 23, 2003, or at such other time on the same or such other date,
         as shall be determined by the Initial Purchasers and the Company. The
         time and date of such payment are herein referred to as the Firm
         Closing Date.

                  (d)      Payment for any Additional Offered Securities shall
         be made against delivery of the Additional Offered Securities at a
         closing to be held at the offices of Weil, Gotshal & Manges LLP at
         10:00 A.M., local time, on such date (which may be the same as the
         Closing Date but shall in no event be earlier than

                                       9
<PAGE>

         either the Closing Date or the second business day after the date on
         which the option shall have been exercised nor later than five business
         days after the giving of the notice hereinafter referred to) as shall
         be designated in a written notice from the Initial Purchasers to the
         Company of their determination to purchase an aggregate principal
         amount, specified in said notice, of Additional Offered Securities. The
         time and date of such payment are hereinafter referred to as the Option
         Closing Date. The Firm Closing Date and the Option Closing Date are
         herein individually referred to as the "Closing Date" and collectively
         referred to as the "Closing Dates."

                  (e)      On each Closing Date, payment for the Firm Offered
         Securities and Additional Offered Securities shall be made by certified
         or official bank check or checks, or by wire transfer, payable to the
         order of the Company, in Federal (same day) funds. On each Closing
         Date, payment will be made against delivery of one or more global
         Debentures in registered form to be deposited with, on behalf of, The
         Depository Trust Company ("DTC") and registered in the name of Cede &
         Co., as nominee for DTC, in such denominations and registered in such
         names as the Initial Purchasers shall request. Time shall be of the
         essence, and delivery at the time and place specified pursuant to this
         Agreement is a further condition to the obligation of the Initial
         Purchasers hereunder. With respect to each Closing Date, the Company
         shall make available the certificates representing the Offered
         Securities to be resold for inspection by the Initial Purchasers in New
         York, New York not later than 2:00 p.m., New York City time, on the
         business day prior to such Closing Date.

                  3.       Representations, Warranties and Agreements of the
Initial Purchasers. Each Initial Purchaser, severally and not jointly:

                  (a)      represents and warrants that it is a Qualified
         Institutional Buyer and that it will offer the Offered Securities for
         resale only upon the terms and conditions set forth in this Agreement
         and in the Offering Memorandum.

                  (b)      acknowledges that the Offered Securities have not
         been registered under the Securities Act and may not be offered or sold
         within the United States or to, or for the benefit of, U.S. persons
         except pursuant to an exemption from the registration requirements of
         the Securities Act; represents, warrants and agrees that it has only
         offered the Offered Securities, and will only offer and sell the
         Offered Securities inside the United States to persons whom the Initial
         Purchasers reasonably believes to be Qualified Institutional Buyers.

                  (c)      represents, warrants and agrees that it has not and
         will not solicit offers for, or offer or sell the Offered Securities
         purchased from the Company hereunder by means of any form of general
         solicitation or general advertising (as those terms are used in
         Regulation D under the Securities Act), including, but not limited to
         (i) any advertisement, article, notice or other communication published
         in any newspaper, magazine or similar media or broadcast over
         television or

                                       10
<PAGE>

         radio, or (ii) any seminar or meeting whose attendees have been invited
         by any general solicitation or general advertising. Each Initial
         Purchaser agrees, with respect to resales made in reliance on Rule
         144A, other than through the Private Offerings Resales and Trading
         through Automated Linkages ("PORTAL") market, of any of the Offered
         Securities purchased from the Company hereunder, to deliver either with
         the confirmation of such resale or otherwise prior to settlement of
         such resale a notice to the effect that the resale of such Offered
         Securities has been made in reliance upon the exemption from the
         registration requirements of the Securities Act provided by Rule 144A.

                  (d)      at or before the time that it effects any resale of
         the Debentures, such Initial Purchaser shall have delivered to the
         prospective purchaser a copy of the Offering Memorandum together with
         all supplements and amendments prepared by the Company and delivered to
         such Initial Purchaser prior to the date of such resale.

                  (e)      understands that the Company and, for purposes of the
         opinions to be delivered to the Initial Purchasers pursuant hereto,
         counsel to the Company and counsel to the Initial Purchasers will rely
         upon the accuracy of the foregoing representations and hereby consents
         to such reliance.

                  4.       Certain Agreements of the Company.

                  (a) The Company agrees with the Initial Purchasers that:

                           (i)      The Company will advise the Initial
                  Purchasers promptly of any proposed amendment or supplement to
                  the Offering Memorandum and will not effect such amendment or
                  supplement without the Initial Purchasers' consent, which
                  consent shall not be unreasonably withheld. If at any time
                  prior to the completion of the resale of the Offered
                  Securities by the Initial Purchasers, any event occurs as a
                  result of which the Offering Memorandum as then amended or
                  supplemented would include an untrue statement of a material
                  fact or omit to state any material fact necessary in order to
                  make the statements therein, in the light of the circumstances
                  under which they were made, not misleading, or if it is
                  necessary at such time to amend or supplement the Offering
                  Memorandum to comply with any applicable law, the Company
                  promptly will notify the Initial Purchasers of such event and
                  promptly prepare an amendment or supplement to the Offering
                  Memorandum which will correct such statement or omission or
                  effect such compliance. Neither the Initial Purchasers'
                  consent to, nor the Initial Purchasers' delivery of, any such
                  amendment to or supplement of shall constitute a waiver of any
                  of the conditions set forth in Section 5 hereof.

                           (ii)     The Company will furnish promptly to the
                  Initial Purchasers copies of the Offering Memorandum and all
                  amendments and

                                       11
<PAGE>

                  supplements thereto, in each case as soon as available and in
                  such quantities as it may reasonably request.

                           (iii)    During the period of two years after the
                  Closing Date, the Company will, upon request, furnish to the
                  Initial Purchasers and any holder of Offered Securities a copy
                  of the restrictions on transfer applicable to such Offered
                  Securities.

                           (iv)     The Company will not resell any Offered
                  Securities which have been acquired by it during the period of
                  two years after the Closing Date and which constitute
                  "restricted securities" under Rule 144, otherwise than
                  pursuant to an effective registration statement under the
                  Securities Act.

