DEFA14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 23, 2010

ALLOY, INC.

(Exact Name of Registrant as Specified in Charter)

Delaware	000-26023	04-3310676
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

151 West 26th Street, 11th Floor

New York, NY 10001

(Address of principal executive offices)

Registrant’s telephone number, including area code: (212) 244-4307

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

x Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement

The Merger Agreement

On June 23, 2010, Alloy, Inc., a Delaware corporation (“Alloy”), entered into a definitive Agreement and Plan of Merger (the “Merger Agreement”) with Alloy Media Holdings, L.L.C., a Delaware limited liability company (“Parent”), and Lexington Merger Sub Inc., a wholly-owned subsidiary of Parent (“Merger Subsidiary”). Parent is a newly-formed entity to be owned by ZM Capital, L.P. and other co-investors. In addition, certain members of management of Alloy, including Matthew C. Diamond, Chief Executive Officer and James K. Johnson, President and Chief Operating Officer, will exchange a portion of their Alloy shares for an equity interest in Parent. Geraldine Laybourne, former CEO of Nickelodeon, is expected to serve as Chairman of Alloy following the consummation of this transaction.

Pursuant to the terms of the Merger Agreement, and subject to the conditions thereof, Merger Subsidiary will merge with and into Alloy, and Alloy will become a wholly-owned subsidiary of Parent (the “Merger”).

In connection and concurrently with the Merger Agreement, certain stockholders of Alloy, including Messrs. Diamond and Johnson, entered into a voting agreement with Parent pursuant to which such stockholders committed to vote in the aggregate approximately 25% of the outstanding shares of Alloy common stock in favor of the Merger, as more fully described below.

At the effective time and as a result of the Merger, each outstanding share of Alloy common stock, other than shares owned by Alloy, Parent or Merger Subsidiary and other than those shares with respect to which appraisal rights are properly exercised and not withdrawn, will be converted into the right to receive $9.80, in cash, without interest.

Each option to purchase Alloy common stock outstanding immediately prior to the effective time of the Merger will become fully vested and exercisable immediately prior to the effective time of the Merger, and the holder will be entitled to receive the difference (if positive) between the merger consideration and the exercise price for each share of Alloy common stock subject to such outstanding option. Each restricted share of Alloy common stock outstanding immediately prior to the effective time of the Merger (other than Cancelled Shares, as defined below) will, to the extent not vested, vest as of the effective time of the Merger, and the holder will be entitled to receive the merger consideration.

Prior to and in connection with its entry into the Merger Agreement, the Company entered into agreements with a certain number of employees of Alloy who hold unvested restricted shares of Alloy common stock, in which such holders agreed to the cancellation of such unvested restricted shares (collectively, the “Cancelled Shares”) in exchange for contingent membership units of Parent. The cancellation of such Cancelled Shares will be effective as of and contingent upon the effective time of the Merger.

Consummation of the Merger is subject to certain conditions, including (i) the adoption of the Merger Agreement by Alloy’s stockholders, (ii) the absence of any law or order prohibiting the closing, (iii) the receipt in full of the debt financing for the transaction, (iv) the expiration or termination of any waiting period (and any extension thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (v) subject to certain exceptions, the accuracy of representations and warranties, (vi) clearance by the Securities and Exchange Commission of proxy materials, (vii) the satisfaction of certain financial tests by Alloy, and (viii) certain other customary closing conditions.

Parent and Merger Subsidiary have secured committed financing, consisting of a combination of equity to be provided by an investor group and debt financing from a group of lenders led by Bank of America, N.A., the aggregate proceeds of which will be sufficient for Parent and Merger Subsidiary to pay the aggregate merger consideration and all related fees and expenses and to provide a working capital facility for the surviving company. Parent and Merger Subsidiary have committed to use their reasonable best efforts to obtain the debt financing on the terms and conditions described in the debt commitment letter (the “Debt Commitment Letter”) entered into on June 23, 2010 with its debt financing sources, which is filed as Exhibit 99.1 hereto. If the debt financing is not available, Parent and Merger Subsidiary have agreed to use reasonable best efforts to arrange and obtain alternate debt financing in an amount sufficient to consummate the transactions under the Merger Agreement, upon terms not materially less favorable, in the aggregate, to Parent and Merger Subsidiary than those in the Debt Commitment Letter. Alloy has a general obligation to use its reasonable best efforts to provide cooperation reasonably requested by Parent in connection with the debt financing.

Parent and Merger Subsidiary have committed to provide the equity financing, and are obligated, among other things, to maintain in effect the equity commitment letters (collectively, the “Equity Commitment Letters”) entered into on June 23, 2010 with its equity co-investors, which are filed as Exhibits 99.2 through 99.6 hereto, comply with covenants and ensure the accuracy of representations and warranties set forth in the Equity Commitment Letters, satisfy all conditions in the Equity Commitment Letters, consummate the equity financing upon satisfaction of the closing conditions in the Equity Commitment Letters and enforce the obligations of the co-investors.

Alloy, Parent and Merger Subsidiary have made customary representations, warranties and covenants in the Merger Agreement, including covenants to use reasonable best efforts to cause the Merger to be consummated. In addition, Alloy has covenanted (i) to cause a stockholder meeting to be held to consider approval of the transactions contemplated by the Merger Agreement, (ii) subject to certain exceptions, for Alloy’s board of directors to recommend adoption of the Merger Agreement by Alloy’s stockholders, (iii) not to solicit proposals relating to alternative business combination transactions and (iv) subject to certain exceptions, not to enter into discussions concerning or provide confidential information in connection with alternative business combination transactions.

Prior to the adoption of the Merger Agreement by Alloy’s stockholders, Alloy’s board of directors may, in certain circumstances, change its recommendation with respect to the Merger in response to a Superior Proposal or an Intervening Event (in each case, as defined in the Merger Agreement) upon compliance with certain notice and other specified conditions set forth in the Merger Agreement.

The Merger Agreement contains certain termination rights for both Alloy and Parent, including (i) the right of Alloy or Parent to terminate the Merger Agreement if Alloy’s board of directors fails to make, withdraws, or adversely modifies its recommendation with respect to the Merger, (ii) the right of Parent to terminate the Merger Agreement if a tender or exchange offer for outstanding shares of Alloy common stock is commenced and Alloy’s board of directors recommends that Alloy’s stockholders tender their shares in such offer, or fails to recommend against such offer and reaffirm its recommendation to adopt the Merger Agreement, or Alloy enters into an agreement to effect a third party acquisition proposal, and (iii) certain other customary termination rights. The Merger Agreement further provides that upon termination of the Merger Agreement under specified circumstances, including the circumstances described in the foregoing clauses (i) and (ii), Alloy would be required to pay Parent a cash termination fee of $3.9 million (the “Company Termination Fee”). In addition, Alloy is obligated under the Merger Agreement to pay Parent up to $2.5 million as reimbursement for expenses incurred in connection with the transactions contemplated by the Merger Agreement if Alloy or Parent terminates the Merger Agreement due to (a) a failure to consummate the Merger on or before December 15, 2010 if stockholder approval has not been obtained (the “Outside Date”), (b) the failure of Alloy’s stockholders to approve the transaction at the stockholders meeting, or (c) an uncured material breach by Alloy of any of its covenants, agreements, representations or warranties in the Merger Agreement, which breach would result in a failure of a closing condition if the breach occurs or continues on the closing, and where a third party acquisition proposal has been publicly announced and not withdrawn. In the event that within twelve months following the date of such termination Alloy has entered into a definitive agreement with respect to or recommended to its stockholders a third party acquisition proposal, then Alloy must pay the Company Termination Fee, with an offset for any expense reimbursement previously paid to Parent.

In addition, the Merger Agreement provides that if Parent or Alloy terminates the Merger Agreement due to the failure of Alloy’s stockholders to approve the transaction at the stockholders meeting (and Alloy is not otherwise obligated to reimburse Parent for expenses upon a stockholder no-vote), then Alloy must pay Parent up to $2.5 million as reimbursement for expenses incurred in connection with the transactions contemplated by the Merger Agreement.

Parent is obligated under the Merger Agreement to pay a cash termination fee of $5.8 million to Alloy if (i) Alloy or Parent terminates the Merger Agreement due to a failure to consummate the Merger on or before the Outside Date and (A) all conditions to the closing are satisfied other than the receipt in full of the debt financing for the transaction, but (B) the full proceeds of the appropriate debt financing would be available to be drawn down by Parent if Parent funded the equity financing at closing, or (ii) Alloy terminates the Merger Agreement because of an uncured material breach by Parent of any of its covenants, agreements, representations or warranties in the Merger Agreement, which breach would result in a failure of a closing condition if the breach occurs or continues on the closing. ZM Capital, L.P. has agreed to guarantee any such amounts payable by Parent to Alloy pursuant to that certain Limited Guarantee dated June 23, 2010, by ZM Capital, L.P., in favor of Alloy, which is filed as Exhibit 99.7 hereto.

Messrs. Diamond and Johnson have entered into agreements with Parent pursuant to which they have agreed to contribute at least 470,007 and 438,196 Alloy shares owned by them, respectively, in exchange for equity

interests in Parent. Messrs. Diamond and Johnson, on the one hand, and Parent, on the other, have agreed to enter into employment and non-competition agreements with Parent that become effective only upon consummation of the Merger. See the disclosure regarding Compensatory Arrangements of Certain Officers under Item 5.02 below for additional information.

The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, which is filed as Exhibit 2.1 hereto.

The Voting Agreement

On June 23, 2010, as an inducement for Parent and Merger Subsidiary to enter into the Merger Agreement, (i) Matthew C. Diamond, (ii) James K. Johnson, (iii) Jeffrey Jacobowitz (a member of the Board of Directors of Alloy) and certain investment entities affiliated with him and (iv) Steven R. Becker and Matthew A. Drapkin (a member of the Board of Directors of Alloy), and certain investment entities affiliated with Messrs. Becker and Drapkin (collectively, the “Supporting Stockholders”), which collectively own approximately 25% of the outstanding shares of Alloy common stock, entered into a Stockholder Voting Agreement (the “Voting Agreement”) with Parent and Alloy. The Voting Agreement provides that the Supporting Stockholders will vote (or cause to be voted) all of their shares of Alloy common stock (i) in favor of, among other things, the approval and adoption of the Merger Agreement and (ii) against, among other things, any alternative business transaction involving Alloy. Each Supporting Stockholder has also granted an irrevocable proxy appointing Parent as such Supporting Stockholder’s attorney-in-fact to vote his or its shares covered by the aforementioned voting obligations as required.

Each Supporting Stockholder has agreed that, other than according to the terms of the Voting Agreement, it will not (i) grant any proxies or enter into any voting trust or any voting agreement or arrangement with respect to with respect to the voting of any shares of Alloy common stock or (ii) subject to certain limited exceptions, transfer, sell, or otherwise dispose of any shares of Alloy common stock during the term of the Voting Agreement.

The Voting Agreement will terminate on the earlier of (i) the effective time of the Merger and (ii) the termination of the Merger Agreement by any party thereto in accordance with its terms. In addition, each Supporting Stockholder may terminate the Voting Agreement (as to such Supporting Stockholder) following any amendment to the Merger Agreement that (i) decreases the amount of merger consideration which such Supporting Stockholder would have the right to receive in the Merger or (ii) changes any of the merger consideration from cash to non-cash consideration.

The foregoing description of the Voting Agreement does not purport to be complete and is qualified in its entirety by reference to the Voting Agreement, which is filed as Exhibit 99.8 hereto, and is incorporated into this report by reference.

The Termination Agreements

On June 23, 2010, in connection with the entry by the Company into the Merger Agreement, Alloy, Steven R. Becker and Matthew A. Drapkin, and certain investment entities affiliated with Messrs. Becker and Drapkin entered into a Termination Agreement (the “Drapkin

Termination Agreement”), in respect of that certain Agreement, dated April 15, 2010, by and between Alloy, SRB Management, L.P., BD Media Investors LP, SRB Greenway Opportunity Fund, (QP), L.P., SRB Greenway Opportunity Fund, L.P., BC Advisors, LLC, Steven R. Becker and Matthew A. Drapkin. Alloy also entered into a Termination Agreement (the “Jacobowitz Termination Agreement,” and together with the Drapkin Termination Agreement, the “Termination Agreements”) with Jeffrey Jacobowitz and certain investment entities affiliated with Mr. Jacobowitz, in respect of that certain Agreement, dated April 15, 2010, by and between Alloy, Simcoe Partners, L.P., Simcoe Opportunity Partners, L.P., Simcoe Service Company, LLC, Simcoe Management Company, LLC and Jeffrey Jacobowitz.

The Termination Agreements will be effective as of the effective time under the Merger Agreement.

The foregoing description of the Termination Agreements does not purport to be complete and is qualified in its entirety by reference to the Termination Agreements, which are filed as Exhibits 99.9 and 99.10, respectively, and are incorporated into this report by reference.

The Merger Agreement has been attached as an exhibit to provide investors with information regarding its terms. It is not intended to provide any other factual information about Parent, Merger Subsidiary or Alloy. The representations, warranties and covenants contained in the Merger Agreement were made solely for purposes of such agreement and as of specific dates, were solely for purposes of the Merger Agreement and the benefit of the parties to the Merger Agreement, and may be subject to limitations agreed upon by the contracting parties. Certain of the representations and warranties have been made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts. Investors are not third-party beneficiaries under the Merger Agreement. In addition, the representations and warranties contained in the Merger Agreement (i) are qualified by information in a confidential disclosure schedule that the parties have exchanged, (ii) were made only as of the date of such Merger Agreement or a prior, specified date, and (iii) in some cases are subject to qualifications with respect to materiality, knowledge and/or other matters, including standards of materiality applicable to the contracting parties that differ from those applicable to investors. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in Alloy’s public disclosures. Accordingly, investors should not rely on the representations and warranties as characterizations of the actual state of facts or condition of Alloy or Parent or any of their respective subsidiaries or affiliates.

Item 3.03 Material Modification to Rights of Security Holders

On June 23, 2010, prior to the execution of the Merger Agreement, Alloy and American Stock Transfer & Trust Company (the “Rights Agent”) entered into Amendment No. 1 to Stockholder Rights Agreement (“Amendment No. 1”), which makes certain amendments to the Stockholder Rights Agreement dated April 14, 2003, by and between Alloy and the Rights Agent (the “Rights Agreement”).

Amendment No. 1 amended the Rights Agreement to, among other things, render the rights therein inapplicable to the Merger, the Merger Agreement and the transactions contemplated thereby. In addition, Amendment No. 1 provides that immediately prior to the effective time under the Merger Agreement, but only if the effective time occurs, the Rights Agreement will terminate.

Item 5.01 Changes of Control of Registrant

If the Merger is consummated, there will be a change in control of Alloy. See the disclosure regarding the Merger and the Merger Agreement under Item 1.01 above for additional information.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

In connection with execution of the Merger Agreement, Messrs. Diamond and Johnson have agreed to enter into employment agreements with Parent, which agreements will be modeled along the same principles as their existing employment arrangements with Alloy, as set forth in the Summary of Employment and Equity Terms for each of Mr. Diamond and Johnson, which are filed as Exhibits 99.11 and 99.12, respectively. The foregoing agreements, when executed, will become effective only upon the consummation of the Merger.

On June 23, 2010, the Board of Directors of Alloy authorized a special payment to Peter L. Graham (lead independent director and Chairman of the Special Committee of the Board of Directors of Alloy) of $100,000, in recognition of his efforts in connection with the Merger.

IMPORTANT ADDITIONAL INFORMATION WILL BE FILED WITH THE SEC

Alloy plans to file with the SEC and mail to its stockholders a Proxy Statement in connection with the transaction. The Proxy Statement will contain important information about Parent, Alloy, the Merger and related matters. Investors and security holders are urged to read the Proxy Statement carefully when it is available. Investors and security holders may obtain a free copy of the proxy statement and any other relevant documents (when available) at the SEC’s web site at http://www.sec.gov.

In addition, the definitive proxy statement and these other documents also will be available on Alloy’s website (http://www.alloymarketing.com) and may be obtained free from Alloy by directing a request to Alloy, Inc., Attn: Investor Relations, 151 West 26th Street, 11th Floor, New York, NY 10001.

Alloy, and its directors and executive officers, may be deemed to be participants in the solicitation of proxies from Alloy’s stockholders with respect to the transactions contemplated by the Merger Agreement. Information about the directors and executive officers of Alloy and their respective interests in Alloy by security holdings or otherwise is set forth in its proxy statement relating to the 2010 annual meeting of stockholders, which was filed with the SEC on May 28, 2010. Investors may obtain additional information regarding the interest of the participants by reading the proxy statement regarding the proposed transaction when it becomes available.

Item 9.01. Financial Statements and Exhibits

(d) See the Exhibit Index attached to this Current Report on Form 8-K, which is incorporated herein by reference.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	ALLOY, INC.
Date: June 28, 2010	By:	/S/    MATTHEW C. DIAMOND
		Matthew C. Diamond
		Chairman of the Board and Chief Executive Officer

EXHIBIT INDEX

Exhibit No.	Description
Exhibit 2.1	Agreement and Plan of Merger dated as of June 23, 2010, by and among Alloy, Inc., Alloy Media Holdings, L.L.C. and Lexington Merger Sub Inc.
Exhibit 4.1	Amendment No. 1 to Stockholder Rights Plan dated as of June 23, 2010, by and between Alloy, Inc. and American Stock Transfer & Trust Company.
Exhibit 99.1	Letter Agreement dated as of June 23, 2010, by and among Bank of America, N.A., Banc of America Securities LLC, RBS Citizens, N.A., The Private Bank, Alloy Media Holdings, L.L.C. and Lexington Merger Sub Inc.
Exhibit 99.2	Letter Agreement dated as of June 23, 2010, by and between Alloy Media Holdings, L.L.C. and ZM Capital, L.P.
Exhibit 99.3	Letter Agreement dated as of June 23, 2010, by and between Alloy Media Holdings, L.L.C. and Private Equity Direct Partnership II (QP), LP.
Exhibit 99.4	Letter Agreement dated as of June 23, 2010, by and between Alloy Media Holdings, L.L.C. and Hudson River Co-Investment Fund, L.P.
Exhibit 99.5	Letter Agreement dated as of June 23, 2010, by and between Alloy Media Holdings, L.L.C. and NPE Caspian I B, L.P.
Exhibit 99.6	Letter Agreement dated as of June 23, 2010, by and among Alloy Media Holdings, L.L.C., Rosemont Solebury Co-Investment Fund, L.P. and Rosemont Solebury Co-Investment Fund (Offshore), L.P.
Exhibit 99.7	Limited Guarantee dated as of June 23, 2010, by ZM Capital, L.P., in favor of Alloy, Inc.
Exhibit 99.8	Stockholder Voting Agreement dated as of June 23, 2010, by and among Alloy Media Holdings, L.L.C., the stockholders named therein, and Alloy, Inc.
Exhibit 99.9	Termination Agreement dated as of June 23, 2010, by and among Alloy, Inc., SRB Management, L.P., BD Media Investors LP, SRB Greenway Opportunity Fund, (QP), L.P., SRB Greenway Opportunity Fund, L.P., BC Advisors, LLC, Steven R. Becker and Matthew A. Drapkin.

Exhibit 99.10	Termination Agreement dated as of June 23, 2010, by and among Alloy, Inc., Simcoe Partners, L.P., Simcoe Opportunity Partners, L.P., Simcoe Service Company, LLC, Simcoe Management Company, LLC and Jeffrey Jacobowitz.
Exhibit 99.11	Summary of Employment and Equity Terms, Matthew C. Diamond (President & CEO).
Exhibit 99.12	Summary of Employment and Equity Terms, James K. Johnson, Jr. (Chief Operating Officer).

EX-2.1

Exhibit 2.1

EXECUTION VERSION

AGREEMENT AND PLAN OF MERGER

dated as of

June 23, 2010

among

ALLOY, INC.,

ALLOY MEDIA HOLDINGS, L.L.C.

and

LEXINGTON MERGER SUB INC.

TABLE OF CONTENTS

		PAGE
ARTICLE 1 DEFINITIONS
Section 1.01	Definitions	1
Section 1.02	Other Definitional and Interpretative Provisions	9
ARTICLE 2 THE MERGER
Section 2.01	The Merger	9
Section 2.02	Conversion of Shares	10
Section 2.03	Surrender and Payment	10
Section 2.04	Stock Options and Restricted Shares	12
Section 2.05	Treatment of Warrants	13
Section 2.06	Dissenting Shares	13
Section 2.07	Adjustments	13
Section 2.08	Withholding Rights	14
Section 2.09	Lost Certificates	14
ARTICLE 3 THE SURVIVING CORPORATION
Section 3.01	Certificate of Incorporation	14
Section 3.02	Bylaws	14
Section 3.03	Directors and Officers	14
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.01	Corporate Existence and Power	15
Section 4.02	Corporate Authorization	15
Section 4.03	Governmental Authorization	16
Section 4.04	Non-contravention	16
Section 4.05	Capitalization	17
Section 4.06	Subsidiaries	18
Section 4.07	SEC Filings	19
Section 4.08	Financial Statements	20
Section 4.09	No Undisclosed Material Liabilities	20
Section 4.10	Information Supplied	20
Section 4.11	Absence of Certain Changes	21
Section 4.12	Compliance with Laws	22
Section 4.13	Litigation	23
Section 4.14	Properties	23
Section 4.15	Intellectual Property	23

i

Section 4.16	Taxes	26
Section 4.17	Environmental Matters	27
Section 4.18	Employee Benefit Plans	28
Section 4.19	Labor.	30
Section 4.20	Material Contracts	31
Section 4.21	Stockholder Rights Agreement; State Takeover Statutes	34
Section 4.22	Finders’ Fees	34
Section 4.23	Opinion of Financial Advisor	34
Section 4.24	Insurance	34
Section 4.25	No Other Information	35
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBSIDIARY
Section 5.01	Corporate Existence and Power	35
Section 5.02	Corporate Authorization	36
Section 5.03	Governmental Authorization	36
Section 5.04	Non-contravention	36
Section 5.05	Ownership of Company Stock	37
Section 5.06	Information Supplied	37
Section 5.07	Litigation	37
Section 5.08	Parent Financial Capability	37
Section 5.09	Operations of Parent and Merger Subsidiary	38
Section 5.10	Solvency	38
Section 5.11	Guarantee	39
Section 5.12	Agreements with Company Stockholders, Directors or Management	39
Section 5.13	Access to Information; Disclaimer	39
ARTICLE 6 COVENANTS OF THE COMPANY
Section 6.01	Conduct of the Company	40
Section 6.02	Company Stockholder Meeting	43
Section 6.03	No Solicitation; Other Offers; Obligation to Terminate Existing Discussions	44
Section 6.04	Access to Information	46
Section 6.05	Tax Matters	47
ARTICLE 7 COVENANTS OF PARENT
Section 7.01	Voting of Shares	47
Section 7.02	Director and Officer Liability	47
Section 7.03	Employee Matters	49
Section 7.04	Equity Financing Commitment	50

ii

ARTICLE 8 COVENANTS OF PARENT AND THE COMPANY
Section 8.01	Reasonable Best Efforts	51
Section 8.02	Regulatory Filings	51
Section 8.03	Proxy Statement and Other Required Company Filings	52
Section 8.04	Public Announcements	53
Section 8.05	Further Assurances	54
Section 8.06	Notices of Certain Events	54
Section 8.07	Section 16 Matters	54
Section 8.08	Stock Exchange De-listing; 1934 Act Deregistration	55
Section 8.09	Debt Financing Commitment.	55
ARTICLE 9 CONDITIONS TO THE MERGER
Section 9.01	Conditions to the Obligations of Each Party	58
Section 9.02	Conditions to the Obligations of Parent and Merger Subsidiary	58
Section 9.03	Conditions to the Obligations of the Company	59
Section 9.04	Frustration of Closing Conditions	60
ARTICLE 10 TERMINATION
Section 10.01	Termination	60
Section 10.02	Effect of Termination	62
ARTICLE 11 MISCELLANEOUS
Section 11.01	Notices	62
Section 11.02	Survival	63
Section 11.03	Amendments and Waivers	63
Section 11.04	Expenses	64
Section 11.05	Disclosure Schedule and SEC Document References	66
Section 11.06	Binding Effect; Benefit; Assignment	67
Section 11.07	Governing Law	67
Section 11.08	Jurisdiction	67
Section 11.09	WAIVER OF JURY TRIAL	67
Section 11.10	Counterparts; Effectiveness	67
Section 11.11	Entire Agreement	68
Section 11.12	Severability	68
Section 11.13	Specific Performance.	68

iii

AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made as of June 23, 2010 by and among Alloy, Inc., a Delaware corporation (the “Company”), Alloy Media Holdings, L.L.C., a Delaware limited liability company (“Parent”), and Lexington Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of Parent (“Merger Subsidiary”).