                           (v)      (A) For a period of 90 days from the date of
                  the Offering Memorandum, it shall not directly or indirectly,
                  (1) (A) offer for sale, sell, pledge or otherwise dispose of
                  (or enter into any transaction or device which is designed to,
                  or could be expected to, result in the disposition by any
                  person at any time in the future of) any shares of Common
                  Stock or securities convertible into or exchangeable for
                  Common Stock (other than Common Stock and shares issued
                  pursuant to employee benefit plans, qualified stock option
                  plans or other employee compensation plans existing on the
                  date hereof or pursuant to currently outstanding options,
                  warrants or rights), or (B) sell or grant options, rights or
                  warrants with respect to any shares of Common Stock or
                  securities convertible into or exchangeable for Common Stock
                  (other than the grant of options pursuant to option plans
                  existing on the date hereof), or (2) enter into any swap or
                  other derivatives transaction that transfers to another, in
                  whole or in part, any of the economic benefits or risks of
                  ownership of such shares of Common Stock, whether any such
                  transaction described in clause (1) or (2) above is to be
                  settled by delivery of Common Stock or other securities, in
                  cash or otherwise, in each case without the prior written
                  consent of Lehman Brothers Inc. on behalf of the Initial
                  Purchasers; provided, however, that the foregoing restrictions
                  shall not apply for shares of Common Stock issued by the
                  Company pursuant to an acquisition not in excess of 20% of the
                  outstanding shares of Common Stock as of the date of this
                  Agreement and (B) to cause each officer and director of the
                  Company identified on Schedule 2 to furnish to the Initial
                  Purchasers, a letter or letters, substantially in the form of
                  Exhibit A hereto.

                           (vi)     The Company will reserve and keep available
                  at all times, free of preemptive rights, the full number of
                  Conversion Shares issuable upon conversion of the Offered
                  Securities.

                           (vii)    The Company will use all reasonable efforts
                  to effect, prior to the time the Offered Securities may be
                  converted, the designation or

                                       12
<PAGE>

                  listing subject to notice of issuance, of the Conversion
                  Shares issuable upon such conversion on the Nasdaq National
                  Market or on such market or exchange on which the Common Stock
                  is then quoted or listed.

                           (viii)   The Company will use all reasonable efforts
                  to arrange for qualification of the Offered Securities for
                  sale under the laws of such jurisdictions as the Initial
                  Purchasers may reasonably designate and to maintain such
                  qualifications in effect so long as reasonably required for
                  the distribution of the Offered Securities; provided, however,
                  that the Company will not be obligated to qualify to do
                  business as a foreign corporation in any state in which it is
                  not so qualified or to file a general consent to service of
                  process in any jurisdiction.

                           (ix)     The Company agrees to pay (A) the fees and
                  expenses of its counsel and accountants and the Trustee and
                  any transfer agents, conversion agents and paying agents; (B)
                  costs associated with the packaging and initial delivery of
                  the certificates evidencing the Offered Securities and the
                  preparation and printing of the certificates evidencing the
                  Offered Securities, this Agreement, the Indenture, the
                  Registration Rights Agreement, the Offering Memorandum and any
                  information provided by the Company pursuant to Section
                  4(a)(ii) and (xi) hereof and any other document relating to
                  the issuance of the Offered Securities; (C) the cost of
                  obtaining approval for the trading of the Offered Securities
                  through the PORTAL market and the designation or listing of
                  the Common Stock issuable upon the conversion of the Offered
                  Securities on the Nasdaq National Market or on such market or
                  exchange on which the Common Stock is then quoted or listed;
                  (D) the costs and expenses of the Company relating to investor
                  presentations on any "ROAD SHOW" undertaken in connection with
                  the marketing of the offering of the Offered Securities,
                  including, without limitation, expenses associated with the
                  production of road show slides and graphics, fees and expenses
                  of any consultants engaged in connection with the road show
                  presentations with the prior approval of the Company, travel
                  and lodging expenses of the Initial Purchasers and officers of
                  the Company and any such consultants, and the cost of any
                  aircraft chartered in connection with the road show; (E) all
                  fees and expenses of DTC; (F) the costs of qualifying the
                  Offered Securities for offering and sale under any state
                  securities or blue sky laws, including reasonable legal fees
                  and expenses of counsel for the Initial Purchasers in
                  connection therewith; and (G) all other costs, fees and
                  expenses incident to the performance of its obligations
                  hereunder which are not specifically provided for above.

                           (x)      So long as any of the Offered Securities are
                  "restricted securities" within the meaning of Rule 144(a)(3)
                  under the Securities Act, the Company will, during any period
                  in which it is not subject to and in compliance with Section
                  13 or 15(d) of the Exchange Act, provide to each

                                       13
<PAGE>

                  holder of such restricted securities and to each prospective
                  purchaser (as designated by such holder) upon request of such
                  holder or prospective purchaser, any information required to
                  be provided by Rule 144A(d)(4) under the Securities Act. This
                  covenant is intended to be for the benefit of the holders, and
                  the prospective purchasers designated by such holders, from
                  time to time of such restricted securities.

                           (xi)     The Company will use all reasonable efforts
                  to cause the Offered Securities to be eligible for the PORTAL
                  trading system of the National Association of Securities
                  Dealers, Inc. and to cause the Offered Securities to be
                  eligible for clearance and settlement through the facilities
                  of DTC.

                  5.       Conditions of the Obligations of the Initial
         Purchasers. The respective obligations of the Initial Purchasers to
         purchase and pay for the Firm Offered Securities on the Firm Closing
         Date and the Additional Offered Securities on the Option Closing Date
         will be subject to the accuracy of the representations and warranties
         on the part of the Company when made and as of such respective dates,
         to the accuracy of the statements of officers of the Company made in
         certificates delivered pursuant to the provisions hereof, to the
         performance by the Company of its respective obligations hereunder and
         to the following additional conditions precedent:

                  (a)      No Initial Purchaser shall have been advised by the
         Company or shall have discovered and disclosed to the Company that the
         Offering Memorandum or any amendment or supplement thereto, contains an
         untrue statement of fact which, in the opinion of counsel for the
         Initial Purchasers, is material, or omits to state a fact which, in the
         opinion of counsel for the Initial Purchasers, is material and is
         required to be stated therein or is necessary to make the statements
         therein not misleading.

                  (b)      All corporate proceedings and other legal matters
         incident to the authorization, form and validity of this Agreement, the
         Indenture, the Registration Rights Agreement, the Offered Securities
         and the Offering Memorandum, and all other legal matters relating to
         this Agreement and the transactions contemplated hereby shall be
         reasonably satisfactory in all respects to the Initial Purchasers.