W I T N E S S E T H :

WHEREAS, the respective Boards of Directors or Managing Member of the Company, Parent and Merger Subsidiary have approved and deemed advisable the transactions contemplated by this Agreement, pursuant to which, among other things, Parent would acquire the Company by means of a merger of Merger Subsidiary with and into the Company on the terms and subject to the conditions set forth in this Agreement;

WHEREAS, as an inducement and condition to Parent’s willingness to enter into this Agreement, (i) certain stockholders of the Company are entering into a voting agreement with Parent simultaneously with the execution of this Agreement (the “Voting Agreement”), whereby, among other things, such stockholders have agreed to vote their shares representing, in the aggregate, 25% of the shares of the Company outstanding as of the date hereof in favor of the approval and adoption of this Agreement and (ii) certain stockholders of the Company have executed the Rollover Commitment Letters (as defined below) simultaneously with the execution of this Agreement, whereby, such stockholders will exchange Rollover Shares (as defined below) for equity interests in Parent; and

WHEREAS, the Company, Parent and Merger Subsidiary desire to make certain representations, warranties, covenants and other agreements in connection with the transactions contemplated by this Agreement and to prescribe certain conditions with respect to the consummation of the transactions contemplated by this Agreement.

NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows:

ARTICLE 1

DEFINITIONS

Section 1.01 Definitions. (a) As used herein, the following terms have the following meanings:

“1933 Act” means the Securities Act of 1933.

“1934 Act” means the Securities Exchange Act of 1934.

“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person. For purposes of the immediately preceding sentence, the term “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise.

“Applicable Law” means, with respect to any Person, any federal, state or local law (statutory, common or otherwise), constitution, treaty, convention, ordinance, code, rule, regulation, order, injunction, judgment, decree, ruling or other similar requirement enacted, adopted, promulgated or applied by a Governmental Authority that is binding upon or applicable to such Person, as amended unless expressly specified otherwise.

“Business Day” means a day, other than Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by Applicable Law to close.

“Code” means the Internal Revenue Code of 1986, as amended.

“Company Acquisition Proposal” means, other than the transactions contemplated by this Agreement, any bona fide, written offer, proposal or inquiry relating to, or any Third Party indication of interest in, (i) any acquisition or purchase, direct or indirect, of 20% or more of the consolidated assets of the Company and its Subsidiaries or 20% or more of any class of equity or voting securities of the Company or any of its Subsidiaries whose assets, individually or in the aggregate, constitute 20% or more of the consolidated assets of the Company, (ii) any tender offer (including a self-tender offer) or exchange offer that, if consummated, would result in such Third Party’s beneficially owning 20% or more of any class of equity or voting securities of the Company or any of its Subsidiaries whose assets, individually or in the aggregate, constitute 20% or more of the consolidated assets of the Company or (iii) a merger, consolidation, share exchange, business combination, sale of substantially all the assets, reorganization, recapitalization, liquidation, dissolution or other similar transaction involving the Company or any of its Subsidiaries whose assets, individually or in the aggregate, constitute 20% or more of the consolidated assets of the Company; provided, however, that any Excluded Transaction shall not constitute a Company Acquisition Proposal.

“Company Balance Sheet” means the consolidated balance sheet of the Company as of January 31, 2010 and the footnotes thereto set forth in the Company 10-K.

“Company Balance Sheet Date” means January 31, 2010.

“Company Disclosure Schedule” means the disclosure schedule dated the date hereof regarding this Agreement that has been provided by the Company to Parent and Merger Subsidiary.

“Company Scheduled Contract” means each contract or agreement filed or incorporated by reference as an exhibit to the Company 10-K pursuant to Item 601(b)(10) of Regulation S-K under the 1933 Act.

“Company Stock” means the common stock, $0.01 par value, of the Company.

“Company Stock Plans” means (i) the Alloy, Inc. Amended and Restated 2007 Employee Director and Consultant Stock Incentive Plan, (ii) the Alloy, Inc. Amended and Restated 2002

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Restricted Stock and Non-Qualified Stock Option Plan, (iii) the Alloy, Inc. Amended and Restated 1997 Employee, Director and Consultant Stock Option and Stock Incentive Plan, (iv) the iTurf Inc. Amended and Restated 1999 Stock Incentive Plan, (v) the Alloy, Inc. 1999 Employee Stock Purchase Plan and (vi) the dELiA*s Inc. 1998 Stock Incentive Plan.

“Company 10-K” means the Company’s annual report on Form 10-K for the fiscal year ended January 31, 2010.

“Copyrights” has the meaning specified in the definition of “Intellectual Property Rights.”

“Delaware Law” means the General Corporation Law of the State of Delaware.

“Domain Names” has the meaning specified in the definition of “Intellectual Property Rights.”

“Environmental Laws” means any Applicable Laws or any agreement with any Person relating to human health and safety, the environment or to any pollutant, contaminant, waste or chemical or any toxic, radioactive, ignitable, corrosive, reactive or otherwise hazardous substance, waste or material.

“Environmental Permits” means all permits, licenses, franchises, certificates, consents, approvals and other similar authorizations of Governmental Authorities relating to or required by Environmental Laws and relating to the business of the Company or any of its Subsidiaries as currently conducted.

“ERISA” means the Employee Retirement Income Security Act of 1974.

“Excluded Transaction” means (i) any acquisition or purchase, direct or indirect, of any portion of the assets of, or any equity interest in, any of the Company’s businesses or assets which are solely related to the Company’s “FrontLine” business or (ii) any transaction offer, proposal or inquiry relating to, or any Third Party indication of interest in, any acquisition or purchase, direct or indirect, of any portion of the assets of, or any equity interest in, any of the Company’s businesses or assets which are solely related to the uniform resource locator (“URL”) designations relating to the business conducted by the Company’s “dELiA*s” business.

“FrontLine Asset Purchase Agreement” means that certain Asset Purchase Agreement dated as of June 7, 2010, by and among Acosta, Inc., Acosta Frontline, LLC, Alloy Media, LLC, and the Company.

“GAAP” means generally accepted accounting principles in the United States.

“Governmental Authority” means any transnational, domestic or foreign federal, state or local governmental, regulatory or administrative authority, department, court, agency or official, including any political subdivision thereof or arbitral or similar forum.

“Hazardous Substance” means any pollutant, contaminant, waste or chemical or any toxic, radioactive, ignitable, corrosive, reactive or otherwise hazardous substance, waste or

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material, or any substance, waste or material having any constituent elements displaying any of the foregoing characteristics, including any substance, waste or material regulated under any Environmental Law.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

“Intellectual Property Rights” means all intellectual property rights of any kind, including (i) all domestic and foreign copyright interests in any original work of authorship, whether registered or unregistered, including but not limited to all copyright registrations or foreign equivalent, all applications for registration or foreign equivalent, all moral rights, all common-law rights, and all rights to register and obtain renewals and extensions of copyright registrations, together with all other copyright interests accruing by reason of international copyright convention (“Copyrights”); (ii) all domestic and foreign patents (including certificates of invention and other patent equivalents), provisional applications, patent applications and patents issuing therefrom as well as any division, continuation or continuation in part, reissue, extension, reexamination, certification, revival or renewal of any patent, all Inventions and subject matter related to such patents, in any and all forms (“Patents”); (iii) all domestic and foreign trademarks, trade dress, service marks, trade names, icons, logos, slogans, and any other indicia of source or sponsorship of goods and services, designs and logotypes related to the above, in any and all forms, all trademark registrations and applications for registration related to such trademarks (including, but not limited to intent to use applications), and all goodwill related to the foregoing (“Trademarks”); (iv) all domain name registrations (“Domain Names”); (v) any formula, design, device or compilation, or other information which is used or held for use by a business, which gives the holder thereof an advantage or opportunity for advantage over competitors which do not have or use the same, and which is not generally known by the public, (“Trade Secrets”), which include, by way of example, formulas, algorithms, market surveys, market research studies, information contained on drawings and other documents, and information relating to research, development or testing; (vi) novel devices, processes, compositions of matter, methods, techniques, observations, discoveries, apparatuses, machines, designs, expressions, theories and ideas, whether or not patentable (“Inventions”); (vii) scientific, engineering, mechanical, electrical, financial, marketing or practical knowledge or experience useful in the operation of any of the Company, its Subsidiaries or the business of the Company or any of its Subsidiaries as currently conducted; (viii) (A) any and all computer programs and/or software programs (including all source code, object code, firmware, programming tools and/or documentation), (B) machine-readable databases and compilations, including any and all data and collections of data, and (C) all content contained on Internet site(s) ((A)-(C), collectively, “Software”); (ix) all documentation and media constituting, describing or relating to the above, including memoranda, manuals, technical specifications and other records wherever created throughout the world; and (x) the right to sue for past, present, or future infringement and to collect and retain all damages and profits related to the foregoing.

“Intervening Event” means a material event, development or change in circumstances that was not known to the Board of Directors of the Company on the date hereof (or if known, the material consequences of which are not known to or understood by the Board of Directors of the Company as of the date hereof), which material event, development or change in circumstances or any material consequences thereof, becomes known to or understood by the Board of Directors of the Company prior to the Company Stockholder Meeting.

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“Inventions” has the meaning specified in the definition of “Intellectual Property Rights.”

“knowledge” means, (i) with respect to the Company, the actual knowledge, after reasonable inquiry, of the officers of the Company set forth in Section 1.01(a) of the Company Disclosure Schedule and (ii) with respect to Parent, the actual knowledge, after reasonable inquiry, of the individuals set forth on Exhibit A hereto.

“Licensed Intellectual Property Rights” means all Intellectual Property Rights owned by a third party and licensed or sublicensed to either the Company or any of its Subsidiaries.

“Lien” means, with respect to any property or asset, any mortgage, lien, pledge, charge, security interest, encumbrance or other adverse claim of any kind in respect of such property or asset.

“Material Adverse Effect” means any effect, circumstance, change, event or development, individually or in the aggregate, that has a material adverse effect on the financial condition, business, assets or results of operations of the Company and its Subsidiaries, taken as a whole, other than, in the case of any of the foregoing, any such effect to the extent resulting from

(A) changes in the financial or securities markets or general economic or political conditions in the United States or any other market in which the Company and its Subsidiaries operate that affect the industries in which the Company and its Subsidiaries conduct their business (including changes in interest rates or the availability of credit financing, changes in exchange rates and any suspension of trading in securities (whether equity, debt, derivative or hybrid securities) generally on any securities exchange or over-the-counter-market operating in the United States or any other market in which the Company or its Subsidiaries operate), so long as such changes or conditions do not adversely affect the Company and its Subsidiaries, taken as a whole, in a materially disproportionate manner relative to other participants in the industries or markets in which they operate,

(B) changes required by GAAP or other accounting standards or regulatory accounting requirements (or the interpretation thereof) applicable to any industry in which the Company and its Subsidiaries operate,

(C) changes (including changes of Applicable Law) or conditions generally affecting the industries or markets in which the Company and its Subsidiaries operate, so long as such changes or conditions do not adversely affect the Company and its Subsidiaries, taken as a whole, in a materially disproportionate manner relative to other participants in the industries or markets in which they operate,

(D) changes in national or international political conditions, including any engagement in hostilities or the occurrence of any acts of war, sabotage or terrorism or natural disasters in the United States occurring after the date of this Agreement, so long as such changes do not adversely affect the Company and its Subsidiaries, taken as a whole, in a materially disproportionate manner relative to other participants in the industries or markets in which they operate,

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(E) the announcement of, or entry into, this Agreement or the consummation of the transactions contemplated hereby (including the termination or potential termination of (or the failure or potential failure to renew or enter into) any contracts with customers, suppliers, distributors or other business partners, and any impact on employees, to the extent caused by the pendency or the announcement of the transactions contemplated hereby),

(F) any failure by the Company and its Subsidiaries to meet any internal or published budgets, projections, forecasts or predictions of financial performance for any period ending on or after the date of this Agreement (provided, however, that the exception in this clause shall not prevent or otherwise affect a determination that any effect, circumstance, change, event or development underlying such failure has resulted in, or contributed to, a Material Adverse Effect),

(G) a change in the trading prices or volume of the Company Stock (provided, however, that the exception in this clause shall not prevent or otherwise affect a determination that any effect, circumstance, change, event or development underlying such failure has resulted in, or contributed to, a Material Adverse Effect),

(H) any action taken (or omitted to be taken) as expressly required by this Agreement or at the request of Parent,

(I) an Excluded Transaction, or

(J) such other matters as set forth in Section 4.11 of the Company Disclosure Schedule.

“Patents” has the meaning specified in the definition of “Intellectual Property Rights.”

“Permitted Liens” means (i) Liens disclosed on the Company Balance Sheet, (ii) statutory, common or civil law Liens in favor of carriers, warehousemen, mechanics and materialmen to secure claims for labor, materials or supplies arising or incurred in the ordinary course of business not yet due and payable or being contested in good faith by appropriate proceedings and for which adequate accruals or reserves have been established on the Company Balance Sheet, (iii) statutory Liens for Taxes not yet due and payable or Taxes being contested in good faith by appropriate proceedings and for which adequate accruals or reserves have been established on the Company Balance Sheet in accordance with GAAP, (iv) Liens arising under sales contracts and equipment leases with third parties entered into in the ordinary course of business, and (v) Liens which do not materially detract from the value or materially interfere with any present or intended use of any property or assets of the Company or any of its Subsidiaries.

“Person” means an individual, corporation, partnership, limited partnership, limited liability company, association, joint venture, trust, Governmental Authority or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

“SEC” means the Securities and Exchange Commission.

“Software” has the meaning specified in the definition of “Intellectual Property Rights.”

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“Stockholder Rights Agreement” means that certain Stockholder Rights Agreement, dated as of April 14, 2003, by and between the Company and American Stock Transfer & Trust Company.

“Subsidiary” means, with respect to any Person, any entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at any time directly or indirectly owned by such Person.

“Third Party” means any Person, including as defined in Section 13(d) of the 1934 Act, other than, in the case of the Company, Parent or any of its Affiliates and, in the case of Parent, the Company or any of its Affiliates.

“Trade Secrets” has the meaning specified in the definition of “Intellectual Property Rights.”

“Trademarks” has the meaning specified in the definition of “Intellectual Property Rights.”

(b) Each of the following terms is defined in the Section set forth opposite such term:

Term	Section
Adverse Company Recommendation Change	Section 6.03(a)
Action	Section 4.13
Agreement	Preamble
Alternative Debt Financing	Section 8.09(c)
Alternative Debt Financing Agreement	Section 8.09(c)
Alternative Debt Financing Commitment	Section 8.09(c)
Certificates	Section 2.03(a)
Closing	Section 2.01(b)
Closing Date	Section 2.01(b)
Company	Preamble
Company Acquisition Proposal Expense Reimbursement	Section 11.04(b)(ii)
Company Board Recommendation	Section 4.02(b)
Company Restricted Share	Section 2.04(b)
Company SEC Documents	Section 4.07(a)
Company Securities	Section 4.05(b)
Company Stockholder Approval	Section 4.02(a)
Company Stockholder Meeting	Section 6.02
Company Stock Option	Section 2.04(a)
Company Subsidiary Securities	Section 4.06(b)
Company Termination Fee	Section 11.04(b)(i)
Confidentiality Agreement	Section 6.04(b)
Continuing Employee(s)	Section 7.03(a)
Debt Financing	Section 5.08(a)

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Term	Section
Debt Financing Agreements	Section 8.09(a)
Debt Financing Commitment	Section 5.08(a)
D&O Insurance	Section 7.02(c)
Dissenting Shares	Section 2.06
DOJ	Section 8.02(a)
DOL	Section 4.18(d)
Effective Time	Section 2.01(c)
e-mail	Section 11.01
Employee Plans	Section 4.18(a)
Employment Term Sheets	Section 5.12
Equity Financing	Section 5.08(a)
Equity Financing Commitment	Section 5.08(a)
Exchange Agent	Section 2.03(a)
Filed Company SEC Documents	Article 4
Financing	Section 5.08(a)
Financing Commitments	Section 5.08(a)
FTC	Section 8.02(a)
Guarantee	Section 5.11
Guarantor	Section 5.11
Indemnified Person	Section 7.02(a)
IRS	Section 4.18(d)
Material Contract	Section 4.20(a)
Merger	Section 2.01(a)
Merger Consideration	Section 2.02(a)
Merger Subsidiary	Preamble
No-Vote Expense Reimbursement	Section 11.04(f)
Option Consideration	Section 2.04(a)
Outside Date	Section 10.01(b)(i)
Owned Intellectual Property Rights	Section 4.15(a)
Parent	Preamble
Parent Disclosure Schedule	Article 5
Parent Employee Plan	Section 7.03(a)
Parent Material Adverse Effect	Section 5.01(a)
Parent Termination Fee	Section 11.04(b)(iii)
Proxy Statement	Section 4.10
PTO	Section 4.15(c)(i)
Representatives	Section 6.03(a)
Restricted Stock Consideration	Section 2.04(b)
Rollover Commitment Letters	Section 2.04(b)
Rollover Shares	Section 2.04(b)
Schedule 13E-3	Section 4.10
Superior Proposal	Section 6.03(e)
Surviving Corporation	Section 2.01(a)
Tax	Section 4.16(m)
Taxing Authority	Section 4.16(m)

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Term	Section
Tax Return	Section 4.16(m)
Uncertificated Shares	Section 2.03(a)
Voting Agreement	Recitals
Warrants	Section 2.05

Section 1.02 Other Definitional and Interpretative Provisions. The words “hereof”, “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. References to Articles, Sections, Exhibits and Schedules are to Articles, Sections, Exhibits and Schedules of this Agreement unless otherwise specified. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms used in any Exhibit or Schedule but not otherwise defined therein, shall have the meaning as defined in this Agreement. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”, whether or not they are in fact followed by those words or words of like import. “Writing”, “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. References to any statute shall be deemed to refer to such statute as amended from time to time and to any rules or regulations promulgated thereunder. References to any agreement or contract are to that agreement or contract as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof. References to any Person include the successors and permitted assigns of that Person. References from or through any date mean, unless otherwise specified, from and including or through and including, respectively. References to “law”, “laws” or to a particular statute or law shall be deemed also to include any Applicable Law.

ARTICLE 2

THE MERGER

Section 2.01 The Merger.

(a) At the Effective Time, Merger Subsidiary shall be merged (the “Merger”) with and into the Company in accordance with Delaware Law, whereupon the separate existence of Merger Subsidiary shall cease, and the Company shall be the surviving corporation (the “Surviving Corporation”) and a direct wholly-owned subsidiary of Parent.

(b) Subject to the provisions of Article 9, the closing of the Merger (the “Closing”) shall take place at 10:00 a.m. EDT in New York City at the offices of Kramer Levin Naftalis & Frankel LLP, 1177 Avenue of the Americas, New York, New York 10036 as soon as possible, but in any event no later than two (2) Business Days after the date the conditions set forth in Article 9 (other than conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or, to the extent permissible, waiver of those conditions at the Closing) have been satisfied or, to the extent permissible, waived by the party or parties entitled to the benefit of such conditions, or at such other place, at such other time or on such other date as Parent and the Company may mutually agree in writing. The date on which the Closing occurs is referred to in this Agreement as the “Closing Date”.

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(c) At the Closing, the Company and Merger Subsidiary shall file a certificate of merger with the Delaware Secretary of State and make all other filings or recordings required by Delaware Law in connection with the Merger. The Merger shall become effective at such time (the “Effective Time”) as the certificate of merger is duly filed with the Delaware Secretary of State (or at such later time as may be agreed upon by the parties hereto and specified in the certificate of merger).

(d) From and after the Effective Time, the Surviving Corporation shall possess all the rights, powers, privileges and franchises and be subject to all of the obligations, liabilities, restrictions and disabilities of the Company and Merger Subsidiary, all as provided under Delaware Law.

Section 2.02 Conversion of Shares. At the Effective Time:

(a) Except as otherwise provided in Section 2.02(b), Section 2.04 or Section 2.05, each share of Company Stock outstanding immediately prior to the Effective Time shall be converted into the right to receive $9.80 in cash (the “Merger Consideration”). As of the Effective Time, all such shares of Company Stock shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and shall thereafter represent only the right to receive the Merger Consideration paid in accordance with Section 2.03, without interest.

(b) Each share of Company Stock held by the Company as treasury stock or owned by Parent or any Subsidiary of Parent immediately prior to the Effective Time shall be canceled, and no payment shall be made with respect thereto.

(c) Each share of common stock of Merger Subsidiary outstanding immediately prior to the Effective Time and each share of Company Stock held by any Subsidiary of the Company shall be converted into and become one share of common stock of the Surviving Corporation with the same rights, powers and preferences as the shares so converted and shall constitute the only outstanding shares of capital stock of the Surviving Corporation.

Section 2.03 Surrender and Payment.

(a) Prior to the Effective Time, Parent shall appoint an agent reasonably acceptable to the Company (the “Exchange Agent”) for the purpose of exchanging for the Merger Consideration (i) certificates representing shares of Company Stock (the “Certificates”) or (ii) uncertificated shares of Company Stock (the “Uncertificated Shares”). As of or prior to the Effective Time, Parent shall make available to the Exchange Agent, as needed, the aggregate Merger Consideration to be paid pursuant to Section 2.02. Promptly after the Effective Time (but not later than five (5) Business Days after the Effective Time), Parent shall send, or shall cause the Exchange Agent to send, to each holder of shares of Company Stock as of the Effective Time a letter of transmittal (which will be in customary form and reviewed by the Company prior to delivery thereof) and instructions (which shall specify that the delivery shall be effected, and risk of loss and title shall pass, only upon proper delivery of the Certificates or transfer of the Uncertificated Shares to the Exchange Agent) for use in effecting the surrender of Certificates or Uncertificated Shares in exchange for the Merger Consideration.

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(b) Each holder of shares of Company Stock that have been converted into the right to receive the Merger Consideration shall be entitled to receive, upon (i) surrender to the Exchange Agent of a Certificate, together with a properly completed and validly executed letter of transmittal and such other documents as may reasonably be requested by the Exchange Agent, or (ii) receipt of an “agent’s message” by the Exchange Agent (or such other evidence, if any, of transfer as the Exchange Agent may reasonably request) in the case of a book-entry transfer of Uncertificated Shares, the Merger Consideration in respect of the Company Stock represented by a Certificate or Uncertificated Share. Until so surrendered or transferred, as the case may be, each such Certificate or Uncertificated Share shall represent after the Effective Time for all purposes only the right to receive such Merger Consideration. No interest shall be paid or accrued on the cash payable upon the surrender or transfer of such Certificate or Uncertificated Share. Upon payment of the Merger Consideration pursuant to the provisions of this Article 2, each Certificate or Certificates so surrendered shall immediately be canceled.

(c) If any portion of the Merger Consideration is to be paid to a Person other than the Person in whose name the surrendered Certificate or the transferred Uncertificated Share is registered, it shall be a condition to such payment that (i) either such Certificate shall be properly endorsed or shall otherwise be in proper form for transfer or such Uncertificated Share shall be properly transferred and (ii) the Person requesting such payment shall pay to the Exchange Agent any transfer or other taxes required as a result of such payment to a Person other than the registered holder of such Certificate or Uncertificated Share or establish to the satisfaction of the Exchange Agent that such tax has been paid or is not payable.

(d) All Merger Consideration paid upon the surrender of Certificates or transfer of Uncertificated Shares in accordance with the terms hereof shall be deemed to have been paid in full satisfaction of all rights pertaining to the shares of Company Stock formerly represented by such Certificate or Uncertificated Shares. After the Effective Time, there shall be no further registration of transfers of shares of Company Stock. If, after the Effective Time, Certificates or Uncertificated Shares are presented to the Surviving Corporation or the Exchange Agent, they shall be canceled and exchanged for the Merger Consideration provided for, and in accordance with the procedures set forth, in this Article 2.

(e) Any portion of the aggregate Merger Consideration made available to the Exchange Agent pursuant to Section 2.03(a) that remains unclaimed by the holders of shares of Company Stock twelve (12) months after the Effective Time shall be returned to Parent, upon demand, and any such holder who has not exchanged shares of Company Stock for the Merger Consideration in accordance with this Section 2.03 prior to that time shall thereafter look only to Parent for payment of the Merger Consideration in respect of such shares without any interest thereon. Notwithstanding the foregoing, Parent shall not be liable to any holder of shares of Company Stock for any amounts paid to a public official pursuant to applicable abandoned property, escheat or similar laws. Any amounts remaining unclaimed by holders of shares of Company Stock two (2) years after the Effective Time (or such earlier date, immediately prior to such time when the amounts would otherwise escheat to or become property of any Governmental Authority) shall become, to the extent permitted by Applicable Law, the property of Parent free and clear of any claims or interest of any Person previously entitled thereto.

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(f) Any portion of the aggregate Merger Consideration made available to the Exchange Agent pursuant to Section 2.06 in respect of any Dissenting Shares shall be returned to Parent, upon demand.

(g) The Surviving Corporation shall pay all charges and expenses, including those of the Exchange Agent, in connection with the exchange of shares for the Merger Consideration.

Section 2.04 Stock Options and Restricted Shares.

(a) By virtue of the Merger, each outstanding option to purchase shares of Company Stock under any employee stock option or compensation plan or arrangement of the Company that is outstanding immediately prior to the Effective Time, whether or not then exercisable or vested (a “Company Stock Option”) shall become fully vested and exercisable immediately prior to, and then shall be canceled at, the Effective Time, and the holder thereof shall, subject to Section 2.08, be entitled to receive, from the Surviving Corporation (and Parent shall cause the Surviving Corporation to pay to such holder), an amount in cash equal to the product of (i) the excess, if any, of (1) the Merger Consideration over (2) the exercise price per share of Company Stock subject to such Company Stock Option, with the aggregate amount of such payment rounded up to the nearest cent, and (ii) the total number of shares of Company Stock subject to such fully vested and exercisable Company Stock Option as in effect immediately prior to the Effective Time (the “Option Consideration”). The Option Consideration shall be paid in a lump sum promptly after the Effective Time (but no later than five (5) Business Days after the Effective Time). In the event that the exercise price of any Company Stock Option is equal to or greater than the Merger Consideration, such Company Stock Option shall be canceled and have no further force or effect. As soon as practicable following the execution of this Agreement, the Company shall provide written notice to each person who is a holder of Company Stock Options describing the treatment of and, if applicable, payment for such Company Stock Options pursuant to this Section 2.04(a) and providing instructions for obtaining payment for such Company Stock Options.

(b) By virtue of the Merger, each restricted share of Company Stock, which is outstanding immediately prior to the Effective Time (a “Company Restricted Share”), other than any such Company Restricted Share that is a Rollover Share (for the avoidance of doubt and notwithstanding anything to the contrary in the Agreement, Rollover Shares shall not be entitled to receive any Restricted Stock Consideration or Merger Consideration, as applicable), shall, to the extent not vested, vest as of the Effective Time, and at the Effective Time, each holder of such Company Restricted Share shall, subject to Section 2.08, be entitled to receive, from the Surviving Corporation (and Parent shall cause the Surviving Corporation to pay to such holders), an amount in cash equal to the Merger Consideration in cancellation of each share of Company Restricted Share previously held (the “Restricted Stock Consideration”). The Restricted Stock Consideration shall be paid in a lump sum promptly after the Effective Time (but no later than five (5) Business Days after the Effective Time). As soon as practicable following the execution of this Agreement, the Company shall provide written notice to each person who is a holder of Company Restricted Shares describing the treatment of and, if applicable, payment for such

12

Company Restricted Shares pursuant to this Section 2.04(b) and providing instructions for obtaining payment for such Company Restricted Shares. For purposes of this Agreement, “Rollover Shares” shall include the Company Restricted Shares that are subject to cancellation in exchange for membership units of Parent, pursuant to those certain mutually binding rollover commitment letters entered into by and between the Company and those other parties appearing on the signature pages thereto (i) as of the date hereof and (ii) as may be entered into, subject to the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned or delayed), subsequent to the date hereof (collectively, the “Rollover Commitment Letters”), pursuant to the terms and conditions set forth therein.

(c) Prior to the Effective Time, the Company shall take such actions as are reasonably necessary to give effect to the transactions contemplated by this Section 2.04, including, without limitation, (i) adopting appropriate resolutions, (ii) preventing the commencement of any new offering periods under the Company’s 1999 Employee Stock Purchase Plan, and (iii) taking all actions necessary to terminate the Company Stock Plans.

Section 2.05 Treatment of Warrants. On or prior to the Effective Time, the Company shall use commercially reasonable efforts to cancel each warrant to purchase Company Stock that is listed on Section 2.05 of the Company Disclosure Schedule (collectively, the “Warrants”).

Section 2.06 Dissenting Shares. Notwithstanding Section 2.03, shares of Company Stock issued and outstanding immediately prior to the Effective Time (other than shares of Company Stock canceled in accordance with Section 2.02(b)) and held by a holder who has not voted in favor of adoption of this Agreement or consented thereto in writing and who has properly exercised appraisal rights of such shares in accordance with Section 262 of Delaware Law (such shares being referred to collectively as the “Dissenting Shares” until such time as such holder fails to perfect or otherwise loses such holder’s appraisal rights under Delaware Law with respect to such shares) shall not be converted into a right to receive the Merger Consideration but instead shall be entitled to payment of the appraised value of such shares in accordance with Section 262 of Delaware Law; provided, however, that if, after the Effective Time, such holder fails to perfect, withdraws or loses such holder’s right to appraisal, pursuant to Section 262 of Delaware Law or if a court of competent jurisdiction shall determine that such holder is not entitled to the relief provided by Section 262 of Delaware Law, such shares of Company Stock shall be treated as if they had been converted as of the Effective Time into the right to receive the Merger Consideration in accordance with Section 2.02(a), without interest thereon, upon surrender of such Certificate formerly representing such share or transfer of such Uncertificated Share, as the case may be. The Company shall provide Parent prompt written notice of any demands received by the Company for appraisal of shares of Company Stock, any withdrawal of any such demand and any other demand, notice, instrument delivered to the Company prior to the Effective Time pursuant to Delaware Law that relate to such demand, and Parent shall have the opportunity and right to participate in all negotiations and proceedings with respect to such demands under the applicable provisions of Delaware Law. Except with the prior written consent of Parent, or to the extent required by Applicable Law, the Company shall not make any payment with respect to, or offer to settle or settle, any such demands.

Section 2.07 Adjustments. If, during the period between the date of this Agreement and the Effective Time, the outstanding shares of Company Stock shall be changed into a

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different number of shares or a different class (including by reason of any reclassification, recapitalization, stock split or combination, exchange or readjustment of shares, or stock dividend thereon with a record date during such period), the Merger Consideration and any other amounts payable pursuant to this Agreement shall be appropriately adjusted.

Section 2.08 Withholding Rights. Notwithstanding any provision contained herein to the contrary, each of the Exchange Agent, the Surviving Corporation and Parent shall be entitled to deduct and withhold from the consideration otherwise payable to any Person pursuant to this Article 2 such amounts as it is required to deduct and withhold with respect to the making of such payment under any provision of federal, state, local or foreign tax law. If the Exchange Agent, the Surviving Corporation or Parent, as the case may be, so withholds amounts, such amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which the Exchange Agent, the Surviving Corporation or Parent, as the case may be, made such deduction and withholding.

Section 2.09 Lost Certificates. If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by the Surviving Corporation, the posting by such Person of a bond, in such reasonable amount as Parent may reasonably require, as indemnity against any claim that may be made against it with respect to such Certificate, the Exchange Agent will issue, in exchange for such lost, stolen or destroyed Certificate, the Merger Consideration to be paid in respect of the shares of Company Stock represented by such Certificate, as contemplated by this Article 2.

ARTICLE 3

THE SURVIVING CORPORATION

Section 3.01 Certificate of Incorporation. At the Effective Time and by virtue of the Merger, the certificate of incorporation of the Company shall read in its entirety as set forth in Exhibit B hereto and, as so amended, shall be the certificate of incorporation of Merger Subsidiary until thereafter amended in accordance with Delaware Law. Nothing in this Section 3.01 shall affect in any way the indemnification obligations provided for in Section 7.02.

Section 3.02 Bylaws. At the Effective Time, the bylaws of the Company shall be amended to be identical to the bylaws of Merger Subsidiary in effect immediately prior to the Effective Time and as so amended shall be the bylaws of the Surviving Corporation until thereafter amended in accordance with Delaware Law. Nothing in this Section 3.02 shall affect in any way the indemnification obligations provided for in Section 7.02.

Section 3.03 Directors and Officers. From and after the Effective Time, until successors are duly elected or appointed and qualified in accordance with Applicable Law, (i) the directors of Merger Subsidiary at the Effective Time shall be the directors of the Surviving Corporation and (ii) the officers of the Company at the Effective Time shall be the officers of the Surviving Corporation.

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ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Subject to Section 11.05, except (x) as disclosed in any Company SEC Document filed after January 31, 2009 and before the date of this Agreement (the “Filed Company SEC Documents”), other than disclosure in such Company SEC Documents (as defined below) referred to in the “Risk Factors” and “Forward Looking Statements” sections thereof or any other disclosures in the Filed Company SEC Documents which are forward-looking in nature, or (y) as set forth in the Company Disclosure Schedule, the Company represents and warrants to Parent that:

Section 4.01 Corporate Existence and Power. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate powers and all governmental licenses, authorizations, permits, consents and approvals required to own, lease and operate its properties and assets it purports to own and to carry on its business as now conducted, except for those licenses, authorizations, permits, consents and approvals the absence of which have not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Where applicable as a legal concept, the Company is duly qualified to do business and in good standing as a foreign corporation in each jurisdiction in which the character of the properties it owns, operates or leases or the nature of its activities makes such qualification necessary, except for such failures to be so qualified or in good standing that have not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. The Company has heretofore made available to Parent true and complete copies of the certificate of incorporation and bylaws, or other organizational documents, of the Company as amended and in effect as of the date hereof and is not in violation in any material respect of any of the provisions contained in such documents.

Section 4.02 Corporate Authorization.

(a) The execution, delivery and performance by the Company of this Agreement and each other instrument required hereby to be executed and delivered by it at the Closing and the performance of its obligations hereunder and thereunder and consummation by the Company of the transactions contemplated hereby are within the Company’s corporate powers and authority and, except for the required approval of the Company’s stockholders in connection with the consummation of the Merger, have been duly and validly authorized by all necessary corporate action on the part of the Company and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or to consummate the Merger and the other transactions contemplated hereby. The affirmative vote of the holders of a majority of the outstanding shares of Company Stock is the only vote of the holders of any of the Company’s capital stock necessary in connection with the consummation of the Merger (the “Company Stockholder Approval”). This Agreement and each other instrument required hereby to be executed and delivered by the Company has been duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery hereof by Parent and Merger Subsidiary, constitutes a legal, valid and binding agreement of the Company enforceable against the Company in accordance with its terms (subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws affecting creditors’ rights generally and general principles of equity whether considered in a proceeding in equity or at law).

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(b) At a meeting duly called and held, the Company’s Board of Directors or an authorized committee thereof has by the unanimous vote of all members of the Company’s Board of Directors or an authorized committee thereof (i) determined that this Agreement and the transactions contemplated hereby are fair to and in the best interests of the Company and its stockholders, (ii) approved this Agreement and the transactions contemplated hereby and the performance by the Company of its covenants and obligations hereunder, and declared its advisability in accordance with Delaware Law, and (iii) unanimously resolved, subject to Section 6.03(b), to recommend approval and adoption of this Agreement by its stockholders (such recommendation, the “Company Board Recommendation”), and directed that such matter be submitted for consideration of the stockholders of the Company at the Company Stockholders Meeting.

Section 4.03 Governmental Authorization. The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby require no action, consent, approval, license, permit, order or authorization of, or registration, declaration, notice or filing with, any Governmental Authority or any stock market or stock exchange on which shares of Company Stock are listed for trading, other than (i) the filing of a certificate of merger with respect to the Merger with the Delaware Secretary of State and appropriate corresponding documents with the relevant authorities of other states in which the Company is qualified to do business, (ii) compliance with any applicable requirements of the HSR Act and any other applicable foreign antitrust law, (iii) filings required under, and compliance with any applicable requirements of, the 1933 Act and 1934 Act, and any other applicable state or federal securities laws, (iv) such consents, approvals, orders, authorizations, registrations, declarations and filings as may be required under applicable state securities laws, (iv) any filings required by, and any approvals required under, the rules and policies of The NASDAQ Stock Market and (v) such other consents, approvals, licenses, permits, orders, authorizations, registrations, declarations, notices and filings, the absence of which would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

Section 4.04 Non-contravention. The execution, delivery and performance by the Company of this Agreement and the consummation of the transactions contemplated hereby do not and will not (i) contravene, conflict with, or result in any violation or breach of any provision of the certificate of incorporation or bylaws of the Company or of the charter, bylaws or other organizational document of any of the Subsidiaries of the Company, in each case as in effect as of the date hereof, (ii) assuming compliance with the matters referred to in Section 4.03, contravene, conflict with or result in a violation or breach of any provision of any Applicable Law, (iii) assuming compliance with the matters referred to in Section 4.03, require any consent, waiver or other action by any Person under, constitute a default, or an event that, with or without notice or lapse of time or both, would constitute a default, under, or cause or permit the termination, cancellation, modification or acceleration under, require a consent or waiver under, constitute a change in control under, require the payment of a penalty under any provision of any agreement or other instrument binding upon the Company or any of its Subsidiaries or any license, franchise, permit, certificate, approval or other similar authorization affecting, or relating in any way to, the assets or business of the Company and its Subsidiaries or (iv) result in the

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creation or imposition of any Lien on any asset of the Company or any of its Subsidiaries, with only such exceptions, in the case of each of clauses (ii), (iii) and (iv), as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

Section 4.05 Capitalization.

(a) The authorized capital stock of the Company consists of 200,000,000 shares of Company Stock, $0.01 par value, and 10,000,000 shares of preferred stock, par value $0.01 per share. Each share of Company Stock carries with it an associated share purchase right issued pursuant to the Stockholder Rights Agreement, which entitles the holder thereof to purchase, upon the occurrence of certain events, one one-hundredth of a share of Series C Junior Participating Preferred Stock. As of June 21, 2010, (i) 12,866,217 shares of Company Stock were issued and outstanding (excluding treasury stock), (ii) 2,441,924 shares of Company Stock were subject to outstanding Company Stock Options at a weighted-average exercise price of $10.01 per share (of which Company Stock Options to purchase an aggregate of 1,643,425 shares of Company Stock were exercisable), (iii) 1,249,532 Company Restricted Shares were issued and outstanding and remain subject to forfeiture and (iv) no shares of Company preferred stock were issued or outstanding. All outstanding shares of capital stock of the Company are duly authorized and validly issued, fully paid and non-assessable and not subject to, or issued in violation of, any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of Delaware Law, the Company’s certificate of incorporation or bylaws or any agreement to which the Company is a party or is otherwise bound. Section 4.05(a) of the Company Disclosure Schedule sets forth, as of June 21, 2010 (i) a complete and correct list of each outstanding Company Stock Option, including the holder, date of grant, vesting schedule, number of shares of Company Stock subject thereto, and in the case of each outstanding Company Stock Option, the exercise price therefor and (ii) a complete and correct list of each outstanding Company Restricted Share, including the holder, date of grant and the vesting schedule. Each Company Stock Option (A) was validly issued in all material respects in compliance with all applicable law and properly approved by the Company’s Board of Directors (or a duly authorized committee or subcommittee thereof), and (B) had, on the date of grant, an exercise price of no less than the fair market value (as determined under the applicable Company Stock Plan) of the shares subject to such Company Stock Option. As of the date of this Agreement, there are no outstanding options or rights to purchase Company Stock under the Company’s 1999 Employee Stock Purchase Plan.

(b) Except as set forth in this Section 4.05 and for changes since June 21, 2010 resulting from the exercise of Company Stock Options outstanding on such date, other than the Warrants, there are no issued, reserved for issuance or outstanding (i) shares of capital stock or other voting securities of or ownership interests in the Company, (ii) securities of the Company convertible into or exchangeable for shares of capital stock or other voting securities of or ownership interests in the Company or (iii) warrants, calls, options or other rights to acquire from the Company, or other obligation of the Company to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of the Company (the items in clauses (i) through (iii) being referred to collectively as the “Company Securities”). Except as set forth in the Warrants, there are no outstanding obligations, contingent or otherwise, of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any of the Company Securities or any obligation binding on the Company to

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grant or extend such rights. Neither the Company nor any of its Subsidiaries is a party to any voting agreement with respect to the voting of any Company Securities. As of the date hereof, an aggregate of 254,822.75 shares of Company Stock are subject to issuance upon exercise of the Warrants, all of which are reserved for issuance upon such exercise. The Company has no outstanding bonds, debentures, notes or other indebtedness that have the right to vote (or which are convertible into, or exchangeable for, securities having the right to vote) on any matters on which Company shareholders may vote. The Company Stock constitutes the only outstanding class of securities of the Company registered under the 1933 Act or the 1934 Act.

(c) Except as set forth in this Section 4.05, none of (i) the shares of capital stock of the Company or (ii) the Company Securities are owned by any Subsidiary of the Company.

Section 4.06 Subsidiaries.

(a) Section 4.06(a) of the Company Disclosure Schedule sets forth a complete and accurate list of all Subsidiaries of the Company and their respective jurisdictions of organization. Each Subsidiary of the Company has been duly organized, is validly existing and (where applicable) in good standing under the laws of its jurisdiction of organization, has all organizational powers and all governmental licenses, authorizations, permits, consents and approvals required to carry on its business as now conducted, except for those licenses, authorizations, permits, consents and approvals the absence of which would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Each such Subsidiary is duly qualified to do business as a foreign entity and is in good standing in each jurisdiction in which the character of the properties it owns, operates or leases or the nature of its activities makes such qualification necessary, except for those jurisdictions where failure to be so qualified would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(b) All of the outstanding capital stock or other voting securities of, or ownership interests in, each Subsidiary of the Company, has been duly authorized and validly issued, fully paid and nonassessable and is owned by the Company, directly or indirectly, free and clear of any Lien, and free of any other limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of such capital stock or other voting securities or ownership interests). There are no issued, reserved for issuance or outstanding (i) securities of the Company or any of its Subsidiaries convertible into, or exchangeable for, shares of capital stock or other voting securities of, or ownership interests in, any Subsidiary of the Company or (ii) warrants, calls, options, equity securities, rights, commitments or other rights or agreements of any character to which the Company or any of its Subsidiaries is bound obligating the Company or any of its Subsidiaries to issue, exchange, transfer, deliver or sell, or cause to be issued, exchanged, transferred, delivered or sold, any capital stock or other equity or voting interests of any of the Company’s Subsidiaries or any security or rights convertible into or exchangeable or exercisable for any such shares or other equity interests, or obligating the Company or any of its Subsidiaries to grant, extend, accelerate the vesting of, otherwise modify or amend or enter into any such warrant, call, option, equity security, right, commitment or agreement or other similar contract relating to any capital stock of, or other equity or voting interest (including any voting debt) including any agreements granting any preemptive rights, subscription rights, anti-dilutive rights, rights of first refusal or similar rights with respect to any

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securities of the Company’s Subsidiaries (the items in clauses (i) through (ii) being referred to collectively as the “Company Subsidiary Securities”), other than any of the foregoing owned or held by the Company and/or a Subsidiary of the Company. There are no outstanding obligations, contingent or otherwise, of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any of the Company Subsidiary Securities, other than any of the foregoing owned or held by the Company and/or a Subsidiary of the Company.

(c) The Company does not control directly or indirectly or have any direct or indirect equity participation or similar interest in (and neither the Company nor any of its Subsidiaries has any obligation to make an investment in or capital contribution to) any corporation, partnership, limited liability company, joint venture, trust or other business association or entity which is not a Subsidiary of the Company.

Section 4.07 SEC Filings.

(a) The Company has filed with or furnished to the SEC, all reports, schedules, forms, statements, prospectuses, registration statements and other documents required to be filed or furnished by the Company since January 31, 2008 (collectively, together with any exhibits and schedules thereto or incorporated by reference therein and other information incorporated therein, including those that the Company may file after the date hereof until the Closing, the “Company SEC Documents”).