                  (c)      On each Closing Date, there shall have been furnished
         to the Initial Purchasers the opinion (addressed to the Initial
         Purchasers) of Katten Muchin Zavis & Rosenman, counsel for the Company,
         dated such Closing Date and in form and substance reasonably
         satisfactory to counsel for the Initial Purchasers, substantially to
         the effect that:

                           (i)      The Company and each of its subsidiaries
                  have been duly incorporated or organized, as applicable, and
                  are validly existing as corporations, limited liability
                  companies, trusts or other entities, in good standing under
                  the laws of their respective jurisdictions of incorporation or

                                       14
<PAGE>

                  organization and have all corporate, limited liability company
                  or trust power and authority, as applicable, necessary to own
                  or hold their respective properties and conduct the businesses
                  in which they are engaged;

                           (ii)     The Company has an authorized capitalization
                  as set forth in the Offering Memorandum, and all of the issued
                  shares of capital stock of the Company have been duly and
                  validly authorized and issued, are fully paid and
                  non-assessable and conform to the description thereof
                  contained in the Offering Memorandum; and all of the issued
                  shares of capital stock, limited liability company interest or
                  trust shares, as applicable, of each subsidiary of the Company
                  have been duly and validly authorized and issued and to the
                  extent they are shares of capital stock of a corporation, are
                  fully paid, non-assessable and are owned directly or
                  indirectly by the Company, and to such counsel's knowledge,
                  free and clear of all liens, encumbrances, equities or claims;

                           (iii)    The Conversion Shares have been duly and
                  validly authorized and, when issued and delivered against
                  payment therefor will be duly and validly issued, fully paid
                  and non-assessable;

                           (iv)     Except as set forth in the Offering
                  Memorandum, to the knowledge of such counsel, there are no
                  outstanding warrants or options issued by the Company to
                  purchase any shares of capital stock of the Company or any
                  security convertible or exchangeable for capital stock of the
                  Company and there are no preemptive or other rights to
                  subscribe for or to purchase, nor any restriction upon the
                  voting or transfer of, any shares of the Stock pursuant to the
                  Company's charter or by laws or any agreement or other
                  instrument known to such counsel;

                           (v)      This Agreement has been duly authorized,
                  executed and delivered by the Company;

                           (vi)     Each of the Indenture and the Registration
                  Rights Agreement has been duly authorized, executed and
                  delivered by the Company and, assuming due authorization,
                  execution and delivery by the other parties thereto,
                  constitutes the valid and legally binding agreement of the
                  Company. The Indenture is enforceable against the Company in
                  accordance with its terms, except as the enforceability
                  thereof may be limited by bankruptcy, insolvency, fraudulent
                  conveyance, reorganization, moratorium and other similar laws
                  now or hereafter in effect relating to or affecting rights of
                  creditors and other obligees generally, by general equitable
                  principles (regardless of whether such enforceability is
                  considered in a proceeding in equity or at law) or by an
                  implied covenant of good faith and fair dealing and except
                  further as enforceability of the

                                       15
<PAGE>

                  indemnification and contribution provisions thereof, may be
                  limited by considerations of public policy;

                           (vii)    The Offered Securities have been duly
                  authorized by the Company and, when executed, authenticated
                  and delivered in accordance with this Agreement and the
                  Indenture, will be valid and legally binding obligations of
                  the Company enforceable against the Company in accordance with
                  their terms, except in all cases as the enforceability thereof
                  may be limited by bankruptcy, insolvency, fraudulent
                  conveyance, reorganization, moratorium and other similar laws
                  now or hereafter in effect relating to or affecting rights of
                  creditors and other obligees generally, by general equitable
                  principles (regardless of whether such enforceability is
                  considered in a proceeding in equity or at law) or by an
                  implied covenant of good faith and fair dealing, and except
                  further as enforceability of the indemnification and
                  contribution provisions thereof, may be limited by
                  considerations of public policy will be entitled to the
                  benefits of the Indenture;

                           (viii)   The statements in the Offering Memorandum
                  under the captions "Description of the Debentures,"
                  "Description of Capital Stock" and "Notice to Investors"
                  insofar as they purport to summarize the provisions of the
                  Indenture, the Offered Securities and the Common Stock
                  (including the Conversion Shares) are true and accurate in all
                  material respects;

                           (ix)     The statements in the Offering Memorandum
                  under the caption "Certain United States Federal Income Tax
                  Considerations" as to matters of U.S. tax law and regulation
                  are true and accurate in all material respects;

                           (x)      No registration of the Offered Securities or
                  the Conversion Shares under the Securities Act and no
                  qualification of the Indenture or an indenture under the U.S.
                  Trust Indenture Act of 1939, as amended, is required in
                  connection with the offer, sale and delivery of the Offered
                  Securities or in connection with the conversion of the Offered
                  Securities into Conversion Shares, in each case, in the manner
                  contemplated by the Offering Memorandum, this Agreement and
                  the Indenture;

                           (xi)     Except as set forth in the Offering
                  Memorandum, to our knowledge, there is no litigation,
                  proceeding or governmental investigation pending or overtly
                  threatened against the Company that relates to any of the
                  transactions contemplated by the Agreement;

                           (xii)    The execution, delivery and compliance by
                  the Company with all of the provisions of this Agreement, the
                  Registration Rights Agreement, and the Indenture and the
                  issuance of the Offered Securities

                                       16
<PAGE>

                  and the Conversion Shares and the consummation of the
                  transactions contemplated hereby and thereby will not conflict
                  with or result in a breach or violation of any of the terms or
                  provisions of, or constitute a default under, any material
                  indenture, mortgage, deed of trust, loan agreement or other
                  material agreement or instrument known to such counsel to
                  which the Company or any of its subsidiaries is a party or by
                  which the Company or any of its subsidiaries is bound or to
                  which any of the property or assets of the Company or any of
                  its subsidiaries is subject, nor will such actions result in
                  any violation of the provisions of the charter or by-laws of
                  the Company or any of its subsidiaries or the charter, by-laws
                  or other organizational documents of any of its subsidiaries
                  or in the violation of any statute or any order, rule or
                  regulation known to such counsel of any court or governmental
                  agency or body having jurisdiction over the Company or any of
                  its subsidiaries or any of their properties or assets; and,
                  assuming the accuracy of the representations of the Initial
                  Purchasers set forth in Section 3 of the Purchase Agreement
                  and further assuming (a) no changes in the applicable facts,
                  laws or regulations and (b) the due compliance by the Company
                  with the requirements of the Securities Act with respect to
                  the performance by the Company of its obligations under the
                  Registration Rights Agreement, except for the registration of
                  the Offered Securities and the Conversion Shares under the
                  Securities Act as required pursuant to the Registration Rights
                  Agreement, no consent, approval, authorization or order of, or
                  filing or registration with, any such court or governmental
                  agency or body is required for the execution, delivery and
                  performance of this Agreement, the Registration Rights
                  Agreement and the Indenture and the issuance of the Offered
                  Securities and the Conversion Shares by the Company and the
                  consummation of the transactions contemplated hereby and
                  thereby, except (i) for such consents, approvals,
                  authorizations, orders, filings or registrations as have been
                  obtained or made and (ii) for such consents, approvals,
                  authorizations, orders, filings or registrations, the failure
                  to make or obtain would not have a Material Averse Effect.