(b) As of its filing date (and as of the date of any amendment or superseding filing), each Company SEC Document complied, or will comply when filed, as to form in all material respects with the applicable requirements of the 1933 Act, 1934 Act and the Sarbanes-Oxley Act of 2002, as the case may be, and the rules and regulations of the SEC thereunder applicable to such Company SEC Documents.

(c) As of its filing date (or, if amended or superseded by a filing prior to the date hereof, on the date of such filing), each Company SEC Document filed pursuant to the 1933 Act or 1934 Act did not, or will not at the time they are filed, contain any untrue statement of a material fact or omit to state any material fact required to be stated or incorporated by reference therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.

(d) As of the date of this Agreement, (i) there are no outstanding or unresolved comments in any comment letter received from the SEC and (ii) the Company has not received written notice that any of the Company SEC Documents is the subject of ongoing SEC review that is still pending.

(e) No Subsidiary of the Company is required to file any report, schedule, form, statement, prospectus, registration statement or other document with the SEC. No Subsidiary of the Company is subject to the reporting requirements of Section 13(a) or Section 15(d) of the 1934 Act.

(f) The Company is in material compliance with the applicable listing, corporate governance rules and regulations and other rules and regulations of The NASDAQ Stock Market.

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(g) The Company and its Subsidiaries have established and maintained a system of disclosure controls and procedures (as defined in Rule 13a-15(e) under the 1934 Act) that are designed to provide reasonable assurance that material information relating to the Company and its Subsidiaries, required to be included in reports under the 1934 Act, is made known to the chief executive officer and chief financial officer of the Company by others within those entities. Neither the Company nor, to the Company’s knowledge, the Company’s independent registered public accounting firm, has identified or been made aware of “significant deficiencies” or “material weaknesses” (as defined by the Public Company Accounting Oversight Board) in the design or operation of the Company’s internal controls and procedures which could reasonably adversely affect the Company’s ability to record, process, summarize and report financial data, in each case which has not been subsequently remediated. To the Company’s knowledge, there is no fraud, whether or not material, that involves the Company’s management or other employees who have a significant role in the preparation of financial statements or the internal control over financial reporting utilized by the Company and its Subsidiaries. The Company’s chief executive officer and chief financial officer have made, with respect to the Company SEC Documents, all certifications required by the Sarbanes-Oxley Act of 2002 and any related rules and regulations promulgated by the SEC. As of the date hereof, neither the Company nor any of its Subsidiaries has outstanding “extensions of credit” to directors or executive officers of the Company within the meaning of Section 402 of the Sarbanes-Oxley Act of 2002.

Section 4.08 Financial Statements. The audited consolidated financial statements and unaudited consolidated interim financial statements (including, in each case, any related notes or schedules) of the Company included (or incorporated by reference) in the Company SEC Documents (i) fairly present in all material respects, the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and their consolidated results of their operations and cash flows and statements of shareholders equity for the periods then ended (subject to normal year-end audit adjustments and notes in the case of any unaudited interim financial statements), (ii) were prepared in accordance with GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto to such financial statements or, in the case of unaudited interim financial statements, as permitted by the SEC on Form 10-Q under the 1934 Act) and (iii) complied as to form in all material respects with the applicable requirements of the 1933 Act and 1934 Act, as the case may be, and the rules and regulations of the SEC thereunder applicable to such financial statements included in or incorporated by reference in the Company SEC Documents.

Section 4.09 No Undisclosed Material Liabilities. There are no liabilities or obligations of the Company or any of its Subsidiaries of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, other than liabilities or obligations: (a) disclosed and provided for in the Company Balance Sheet or in the notes thereto; (b) incurred in the ordinary course of business consistent with past practice since the Company Balance Sheet Date; (c) incurred in connection with the transactions contemplated by this Agreement and (d) that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

Section 4.10 Information Supplied. The information supplied by the Company for inclusion in (a) the proxy statement, or any amendment or supplement thereto, to be sent to the Company stockholders in connection with the Merger and the other transactions contemplated by

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this Agreement (the “Proxy Statement”) and (b) a Rule 13E-3 transaction statement on Schedule 13E-3 (“Schedule 13E-3”), or any amendment or supplement thereto, shall not, at the time filed with the SEC and as of the date it or any amendment or supplement thereto is mailed to the stockholders of the Company or at the time of the Company Stockholder Approval, contain any false or misleading statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not false or misleading; or, with respect to the Proxy Statement, omit to state any material fact required to be stated therein or necessary to correct any statement in any earlier communication with respect to the solicitation of proxies for the Company Stockholder Meeting which has become false or misleading. The Proxy Statement and the Schedule 13E-3 will comply as to form in all material respects with the requirements of the 1934 Act. The representations and warranties contained in this Section 4.10 will not apply to statements or omissions included or incorporated by reference in the Proxy Statement or the Schedule 13E-3 based upon information supplied by Parent, Merger Subsidiary or any of their respective Representatives specifically for use or incorporation by reference therein. If at any time prior to the Company Stockholder Meeting any fact or event relating to the Company or any of its Affiliates which should be set forth in an amendment or supplement to the Proxy Statement or Schedule 13E-3 should be discovered by the Company or should occur, the Company shall, promptly after it becomes aware thereof, inform Parent and Merger Subsidiary of such fact or event.

Section 4.11 Absence of Certain Changes. Since the Company Balance Sheet Date, the business of the Company and its Subsidiaries has been conducted in the ordinary course consistent with past practice and there has not been:

(a) any event, occurrence or development or state of circumstances or facts that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

(b) any declaration, setting aside or payment of any dividend or other distribution (whether in cash, stock or property or any combination thereof) with respect to any shares of capital stock of the Company, or any redemption, repurchase or other acquisition by the Company or any Subsidiary of any Company Securities or any Company Subsidiary Securities (other than in connection with the forfeiture, cancellation or exercise of equity based awards, options and restricted stock in the Company or any Subsidiary in either case, in accordance with existing agreements or terms);

(c) any material change in any method or principle of accounting or accounting practice by the Company or any Subsidiary, except as required by concurrent changes in GAAP or in Regulation S-X of the 1934 Act;

(d) with respect to any director, officer or employee of the Company or any of its Subsidiaries whose current annual base salary exceeds $150,000, or any individual independent contractor of the Company or any of its Subsidiaries who has been paid more than $150,000 in the past fiscal year, (i)(A) any grant of any new or any material increase of any severance or termination pay (or any amendment to any existing severance pay or termination arrangement), except for increases in the ordinary course of business consistent with past practice or (B) any

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entering into of any employment, deferred compensation or other similar agreement (or any amendment to any such existing agreement), (ii) any increase in benefits payable under any existing severance or termination pay policies, except as provided for in such policies, (iii) any establishment, adoption or amendment, except as required by Applicable Law, to any collective bargaining, bonus, profit-sharing, thrift, pension, retirement, deferred compensation, stock option, restricted stock or other benefit plan or arrangement, (iv) any increase in compensation, bonus or other benefits payable to any employee (other than an officer or director) or to any individual independent contractor who has been paid more than $150,000 in the past fiscal year, except for increases in the ordinary course of business consistent with past practice or (v) any loan or advance of money or other property made to any director, officer or employee of the Company or any of its Subsidiaries (other than routine advances to employees for business expenses in the ordinary course of business in an amount not exceeding $20,000 to any such individual);

(e) any material Tax election made or changed, any material method of tax accounting adopted or changed, or any material Tax claim, audit or assessment settled or compromised, any extension or waiver of the statute of limitations with respect to a material assessment or determination of Taxes, or any closing agreement with respect to any material Tax liability agreed to, or any right to claim a material Tax refund surrendered;

(f) any sale, lease, license, lapse, transfer or disposal of any asset, security, right (including Intellectual Property Right), property, interest or business other than (x) in the ordinary course of business consistent with past practice or (y) pursuant to an Excluded Transaction; or

(g) any claim for indemnity made against the Company or any of its Subsidiaries pursuant to the FrontLine Asset Purchase Agreement that could reasonably be expected to result in a liability to the Company or any of its Subsidiaries in excess of $180,000.

Section 4.12 Compliance with Laws.

(a) The Company and each of its Subsidiaries is and since January 31, 2008 has been in compliance with, and to the knowledge of the Company is not under investigation with respect to and has not been given written notice of any violation of, any Applicable Law (including, without limitation, any Applicable Law, internal or posted policy or agreement relating to privacy, data security and personal information), and to the knowledge of the Company no Action has been filed, commenced or threatened against the Company or any of its Subsidiaries alleging any violation of any Applicable Law (including, without limitation, any Applicable Law, internal or posted policy or agreement relating to privacy, data security and personal information), except for failures to comply or violations that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.

(b) The Company and each of its Subsidiaries are, and at all times have been, in compliance in all material respects with the Foreign Corrupt Practices Act of 1977, as amended, or any rules or regulations thereunder, or any comparable foreign law or statute, except for such violations or noncompliance that have not had, and would not reasonably be expected to have, a Material Adverse Effect.

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Section 4.13 Litigation. There is no action, suit, arbitration, charge, investigation or proceeding (collectively, “Action”) pending against, or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries or any of their securities, rights, assets or properties (including “cease and desist” letters or invitations to take a patent license), before (or, in the case of threatened Actions, which would be before) or by any Governmental Authority or self-regulatory organization, that, if determined or resolved adversely in accordance with the plaintiff’s demands, would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. There are no material judgments, rulings, orders, decrees, writs or injunctions outstanding against the Company or any of its Subsidiaries or to which the Company or any of its Subsidiaries are subject.

Section 4.14 Properties.

(a) Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, the Company and its Subsidiaries own and have good and valid title to, or valid leasehold interests in, all property and assets (other than Intellectual Property Rights) reflected on the Company Balance Sheet, or acquired after the Company Balance Sheet Date, except as have been disposed of since the Company Balance Sheet Date in the ordinary course of business consistent with past practice, sufficient to conduct the respective businesses of the Company and its Subsidiaries as currently conducted, subject to no Liens other than Permitted Liens, assuming the timely discharge of all obligations owing under or related to the owned or leased property. All leases under which the Company or any of its Subsidiaries lease any material real or personal property (other than Intellectual Property Rights) are valid and binding against the Company or any of its Subsidiaries as a party thereto and, to the Company’s knowledge, the counterparties thereto, in accordance with their respective terms (except to the extent that enforcement of the rights and remedies under such leases are subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws of general application affecting the rights and remedies of creditors and to general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law)), and there is not, under any of such leases, any existing default by the Company or any of its Subsidiaries which, with notice or lapse of time or both, would become a default by the Company or any of its Subsidiaries, in each case except as would not, or would not reasonably be expected to, individually, or in the aggregate, have a Material Adverse Effect.

(b) Neither the Company nor any of its Subsidiaries has any fee ownership in any real property.

Section 4.15 Intellectual Property.

(a) Section 4.15(a) of the Company Disclosure Schedule lists (i) all registered Trademarks, and all pending applications for Trademarks; (ii) all Domain Names; (iii) issued Patents and any applications for Patents; and (iv) registered Copyrights or any applications for Copyrights, in each case, owned by either the Company or any of its Subsidiaries (collectively, together with all other Intellectual Property Rights owned by the Company or any of its Subsidiaries, the “Owned Intellectual Property Rights”).

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(b) Patents.

(i) The Company and/or its Subsidiaries have one pending application for a Patent.

(ii) All of the issued Patents and pending applications for Patents of the Company and each of its Subsidiaries are currently in compliance with all filing and fee requirements of the applicable registration office.

(iii) No Patent of either the Company or any of its Subsidiaries has been or is now involved in any infringement, interference, reissue or reexamination proceeding and to the knowledge of the Company, no such action is threatened with respect to any of the Patents of the Company or any of its Subsidiaries.

(iv) No product manufactured or sold by the Company or any of its Subsidiaries, nor any Patent of the Company or any of its Subsidiaries is alleged to infringe any patent or product of any Person, and to the knowledge of the Company, no Patent of, or product manufactured or sold by, the Company or any of its Subsidiaries is infringed.

(c) Trademarks. Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect:

(i) All material registered Trademarks, and pending applications for material Trademarks with the United States Patent and Trademark Office (“PTO”) or any other country’s trademark office, of the Company and each of its Subsidiaries are currently in compliance with all filing and fee requirements of the applicable registration office.

(ii) No material Trademark of the Company or any of its Subsidiaries is currently involved in any opposition, infringement, dilution, unfair competition, cancellation or other proceeding and to the knowledge of the Company, no such action is currently threatened with respect to any of the material Trademarks of the Company or any of its Subsidiaries.

(iii) No material Trademark of the Company or any of its Subsidiaries is currently alleged to infringe, misappropriate or otherwise violate any trade name, trademark, service mark or other right of any other Person, and to the knowledge of the Company, no material Trademark of the Company or any of its Subsidiaries is currently infringed, misappropriated or otherwise violated.

(d) Copyrights. Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect:

(i) No material Copyright of the Company or any of its Subsidiaries has been is currently the subject of any infringement or other proceeding and to the knowledge of the Company no such action is currently threatened with respect to any material Copyright of the Company or any of its Subsidiaries.

(ii) No material Copyright of the Company or any of its Subsidiaries is currently alleged to infringe, misappropriate or otherwise violate any copyright of any other Person, and to the knowledge of the Company, no material Copyright of the Company or any of its Subsidiaries is currently infringed, misappropriated or violated.

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(e) Domain Names. Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect:

(i) All material registered Domain Names of the Company and each of its Subsidiaries are currently in compliance with filing and fee requirements of the applicable registry.

(ii) No material Domain Name of the Company or any of its Subsidiaries is currently the subject of any dispute resolution, infringement or other proceeding and to the knowledge of the Company, no such action is currently threatened with respect to any material Domain Name of the Company or any of its Subsidiaries.

(iii) No material Domain Name of the Company or any of its Subsidiaries is currently alleged to infringe the trademark or domain name of any other Person, and to the knowledge of the Company, no material Domain Name of the Company or any of its Subsidiaries is or are currently infringed.

(f) Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect:

(i) The Company and its Subsidiaries are the sole owners of all Owned Intellectual Property Rights and hold all right, title and interest in and to all Owned Intellectual Property Rights, free and clear of any Liens other than Permitted Liens. The Licensed Intellectual Property Rights and the Owned Intellectual Property Rights together constitute all the material Intellectual Property Rights necessary to, or used or held for use in, the conduct of the business of the Company and its Subsidiaries as currently conducted. The consummation of the transactions contemplated by this Agreement will not terminate or otherwise prevent the use of any Owned Intellectual Property Rights or any material Licensed Intellectual Property Rights.

(ii) The conduct of the business of the Company and its Subsidiaries as currently conducted does not infringe, misappropriate or otherwise violate any Intellectual Property Right of any third person. There is no Action pending against, or to the knowledge of the Company, threatened against, the Company or any of its Subsidiaries relating to any Intellectual Property Rights or any of the Company’s or its Subsidiaries’ rights therein. None of the Owned Intellectual Property Rights has been adjudged invalid or unenforceable in whole or part, and all such Owned Intellectual Property Rights are valid and enforceable.

(iii) The Company and its Subsidiaries have taken all commercially reasonable actions to (i) qualify for the applicable “safe harbors” under 17 U.S.C. § 512, (ii) protect their Trade Secrets and confidential information and their ownership of any material Owned Intellectual Property Rights and (iii) protect the security and operation of their facilities, systems, Software, websites and networks (and all information stored therein or transmitted thereby), and with regard to such security, there have been no material breaches or unintended disclosures.

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Section 4.16 Taxes.

(a) All material Tax Returns required to be filed with any Taxing Authority by, or on behalf of, the Company or any of its Subsidiaries have been filed when due in accordance with all Applicable Law (including any extensions), and all such Tax Returns are true and complete in all material respects. No written unresolved claim has been made by any Taxing Authority in a jurisdiction where neither the Company nor any of its subsidiaries files Tax Returns that it is or may be subject to taxation by that jurisdiction.

(b) The Company and each of its Subsidiaries has paid or has withheld and remitted to the appropriate Taxing Authority all material Taxes that have become due and payable, whether or not shown on any Tax Return, except for such Taxes that are being contested in good faith or for which the Company has established reserves in accordance with GAAP.

(c) The unpaid Taxes of the Company and its Subsidiaries did not as of the Company Balance Sheet Date exceed the reserve for Taxes (excluding any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth in the Company Balance Sheet (and/or in any notes thereto).

(d) Since the Company Balance Sheet Date, the Company has not incurred any Taxes from extraordinary gains or losses outside the ordinary course of business, except in respect of any Excluded Transaction.

(e) Neither the Company nor any of its Subsidiaries has granted an extension or waiver of the limitation period for the assessment or collection of any material Tax that remains in effect.

(f) There is no Action now pending or threatened in writing against or with respect to the Company or its Subsidiaries in respect of any material Tax.

(g) There are no Liens for material Taxes (other than statutory liens for Taxes not yet due and payable or Taxes being contested in good faith, for which adequate reserves have been established in accordance with GAAP) upon any of the assets of the Company or any of its Subsidiaries.

(h) (i) Neither the Company nor any of its Subsidiaries is a party to or is bound by any tax sharing agreement (other than such an agreement or arrangement exclusively between or among the Company and its Subsidiaries) or any other agreement described in clause (iii) of the definition of Tax; (ii) neither the Company nor any of its Subsidiaries has been a member of an affiliated group filing a consolidated federal income Tax Return (other than a group the common parent of which was the Company); and (iii) neither the Company nor any of its Subsidiaries has any liability for Taxes of any person (other than a person that is a member of the affiliated group that is comprised of the Company and its Subsidiaries) arising from the application of Treasury Regulation Section 1.1502-6 or any analogous provision of state, local or foreign law.

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(i) To the knowledge of the Company, neither the Company nor any of its Subsidiaries has been a party to any “listed transaction” within the meaning of Treasury Regulations Section 1.6011-4.

(j) During the five (5)-year period ending on the date hereof, neither the Company nor any of its Subsidiaries was a distributing corporation or a controlled corporation in a transaction intended to be governed by Section 355 of the Code.

(k) No closing agreement pursuant to Section 7121 of the Code (or any similar provision of state, local or foreign law) has been entered into by or with respect to the Company or any of its Subsidiaries.

(l) The Company and its Subsidiaries have sufficient federal net operating losses available prior to the Closing to offset any and all regular federal taxable income (but not alternative minimum taxable income) of the Company and its Subsidiaries arising in connection with the sale of the Company’s “FrontLine” business.

For the avoidance of doubt, the representations and warranties made in this Section 4.16 and Section 4.11(e) and Section 4.18 with respect to Taxes are the only representations and warranties made by the Company and its Subsidiaries with respect to matters relating to Taxes under this Agreement.

(m) “Tax” means (i) any gross receipts, property, sales, use, license, excise, franchise, employment, payroll, withholding, alternative or add on minimum, ad valorem, transfer or excise tax, or any other tax, custom, duty, governmental fee or other like assessment or charge of any kind whatsoever, or other like assessment together with any interest, penalty, addition to tax or additional amount imposed by any Governmental Authority responsible for the imposition of any such tax (domestic or foreign) (a “Taxing Authority”), and any liability for any of the foregoing as transferee or successor, (ii) liability for the payment of any Tax of the type described in clause (i) as a result of being or having been before the Effective Time a member of an affiliated, consolidated, combined or unitary group and (iii) liability for the payment of any amount as a result of being party to any tax sharing agreement or tax indemnity agreement. “Tax Return” means any report, return, document, declaration or other information or filing required to be supplied to any Taxing Authority with respect to Taxes, including information returns, any documents with respect to or accompanying payments of estimated Taxes, or with respect to or accompanying requests for the extension of time in which to file any such report, return, document, declaration or other information.

Section 4.17 Environmental Matters. Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect: (i) no notice, notification, demand, request for information, citation, summons or order has been received, no complaint has been filed, no penalty has been assessed, and no Action is pending or, to the knowledge of the Company, is threatened by any Person relating to the Company or any of its Subsidiaries and relating to or arising out of any Environmental Law; (ii) the Company and its Subsidiaries are in compliance with all, and has not violated any, Environmental Laws and to the knowledge of the Company, there is no event, condition or development that will materially interfere with, or add material cost to, maintaining compliance with all applicable Environmental Laws in the future;

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(iii) the Company and its Subsidiaries have obtained and are in compliance with all required Environmental Permits and, except for any noncompliance that has been fully resolved, have been in the past in compliance with such Environmental Permits and to the knowledge of the Company there are no Actions (including governmental investigations or inquiries) pending or threatened, to revoke, suspend, cancel, terminate, or adversely modify any Environmental Permit; (iv) to the knowledge of the Company the execution of this Agreement and the consummation of the transactions contemplated hereby do not require any submission to, or any consent or approval of, any Governmental Authority under or relating to any Environmental Law; (v) neither the Company nor any of its Subsidiaries has contractually assumed or provided indemnity against any liability of any other person or entity relating to any Environmental Laws; (vi) Hazardous Substances are not present at and have not been disposed of, arranged to be disposed of, transported, released or threatened to be released at or from any of the properties or facilities currently or formerly owned, leased or operated by the Company or any of its Subsidiaries in violation of, or in a condition or a manner or to a location that would reasonably be expected to give rise to liability to the Company or any of its Subsidiaries under or relating to, any Environmental Law; and (vii) there are no liabilities or obligations of the Company or any Subsidiary (or any of their respective predecessors) of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise arising under or relating to any Environmental Law or any Hazardous Substance, and to the knowledge of the Company, there is no existing condition, situation or set of circumstances that could reasonably be expected to result in such a liability or obligation.

Section 4.18 Employee Benefit Plans.

(a) Section 4.18(a) of the Company Disclosure Schedule contains a correct and complete list identifying (i) each “employee benefit plan,” as defined in Section 3(3) of ERISA, (ii) each employment, consulting, severance or similar contract, plan, arrangement or policy and each other plan or arrangement (written or oral) providing for compensation, bonuses, profit-sharing, stock option or other stock related rights or other forms of incentive or deferred compensation, vacation benefits, health or medical benefits, employee assistance program, disability or sick leave benefits, workers’ compensation, supplemental unemployment benefits, severance benefits and post-employment or retirement benefits (including compensation, pension, health, medical or life insurance benefits), (iii) Code Section 125 “cafeteria” or “flexible” benefit, employee loan, educational assistance or fringe benefit plan (written or oral), and (iv) any other employee benefit plans, agreements, programs, policies, arrangements or payroll practices, whether or not subject to ERISA (including any funding mechanism therefor now in effect or required in the future), in all cases in clauses (i) through (iv) above under which any current employee of the Company or any Subsidiary, or any individual independent contractor of the Company or any of its Subsidiaries (other than Alloy Entertainment LLC) who has been paid more than $150,000 in the past fiscal year or any individual independent contractor of Alloy Entertainment LLC who has been paid more than $500,000 in the past fiscal year in the ordinary course of its business, has any present or future right to benefits and which is maintained, administered, sponsored or contributed to by the Company or any Subsidiary, or with respect to which the Company or any of its Subsidiaries has any liability, in each case, as in effect as of the date hereof. Such plans are referred to collectively herein as the “Employee Plans.”