                           (xiii)   Neither the Company nor any subsidiary is an
                  "investment company," or an entity "controlled" by "investment
                  company," within the meaning of such term under the Investment
                  Company Act of 1940, as amended;

                           (xiv)    The Offered Securities satisfy the
                  eligibility requirements of Rule 144A(d)3 under the Securities
                  Act;

                           (xv)     To the knowledge of such counsel, none of
                  the Company or its significant subsidiaries (A) is in
                  violation of its charter or by-laws (B) is in default in any
                  material respect, and no event has occurred which, with notice
                  or lapse of time or both, would constitute such a default, in
                  the due performance or observance of any time period, covenant
                  or condition

                                       17
<PAGE>

                  contained in this Agreement, the Registration Rights Agreement
                  or the Indenture, or (C) is in violation of any law,
                  ordinance, governmental rule, regulation or court decree to
                  which it or its properties or assets may be subject or has
                  failed to obtain any material license, permit, certificate,
                  franchise or other governmental authorization or permit
                  necessary to the ownership of its properties or assets or to
                  the conduct of its business, which violation or failure to
                  obtain reasonably could be expected to have a Material Adverse
                  Effect; and

                           (xvi)    Each document incorporated by reference in
                  the Offering Memorandum (except for financial statements and
                  schedules and other financial data included therein as to
                  which such counsel need not express any opinion), when filed
                  with the Commission complied as to form in all material
                  respects with the requirements of the Exchange Act and the
                  rules and regulations promulgated thereunder.

                  In rendering such opinion, such counsel may state that its
opinion is limited to matters governed by the Federal laws of the United States
of America, the laws of the State of New York and the General Corporation Law of
the State of Delaware. Such opinion shall also be to the effect that (x) such
counsel has acted as counsel to the Company on a regular basis, and has acted as
counsel to the Company in connection with the preparation of the Offering
Memorandum and such counsel has participated in conferences with officers and
other representatives of the Company, representatives of the independent public
accountants of the Company and representatives of the Initial Purchasers at
which the contents of the Offering Memorandum was discussed and (y) based on the
foregoing, no facts have come to the attention of such counsel which lead it to
believe (I) that the Offering Memorandum as of its date, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading (except for financial statements and schedules and other financial
data included therein as to which such counsel need not express any opinion), or
(II) any document incorporated by reference in the Offering Memorandum (except
for financial statements and schedules and other financial data included therein
as to which such counsel need not express any opinion) when they were filed with
the Commission contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements therein, in
light of the circumstances is which they were made, not misleading. The
foregoing opinion and statement may be qualified by a statement to the effect
that such counsel does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Offering Memorandum
(other than as set forth in clause (xi) and (xii) above).

                  (d)      The Company shall have furnished to the Initial
         Purchasers a certificate, dated such Closing Date, signed on behalf of
         the Company of its Chairman of the Board , its President or a Vice
         President and its Chief Financial Officer of the Company to the effect
         that: (i) the representations and warranties of the Company contained
         in this Agreement are true and correct in all material

                                       18
<PAGE>
         respects, as if made at and as of such Closing Date, and the Company
         has complied in all material respects with all the agreements and
         satisfied all the conditions on its part to be complied with or
         satisfied at or prior to such Closing Date; (ii) the signers of said
         certificate have carefully examined the Offering Memorandum, and any
         amendments or supplements thereto (including any documents filed under
         the Exchange Act and deemed to be incorporated by reference in the
         Offering Memorandum), and in their opinion such documents do not
         include any untrue statement of material fact or omit to state any
         material fact required to be included therein in order to make the
         statements therein, in the light of the circumstances under which they
         were made, not misleading; and (iii) since the date of the most recent
         financial statements incorporated by reference in the Offering
         Memorandum there has occurred no event required to be set forth in an
         amendment or supplement to the Offering Memorandum which has not been
         so set forth.

                  (e)      The Initial Purchasers shall have received a letter
         (the "INITIAL LETTER") of KPMG LLP, dated the date hereof and addressed
         to the Initial Purchasers, confirming that they are independent
         certified public accountants with respect to the Company and its
         Subsidiaries within the meaning of the Securities Act and the Rules and
         Regulations and are in compliance with the requirements relating to
         qualification of accountants under Rule 2-01 of Regulation S-X of the
         Securities and Exchange Commission and stating, as of the date hereof
         (or, with respect to matters involving changes or developments since
         the respective dates as of which specified financial information is
         given or incorporated in the Offering Memorandum, as of a date not more
         than five days prior to the date hereof), the conclusions and findings
         of such firm with respect to the financial information and other
         matters ordinarily covered by accountants' "comfort letters" to Initial
         Purchasers. On each Closing Date, you shall have furnished to the
         Initial Purchasers a letter from such accountants, addressed to the
         Initial Purchasers and dated such Closing Date confirming the
         information set forth in the initial letter.

                  (f)      Subsequent to the execution and delivery of this
         Agreement there shall not have occurred any of the following: (i)
         trading in securities generally on the New York Stock Exchange or the
         American Stock Exchange or in the over-the-counter market, or trading
         in any securities of the Company on any exchange or in the
         over-the-counter market, shall have been suspended or the settlement of
         such trading generally shall have been materially disrupted or minimum
         prices shall have been established on any such exchange or such market
         by the Commission, by such exchange or by any other regulatory body or
         governmental authority having jurisdiction, (ii) a banking moratorium
         shall have been declared by Federal or state authorities, (iii) the
         United States shall have become engaged in hostilities (other than such
         hostilities existing as of the date hereof), there shall have been an
         escalation in hostilities involving the United States or there shall
         have been a declaration of a national emergency or war by the United
         States or (iv) there shall have occurred such a material adverse change
         in general

                                       19
<PAGE>

         economic, political or financial conditions, including without
         limitation as a result of terrorist activities after the date hereof
         (or the effect of international conditions on the financial markets in
         the United States shall be such) as to make it, in the judgment of the
         Initial Purchasers, impracticable or inadvisable to proceed with the
         payment for and delivery of the Offered Securities.

                  (g)      The Initial Purchasers shall have received from Weil,
         Gotshal & Manges LLP, counsel for the Initial Purchasers, such opinion
         or opinions, dated such Closing Date, with respect to the validity of
         the Indenture, the Offered Securities, the Offering Memorandum, and
         other related matters as they may reasonably require, and the Company
         shall have furnished to such counsel such documents as they reasonably
         request for the purpose of enabling them to pass upon such matters.

                  (h)      The Offered Securities shall have been (A) approved
         by the National Association of Securities Dealers, Inc., as being
         eligible for trading in the PORTAL market and (B) accepted for
         settlement through the facilities of DTC.

                  (i)      Neither the Company nor any of its subsidiaries shall
         have sustained since the date of the latest audited financial
         statements included in the Offering Memorandum (A) any loss or
         interference with its business from fire, explosion, flood or other
         calamity, whether or not covered by insurance, or from any labor
         dispute or court or governmental action, order or decree, which loss or
         interference could reasonably be expected to have a Material Adverse
         Effect, otherwise than as set forth or contemplated in the Memorandum
         or (B) since such date there shall not have been any change in the
         capital stock or long-term debt of the Company or any of its
         subsidiaries or any change, or any development involving a prospective
         change, in or affecting the general affairs, management, financial
         position, stockholders' equity or results of operations of the Company
         and its subsidiaries, otherwise than as set forth or contemplated in
         the Offering Memorandum, the effect of which, in any such case
         described in clause (A) or (B), is, in the judgment of the Initial
         Purchasers, so material and adverse as to make it impracticable or
         inadvisable to proceed with the public offering or the delivery of the
         Offered Securities being delivered on such Closing Date on the terms
         and in the manner contemplated in the Offering Memorandum.

                  (j)      The Registration Rights Agreement shall have been
         executed and delivered and be substantially in the form of Exhibit A
         hereto.

                  All such opinions, certificates, letters and documents shall
be in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to the Initial Purchasers. The Company shall
furnish to the Initial Purchasers conformed copies of such opinions,
certificates, letters and other documents in such number as the Initial
Purchasers shall reasonably request. If any of the conditions specified in this
Section 5 shall not have been fulfilled when and as required by this

                                       20
<PAGE>

Agreement, this Agreement and all obligations of the Initial Purchasers
hereunder may be canceled at, or at any time prior to, each Closing Date, by the
Initial Purchasers. Any such cancellation shall be without liability of the
Initial Purchasers to the Company. Notice of such cancellation shall be given to
the Company in writing, or by telegraph or telephone and confirmed in writing.

                  6.       Indemnification and Contribution.

                  (a)      The Company shall indemnify and hold harmless each
         Initial Purchaser, its directors, officers, employees and agents and
         each person, if any, who controls any Initial Purchasers within the
         meaning of either the Securities Act or the Exchange Act, from and
         against any loss, claim, damage or liability, joint or several, or any
         action in respect thereof (including, but not limited to, any loss,
         claim, damage, liability or action relating to purchases and sales of
         Offered Securities), to which that Initial Purchaser or any such
         director, officer, employee or controlling person may become subject,
         under either the Securities Act or Exchange Act otherwise, insofar as
         such loss, claim, damage, liability or action arises out of, or is
         based upon, (i) any untrue statement or alleged untrue statement of a
         material fact contained (A) in the Preliminary Offering Memorandum or
         the Offering Memorandum, or any amendment or supplement thereto or the
         reports filed pursuant to the Exchange Act and incorporated by
         reference in the Offering Memorandum or (B) in any materials or
         information provided to investors by, or with the approval of, the
         Company in connection with the marketing of the offering of the Offered
         Securities ("MARKETING MATERIALS") including any roadshow or investor
         presentations made to investors by the Company (whether in person or
         electronically) in any blue sky application or other document prepared
         or executed by the Company (or based upon any written information
         furnished by the Company) specifically for the purpose of qualifying
         any or all of the Offered Securities under the securities laws of any
         state or other jurisdiction (any such application, document or
         information being hereinafter called a "Blue Sky Application"), or (ii)
         the omission or alleged omission to state in the Preliminary Offering
         Memorandum or Offering Memorandum, or any amendment or supplement
         thereto, or the reports filed pursuant to the Exchange Act incorporated
         by reference in the Offering Memorandum or in any Marketing Materials
         any material fact required to be stated therein or necessary to make
         the statements therein, in light of the circumstances under which they
         were made, not misleading, (iii) any act or failure to act or any
         alleged act or failure to act by any Initial Purchaser in connection
         with, or relating in any manner to, the Offered Securities or the
         offering contemplated hereby, and that is included as part of or
         referred to in any loss, claim, damage, liability or action arising out
         of or based upon matters covered by clause (i) or (ii) above (provided
         that the Company shall not be liable under this clause (iii) to the
         extent that it is determined in a final judgment by a court of
         competent jurisdiction that such loss, claim, damage, liability or
         action resulted directly from any such acts or failures to act
         undertaken or omitted to be taken by such Initial Purchaser through its
         gross negligence or

                                       21
<PAGE>

         willful misconduct), and shall reimburse each Initial Purchaser and
         each such director, officer, employee, agent or controlling person
         promptly upon demand for any legal or other expenses reasonably
         incurred by that Initial Purchaser, director, officer, employee, agent
         or controlling person in connection with investigating or defending or
         preparing to defend against any such loss, claim, damage, liability or
         action as such expenses are incurred; provided, however, that the
         Company shall not be liable in any such case to the extent that any
         such loss, claim, damage, liability or action arises out of, or is
         based upon, any untrue statement or alleged untrue statement or
         omission or alleged omission made in the Preliminary Offering
         Memorandum or Offering Memorandum, or in any such amendment or
         supplement, in reliance upon and in conformity with written information
         concerning such Initial Purchaser furnished to the Company through the
         Initial Purchasers by or on behalf of any Initial Purchaser
         specifically for inclusion therein which information consists solely of
         the information specified in Section 6(e). The foregoing indemnity
         agreement is in addition to any liability which the Company may
         otherwise have to any Initial Purchaser or to any director, officer,
         employee, agent or controlling person of that Initial Purchaser.

                  (b)      Each Initial Purchaser, severally and not jointly,
         shall indemnify and hold harmless the Company, its directors, officers,
         employees, agents and each person, if any, who controls the Company
         within the meaning of either the Securities Act or the Exchange Act,
         from and against any loss, claim, damage or liability, joint or
         several, or any action in respect thereof, to which the Company or any
         such director, officer, employee or controlling person may become
         subject, under the Securities Act or Exchange Act otherwise, insofar as
         such loss, claim, damage, liability or action arises out of, or is
         based upon, (i) any untrue statement or alleged untrue statement of a
         material fact contained in the Preliminary Offering Memorandum or
         Offering Memorandum, or any amendment or supplement thereto or (ii) the
         omission or alleged omission to state in the Preliminary Offering
         Memorandum or Offering Memorandum or any amendment or supplement
         thereto or any material fact required to be stated therein or necessary
         to make the statements therein, in light of the circumstances under
         which they were made, not misleading, but in each case only to the
         extent that the untrue statement or alleged untrue statement or
         omission or alleged omission was made in reliance upon and in
         conformity with written information concerning such Initial Purchaser
         furnished to the Company through the Initial Purchasers by or on behalf
         of the Initial Purchasers specifically for inclusion therein; and shall
         reimburse the Company and any such director, officer, employee, agent
         or controlling persons for any reasonable legal or other expenses
         reasonably incurred by the Company or any such director, officer,
         employee, agent or controlling person in connection with investigating
         or defending or preparing to defend against any such loss, claim,
         damage, liability or action as such expenses are incurred. The
         foregoing indemnity agreement is in addition to any liability which the
         Initial Purchasers may otherwise have to the Company or any such
         director, officer, employee or controlling person.