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(b) With respect to each Employee Plan, to the extent applicable, the Company has furnished or made available to Parent (i) the plan, (ii) the trust agreement, (iii) the summary plan description, (iv) the most recent annual report on Form 5500 and (v) the most recent determination letter.

(c) Neither the Company nor any of its Subsidiaries maintains, contributes or has any liability, whether contingent or otherwise, or has within the preceding six years maintained, contributed or had any liability, whether contingent or otherwise, with respect to any Employee Plan (including, for such purpose, any “employee benefit plan,” within the meaning of Section 3(3) of ERISA, which the Company previously maintained or contributed to within such preceding six years), that is, or has been, (i) subject to Title IV of ERISA or Section 412 of the Code; (ii) maintained by more than one employer within the meaning of Section 413(c) of the Code; (iii) subject to Sections 4063 or 4064 of ERISA; (iv) a “multiemployer plan,” (as defined in Section 3(37) of ERISA); or (v) an “employee pension benefit plan” within the meaning of Section 3(2) of ERISA and that is not intended to be qualified under Section 401(a) of the Code. All references to “the Company” in this Section 4.18(c) shall refer to the Company, any Subsidiary, and any employer that would be considered a single employer with the Company or any Subsidiary under Sections 414(b), (c), (m) or (o) of the Code.

(d) Each Employee Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter, or has pending or has time remaining in which to file, an application for such determination from the Internal Revenue Service (“IRS”), and the Company is not aware of any reason why any such determination letter would be likely to be revoked or not be reissued. Each Employee Plan has been established and administered in all material respects in accordance with its terms and in compliance with the requirements of the Code, ERISA and other Applicable Law, and with respect to each Employee Plan (i) all reports, returns, notices and other documentation that are required to have been filed with or furnished to the IRS, the United States Department of Labor (“DOL”) or any other Governmental Authority, or to the participants or beneficiaries of such Employee Plan have been filed or furnished on a timely basis, (ii) other than routine claims for benefits, no Liens or lawsuits by any person or Governmental Authority have been filed against any Employee Plan or the Company or, to the knowledge of the Company, against any other person or party and, to the knowledge of the Company, no such Liens, lawsuits or complaints are contemplated or threatened; (iii) no individual who has performed services for the Company or any Subsidiary has been improperly excluded from participation in any Employee Plan and (iv) there are no audits or proceedings initiated pursuant to the IRS Employee Plans Compliance Resolution System (currently set forth in Revenue Procedure 2008-50) or similar proceedings pending with the IRS or DOL.

(e) Except as provided herein, the consummation of the transactions contemplated by this Agreement will not (either alone or together with any other event) (i) entitle any employee or independent contractor of the Company or any of its Subsidiaries to severance pay, (ii) accelerate the time of payment or vesting of any compensation or benefits, (iii) trigger any payment of funding (through a grantor trust or otherwise) of compensation or benefits under, or increase the amount payable or trigger any other material obligation pursuant to, any Employee Plan, or (iv) result in the payment of any amount that could, individually or in combination with any other such payment, constitute an “excess parachute payment”, as defined in Section 280G(b)(1) of the Code.

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(f) Neither the Company nor any of its Subsidiaries has any liability in respect of post-retirement health, medical or life insurance benefits for retired, former or current employees, or directors of the Company or its Subsidiaries, or for any individual independent contractor of the Company or any of its Subsidiaries, in each case, who has been paid more than $150,000 in the past fiscal year, except as required to avoid excise tax under Section 4980B of the Code.

(g) There has been no amendment to, written interpretation or announcement by the Company or any of its Subsidiaries relating to, or change in employee participation or coverage under, an Employee Plan which would increase materially the expense of maintaining such Employee Plan above the level of the expense incurred in respect thereof for the fiscal year ended January 31, 2010.

(h) All contributions due under each Employee Plan have been paid when due or properly accrued on the Company’s consolidated financial statements.

(i) Each Employee Plan is in documentary and operational compliance with Code Section 409A and the applicable guidance issued thereunder, and the Company and its Subsidiaries have complied in all material respects with Section 409A of the Code, including all guidance from the IRS, with respect to any interest granted or awarded pursuant to an Employee Plan, and no person has a legally binding right to an amount under any such plan, which, to the knowledge of the Company would subject such person to Taxes imposed by Section 409A of the Code.

Section 4.19 Labor.

(a) Neither the Company nor any of its Subsidiaries has any labor contracts or collective bargaining agreements with any persons employed by the Company or any of its Subsidiaries or any persons otherwise performing services primarily for the Company or any of its Subsidiaries, and no employee of the Company or any of its Subsidiaries is covered by any such contracts or agreements. Since January 31, 2007, there has not been, and as of the date of this Agreement there is not pending or, to the knowledge of the Company, threatened, any work stoppage, slowdown, lockout or labor strike against the Company or any of its Subsidiaries by employees. Section 4.19(a) of the Company Disclosure Schedule contains a list as of the date of this Agreement of all employees of the Company and each of its Subsidiaries whose current annual base salary exceeds $150,000, along with the position and the annual base salary for each such person.

(b) To the knowledge of the Company, no labor organization or group of employees of the Company or any of its Subsidiaries has made a pending demand for recognition or certification. There are no (i) unfair labor practice charges or complaints against the Company or any of its Subsidiaries pending before the National Labor Relations Board or any foreign equivalent and, to the knowledge of the Company, no such charges or complaints are threatened and neither the Company nor any of its Subsidiaries has committed any unfair labor practice, (ii) representation claims or petitions pending before the National Labor Relations Board or any foreign equivalent, (iii) grievances or pending arbitration proceedings against the Company or any of its Subsidiaries that arose out of or under any collective bargaining agreement,

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(iv) liabilities or obligations under the Worker Adjustment and Retraining Notification Act or any similar state or local law incurred by the Company or any of its Subsidiaries within the last six months which remain unsatisfied, or (v) direct or indirect material liabilities incurred by the Company or any of its Subsidiaries, whether absolute or contingent, with respect to any misclassification of any person as an independent contractor rather than as an employee, in each such case contemplated by clauses (i) through (v) except as would not, or would not reasonably be expected to, result in a material liability to the Company and its Subsidiaries.

Section 4.20 Material Contracts.

(a) For the purposes of this Agreement, a “Material Contract” shall mean, with respect to the Company or any of its Subsidiaries, any agreement, contract, license, commitment or other binding arrangement to which the Company or any of its Subsidiaries is a party to or bound by as of the date hereof:

(i) any lease of real or personal property (other than Intellectual Property) providing for annual rental payments of $100,000 or more;

(ii) any contract, agreement or commitment containing any covenant materially limiting the right of the Company or any its Subsidiaries to engage in any line of business or compete with any person in any line of business or in any geographic area (other than any of the foregoing relating to exclusivity arrangements described in Section 4.20(a)(iii),

(iii) any contract, agreement or commitment granting any exclusive rights to make, sell or distribute the Company’s or any of its Subsidiaries’ products and services, other than any such contract, agreement or commitment entered into in the ordinary course of business consistent with past practice which provides for payments in any year of less than $500,000, or less than $1,000,000 solely in the case of Alloy Entertainment LLC (in each case, as of or subsequent to the date hereof, and other than amounts constituting pass-through revenue or expenses paid by clients);

(iv) any contract, agreement or commitment that would obligate the Company or any of its Subsidiaries to file a registration statement under the 1933 Act, which filing has not yet been made;

(v) any mortgages, indentures, guarantees, loans or credit agreements, security agreements or other contracts relating to the borrowing of money, extension of credit, surety bonds or guarantees of indebtedness other than (A) accounts receivables and payables, (B) loans to or from direct or indirect wholly-owned Subsidiaries, in each case in the ordinary course of business and (C) Company guarantees of Subsidiary performance and payment obligations under agreements with third parties;

(vi) any contract, agreement or commitment that involves any material joint venture, partnership or similar arrangement;

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(vii) any contract, agreement or commitment entered into since January 31, 2007 that involves acquisitions or dispositions of (A) a material amount of assets or (B) directly or indirectly (by merger or otherwise), capital stock or other voting securities or equity interests of another Person or the Company or any of its Subsidiaries, including but not limited to any contract, agreement or commitment that involves continuing, earn-out or other contingent obligations of the Company or any of its Subsidiaries that are material to the Company and its Subsidiaries taken as a whole or is not yet consummated;

(viii) any agreement that relates to a settlement of any material Action, other than (A) releases immaterial in nature or amount entered into with former employees or independent contractors of the Company in the ordinary course of business or in connection with the routine cessation of such employee’s or independent contractor’s employment with the Company, (B) settlement agreements for cash only (which has been paid) and which do not exceed $100,000 as to any such settlement or (C) settlement agreements entered into more than one year prior to the date of this Agreement under which neither the Company nor any of its Subsidiaries has any continuing material obligations, liabilities or rights (excluding releases);

(ix) any contract, agreement or commitment for advertising or the provision of advertising-related services requiring the provision of services as of or subsequent to the date hereof, to the extent that annual Company revenues thereunder are in excess of $500,000 (other than amounts constituting pass-through revenue or expenses paid by clients), other than any such contract, agreement or commitment relating to an Excluded Transaction;

(x) any employment, consulting, severance, change in control, termination agreement or other contract with (x) any member of the Company’s Board of Directors, (y) any executive officer of the Company or (z) any employee of the Company or its Subsidiaries whose current annual base salary exceeds $150,000 or any individual independent contractor of the Company or any of its Subsidiaries who has been paid more than $150,000 in the past fiscal year, other than those that are terminable by the Company or any of its Subsidiaries on no more than thirty (30) days notice without liability or financial obligation to the Company or any of its Subsidiaries;

(xi) any contract or agreement pursuant to which the Company or any of its Subsidiaries agrees to indemnify or hold harmless any director or executive officer of the Company or any such Subsidiary (other than the Company’s or such Subsidiary’s certificate of incorporation, bylaws or other organizational document(s) as in effect on the date hereof);

(xii) any contract, agreement or commitment in connection with which or pursuant to which the Company and its Subsidiaries will spend (or are expected to spend), in the aggregate, more than $250,000 during the current fiscal year or during the next fiscal year (other than amounts spent on behalf of clients for which the Company expects reimbursement) after the date hereof, other than any such contract, agreement or commitment entered into in the ordinary course of business consistent with past practice; and

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(xiii) any Company Scheduled Contract and any other “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K under the 1933 Act) with respect to the Company or any of its Subsidiaries to the extent such “material contract” is not a Company Scheduled Contract.

(b) Section 4.20(b) of the Company Disclosure Schedule lists all Material Contracts other than Company Scheduled Contracts.

(c) Except for breaches, violations or defaults which would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (i) each of the Material Contracts is valid and binding and in full force and effect upon the Company and each of its Subsidiaries party thereto and, to the Company’s knowledge, each other party thereto, enforceable against such parties in accordance with their terms (subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws affecting creditors’ rights generally and general principles of equity whether considered in a proceeding in equity or at law), and (ii) neither the Company nor any of its Subsidiaries, nor to the Company’s knowledge, any other party to a Material Contract, has or is alleged to have violated any provision of, or taken or failed to take any act which, with or without notice, lapse of time, or both, would constitute a default under the provisions of such Material Contract, and neither the Company nor any of its Subsidiaries has received written notice that it has breached, violated or defaulted under any Material Contract, in each case except as would not, or would not reasonably be expected to, individually, or in the aggregate, have a Material Adverse Effect on the Company. To the knowledge of the Company, as of the date hereof, neither the Company nor any of its Subsidiaries has received notice in writing that any party to a Material Contract which is currently doing business with the Company or any of its Subsidiaries intends to terminate, limit or restrict its relationship with the Company or any of its Subsidiaries. The Company has made available to Parent a complete and accurate copy of each Material Contract, other than the Company Scheduled Contracts.

(d) Neither the Company nor any of its Subsidiaries has entered into any transaction, agreement, arrangement or understanding with any Affiliate (including any director or officer) of the Company or any of its Subsidiaries or any transaction that would be subject to disclosure pursuant to Item 404 of Regulation S-K under the 1933 Act and which transaction, agreement, arrangement or has not been so disclosed.

(e) Neither the Company nor any of its Subsidiaries is a party to, or has a legally binding commitment to enter into, any joint venture, off balance sheet partnership or any similar contract (including any contract or arrangement relating to any transaction or relationship between or among the Company or any of its Subsidiaries, on the one hand, and any unconsolidated Affiliate, including any structured finance, special purpose or limited purpose entity or person, on the other hand or any “off balance sheet arrangements” (as defined in Item 303(a) of Regulation S-K under the 1933 Act)), where the purpose or intended effect of such contract or arrangement is to avoid disclosure of any material transaction involving, or material liabilities of, the Company or any of its Subsidiaries in the Company’s published financial statements or other Company SEC Documents.

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Section 4.21 Stockholder Rights Agreement; State Takeover Statutes.

(a) The Company has taken all action necessary (a) to render the Stockholder Rights Agreement inapplicable to the Merger, this Agreement and the transactions contemplated hereby or thereby, (b) to ensure that (i) neither Parent, Merger Subsidiary or any of its Affiliates will become an “Acquiring Person” (as such term is defined in the Stockholder Rights Agreement) by reason of the approval, execution, announcement or consummation of this Agreement or the transactions contemplated hereby, including the Merger, and (ii) neither a “Stock Acquisition Date” nor a “Distribution Date” (as such terms are defined in the Stockholder Rights Agreement) shall occur, in each case, by reason of the approval, execution, announcement or consummation of this Agreement or the transactions contemplated hereby, including the Merger, and (c) to cause the Stockholder Rights Agreement to terminate at the Effective Time.

(b) Assuming the accuracy of the representations set forth in Section 5.10, the Company has taken all action necessary, including, without limitation, the adoption of any necessary resolutions of the Board of Directors of the Company, so that the restrictions on “business combinations” otherwise applicable under Section 203 of Delaware Law do not apply to this Agreement, the Merger, the Voting Agreement and the other transactions contemplated hereby and thereby, and, accordingly, no such restrictions nor other anti-takeover or similar statute or regulation applies or purports to apply to any such transactions. No other “business combination,” “control share acquisition,” “fair price,” “moratorium” or other anti-takeover laws enacted under an Applicable Law apply to this Agreement or any of the transactions contemplated hereby.

Section 4.22 Finders’ Fees. Except for Macquarie Capital (USA) Inc., whose fees shall be paid by the Company, there is no agent, financial advisor, investment banker, broker, finder or other intermediary that has been retained by or is authorized to act on behalf of the Company or any of its Subsidiaries who might be entitled, as a result of any action, agreement or commitment of the Company or any of its Affiliates, to any broker’s, finder’s, investment banking, financial advisor’s or other similar fee or commission in connection with the Merger contemplated by this Agreement.

Section 4.23 Opinion of Financial Advisor. The Company has received the opinion of Macquarie Capital (USA) Inc., financial advisor to the Company, to the effect that, as of the date of this Agreement, and based upon and subject to the factors and assumptions set forth therein, the Merger Consideration is fair to the Company’s stockholders (other than such holders party to the Rollover Commitment Letters) from a financial point of view. The Company shall deliver an executed copy of such opinion to Parent promptly following receipt of such opinion in written form.

Section 4.24 Insurance. Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (i) the Company and its Subsidiaries maintain insurance in such amounts and against such risks as is sufficient to comply with Applicable Law, (ii) all policies or binders of material fire, liability, product liability, workers’ compensation, vehicular, directors’ and officers’ and other insurance held by or on behalf of the Company or its Subsidiaries (collectively, the “Company Insurance Policies”) are (a) except for policies that have expired under their terms, in full force and effect, and (b) to the knowledge of the Company, valid and enforceable in accordance with their terms, (iii) neither the Company nor any of its Subsidiaries is in breach or default with respect to any provision contained in any

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such policy or binder, and (iv) neither the Company nor any of its Subsidiaries has (a) received notice of actual or threatened modification or termination of any Company Insurance Policy, or (b) received notice of cancellation or non-renewal of any such Company Insurance Policy, other than in connection with ordinary renewals.

Section 4.25 No Other Information. The Company acknowledges that neither the Parent, the Merger Subsidiary nor any of their Affiliates or Representatives make any representations or warranties as to any matter whatsoever except as expressly set forth in Article 5 of this Agreement. The representations and warranties set forth in Article 5 of this Agreement are made solely by Parent and Merger Subsidiary, and the Company will have no recourse against any Representative of Parent or the Merger Subsidiary including any former, current or future general or limited partner, member, officer, employee or stockholder of Parent or any of its Affiliates in connection with or arising out of the transactions contemplated by this Agreement, except as may be expressly set forth in this Agreement.

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBSIDIARY

Parent and Merger Subsidiary represent and warrant to the Company that the statements made in this Article 5 are true and correct, except as set forth in the corresponding section of the disclosure schedule delivered by the Parent and Merger Subsidiary to the Company and dated the date of this Agreement (the “Parent Disclosure Schedule”):

Section 5.01 Corporate Existence and Power.

(a) Parent is a limited liability company duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has all requisite limited liability company power and all governmental licenses, authorizations, permits, consents and approvals required to own, lease and operate its properties and assets its purports to own and to carry on its business as now conducted, except for those licenses, authorizations, permits, consents and approvals the absence of which would not reasonably be expected, individually or in the aggregate, to prevent or materially delay or materially impair the ability of Parent or Merger Subsidiary to consummate the transactions contemplated by this Agreement (a “Parent Material Adverse Effect”). Where applicable as a legal concept, Parent is duly qualified to do business and in good standing as a foreign limited liability company in each jurisdiction in which the character of the properties it owns, operates or leases or the nature of its activities makes such qualification necessary, except for such failures to be so qualified or in good standing that have not had and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.

(b) Merger Subsidiary is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and all governmental licenses, authorizations, permits, consents and approvals required to own, lease and operate its properties and assets its purports to own and to carry on its business as now conducted, except for those licenses, authorizations, permits, consents and approvals the absence of which have not had and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. Where applicable as a legal concept, Merger

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Subsidiary is duly qualified to do business and in good standing as a foreign limited liability company in each jurisdiction in which the character of the properties it owns, operates or leases or the nature of its activities makes such qualification necessary, except for such failures to be so qualified or in good standing that have not had and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.

Section 5.02 Corporate Authorization. The execution, delivery and performance by Parent and Merger Subsidiary of this Agreement and the consummation by Parent and Merger Subsidiary of the transactions contemplated hereby are within the limited liability company or corporate powers of Parent and Merger Subsidiary and, except for the adoption of this Agreement by the sole stockholder of Merger Subsidiary, have been duly authorized by all necessary limited liability company or corporate action on the part of Parent and Merger Subsidiary. This Agreement constitutes a valid and binding agreement of each of Parent and Merger Subsidiary, enforceable against Parent and Merger Subsidiary in accordance with its terms (subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws affecting creditors’ rights generally and general principles of equity whether considered in a proceeding in equity or at law).

Section 5.03 Governmental Authorization. The execution, delivery and performance by Parent and Merger Subsidiary of this Agreement and the consummation by Parent and Merger Subsidiary of the transactions contemplated hereby require no action by or in respect of, or filing with, any Governmental Authority, other than (i) the filing of a certificate of merger with respect to the Merger with the Delaware Secretary of State and appropriate documents with the relevant authorities of other states in which Parent is qualified to do business, (ii) compliance with the pre-merger notification requirements under the HSR Act, (iii) compliance with any applicable requirements of the 1934 Act and any other applicable state or federal securities laws, and (iv) any actions or filings the absence of which would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.

Section 5.04 Non-contravention. The execution, delivery and performance by Parent and Merger Subsidiary of this Agreement and the consummation by Parent and Merger Subsidiary of the transactions contemplated hereby do not and will not (i) contravene, conflict with, or result in any violation or breach of any provision of the certificate of incorporation or bylaws of Parent or Merger Subsidiary, (ii) assuming compliance with the matters referred to in Section 5.03, contravene, conflict with or result in a violation or breach of any provision of any Applicable Law, (iii) assuming compliance with the matters referred to in Section 5.03, require any consent or other action by any Person under, constitute a default, or an event that, with or without notice or lapse of time or both, would constitute a default, under, or cause or permit the termination, cancellation, or acceleration under any provision of any agreement or other instrument binding upon Parent or any of its Subsidiaries or any license, franchise, permit, certificate, approval or other similar authorization affecting, or relating in any way to, the assets or business of Parent and its Subsidiaries or (iv) result in the creation or imposition of any Lien on any asset of Parent or any of its Subsidiaries, with only such exceptions, in the case of each of clauses (ii) through (iv), as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.

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Section 5.05 Ownership of Company Stock. As of the date hereof, Parent owns no shares of Company Stock.

Section 5.06 Information Supplied. The information supplied by Parent for inclusion in the Proxy Statement (including any amendment or supplement) to be sent to stockholders of the Company in connection with the Company Stockholder Meeting or the Schedule 13E-3 (including any amendment or supplement) shall not, on the date the Proxy Statement (including any amendment or supplement) is first mailed to stockholders of the Company or at the time of the Company Stockholder Meeting, or, in the case of the Schedule 13E-3 (including any amendment or supplement), on the date it is filed with the SEC, contain any statement which, at such time and in light of the circumstances under which it shall be made, is false or misleading with respect to any material fact, or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not false or misleading; or, with respect to the Proxy Statement, omit to state any material fact required to be stated therein or necessary to correct any statement in any earlier communication with respect to the solicitation of proxies for the Company Stockholder Meeting which has become false or misleading. The representations and warranties contained in this Section 5.06 will not apply to statements or omissions included or incorporated by reference in the Proxy Statement or the Schedule 13E-3 based upon information supplied by the Company or any of its Representatives specifically for use or incorporation by reference therein. If at any time prior to the Company Stockholder Meeting any fact or event relating to the Company or any of its Affiliates which should be set forth in an amendment or supplement to the Proxy Statement or Schedule 13E-3 should be discovered by Parent or should occur, Parent shall, promptly after it becomes aware thereof, inform the Company of such fact or event.

Section 5.07 Litigation. As of the date of this Agreement, there is no Action pending against, or, to the knowledge of Parent, threatened against Parent or any of its Subsidiaries, before (or, in the case of threatened actions, suits, investigations or proceedings, would be before) or by any Governmental Authority or arbitrator, that, if determined or resolved adversely in accordance with the plaintiff’s demands, would reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.

Section 5.08 Parent Financial Capability.

(a) Parent has delivered to the Company true and complete copies of (i) a fully-executed commitment letter, dated as of June 23, 2010, by and among Parent, Bank of America, N.A., Banc of America Securities LLC, RBS Citizens, N.A., and The Private Bank (the “Debt Financing Commitment”), including the term sheets attached thereto, pursuant to which the lenders set forth therein have agreed to lend, subject to the conditions contained therein, the amounts set forth therein (the “Debt Financing”), and (ii) fully-executed Equity Financing Commitments by and between Parent and each of: (i) ZM Capital, L.P. (dated as of June 23, 2010); (ii) Private Equity Direct Partnership II (QP), LP (dated as of June 23, 2010); (iii) Hudson River Co-Investment Fund, L.P. (dated as of June 23, 2010); (iv) NPE Caspian I B, L.P. (dated as of June 23, 2010); and (v) Rosemont Solebury Coinvestment Fund, L.P. and Rosemont Solebury Coinvestment Fund (Offshore), L.P. (dated as of June 23, 2010), true and correct copies of which are set forth on Exhibit C hereto (the “Equity Financing Commitment” and together with the Debt Financing Commitment, the “Financing Commitments”), pursuant to

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which the Equity Providers (as defined therein) have committed to invest, subject to the conditions contained therein, the amount set forth therein (the “Equity Financing” and together with the Debt Financing, and each for the purposes of consummating the transactions contemplated by this Agreement, the “Financing”).

(b) None of the Financing Commitments has been amended or modified except to the extent permitted by this Agreement, and, as of the date hereof, the respective commitments contained in the Financing Commitments have not been withdrawn or rescinded in any respect, and as of the date of this Agreement, no event has occurred which, with or without notice, lapse of time or both, would constitute a breach or default thereunder. As of the date of this Agreement, the Financing Commitments are in full force and effect and are legal, valid and binding obligations of Parent and the other parties thereto. All commitment fees and other fees required to be paid pursuant to each of the Financing Commitments have been paid in full or will be duly paid in full when due. There are no conditions precedent or other contingencies related to the funding of the full amount of the Financing, other than as set forth in or contemplated by the Financing Commitments. The Financing Commitments set forth the entire agreement of the parties thereto with respect to the Financing. Assuming the accuracy of the representations and warranties set forth in Section 4.05 and Section 4.08, the aggregate proceeds to be disbursed pursuant to the agreements contemplated by the Financing Commitments, if funded, will be sufficient for Parent and the Surviving Corporation to pay the Merger Consideration, the Option Consideration, the Restricted Stock Consideration and all fees and expenses related to the transactions contemplated by this Agreement. As of the date of this Agreement, Parent does not have any reason to believe that any of the conditions to the Financing will not be satisfied or that the Financing will not be available to Parent and Merger Subsidiary at the Closing as contemplated in the Financing Commitments.

(c) Neither Parent nor Merger Subsidiary is, as of the date hereof, aware of any fact, occurrence or condition that makes any of the assumptions or statements set forth in any Financing Commitment inaccurate in any material respect or that would cause the commitments provided in any Financing Commitment to be terminated or ineffective or any of the conditions contained therein not to be met.

(d) The equity investment by the Equity Providers under the Equity Financing Commitment is not subject to any condition other than the fulfillment in accordance with the terms hereof of the conditions to Parent’s and Merger Subsidiary’s obligations to consummate the Merger set forth in Section 9.01 and Section 9.02.

Section 5.09 Operations of Parent and Merger Subsidiary. Each of Parent and Merger Subsidiary has been formed solely for the purpose of engaging in the transactions contemplated hereby and, prior to the Effective Time, neither Parent nor Merger Subsidiary has engaged in any other business activities and/or incurred any liabilities or obligations other than as contemplated by this Agreement.

Section 5.10 Solvency. As of the Effective Time, assuming (a) satisfaction or waiver of the conditions to Parent’s obligations to consummate the Merger as set forth herein and (b) the accuracy of the representations and warranties of the Company set forth in Article 4 hereof (for such purposes, such representations and warranties shall be true and correct in all respects

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without giving effect to any Company’s knowledge, materiality or Material Adverse Effect qualification or exception), (i) immediately after giving effect to the transactions contemplated by this Agreement and the closing of any financing to be obtained by Parent or any of its Affiliates in order to effect the transactions contemplated by this Agreement, the Surviving Corporation shall, as of such date, be able to pay its debts as they become due and shall own property having a fair saleable value greater than the amounts required to pay its debts (including a reasonable estimate of the amount of all contingent liabilities) as they become absolute and mature; and (ii) immediately after giving effect to the transactions contemplated by this Agreement and the closing of any financing to be obtained by Parent or any of its Affiliates in order to effect the transactions contemplated by this Agreement, the Surviving Corporation shall not have, as of such date, unreasonably small capital to carry on its business. Neither Parent nor Merger Subsidiary is entering into the transactions contemplated by this Agreement with the intent to hinder, delay or defraud either present or future creditors of Parent or the Surviving Corporation.

Section 5.11 Guarantee. Concurrently with the execution of this Agreement, Parent has delivered to the Company the duly executed guarantee of ZM Capital, L.P. (the “Guarantor”) in the form set forth on Exhibit D hereto (the “Guarantee”). As of the date of this Agreement, the Guarantee is valid and in full force and effect, and no event has occurred which, with or without notice, lapse of time or both, would constitute a default on the part of the Guarantor under the Guarantee.

Section 5.12 Agreements with Company Stockholders, Directors or Management. Parent has entered into employment term sheets dated as of the date hereof with those other parties appearing on the signature pages thereto (collectively, the “Employment Term Sheets”). Parent has delivered true and complete copies of the Employment Term Sheets to the Company. As of the date hereof, except for the Employment Term Sheets and the Voting Agreement, neither Parent, Merger Subsidiary nor any of their respective Affiliates is a party to any contract or agreement with any member of the Company’s management, directors or stockholders that relate in any way to this Agreement or the transactions contemplated by this Agreement.

Section 5.13 Access to Information; Disclaimer. Each of Parent and Merger Subsidiary acknowledges and agrees that it (a) has had an opportunity to discuss the business and affairs of the Company and its Subsidiaries with the management of the Company, (b) has had reasonable access to (i) the books and records of the Company and its Subsidiaries and (ii) the electronic dataroom maintained on behalf of the Company for purposes of the transactions contemplated by this Agreement, (c) has been afforded the opportunity to ask questions of and receive answers from officers of the Company and (d) has conducted its own independent investigation of the Company and its Subsidiaries, their respective businesses and the transactions contemplated hereby, and has not relied on any representation, warranty or other statement by any person on behalf of the Company or any of its Subsidiaries, other than the representations and warranties of the Company expressly contained in Article 4 of this Agreement and that all other representations and warranties are specifically disclaimed.

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ARTICLE 6

COVENANTS OF THE COMPANY

The Company agrees that:

Section 6.01 Conduct of the Company. From the date hereof until the Effective Time, the Company shall, and shall cause each of its Subsidiaries to, except as contemplated by this Agreement, as set forth in the Company Disclosure Schedule or as required by Applicable Law, or unless Parent shall otherwise consent in writing, conduct its business in the ordinary course consistent with past practice and, to the extent consistent with and not in violation of any other provisions of this Section 6.01, the Company shall, except in connection with an Excluded Transaction, use its reasonable best efforts to (i) preserve substantially intact its present business organization, (ii) maintain in effect all of its foreign, federal, state and local licenses, permits, consents, franchises, approvals and authorizations, (iii) keep available the services of its directors, officers and key employees and (iv) subject to the right of contract parties to exercise applicable rights, maintain satisfactory relationships with its customers, lenders, suppliers and others having material business relationships with it. Without limiting the generality of the foregoing, from the date hereof until the Effective Time, except as otherwise expressly contemplated by this Agreement, set forth in Section 6.01 of the Company Disclosure Schedule, effected as part of an Excluded Transaction or to the extent Parent shall otherwise consent in writing (which consent shall not be unreasonably withheld, conditioned or delayed), the Company shall not, nor shall it permit any of its Subsidiaries to:

(a) amend its certificate of incorporation, bylaws or other similar organizational documents;

(b) (i) pledge, modify, subdivide, split, combine or reclassify any shares of its capital stock, (ii) declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock, except for dividends paid by a direct or indirect wholly-owned Subsidiary of the Company to the Company or to any of the Company’s other direct or indirect wholly-owned Subsidiaries made in the ordinary course of business and consistent with past practice or (iii) redeem, repurchase or otherwise acquire or offer to redeem, repurchase, or otherwise acquire any Company Securities or any shares of capital stock of any Subsidiary, other than the repurchase of Company Restricted Shares in order to satisfy certain Tax liabilities associated with the vesting thereof;

(c) (i) issue, deliver or sell, or authorize the issuance, delivery or sale of, subject to any Lien, any shares of any Company Securities, Company Subsidiary Securities or any other interests, securities or rights convertible or exchangeable into Company Securities or Company Subsidiary Securities, other than the issuance of (A) any shares of the Company Stock upon the exercise of Company Stock Options that are outstanding on the date of this Agreement in accordance with the terms of those options on the date of this Agreement and (B) any Company Subsidiary Securities to the Company or any other Subsidiary of the Company, or (ii) except as provided in Section 2.04 and Section 2.05, amend any term of any Company Security, any Company Subsidiary Security or any other interests, securities or rights convertible or exchangeable into Company Securities or Company Subsidiary Securities;

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(d) incur any capital expenditures in excess of $750,000 per month or $2,500,000 in the aggregate;

(e) acquire (by merger, consolidation, acquisition of stock or assets or otherwise), directly or indirectly, any assets, securities, properties, interests or businesses, in each case, other than (i) in each case, in the ordinary course of business of the Company and its Subsidiaries in a manner that is consistent with past practice and for consideration not in excess of $500,000 (other than amounts constituting pass-through revenue or expenses paid by clients in respect of assets and other properties purchased on their behalf) and (ii) any assets or other properties that would constitute a capital expenditure and be subject to the limitations set forth in Section 6.01(d);

(f) sell, lease out, license out, allow to lapse or otherwise transfer or dispose of, or create or incur any Lien (other than Permitted Liens) on, any of the Company’s or its Subsidiaries’ assets, securities, rights, properties, interests or businesses; provided, however, that the foregoing shall not prohibit the Company and its Subsidiaries from (i) selling, leasing out or otherwise transferring obsolete equipment or assets being replaced, in each case in the ordinary course of business consistent with past practice or (ii) licensing out Intellectual Property Rights in the ordinary course of business consistent with past practice;

(g) make any loans, advances or capital contributions to, or investments in, any other Person, other than (i) loans, advances or capital contributions to, or investments in, wholly-owned Subsidiaries of the Company, (ii) advances of travel and other out-of-pocket Company-related business expenses to directors, officers and employees in the ordinary course of business consistent with past practice and not in excess of $10,000 outstanding to any one such person at any time, and (iii) advances to employees made against commissions, incentive compensation plans, draws and other similar types of advances in the ordinary course of business consistent with past practice;

(h) create, incur or assume any indebtedness for borrowed money or guarantees thereof;

(i) enter into, renew, fail to renew, amend or modify in any material respect or terminate any Material Contract or otherwise waive, release or assign any material rights, claims or benefits of the Company or any of its Subsidiaries thereunder; provided, however, that the foregoing shall not prevent or preclude the Company or any of its Subsidiaries from (x) entering into, amending, modifying, negotiating, failing to renew and/or renewing in the ordinary course of business consistent with past practice any Material Contracts (other than those about which the Board is informed or for which Board approval is required) providing for payments of less than $1,000,000 annually (other than amounts constituting pass-through revenue or expenses paid by clients) or (y) entering into any client or supplier contracts or agreements in the ordinary course of business consistent with past practice providing for payments (A) in the case of client contracts or agreements, of less than $2,000,000 annually (other than amounts constituting pass-through revenue or expenses paid by clients) and (B) in the case of supplier contracts or agreements, of less than $500,000 annually (other than amounts spent on behalf of clients for which the Company expects reimbursement), regardless of whether or not any such contract or agreement would constitute a Material Contract if it had been entered into as of the date hereof;

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provided, further, that no such action may be taken pursuant to clauses (x) and (y) in this Section 6.01(i) with respect to any (A) new contract that contains a change in control provision in favor of the other party or parties thereto or would otherwise require a payment to or give rise to any rights to such other party or parties in connection with the transactions contemplated by this Agreement or (B) non-competition or other agreement that prohibits or otherwise restricts in any material respect, the Company or any of its Subsidiaries or Affiliates from freely engaging in business anywhere in the world (including any agreement restricting the Company or any of its Subsidiaries or Affiliates from competing in any line of business or in any geographic area), other than any agreement relating to exclusivity arrangements of the type described in Section 4.20(a)(iii));

(j) (i) with respect to any director, officer or employee of the Company or any of its Subsidiaries whose current annual base salary exceeds $150,000 or any individual independent contractor of the Company or any of its Subsidiaries who has been paid more than $150,000 in the past fiscal year, and except to the extent required by Applicable Law, (A) grant any new or increase any severance or termination pay to (or amend any existing severance pay or termination arrangement) or (B) enter into any employment, deferred compensation or other similar agreement (or amend any such existing agreement), (ii) increase benefits payable under any existing severance or termination pay policies, (iii) establish, adopt or amend (except as required by Applicable Law) any collective bargaining, bonus, profit-sharing, thrift, pension, retirement, deferred compensation, stock option, restricted stock or other benefit plan or arrangement, (iv) increase compensation, bonus or other benefits payable to any director, officer or employee or individual independent contractor of the Company or any of its Subsidiaries whose current annual base salary (or payments in the past fiscal year, as applicable) exceeds $150,000, except for increases in the ordinary course of business consistent with past practice for any non-officer employee or individual independent contractor, or (v) hire or terminate any executive officer of the Company or any of its Subsidiaries, except, in the case of (i) to (iv) above, as required as of the date of this Agreement by the terms of any Employee Plan;

(k) make any material change in the Company’s methods of accounting, except as required by concurrent changes in GAAP, in Regulation S-X of the 1934 Act, or Applicable Law;

(l) agree to or otherwise settle, (i) any material Action involving or against the Company or any of its Subsidiaries, (ii) any stockholder litigation or claim in writing against the Company or any of its officers or directors or (iii) any Action that relates to the transactions contemplated hereby in each case if such settlement would, in any single case, (A) result in damages, fines or other penalties payable to or by the Company or its Subsidiaries in excess of $200,000, (B) result in non-monetary relief, including debarment, corporate integrity agreements, any other undertaking of any kind, deferred prosecution agreements, consent decrees, plea agreements, injunctive relief, equitable relief, restrictions on the business activities of the Company or any of its Subsidiaries or mandatory or permissive exclusion, (C) involve the issuance of Company Securities or (D) relate to the transactions contemplated by this Agreement;

(m) adopt or implement any stockholder rights plan;

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(n) enter into any new line of business unrelated to its current business and material to the Company and its Subsidiaries, taken as a whole; or

(o) adopt a plan or agreement of complete or partial liquidation or dissolution, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries;

(p) effectuate or permit a “plant closing” or “mass layoff,” as those terms are defined in the Worker Adjustment and Retraining Notification Act, affecting in whole or in part any site of employment, facility, operating unit or employee of the Company or any of its Subsidiaries;

(q) grant any material refunds, credits, rebates or other allowances by the Company or any of its Subsidiaries to any end user, customer, vendor, reseller or distributor, in each case other than in the ordinary course of business and in a manner consistent with past practice;

(r) open any new facility or office; or

(s) agree to do any of the foregoing.

Section 6.02 Company Stockholder Meeting. Subject to the terms set forth in this Agreement, the Company, acting through its Board of Directors or an authorized committee thereof, shall take all action necessary to duly call, give notice of, convene and hold a meeting of its stockholders (the “Company Stockholder Meeting”) as soon as reasonably practicable following the date hereof, for the purpose of voting on the Company Stockholder Approval; provided, however, that the Company may delay, adjourn or postpone the date of the Company Stockholder Meeting (i) if and to the extent necessary to obtain a quorum (either in person or by proxy) of its stockholders to take action at the Company Stockholder Meeting, (ii) if and to the extent the Company determines in good faith that such delay, adjournment or postponement is required by Applicable Law or to comply with any comments made by the SEC with respect to the Proxy Statement, the Schedule 13E-3 or otherwise and/or (iii) the Company determines in good faith (after consultation with outside legal counsel) that it is necessary or appropriate to postpone or adjourn the Company Stockholder Meeting, including in order to give Company’s stockholders sufficient time to evaluate any new information or disclosure that the Company has sent them or otherwise made available to Company’s stockholders by issuing a press release, filing materials with the SEC or otherwise. Subject to Section 6.03, the Company, acting through the Board of Directors of the Company or an authorized committee thereof, shall (a) recommend approval and adoption of this Agreement by the Company’s stockholders and include such recommendation in the Proxy Statement and (b) take all action that is both reasonable and lawful to solicit from its stockholders proxies in favor of the Company Stockholder Approval and shall take all other action reasonably necessary or advisable to obtain the Company Stockholder Approval. Notwithstanding anything contained herein to the contrary, the Company shall not be required to hold the Company Stockholder Meeting if this Agreement is terminated in accordance with its terms before the meeting is held.

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Section 6.03 No Solicitation; Other Offers; Obligation to Terminate Existing Discussions.

(a) General Prohibitions. Neither the Company nor any of its Subsidiaries shall, nor shall the Company or any of its Subsidiaries authorize or permit any of its or their officers, directors, employees, investment bankers, attorneys, accountants, consultants or other agents or advisors (“Representatives”) to, directly or indirectly, (i) solicit, initiate or take any action to knowingly facilitate or encourage, or which could reasonably be expected to lead to, the submission of any Company Acquisition Proposal, (ii) enter into or participate in any negotiations with, furnish any information relating to the Company or any of its Subsidiaries or afford access to the business, properties, assets, books or records of the Company or any of its Subsidiaries to, otherwise cooperate in any way with, or knowingly assist, participate in, knowingly facilitate or encourage any effort by any Third Party that has expressed an intent to make, or has made, a Company Acquisition Proposal, (iii) enter into any merger agreement, letter of intent, agreement in principle, share purchase agreement, asset purchase agreement, share exchange agreement, option agreement or other similar contract relating to a Company Acquisition Proposal, (iv) fail to make, or withdraw or modify in a manner adverse to Parent, the Company Board Recommendation (or recommend a Company Acquisition Proposal or take any action or make any statement inconsistent with the Company Board Recommendation) (any of the foregoing in this clause (iv), an “Adverse Company Recommendation Change”), or (v) resolve or propose to do any of the foregoing. The Company shall, and shall cause its Subsidiaries and its and their Representatives to, cease immediately and cause to be terminated any and all existing activities, discussions or negotiations, if any, with any Third Party and its Representatives and its financing sources conducted prior to the date hereof with respect to any Company Acquisition Proposal.

(b) Exceptions. Notwithstanding Section 6.03(a), at any time prior to obtaining the Company Stockholder Approval, the Company, directly or indirectly through its Representatives or other intermediaries, may (i) engage in negotiations or discussions with any Third Party and its Representatives or financing sources that, subject to the Company’s compliance with Section 6.03(a), has made after the date of this Agreement a Company Acquisition Proposal that the Board of Directors of the Company or an authorized committee thereof reasonably believes constitutes or would reasonably be expected to lead to a Superior Proposal, (ii) furnish to such Third Party or its Representatives or financing sources non-public information relating to the Company or any of its Subsidiaries or afford access to the business, properties, assets, books or records of the Company or any of its Subsidiaries to such Third Party, in each case pursuant to a customary confidentiality agreement; provided, however, that all such information (to the extent that such information has not been previously provided or made available to Parent) is provided or made available to Parent prior to or substantially concurrently with the time it is provided or made available to such Third Party, subject to the right of the Company to withhold information where such disclosure would contravene any Applicable Law or binding agreement entered into prior to the date of this Agreement and (iii) take any nonappealable, final action that any court of competent jurisdiction orders the Company to take, in each case referred to in the foregoing subclauses (i) and (ii) only if the Board of Directors of the Company or any authorized committee thereof determines in good faith, after consultation with outside legal counsel, that the failure to take such action could reasonably be determined to be inconsistent with its fiduciary duties under Applicable Law. Nothing contained herein shall prevent the Board of Directors of the Company from (x) complying with Rule 14e-2(a) or Rule 14D-9 under the 1934 Act with regard to a Company Acquisition Proposal so long as any action taken or statement made to so

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comply is consistent with this Section 6.03; or (y) making any disclosure to the Company’s stockholders if, in the good faith judgment of the Board of Directors of the Company, after receipt of advice from its outside counsel, failure so to disclose could reasonably be determined to be inconsistent with its fiduciary duties or Applicable Law; provided, however, that the Company, the Company’s Board of Directors or any authorized committee thereof shall not recommend that the stockholders of the Company tender their shares in connection with any tender offer or exchange offer (or otherwise recommend any Company Acquisition Proposal) unless the requirements of this Section 6.03 have been satisfied.

(c) Required Notices. The Board of Directors of the Company and any committee thereof shall not take any of the actions referred to in Section 6.03(b) unless the Company shall have delivered to Parent a prior written notice advising Parent that it intends to take such action, and, after taking such action, the Company shall continue to advise Parent on a reasonably current basis of the status and terms of any discussions and negotiations with the Third Party. In addition, the Company shall notify Parent promptly (but in no event later than 48 hours) after receipt by the Company (or any of its Representatives) of any Company Acquisition Proposal, any notification to the Company (or any of its Representatives) that would reasonably be expected to result in a Company Acquisition Proposal or of any request received by the Company (or any of its Representatives) for information relating to the Company or any of its Subsidiaries or for access to the business, properties, assets, books or records of the Company or any of its Subsidiaries by any Third Party that has made, or that has notified the Company (or any of its Representatives) that it is considering making, a Company Acquisition Proposal. The Company shall identify the Third Party making, and the terms and conditions of, any such Company Acquisition Proposal, indication or request.

(d) Adverse Company Recommendation Change. Notwithstanding anything in this Agreement to the contrary, the Board of Directors of the Company or an authorized committee thereof may at any time prior to the Company Stockholder Approval effect an Adverse Company Recommendation Change if it has complied in all material respects with this Section 6.03 in response (i) to an Intervening Event and/or (ii) to a Superior Proposal, in each case, if the Board of Directors of the Company or an authorized committee thereof determines in good faith, after consultation with outside legal counsel, that the failure to take such action could reasonably be determined to be inconsistent with its fiduciary duties under Applicable Law; provided, however, that the Company shall (x) have provided prior written notice to Parent, (A) at least four (4) Business Days in advance in the case of an Intervening Event and (B) at least four (4) Business Days in advance in the case of a Superior Proposal of its intention to effect an Adverse Company Recommendation Change and, in the case of a Superior Proposal, such prior written notice shall describe the identity and material terms and conditions of the Superior Proposal that is the basis of such action, including with such notice a copy of the relevant proposed transaction agreements with the Third Party making such Superior Proposal, (y) during the four (4) Business Day period following the Company’s delivery of written notice of the Superior Proposal, the Company shall, and shall cause its financial and legal advisors to, negotiate with Parent and Merger Subsidiary in good faith (to the extent that Parent and Merger Subsidiary desire to negotiate) to make such modification or adjustments in the terms and conditions of this Agreement so the Superior Proposal ceases to constitute a Superior Proposal and (z) following the end of such four (4) Business Day period, the Company’s Board of Directors or an authorized committee thereof shall have determined in good faith, taking into account any changes to the terms of this

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Agreement proposed in writing by the Parent to the Company in response to the notice of the Superior Proposal or otherwise, that the Superior Proposal giving rise to such notice of the Superior Proposal continues to constitute a Superior Proposal. The Company will advise Parent promptly (but in no event later than one (1) Business Day) after any amendment to the financial terms or any other material amendment to such Superior Proposal.