                                       22
<PAGE>

                  (c)      Promptly after receipt by an indemnified party under
         this Section 6 of notice of any claim or the commencement of any
         action, the indemnified party shall, if a claim in respect thereof is
         to be made against the indemnifying party under this Section 6, notify
         the indemnifying party in writing of the claim or the commencement of
         that action; provided, however, that the failure to notify the
         indemnifying party shall not relieve it from any liability which it may
         have under this Section 6, except to the extent it has been materially
         prejudiced by such failure, or from any liability which it may have to
         an indemnified party otherwise than under this Section 6. If any such
         claim or action shall be brought against an indemnified party, and it
         shall notify the indemnifying party thereof, the indemnifying party
         shall be entitled to participate therein and, to the extent that it
         wishes, jointly with any other similarly notified indemnifying party,
         to assume the defense thereof with counsel reasonably satisfactory to
         the indemnified party. After notice from the indemnifying party to the
         indemnified party of its election to assume the defense of such claim
         or action, the indemnifying party shall not be liable to the
         indemnified party under this Section 6 for any legal or other expenses
         subsequently incurred by the indemnified party in connection with the
         defense thereof other than reasonable costs of investigation; provided,
         however, that the Initial Purchasers shall have the right to employ
         counsel to represent jointly the Initial Purchasers and their
         respective directors, officers, employees, agents and controlling
         persons who may be subject to liability arising out of any claim in
         respect of which indemnity may be sought by the Initial Purchasers
         against the Company under this Section 6 if, in the reasonable judgment
         of the Initial Purchasers, it is advisable for the Initial Purchasers,
         directors, officers, employees and controlling persons to be jointly
         represented by separate counsel, and in that event the fees and
         expenses of such separate counsel shall be paid by the indemnifying
         party. No indemnifying party shall (i) without the prior written
         consent of the indemnified parties (which consent shall not be
         unreasonably withheld), settle or compromise or consent to the entry of
         any judgment with respect to any pending or threatened claim, action,
         suit or proceeding in respect of which indemnification or contribution
         may be sought hereunder (whether or not the indemnified parties are
         actual or potential parties to such claim or action) unless such
         settlement, compromise or consent includes an unconditional release of
         each indemnified party from all liability arising out of such claim,
         action, suit or proceeding, or (ii) be liable for any settlement of any
         such claim, action, suit or proceeding effected without its written
         consent (which consent shall not be unreasonably withheld), but if
         settled with the written consent of the indemnifying party or if there
         be a final judgment in favor of the plaintiff in any such action, the
         indemnifying party agrees to indemnify and hold harmless any
         indemnified party from and against any loss or liability by reason of
         such settlement or judgment.

                  (d)      If the indemnification provided for in this Section 6
         shall for any reason be unavailable to or insufficient to hold harmless
         an indemnified party under Section 6(a) or 6(b) in respect of any loss,
         claim, damage or liability, or any action in respect thereof, referred
         to therein, then each indemnifying party shall,

                                       23
<PAGE>

         in lieu of indemnifying such indemnified party, contribute to the
         amount paid or payable by such indemnified party as a result of such
         loss, claim, damage or liability, or action in respect thereof, (i) in
         such proportion as shall be appropriate to reflect the relative
         benefits received by the Company on the one hand and the Initial
         Purchasers on the other hand from the offering of the Offered
         Securities or (ii) if the allocation provided by clause (i) above is
         not permitted by applicable law, in such proportion as is appropriate
         to reflect not only the relative benefits referred to in clause (i)
         above but also the relative fault of the Company on the one hand and
         the Initial Purchasers on the other with respect to the statements or
         omissions which resulted in such loss, claim, damage or liability, or
         action in respect thereof, as well as any other relevant equitable
         considerations. The relative benefits received by the Company on the
         one hand and the Initial Purchasers on the other with respect to such
         offering shall be deemed to be in the same proportion as the total net
         proceeds from the offering of the Offered Securities purchased under
         this Agreement (before deducting expenses) received by the Company, on
         the one hand, and the total initial purchaser discounts received by the
         Initial Purchasers with respect to the Offered Securities purchased
         under this Agreement, on the other hand, bear to the total gross
         proceeds from the offering of the Offered Securities under this
         Agreement. The relative fault shall be determined by reference to
         whether the untrue or alleged untrue statement of a material fact or
         omission or alleged omission to state a material fact relates to
         information supplied by the Company, on the one hand, or the Initial
         Purchasers, on the other hand, the intent of the parties and their
         relative knowledge, access to information and opportunity to correct or
         prevent such statement or omission. The Company and the Initial
         Purchasers agree that it would not be just and equitable if
         contributions pursuant to this Section 6(d) were to be determined by
         pro rata allocation (even if the Initial Purchasers were treated as one
         entity for such purposes) or by any other method of allocation which
         does not take into account the equitable considerations referred to
         herein. The amount paid or payable by an indemnified party as a result
         of the loss, claim, damage or liability, or action in respect thereof,
         referred to above in this Section 6(d) shall be deemed to include,
         subject to the limitations set forth above, for purposes of this
         Section 6(d), any legal or other expenses reasonably incurred by such
         indemnified party in connection with investigating or defending any
         such action or claim. Notwithstanding the provisions of this Section
         6(d), no Initial Purchasers shall be required to contribute any amount
         in excess of the amount by which the total price at which the Offered
         Securities purchased and resold by it exceeds the amount of any damages
         which such Initial Purchaser has otherwise paid or become liable to pay
         by reason of any untrue or alleged untrue statement or omission or
         alleged omission. No person guilty of fraudulent misrepresentation
         (within the meaning of Section 11(f) of the Securities Act) shall be
         entitled to contribution from any person who was not guilty of such
         fraudulent misrepresentation, the Initial Purchasers' obligations to
         contribute as provided in this Section 6(d) are several in proportion
         to their respective obligations and not joint. Each party entitled to
         contribution agrees that upon the service of a summons or other initial
         legal

                                       24
<PAGE>

         process upon it in any action instituted against it in respect to which
         contribution may be sought, it shall promptly give written notice of
         such service to the party or parties from which contribution may be
         sought, but the omission so to notify such party or parties of any such
         service shall not relieve the party from whom contribution may be
         sought for any obligation it may have hereunder or otherwise (except as
         specifically provided in subsection (c) hereof). The remedies provided
         for in this Section 6 are not exclusive and shall not limit any rights
         or remedies which may otherwise be available to any indemnified party
         in equity or at law.