(e) Definition of Superior Proposal. For purposes of this Agreement, “Superior Proposal” means a Company Acquisition Proposal for at least a majority of the outstanding shares of Company Stock or all or substantially all of the consolidated assets of the Company and its Subsidiaries on terms that the Board of Directors of the Company or an authorized committee thereof determines in good faith by a majority vote, after considering the advice of its financial advisor and outside legal counsel and taking into account all the terms and conditions of the Company Acquisition Proposal, including any break-up fees, expense reimbursement provisions, certainty of completion and conditions to consummation, are more favorable to the Company’s stockholders than as provided hereunder (taking into account any written proposal by Parent to amend the terms of this Agreement).

Section 6.04 Access to Information.

(a) From the date hereof until the Effective Time and subject to Applicable Law and the Confidentiality Agreement (as defined below), the Company shall (i) upon request to the Company, give Parent, its counsel, financial advisors, auditors and other authorized representatives reasonable access to the offices, properties, books and records of such party at all reasonable times, (ii) furnish Parent, its counsel, financial advisors, auditors and other authorized Representatives such financial and operating data and other information as such Persons may reasonably request in writing and (iii) instruct its employees, counsel, financial advisors, auditors and other authorized Representatives to reasonably cooperate with Parent in its investigation. Any investigation pursuant to this Section 6.04 shall be conducted in such a manner as not to interfere unreasonably with the conduct of the business of the Company and its Subsidiaries or otherwise result in any significant interference with the prompt and timely discharge by such employees of their normal duties. Neither the Company nor its Subsidiaries shall be required to provide access to or to disclose information where such access or disclosure would violate or prejudice the rights of its clients, jeopardize the attorney-client privilege of the Company or its Subsidiaries or contravene any Applicable Law or binding agreement entered into prior to the date of this Agreement. No information or knowledge obtained in any investigation pursuant to this Section 6.04 shall affect or be deemed to modify any representation or warranty made by any party hereunder.

(b) Each of Parent and Merger Subsidiary will hold and treat and will cause its officers, employees, auditors and other authorized Representatives to hold and treat in confidence all documents and information concerning the Company and its Subsidiaries furnished to Parent or Merger Subsidiary in connection with the transactions contemplated by this Agreement in accordance with the Mutual Non-Disclosure Agreement, dated December 30, 2009, by and between the Company and ZM Capital Management, L.L.C. (the “Confidentiality Agreement”), which Confidentiality Agreement shall remain in full force and effect in accordance with its terms.

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Section 6.05 Tax Matters.

(a) From the date hereof until the Effective Time, except as set forth in Section 6.05 of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries shall make or change any material Tax election, adopt or change any material method of tax accounting, settle or compromise any material Tax claim, audit or assessment, agree to any extension or waiver of the statute of limitations with respect to any material assessment or determination of Taxes, agree to any closing agreement with respect to any material Tax or surrender any right to claim a material Tax refund.

(b) All transfer, documentary, sales, use, stamp, registration, value added and other such Taxes and fees (including any penalties and interest) incurred by the Company or any of its Subsidiaries in connection with the Merger (including any real property transfer tax and any similar Tax) shall be paid by the Company when due, and the Company shall, at its own expense, file all necessary Tax returns and other documentation with respect to all such Taxes and fees, and, if required by Applicable Law, the Company shall, and shall cause its Affiliates to, join in the execution of any such Tax returns and other documentation.

ARTICLE 7

COVENANTS OF PARENT

Parent agrees that:

Section 7.01 Voting of Shares. Parent shall vote any shares of Company Common Stock beneficially owned by it or any of its Subsidiaries in favor of adoption of this Agreement at the Company Stockholder Meeting, and shall take all action necessary to cause Merger Subsidiary to perform its obligations under this Agreement and to consummate the Merger on the terms and conditions set forth in this Agreement.

Section 7.02 Director and Officer Liability. Without limiting any additional rights that any Person may have under any agreement or Company Plan, Parent shall cause the Surviving Corporation, and the Surviving Corporation hereby agrees, to do the following:

(a) From the Effective Time through the sixth anniversary of the date on which the Effective Time occurs, the Surviving Corporation shall, and Parent shall cause the Surviving Corporation to, indemnify and hold harmless, and provide advancement of expenses (provided, however, that the person to whom expenses are advanced provides an undertaking to repay all such advances to the extent that it is determined by a court of competent jurisdiction that such Indemnified Person (as defined below) is not entitled to be indemnified hereunder) to, the current and former officers and directors of the Company (each, an “Indemnified Person”) in respect of acts or omissions occurring at or prior to the Effective Time to the fullest extent permitted by Delaware Law or any other Applicable Law or provided under the Company’s certificate of incorporation and bylaws in effect on the date hereof or indemnification agreements with directors of the Company in effect on the date hereof; provided, however, that such indemnification shall be subject to any limitation imposed from time to time under Applicable Law.

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(b) Parent and the Company agree that all rights to indemnification and exculpation from liabilities for acts or omissions occurring at or prior to the Effective Time (and rights for advancement of expenses) now existing in favor of the current or former directors or officers of the Company and its Subsidiaries as provided in their respective articles of incorporation or bylaws (or comparable organizational documents) and any indemnification or other agreements of the Company and its Subsidiaries as in effect on the date of this Agreement shall be assumed by and remain obligations of the Surviving Corporation in the Merger, without further action, at the Effective Time and shall survive the Merger and shall continue in full force and effect in accordance with their terms, and, in the event that any proceeding is pending or asserted or any claim made during such period, until the final disposition of such proceeding or claim. Further, the articles of incorporation and bylaws of the Surviving Corporation shall contain provisions no less favorable with respect to indemnification, advancement of expenses and exculpation of former or present directors and officers than are presently set forth in the Company’s Articles of Incorporation and Bylaws, which provisions shall not be amended, repealed or otherwise modified for a period of six (6) years from the Effective Time in any manner that would adversely affect the rights thereunder of any such individuals.

(c) Parent shall, or shall cause the Surviving Corporation to, as of the Effective Time, obtain and fully pay the premium for the non-cancellable extension of the directors’ and officers’ liability coverage of the Company’s existing directors’ and officers’ insurance policies and the Company’s existing fiduciary liability insurance policies (collectively, “D&O Insurance”), in each case for a claims reporting or discovery period of at least six (6) years from and after the Effective Time with respect to any claim related to any period of time at or prior to the Effective Time with terms, conditions, retentions and limits of liability that are no less favorable than the coverage provided under the Company’s existing policies with respect to any actual or alleged error, misstatement, misleading statement, act, omission, neglect, breach of duty or any matter claimed against a director or officer of the Company or any of its Subsidiaries (including, without limitation, those individuals listed on Exhibit E hereto) by reason of him or her serving in such capacity that existed or occurred at or prior to the Effective Time (including in connection with this Agreement or the transactions or actions contemplated hereby); provided, however, that Parent shall give the Company a reasonable opportunity to participate in the selection of such tail policy and Parent shall give reasonable and good faith consideration to any comments made by the Company with respect thereto. If Parent or the Surviving Corporation for any reason fail to obtain such “tail” insurance policies as of the Effective Time, the Surviving Corporation shall, and Parent shall cause the Surviving Corporation to, continue to maintain in effect, for a period of at least six (6) years from and after the Effective Time, the D&O Insurance in place as of the date hereof with terms, conditions, retentions and limits of liability that are no less favorable than the coverage provided under the Company’s existing policies as of the date hereof, or the Surviving Corporation shall, and Parent shall cause the Surviving Corporation to, purchase comparable D&O Insurance for such six (6)-year period with terms, conditions, retentions and limits of liability that are no less favorable than as provided in the Company’s existing policies as of the date hereof, in each case, with such modifications as may be necessary to include coverage with respect to any matter claimed against each individual listed on Exhibit E hereto, in his or her capacity as a former director of the Company; provided, however, that in no event shall Parent or the Surviving Corporation be required to expend for such policies pursuant to this sentence an annual premium amount in excess of 300% of the amount per annum

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the Company paid in its last full fiscal year, which amount has been made available to Parent; and provided, further, that if the aggregate premiums of such insurance coverage exceed such amount, the Surviving Corporation shall be obligated to obtain a policy with the greatest coverage available, with respect to matters occurring prior to the Effective Time, for a cost not exceeding such amount.

(d) If Parent, the Surviving Corporation or any of its successors or assigns (i) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger, or (ii) transfers or conveys all or substantially all of its properties and assets to any Person, then, and in each such case, to the extent necessary, proper provision shall be made so that the successors and assigns of Parent or the Surviving Corporation, as the case may be, shall assume the obligations set forth in this Section 7.02. In addition, the Surviving Corporation shall not distribute, sell, transfer or otherwise dispose of any of its assets in a manner that would reasonably be expected to render the Surviving Corporation unable to satisfy its obligations under this Section 7.02. The rights of this Section 7.02 are intended to be for the benefit of the Third Parties referenced in this Section 7.02 and their respective heirs and legal representatives.

(e) Nothing in this Agreement is intended to, shall be construed to or shall release, waive or impair any rights to directors’ and officers’ insurance claims under any policy that is or has been in existence with respect to the Company or its officers, directors and employees, it being understood and agreed that the indemnification provided for in this Section 7.02 is not prior to, or in substitution for, any such claims under any such policies. These rights shall survive consummation of the Merger and are intended to benefit, and shall be enforceable by, each Indemnified Person, and shall not be terminated or modified in a manner as to adversely affect any Indemnified Person to whom this Section 7.02 applies without the consent of such affected Indemnified Party.

(f) Parent shall pay all reasonable expenses, including reasonable attorneys’ fees, that may be incurred by any Indemnified Party in enforcing the indemnity and other obligations provided in this Section 7.02.

Section 7.03 Employee Matters.

(a) Following the Effective Time, Parent will give each employee of the Company or any of its Subsidiaries as of the Effective Time who continues employment with the Surviving Corporation or any of its Affiliates (each, a “Continuing Employee,” and collectively, the “Continuing Employees”) full credit for prior service with the Company or its Subsidiaries for purposes of (a) eligibility and vesting under any Parent Employee Plan (as defined below), (b) determination of benefit levels under any Parent Employee Plan or policy relating to vacation or severance and (c) determination of “retiree” status under any Parent Employee Plan, in each case for which the Continuing Employee is otherwise eligible and in which the Continuing Employee is offered participation, but except where such credit would result in a duplication of benefits. In addition, Parent shall waive, or cause to be waived, any limitations on benefits relating to pre-existing conditions to the same extent such limitations are waived under any comparable plan of the Company and recognize for purposes of annual deductible and out-of-pocket limits under its medical and dental plans, deductible and out-of-pocket expenses paid by

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Continuing Employees in the calendar year in which the Effective Time occurs. For purposes of this Agreement, the term “Parent Employee Plan” means any “employee benefit plan,” as defined in Section 3(3) of ERISA, each material severance plan, arrangement or policy and each other plan or arrangement providing for bonuses, profit-sharing or other material forms of incentive compensation, vacation benefits, defined contribution retirement benefits, health or medical benefits, employee assistance program, disability or sick leave benefits and supplemental unemployment benefits.

(b) During the one (1) year period following the Effective Time, Parent shall, or Parent shall cause the Surviving Corporation and its Subsidiaries to, provide to all Continuing Employees, to the extent they remain employed during such one (1) year period, compensation and benefits (other than equity-based compensation) that are in the aggregate substantially comparable to the compensation and benefits provided by the Company and its Subsidiaries to the Continuing Employees as in effect immediately prior to the Effective Time.

(c) Nothing in this Section 7.03 shall (i) be treated as an amendment of, or undertaking to amend, any benefit plan, (ii) prohibit Parent or any of its Subsidiaries, including the Surviving Corporation, from amending any employee benefit plan, (iii) obligate Parent, the Company, the Surviving Corporation or any of their respective Affiliates to retain the employment of any particular employee or (iv) confer any rights or benefits on any person other than the parties to this Agreement.

Section 7.04 Equity Financing Commitment.

(a) Parent and Merger Subsidiary acknowledge that they have committed to provide, subject to the Equity Financing Commitment, the Equity Financing, including (i) maintaining in effect the Equity Financing Commitment, (ii) ensuring the accuracy of all representations and warranties of Parent or Merger Subsidiary set forth in the Equity Financing Commitment, (iii) complying with all covenants and agreements of Parent or Merger Subsidiary set forth in the Equity Financing Commitment, (iv) satisfying on a timely basis all conditions applicable to Parent or Merger Subsidiary set forth in the Equity Financing Commitment that are within their control, (v) upon satisfaction of such conditions and other conditions set forth in Section 9.01 and Section 9.02 (other than those conditions that by their nature are to be satisfied at the Closing, subject to the fulfillment or waiver of those conditions), consummating the financing contemplated by the Equity Financing Commitment at or prior to the Closing (and in any event prior to the Outside Date) and (vi) fully enforcing the obligations of the Equity Providers and their investment affiliates (and the rights of Parent and Merger Subsidiary) under the Equity Financing Commitment.

(b) Neither Parent nor Merger Subsidiary shall amend, alter, or waive, or agree to amend, alter or waive (in any case whether by action or inaction), any term of the Equity Financing Commitment without the prior written consent of the Company. Each of Parent and Merger Subsidiary agrees to notify the Company promptly if at any time prior to the Closing Date (i) the Equity Financing Commitment expires or is terminated for any reason (or if any person attempts or purports to terminate the Equity Financing Commitment, whether or not such attempted or purported termination is valid), (ii) the Equity Providers refuse to provide or express an intent in writing to refuse to provide the full Equity Financing on the terms set forth in

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the Equity Financing Commitment or (iii) for any reason, Parent or Merger Subsidiary no longer believes in good faith that it will be able to obtain all or any portion of the Equity Financing on the terms set forth in the Equity Financing Commitment.

(c) Parent and Merger Subsidiary each acknowledge and agree that the obtaining of the Equity Financing is not a condition to the Closing.

ARTICLE 8

COVENANTS OF PARENT AND THE COMPANY

The parties hereto agree that:

Section 8.01 Reasonable Best Efforts. Subject to the terms and conditions of this Agreement, the Company and Parent shall use their reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under Applicable Law to consummate the transactions contemplated by this Agreement, including (i) causing the conditions to the Merger set forth in Article 9 to be satisfied, (ii) preparing and filing as promptly as practicable with any Governmental Authority or other third party all documentation to effect all necessary filings, notices, petitions, statements, registrations, submissions of information, applications and other documents, (iii) obtaining and maintaining all approvals, consents, registrations, permits, authorizations and other confirmations required to be obtained from any Governmental Authority or other third party that are necessary, proper or advisable to consummate the transactions contemplated by this Agreement and no party hereto shall take or cause to be taken any action which would reasonably be expected to prevent, impede or delay the consummation of the Merger and (iv) the execution and delivery of any additional instruments necessary to consummate the Merger and to fully carry out the purposes of this Agreement, subject to Section 6.03. Parent and the Company shall promptly consult with the other with respect to, provide any necessary information with respect to, and provide the other (or its counsel) copies of, all filings made by such party with any Governmental Authority or any other Person or any other information supplied by such party with any Governmental Authority or any other Person or any other information supplied by such party to a Governmental Authority or any other Person in connection with this Agreement and the transactions contemplated by this Agreement.

Section 8.02 Regulatory Filings.

(a) Each of Parent and Merger Subsidiary, on the one hand, and the Company, on the other hand, shall obtain all requisite approvals and authorizations for the transactions contemplated by this Agreement under the HSR Act, use reasonable best efforts to (i) cooperate in all respects with each other in connection with any filing or submission and in connection with any investigation or other inquiry, including any proceeding initiated by a private party; (ii) keep the other party reasonably informed, including by providing the other party with a copy, of any communication received by such party from, or given by such party to, the Federal Trade Commission (the “FTC”), the Antitrust Division of the Department of Justice (the “DOJ”) or any other Governmental Authority and of any communication received or given in connection with any proceeding by a private party, in each case regarding any of the transactions contemplated hereby; and (iii) permit the other party to review in advance any communication planned to be

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given by it to, and consult with each other in advance of any meeting or conference with, the FTC, the DOJ or any other U.S. or foreign Governmental Authority or, in connection with any proceeding by a private party, with any other Person, and to the extent permitted by the FTC, the DOJ or such other applicable Governmental Authority or other Person, give the other party or its Representatives the opportunity to attend and participate in such meetings and conferences. Notwithstanding the foregoing, the Company and Parent may, as each deems advisable and necessary, reasonably designate any competitively sensitive material provided to the other under this Section 8.02(a) as “Antitrust Counsel Only Material.” Such materials and the information contained therein shall be given only to the outside counsel regarding antitrust Applicable Law of the recipient and will not be disclosed by outside counsel to employees, officers, directors or consultants of the recipient or any of its affiliates unless express permission is obtained in advance from the source of the materials (the Company or Parent as the case may be) or its legal counsel. Each of the Company and Parent shall cause their respective outside counsel regarding antitrust Applicable Law to comply with this Section 8.02(a). Notwithstanding anything to the contrary in this Section 8.02(a), materials provided to the other party or its counsel may be redacted to remove references concerning the valuation of the Company and privileged communications.

(b) In furtherance and not in limitation of the foregoing, each party hereto agrees to make appropriate filings under any antitrust Applicable Law, including an appropriate filing of a Notification and Report Form pursuant to the HSR Act with respect to the transactions contemplated hereby as promptly as practicable, but in any event within fifteen (15) Business Days of the date of this Agreement, to supply as promptly as reasonably practicable any additional information and documentary material that may be requested pursuant to the HSR Act, and to take all other actions necessary, proper or advisable to cause the expiration or termination of the applicable waiting periods under the HSR Act, including by requesting early termination of the waiting period provided for in the HSR Act.

(c) In furtherance and not in limitation of the covenants of the parties contained in Section 8.02(a) and Section 8.02(b), if any suit is instituted (or threatened to be instituted) by the FTC, the DOJ or any other Governmental Authority or any private party challenging any of the transactions contemplated hereby as violative of any antitrust Applicable Laws or which would otherwise prevent, materially impede or materially delay the consummation of the transactions contemplated hereby, each of Parent, Merger Subsidiary and the Company shall use reasonable best efforts to resolve any such objections or suits so as to permit consummation of the transactions contemplated by this Agreement.

Section 8.03 Proxy Statement and Other Required Company Filings. As soon as practicable following the date hereof, the Company shall prepare and file with the SEC the Proxy Statement in connection with the solicitation of proxies from the Company’s stockholders for use at the Company Stockholder Meeting, and the Company and Parent shall, as soon as reasonably practicable following the date of this Agreement jointly prepare and file with the SEC the Schedule 13E-3. Parent and Merger Subsidiary shall furnish all information concerning Parent and Merger Subsidiary (and their respective Affiliates, if applicable) as is required to be included in the Proxy Statement, or that is customarily included in such Proxy Statement in connection with the preparation and filing with the SEC of the Proxy Statement, and Parent, Sub and the Company shall cooperate in the preparation of the Schedule 13E-3. The Company shall use

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reasonable best efforts to cause the Proxy Statement to be disseminated to the Company’s stockholders as promptly as practicable following the filing thereof with the SEC and confirmation from the SEC that it will not comment on, or that it has no additional comments on, the Proxy Statement. Neither the Company nor any of its Affiliates, if applicable, shall correspond or otherwise communicate with the SEC or its staff with respect to the Proxy Statement in any such case without providing Parent and Merger Subsidiary a reasonable opportunity to review and comment thereon or participate therein, as the case may be and shall include in such Proxy Statement comments reasonably proposed by Parent or Merger Subsidiary. Unless this Agreement is earlier terminated pursuant to Article 10, the Company shall (i) advise Parent and Merger Subsidiary promptly after it receives notice thereof, of any receipt of a request by the SEC or its staff for an amendment or revisions to the Proxy Statement, any receipt of comments from the SEC or its staff on the Proxy Statement or the Schedule 13E-3 or any receipt of a request by the SEC or its staff for additional information in connection therewith, and (ii) provide Parent and Merger Subsidiary with copies of all correspondence with its Representatives, on the one hand, and the SEC or its staff, on the other hand, with respect to the Proxy Statement, the Schedule 13E-3 any other filing required under Applicable Law. The Company and Parent shall cooperate and provide each other with a reasonable opportunity to review and comment on the Schedule 13E-3 and responses relating thereto and shall consider in good faith comments reasonably proposed by the other party. If at any time prior to the Company Stockholder Meeting, any information relating to the Company, Parent or Merger Subsidiary, or any of their respective directors, officers or Affiliates, should be discovered by the Company, Parent or Merger Subsidiary which should be set forth in an amendment or supplement to the Proxy Statement or the Schedule 13E-3 so that the Proxy Statement, the Schedule 13E-3, or any other filing required under Applicable Law, as applicable, would not include any misstatement of a material fact or omit to state 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, the party which discovers such information shall promptly notify the other, and an appropriate amendment or supplement to the Proxy Statement, the Schedule 13E-3 or the applicable filing required under Applicable Law describing such information shall be promptly prepared and filed with the SEC and, to the extent required by Applicable Law or the SEC or its staff, disseminated to the Company’s stockholders. Unless the Company Board has effected an Adverse Company Recommendation Change, the Company shall include the Company Board Recommendation in the Proxy Statement and, if applicable, any other filing required under Applicable Law.

Section 8.04 Public Announcements. Except as may be required by Applicable Law or stock market regulations:

(a) The press release announcing the execution of this Agreement shall be issued only in such form as shall be mutually agreed upon by the Company and Parent; and

(b) No other public release or announcement concerning the transactions contemplated hereby shall be issued by any party without the prior written consent of the Company and Parent (which consent shall not be unreasonably withheld or delayed);

provided, however, in each case, that if such release or announcement is required by Applicable Law or stock market regulations, the party required to make the release or announcement shall

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use its reasonable best efforts to allow each other party reasonable time to comment on such release or announcement in advance of such issuance, it being understood that the final form and content of any such release or announcement, to the extent so required, shall be at the final discretion of the disclosing party; provided, further, that the restrictions set forth in this Section 8.04 shall not apply to any release, announcement or disclosure made or proposed to be made following an Adverse Company Recommendation Change.

Section 8.05 Further Assurances. At and after the Effective Time, the officers and directors of the Surviving Corporation shall be authorized to execute and deliver, in the name and on behalf of the Company or Merger Subsidiary, any deeds, bills of sale, assignments or assurances and to take and do, in the name and on behalf of the Company or Merger Subsidiary, any other actions and things to vest, perfect or confirm of record or otherwise in the Surviving Corporation any and all right, title and interest in, to and under any of the rights, properties or assets of the Company acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger.