                  (e)      The Initial Purchasers severally confirm and the
         Company acknowledges that (i) the legend concerning over-allotments on
         the cover page, and (ii) the paragraphs under the headings
         "Over-Allotment Option", "Stabilization and Short Positions", "Market
         for the Debentures" and "Passive Market Making Language for Nasdaq
         Traded Issues" under the caption "Plan of Distribution" constitute the
         only information concerning the Initial Purchaser furnished in writing
         to the Company by or on behalf of the Initial Purchaser specifically
         for inclusion in the Offering Memorandum.

                  7.       Defaulting Initial Purchasers.

                  If, on either Closing Date, any Initial Purchaser defaults in
the performance of its obligations under this Agreement, the remaining
non-defaulting Initial Purchasers shall be obligated to purchase the Offered
Securities which the defaulting Initial Purchaser agreed but failed to purchase
on such Closing Date in the respective proportions which the number of shares of
the Offered Securities set opposite the name of each remaining non-defaulting
Initial Purchaser in Schedule 1 hereto bears to the total number of shares of
the Offered Securities set opposite the names of all the remaining
non-defaulting Initial Purchasers in Schedule 1 hereto; provided, however, that
the remaining non-defaulting Initial Purchasers shall not be obligated to
purchase any of the Offered Securities on such Closing Date if the total number
of Offered Securities which the defaulting Initial Purchaser or Initial
Purchasers agreed but failed to purchase on such date exceeds 9.09% of the total
number of Offered Securities to be purchased on such Closing Date, and any
remaining non-defaulting Initial Purchaser shall not be obligated to purchase
more than 110% of the number of Offered Securities which it agreed to purchase
on such Closing Date pursuant to the terms of Section 2. If the foregoing
maximums are exceeded, the remaining non-defaulting Initial Purchasers, shall
have the right, but shall not be obligated, to purchase, in such proportion as
may be agreed upon among them, all the Offered Securities to be purchased on
such Closing Date. If the remaining Initial Purchasers do not elect to purchase
all of the Offered Securities which the defaulting Initial Purchaser or Initial
Purchasers agreed but failed to purchase on such Closing Date, this Agreement
(or, with respect to the Option Closing Date, the obligation of the Initial
Purchasers to purchase, and of the Company to sell, the Additional Offered
Securities) shall terminate without liability on the part of any non-defaulting
Initial Purchaser or the Company, except that the Company will continue to be
liable for the payment of expenses to the extent set forth in Section 9.

                                       25
<PAGE>

                  Nothing contained herein shall relieve a defaulting Initial
Purchaser of any liability it may have to the Company for damages caused by its
default. If other Initial Purchasers are obligated or agree to purchase the
Offered Securities of a defaulting or withdrawing Initial Purchaser, either the
Initial Purchasers or the Company may postpone the Closing Date for up to seven
full business days in order to effect any changes that in the opinion of counsel
for the Company or counsel for the Initial Purchasers may be necessary in the
Offering Memorandum or in any other document or agreement.

                  8.       Termination. The obligations of the Initial
Purchasers hereunder may be terminated by the Initial Purchasers by notice given
to and received by the Company prior to delivery of and payment for the Offered
Securities if, prior to that time, any of the events described in Sections 5(f)
or 5(i), shall have occurred or if the Initial Purchasers shall decline to
purchase the Offered Securities for any reason permitted under this Agreement.

                  9.       Reimbursement of Initial Purchasers' Expenses. If the
Company shall fail to tender the Offered Securities for delivery to the Initial
Purchasers by reason of any failure, refusal or inability on the part of the
Company to perform any agreement on its part to be performed, or because any
other condition of the Initial Purchasers' obligations hereunder required to be
fulfilled by the Company is not fulfilled, the Company will reimburse the
Initial Purchasers for all reasonable out-of-pocket expenses (including fees and
disbursements of counsel) incurred by the Initial Purchasers in connection with
this Agreement and the proposed purchase of the Offered Securities, and upon
demand the Company shall pay the full amount thereof to the Initial Purchasers.
If this Agreement is terminated pursuant to Section 8 by reason of the default
of one or more Initial Purchasers, the Company shall not be obligated to
reimburse any defaulting Initial Purchaser on account of those expenses.

                  10.      Notices, Etc. All statements, requests, notices and
agreements hereunder shall be in writing, and:

                  (a)      if to Lehman Brothers Inc., shall be delivered or
sent by mail, telex or facsimile transmission to Lehman Brothers Inc., 101
Hudson Street, Jersey City, New Jersey 07032, Attention: Syndicate Department
(Fax: 201524-5980), with a copy, in the case of any notice pursuant to Section
10(d), to the Director of Litigation, Office of the General Counsel, Lehman
Brothers Inc., 745 Seventh Avenue, New York, NY 10019; if to CIBC World Markets
shall be delivered or sent by mail telex or facsimile transmission to CIBC World
Markets, 425 Lexington Avenue, New York, NY 10017 (facsimile (212) 885-4901); if
to J.P. Morgan Securities Inc. shall be delivered or sent by telex or facsimile
transmission to J.P. Morgan Securities Inc., 560 Mission Street, San Francisco,
CA 94105 (facsimile ); and if to SG Cowen Securities Corporation shall be
delivered or sent by telex or facsimile transmission to SG Cowen Securities
Corporation, Four Embarcadero Center, Suite 1200, San Francisco, CA 94111.

                                       26
<PAGE>

                  (b)      if to the Company, shall be delivered or sent by
mail, telex or facsimile transmission to the address of the Company set forth in
the Offering Memorandum, Attention: Gina DiGioia (Fax: (212) 244-4311);

                  (c)      Any such statements, requests, notices or agreements
shall take effect at the time of receipt thereof. The Company shall be entitled
to act and rely upon any request, consent, notice or agreement given or made on
behalf of the Initial Purchasers by Lehman Brothers Inc. on behalf of the
Initial Purchasers.

                  11.      Survival. The respective indemnities,
representations, warranties and agreements of the Company and the Initial
Purchasers contained in this Agreement or made by or on behalf on them,
respectively, pursuant to this Agreement, shall survive the delivery of and
payment for the Offered Securities and shall remain in full force and effect,
regardless of any investigation made by or on behalf of any of them or any
person controlling any of them.

                  12.      Definition of the Terms . "Business Day" and
"Subsidiary". For purposes of this Agreement, (a) "business day" means each
Monday, Tuesday, Wednesday, Thursday or Friday which is not a day on which
banking institutions in New York are generally authorized or obligated by law or
executive order to close and (b) "subsidiary" has the meaning set forth in Rule
405 promulgated under the Securities Act.

                  13.      Persons Entitled to Benefit of Agreement. This
Agreement shall inure to the benefit of and be binding upon the Initial
Purchasers, the Company and their respective successors and the controlling
persons referred to in Section 6. This Agreement and the terms and provisions
hereof are for the sole benefit of only those persons, except that (x) the
representations, warranties, indemnities and agreements of the Company contained
in this Agreement shall also be deemed to be for the benefit of the directors,
officers, employees and agents of the Initial Purchasers and the person or
persons, if any, who control the Initial Purchasers within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act and (y) the
representations, warranties, indemnities and agreements of the Initial Purchaser
contained in this Agreement shall be deemed to be for the benefit of directors,
officers, employees and agents of the Company and any person controlling the
Company within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act. Nothing in this Agreement is intended or shall be
construed to give any person, other than the persons referred to in this Section
9, any legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision contained herein.

                  14.      Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO THE PRINCIPLES OF CONFLICTS OF LAWS OF THE STATE OF NEW YORK.

                                       27
<PAGE>

                  15.      Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same instrument.

                  16.      Headings. The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.

                  [Remainder of page intentionally left blank]

                                       28
<PAGE>

                  If the foregoing correctly sets forth the agreement among the
Company, and the Initial Purchasers, please indicate your acceptance in the
space provided for that purpose below.

                                           Very truly yours,

                                           Alloy, Inc.

                                           By     /s/ Samuel A.Gradess
                                             -----------------------------------
                                             Name: Samuel A. Gradess
                                             Title: Chief Financial Officer

                                       29
<PAGE>

Accepted:

LEHMAN BROTHERS INC.
CIBC WORLD MARKETS CORP.
J.P. MORGAN SECURITIES INC.
SG COWEN SECURITIES CORPORATION

By LEHMAN BROTHERS INC.

By   /s/ Grant Miller

Authorized Representative

                                       30
<PAGE>

                                   SCHEDULE 1

<TABLE>
<CAPTION>
Initial Purchasers                                                           Number of Shares
<S>                                                                          <C>
Lehman Brothers Inc. ................................................           45,500,000
CIBC World Markets Corp. .............................................           6,500,000
J.P. Morgan Securities Inc. ..........................................           6,500,000
SG Cowen Securities Corporation  .....................................           6,500,000
                                                                                ----------
Total.................................................................          65,000,000
</TABLE>

                                       31
<PAGE>

                                   SCHEDULE 2

                             OFFICERS AND DIRECTORS

<PAGE>

                                                                       EXHIBIT A

                            LOCK-UP LETTER AGREEMENT

                                                          July 17, 2003

LEHMAN BROTHERS INC.
CIBC WORLD MARKETS CORP.
J.P. MORGAN SECURITIES INC.
SG COWEN SECURITIES CORPORATION

c/o Lehman Brothers Inc.
745 Seventh Avenue
New York, New York 10019

Dear Sirs:

                  The undersigned understands that you and certain other firms
propose to enter into a Purchase Agreement (the "PURCHASE AGREEMENT") providing
for the purchase by you and such other firms (the "INITIAL PURCHASERS") of
Convertible Senior Debentures due August 1, 2023 (the "FIRM OFFERED SECURITIES")
of Alloy, Inc. a Delaware corporation (the "Company"), and that the Initial
Purchasers propose to reoffer the Offered Securities to the public (the
"Offering"). Capitalized terms not otherwise defined herein shall have the
meaning(s) set forth in the Purchase Agreement.

                  In consideration of the execution of the Purchase Agreement by
the Initial Purchasers, and for other good and valuable consideration, the
undersigned hereby irrevocably agrees that, without the prior written consent of
Lehman Brothers Inc., on behalf of the Initial Purchasers, the undersigned will
not, directly or indirectly, (1) offer for sale, sell, pledge, or otherwise
dispose of (or enter into any transaction or device that is designed to, or
could be expected to, result in the disposition by any person at any time in the
future of) any shares of Common Stock (including, without limitation, shares of
Common Stock that may be deemed to be beneficially owned by the undersigned in
accordance with the rules and regulations of the Securities and Exchange
Commission and shares of Common Stock that may be issued upon exercise of any
option or warrant) or securities convertible into or exchangeable for Common
Stock (other than the Offered Securities) owned by the undersigned on the date
of execution of this Lock-Up Letter Agreement or on the date of the completion
of the Offering, or (2) enter into any swap or other derivatives transaction
that transfers to another, in whole or in part, any of the economic benefits or
risks of ownership of such shares of Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or other securities, in cash or otherwise, for a period of 90 days after
the date of the final Offering

<PAGE>

Memorandum relating to the Offering. Capitalized terms not otherwise defined
herein shall have the meaning(s) set forth in the Purchase Agreement.

                  In furtherance of the foregoing, the Company and its Transfer
Agent are hereby authorized to decline to make any transfer of securities if
such transfer would constitute a violation or breach of this Lock-Up Letter
Agreement.

                  It is understood that, if the Company notifies you that it
does not intend to proceed with the Offering, if the Purchase Agreement does not
become effective, or if the Purchase Agreement (other than the provisions
thereof which survive termination) shall terminate or be terminated prior to
payment for and delivery of the Offered Securities, we will be released from my
obligations under this Lock-Up Letter Agreement.

                  The undersigned understands that the Company and the Initial
Purchasers will proceed with the Offering in reliance on this Lock-Up Letter
Agreement.

                  Whether or not the Offering actually occurs depends on a
number of factors, including market conditions. Any Offering will only be made
pursuant to a Purchase Agreement, the terms of which are subject to negotiation
between the Company and the Initial Purchasers.

                  The undersigned hereby represents and warrants that the
undersigned has full power and authority to enter into this Lock-Up Letter
Agreement and that, upon request, the undersigned will execute any additional
documents necessary in connection with the enforcement hereof. Any obligations
of the undersigned shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned.

                                           Very truly yours,

                                           By:______________________________
                                              Name:
                                              Title:

Dated: ____________________

                                       2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00067-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00067-of-00352.parquet"}]]