Section 8.06 Notices of Certain Events. Each of the Company and Parent shall promptly notify the other of:

(a) any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement;

(b) any notice or other communication from any Governmental Authority in connection with the transactions contemplated by this Agreement;

(c) any Actions commenced or, to its knowledge, threatened against, relating to or involving or otherwise affecting the Company or any of its Subsidiaries or Parent or any of its Subsidiaries, as the case may be, that, if pending on the date of this Agreement, would have been required to have been disclosed pursuant to any Section of this Agreement or that relate to the consummation of the transactions contemplated by this Agreement;

(d) any material inaccuracy of any representation or warranty of that party contained in this Agreement at any time during the term hereof; and

(e) any failure of that party to comply in any material respect with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder;

provided, however, that the delivery of any notice pursuant to this Section 8.06 shall not affect or be deemed to modify any representation or warranty made by any party hereunder or limit or otherwise affect the remedies available hereunder to the party receiving such notice.

Section 8.07 Section 16 Matters. Prior to the Effective Time, the Company may approve, in accordance with the procedures set forth in Rule 16b-3 promulgated under the 1934 Act and in accordance with the Interpretative Letter dated January 12, 1999 issued by the SEC relating to Rule 16b-3, any dispositions of equity securities of the Company (including derivative securities with respect to equity securities of the Company) resulting from the transactions contemplated by this Agreement by each officer or director of the Company who is subject to Section 16 of the Exchange Act with respect to equity securities of the Company.

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Section 8.08 Stock Exchange De-listing; 1934 Act Deregistration. Prior to the Effective Time, the Company shall reasonably cooperate with Parent and use its reasonable best efforts to take, or cause to be taken, all actions, and do or cause to be done all things, reasonably necessary, proper or advisable on its part under Applicable Laws and rules and policies of The NASDAQ Stock Market to enable the de-listing by the Surviving Corporation of the Company Stock from The NASDAQ Stock Market and the deregistration of the Company Stock under the 1934 Act as promptly as practicable after the Effective Time, and in any event no more than ten (10) days after the Closing Date.

Section 8.09 Debt Financing Commitment.

(a) Parent and Merger Subsidiary shall use their respective reasonable best efforts to obtain the Debt Financing on the terms and conditions set forth in the Debt Financing Commitment (or terms not materially less favorable, in the aggregate, to Parent and Merger Subsidiary taken as a whole (including with respect to the conditionality thereof)) (provided, that, Parent and Merger Subsidiary may replace or amend the Debt Financing Commitment Letters to add lenders, lead arrangers, bookrunners, syndication agents or similar entities which had not executed the Debt Financing Commitment as of the date hereof, or otherwise so long as the terms would not adversely impact the ability of Parent and Merger Subsidiary to timely consummate the transactions contemplated hereby or the likelihood of the consummation of the transactions contemplated hereby), including by using reasonable best efforts to (i) maintain in effect the Debt Financing Commitment and negotiate a definitive agreement (collectively, the “Debt Financing Agreement”) with respect to the Debt Financing Commitment on the terms and conditions set forth in the Debt Financing Commitment (or on terms not materially less favorable, in the aggregate, to Parent and Merger Subsidiary, taken as a whole, (including with respect to the conditionality thereof) than the terms and conditions in the Debt Financing Commitment), (ii) ensure the accuracy of all representations and warranties of Parent or Merger Subsidiary set forth in the Debt Financing Commitment or Debt Financing Agreement, (iii) comply with all covenants and agreements of Parent or Merger Subsidiary set forth in the Debt Financing Commitment or Debt Financing Agreement, (iv) satisfy on a timely basis all conditions applicable to Parent or Merger Subsidiary set forth in the Debt Financing Commitment or Debt Financing Agreement that are within their control and (v) upon satisfaction of such conditions and the other conditions set forth in Section 9.01 and Section 9.02 (other than those conditions that by their nature are to be satisfied at the Closing, subject to the fulfillment or waiver of those conditions), to consummate the Debt Financing at or prior to the Closing (and in any event prior to the Outside Date). In the event that all conditions in the Debt Financing Commitment (other than the availability of funding of any of the financing contemplated under the Equity Financing Commitment) have been satisfied or, upon funding will be satisfied, each of Parent and Merger Subsidiary shall use its reasonable best efforts to cause the lenders party to the Debt Financing Commitment to fund on the Closing Date the Debt Financing required to consummate the transactions contemplated by this Agreement and otherwise enforce its rights under the Debt Financing Commitment. Parent will furnish to the Company correct and complete copies of any Debt Financing Agreement or any Alternative Debt Financing Commitment (as defined below) and, in each case, ancillary documents thereto (redacted to the

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extent necessary to comply with confidentiality agreements; provided, however, that such redacted information does not relate to the amounts or conditionality of, or contain any conditions precedent to, the funding of the Debt Financing).

(b) Parent shall keep the Company reasonably informed with respect to all material activity concerning the Debt Financing and shall give the Company prompt notice of any material adverse change with respect to the Debt Financing. Without limiting the foregoing, each of Parent and Merger Subsidiary agrees to notify the Company promptly, and in any event within three (3) Business Days, if at any time prior to the Closing Date (i) a Debt Financing Commitment expires or is terminated for any reason (or if any person attempts or purports to terminate a Debt Financing Commitment, whether or not such attempted or purported termination is valid), (ii) a lender refuses to provide all or any portion of the Debt Financing contemplated by a Debt Financing Commitment on the terms set forth therein, or (iii) for any reason Parent or Merger Subsidiary no longer believes in good faith that it will be able to obtain all or any portion of the Debt Financing on substantially the terms described in the Debt Financing Commitments. Neither Parent nor Merger Subsidiary shall, nor shall it permit any of its Affiliates to, without the prior written consent of the Company, take any action or enter into any transaction, including any merger, acquisition, joint venture, disposition, lease, contract or debt or equity financing, that could reasonably be expected to impair, delay or prevent consummation of all or any portion of the Debt Financing. Neither Parent nor Merger Subsidiary shall amend or alter, or agree to amend or alter, a Debt Financing Commitment in any manner that would materially impair, delay or prevent the transactions contemplated by this Agreement without the prior written consent of the Company.

(c) If all or any portion of the Debt Financing becomes unavailable on the terms and conditions contemplated in a Debt Financing Commitment or Debt Financing Agreement, each of Parent and Merger Subsidiary shall use its reasonable best efforts to arrange to promptly obtain such Debt Financing from alternative sources in an amount sufficient, when added to the portion of the Financing that is available, to pay in cash all amounts required to be paid by Parent, the Surviving Corporation and Merger Subsidiary in connection with the transactions contemplated by this Agreement, including the Merger Consideration, the Option Consideration, the Restricted Stock Consideration and all payments, fees and expenses related to or arising out of the transactions contemplated by this Agreement (“Alternative Debt Financing”) and to obtain a new financing commitment letter (the “Alternative Debt Financing Commitment”) and a new definitive agreement with respect thereto (the “Alternative Debt Financing Agreement”) that provides for financing on terms not materially less favorable, in the aggregate, to Parent and Merger Subsidiary taken as a whole and in an amount that is sufficient, when added to the portion of the Financing that is available together with any cash or cash equivalents held by the Company as of the Effective Time, to pay in cash all amounts required to be paid by Parent, the Surviving Corporation and Merger Subsidiary in connection with the transactions contemplated by this Agreement, including the Merger Consideration, the Option Consideration, the Restricted Stock Consideration and all payments, fees and expenses related to or arising out of the transactions contemplated by this Agreement. In such event, the term “Debt Financing” as used in this Agreement shall be deemed to include any Alternative Debt Financing, the term “Debt Financing Commitment” as used in this Agreement shall be deemed to include any Alternative Debt Financing Commitment, and the term “Debt Financing Agreement” as used in this Agreement shall be deemed to include any Alternative Debt Financing Agreement.

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(d) Prior to the Closing, the Company shall provide, and shall cause its Subsidiaries to, and shall use its reasonable best efforts to cause the respective officers, employees and other Representatives, including legal and accounting advisors to, provide all cooperation reasonably requested by Parent in connection with the Debt Financing, including (i) assisting with the preparation for, and participating in, customary meetings, presentations and due diligence sessions, (ii) assisting with the preparation of bank information memoranda (including the delivery of one or more customary representation letters), private placement memoranda, prospectuses and similar documents required in connection with the Financing, (iii) executing and delivering any pledge and security documents, other definitive financing documents, or other certificates, opinions or documents as may be reasonably requested by Parent (including a certificate of the chief financial officer of the Company or any of its Subsidiaries with respect to solvency matters) and consents of accountants for use of their reports in any materials relating to the Debt Financing) and otherwise reasonably facilitating the pledging of collateral, (iv) using commercially reasonable efforts to obtain accountants’ comfort letters, legal opinions as reasonably requested by Parent, (v) taking all actions reasonably necessary to (A) permit the prospective lenders involved in the Financing to evaluate the Company’s inventory, properties, current assets, cash management and accounting systems, policies and procedures relating thereto, and to assist the prospective lenders with field audits and collateral and asset examinations, in each case for the purpose of establishing collateral eligibility and values and (B) establish bank and other accounts and blocked account agreements and lock box arrangements in connection with the foregoing and (vi) taking all corporate actions necessary to permit the consummation of the Debt Financing and to permit the proceeds thereof to be made available to the Surviving Corporation, including the entering into of one or more credit agreements or other instruments on terms satisfactory to Parent in connection with the Debt Financing immediately prior to, and conditioned upon the occurrence of, the Effective Time to the extent the direct borrowing or debt incurrence by the Company is contemplated in the Debt Financing Commitment; provided, however, that (A) nothing herein shall require such cooperation to the extent it would interfere unreasonably with the ongoing business or operations of the Company or its Subsidiaries and (B) neither the Company nor any of its Subsidiaries shall be required to pay any commitment or other similar fee or incur any other liability in connection with the financings contemplated by the Debt Financing Commitment prior to the Effective Time. Parent shall, promptly upon request by the Company, reimburse the Company for all reasonable and documented out-of-pocket costs incurred by the Company or its Subsidiaries in connection with such cooperation. All non-public or otherwise confidential information regarding the Company obtained by Parent or Merger Subsidiary or any of their respective Representatives pursuant to this Section 8.09(d) shall be kept confidential in accordance with the Confidentiality Agreement. Parent and Merger Subsidiary shall, on a joint and several basis, indemnify and hold harmless the Company and its Subsidiaries from and against any and all liabilities, losses, damages, claims, costs, expenses, interest, awards, judgments and penalties suffered or incurred by them in connection with the arrangement of the Debt Financing (other than to the extent that such losses arise from the gross negligence or willful misconduct of the Company, any of its Subsidiaries or any of their respective Representatives) and any information utilized in connection therewith (other than information provided by the Company or any of its Subsidiaries).

(e) The Company shall deliver to Parent a certificate executed by the chief financial officer of the Company setting forth Consolidated EBITDA (as defined in Section 8.09(e) of the

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Company Disclosure Schedule) for the month ended June 30, 2010 and each month thereafter, together with supporting calculations in reasonable detail, by twenty (20) days following the end of each such month.

ARTICLE 9

CONDITIONS TO THE MERGER

Section 9.01 Conditions to the Obligations of Each Party. The respective obligations of the Company, Parent and Merger Subsidiary to consummate the Merger shall be subject to the satisfaction or written waiver at or prior to the Closing Date of the following conditions:

(a) the Company Stockholder Approval in accordance with Applicable Laws and rules and policies of The NASDAQ Stock Market shall have been obtained;

(b) no Governmental Authority having jurisdiction over any party hereto shall have issued, enacted, promulgated, enforced or entered any order, executive order, stay, decree, judgment, injunction or other action that is in effect (whether temporary, preliminary or permanent) restraining, enjoining or otherwise prohibiting the consummation of the Merger or the other transactions contemplated by this Agreement;

(c) no Applicable Law shall have been adopted that makes consummation of the Merger or the other transactions contemplated by this Agreement illegal or otherwise prohibited;

(d) other than the filing of the certificate of merger, all authorization, consents, orders or approvals of, or declarations or filings with, or expirations of waiting periods imposed by, any Governmental Authority in connection with the Merger or the consummation of the other transactions contemplated by this Agreement, the failure of which would reasonably be expected to have a Material Adverse Effect or a Parent Material Adverse Effect, shall have been filed, been obtained or occurred on terms and conditions which would not reasonably be expected to have a Material Adverse Effect or a Parent Material Adverse Effect;

(e) any applicable waiting period under the HSR Act relating to the Merger shall have expired or been terminated; and

(f) no order suspending the use of the Proxy Statement shall have been issued and no proceeding for that purpose shall have been initiated or threatened in writing by the SEC or its staff.

Section 9.02 Conditions to the Obligations of Parent and Merger Subsidiary. The obligations of Parent and Merger Subsidiary to consummate the Merger shall be subject to the satisfaction on or prior to the Closing Date of each of the following further conditions, any of which may be waived, in writing, in whole or in part, exclusively by Parent or Merger Subsidiary:

(a) Performance of Obligations of the Company. The Company shall have performed in all material respects all of its obligations hereunder required to be performed by it at or prior to the Closing Date.

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(b) Representations and Warranties. The representations and warranties of the Company (i) with respect to the matters set forth in Section 4.01, Section 4.02, Section 4.05, Section 4.06, Section 4.21, Section 4.22 and Section 4.23 shall be true in all material respects at and as of the Closing Date as if made at and as of such time (other than such representations and warranties that by their terms address matters only as of another specified time, which shall be true in all material respects only as of such time) and (ii) the other representations and warranties of the Company contained in this Agreement or in any certificate or other writing delivered by the Company pursuant hereto (disregarding all materiality and Material Adverse Effect qualifications contained therein, other than the representation in Section 4.11(a)) shall be true at and as of the Closing Date as if made at and as of such time (other than representations and warranties that by their terms address matters only as of another specified time, which shall be true only as of such time), with, solely in the case of this clause (ii), only such exceptions as have not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(c) Consolidated EBITDA. Consolidated EBITDA (as defined in Section 8.09(e) of the Company Disclosure Schedule) for the four (4) fiscal quarter period ended at least 45 days prior to the Closing Date shall not be less than $9,900,000.

(d) Cash and Cash Equivalents. On the Closing Date, the Company shall have cash and cash equivalents (as would be set forth on the Company’s consolidated balance sheet if prepared as of the Closing Date) in an amount not less than that the greater of (i) $61.00 million and (ii) the amount resulting from the formula set forth in Section 9.02(d) of the Company Disclosure Schedule.

(e) Debt Financing. The Parent shall have received the maximum proceeds from the Debt Financing contemplated by the Debt Financing Commitment, subject to the maximum leverage ratio set forth therein.

(f) No Material Adverse Effect. Since the date of this Agreement, there shall not have occurred any Material Adverse Effect.

(g) Officer’s Certificate. Parent shall have received a certificate, dated as of the Closing Date, signed by the chief executive officer or the chief financial officer of the Company, certifying to the satisfaction of the conditions specified in Section 9.02(a) through Section 9.02(d) and Section 9.02(f).

Section 9.03 Conditions to the Obligations of the Company. The obligations of the Company to consummate the Merger shall be subject to the satisfaction on or prior to the Closing Date of the following further conditions, any of which may be waived, in writing, in whole or in part, exclusively by the Company:

(a) Performance of Obligations of Parent and Merger Subsidiary. Each of Parent and Merger Subsidiary shall have performed in all material respects all of its obligations hereunder required to be performed by it at or prior to the Closing Date.

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(b) Representations and Warranties. The representations and warranties of Parent and Merger Subsidiary contained in this Agreement or in any certificate or other writing delivered by Parent or Merger Subsidiary pursuant hereto shall be true and correct at and as of the Closing Date as if made at and as of such time (other than representations and warranties that by their terms address matters only as of another specified time, which shall be true only as of such time), except where the failure or failures of any such representations and warranties to be true and correct, individually or in the aggregate, have not had, and would not reasonably be expected to have, a Parent Material Adverse Effect.

(c) Officer’s Certificate. The Company shall have received a certificate, dated as of the Closing Date, signed by the chief executive officer, chief financial officer or other duly authorized officer of Parent, certifying to the satisfaction of the conditions specified in Section 9.03(a) and Section 9.03(b).

Section 9.04 Frustration of Closing Conditions. None of the Company, Parent or Merger Subsidiary may rely on the failure of any condition set forth in Section 9.02 or Section 9.03, as the case may be, to be satisfied if such failure was caused by such party’s failure to use the standard of efforts required from such party to consummate the Merger and the other transactions contemplated by this Agreement, including as required by and subject to Section 7.04 and Section 8.09.

ARTICLE 10

TERMINATION

Section 10.01 Termination. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time (notwithstanding any approval of this Agreement by the Company’s stockholders):

(a) by mutual written agreement of the Company and Parent;

(b) by either the Company or Parent, if:

(i) the Merger has not been consummated on or before December 15, 2010 (the “Outside Date”); provided, however, that the right to terminate this Agreement pursuant to this Section 10.01(b)(i) shall not be available to any party whose breach of any provision of this Agreement results in the failure of the Effective Time to occur by such time;

(ii) there shall be any Applicable Law that (A) makes consummation of the Merger illegal or otherwise prohibited or (B) permanently enjoins the Company or Parent from consummating the Merger and such injunction shall have become final and nonappealable; provided, however, that the right to terminate this Agreement pursuant to this Section 10.01(b)(ii) shall not be available to any party hereto unless such party shall have used its reasonable best efforts to contest, appeal and remove such injunction; provided, further, that the right to terminate this Agreement pursuant to this Section 10.01(b)(ii) shall not be available to any party whose failure to comply with any provision of this Agreement has been the principal cause of, or resulted directly in, such action; or

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(iii) at the Company Stockholder Meeting (including any adjournment or postponement thereof), the Company Stockholder Approval shall not have been obtained; or

(c) by Parent, if:

(i) (v) an Adverse Company Recommendation Change shall have occurred or if the Company’s Board of Directors or an authorized committee thereof resolves to effect an Adverse Company Recommendation Change; (w) if the Company’s Board of Directors or any committee thereof shall have failed to recommend the Company Stockholder Approval in the Proxy Statement or shall have withheld, withdrawn, amended or modified its recommendation of the Company Stockholder Approval in a manner adverse to Parent; (x) a tender offer or exchange offer for outstanding shares of Company Stock shall have been commenced (other than by Parent or its Affiliates) and the Company’s Board of Directors or any committee thereof recommends that the stockholders of the Company tender their shares in such tender offer or exchange offer or, within ten (10) Business Days after the public announcement of such tender offer or exchange offer or, if earlier, prior to the date of the Company Stockholder Meeting, the Company’s Board of Directors or a committee thereof fails to recommend against acceptance of such offer and reaffirm the recommendation of the Company Stockholder Approval; (y) the Company enters into an agreement to effect a Company Acquisition Proposal; or (z) the Company or the Company’s Board of Directors or any committee thereof shall have publicly announced its intention to do any of the foregoing; or

(ii) if there shall have been a material breach by the Company of any of the covenants or agreements or any of the representations or warranties set forth in this Agreement on the part of the Company, which breach would, individually or in the aggregate, result in, if occurring or continuing on the Closing, the failure of the conditions set forth in Section 9.02(a) and which breach has not been cured within thirty (30) days following receipt of notice thereof to the Company or, by its nature, cannot be cured within such period; provided, however, that, at the time of delivery of such notice, Parent or Merger Subsidiary shall not be in material breach of its or their obligations under this Agreement; or

(d) by the Company, if:

(i) an Adverse Company Recommendation Change shall have occurred; or

(ii) if there shall have been a material breach by Parent or Merger Subsidiary of any of the covenants or agreements or any of the representations or warranties set forth in this Agreement on the part of Parent or Merger Subsidiary, which breach would, individually or in the aggregate, result in, if occurring or continuing on the Closing, the failure of the conditions set forth in Section 9.03(a) and which breach has not been cured within thirty (30) days following receipt of notice thereof to Parent or, by its nature,

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cannot be cured within such period; provided, however, that, at the time of delivery of such notice, the Company shall not be in material breach of its obligations under this Agreement.

The party desiring to terminate this Agreement pursuant to this Section 10.01 (other than pursuant to Section 10.01(a)) shall give notice of such termination to the other party.

Section 10.02 Effect of Termination. If this Agreement is terminated pursuant to Section 10.01, this Agreement shall become void and of no effect without liability of any party (or any stockholder, director, officer, employee, agent, consultant or Representative of such party) to the other party hereto; provided, however, that, if such termination shall result from the willful and material (i) failure of either party to fulfill a condition to the performance of the obligations of the other party or (ii) failure of either party to perform a covenant hereof, such party shall be fully liable for any and all liabilities and damages incurred or suffered by the other party as a result of such failure. The provisions of this Section 10.02 and Section 6.04(b), Section 11.01, Section 11.04, Section 11.06, Section 11.07, Section 11.08, Section 11.09, Section 11.11, and Section 11.12 shall survive any termination hereof pursuant to Section 10.01.

ARTICLE 11

MISCELLANEOUS

Section 11.01 Notices. All notices, requests and other communications to any party hereunder shall be in writing (including facsimile transmission and electronic mail (“e-mail”) transmission, so long as a receipt of such e-mail is requested and received) and shall be given,

if to Parent or Merger Subsidiary, to:

Alloy Media Holdings, L.L.C.

c/o ZM Capital Management, L.L.C.

19 West 44th Street, 18th Floor

New York, NY 10036

Attn: Andrew Vogel

Facsimile No.: (212) 223 1384

E-mail: andrew@zelnickmedia.com

with a copy to:

Simpson Thacher & Bartlett LLP

1999 Avenue of the Stars – 29^th Floor

Los Angeles, California 90067

Attention: Daniel Clivner

Facsimile No.: (310) 407-7502

E-mail: dclivner@stblaw.com

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if to the Company, to:

Alloy, Inc.

151 W. 26^th Street, 11^th Floor

New York, New York 10001

Attention: Gina Digioia

Facsimile No.: (212) 244-4311

E-mail: ginad@alloy.com

with a copy to:

Kramer Levin Naftalis & Frankel LLP

1177 Avenue of the Americas

New York, New York 10036

Attention: Richard H. Gilden

Facsimile No.: (212) 715-8085

E-mail: rgilden@kramerlevin.com

or to such other address or facsimile number as such party may hereafter specify for the purpose by notice to the other parties hereto. All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. on a Business Day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed to have been received on the next succeeding Business Day in the place of receipt.

Section 11.02 Survival. None of the representations, warranties, covenants and agreements in this Agreement or in any instrument delivered pursuant to this Agreement, including any rights arising out of any breach of such representations, warranties, covenants and agreements, shall survive the Effective Time, except for (i) those covenants and agreements contained herein that by their terms apply or are to be performed in whole or in part after the Effective Time and (ii) this Article 11.

Section 11.03 Amendments and Waivers.

(a) Any provision of this Agreement may be amended or waived prior to the Effective Time if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this Agreement or, in the case of a waiver, by each party against whom the waiver is to be effective; provided, however, that after the Company Stockholder Approval has been obtained there shall be no amendment or waiver that would require the further approval of the stockholders of the Company under Delaware Law without such approval having first been obtained.

(b) No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by Applicable Law.

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Section 11.04 Expenses.

(a) General. Except as otherwise provided herein, all costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense. No party shall be obligated to incur, expend or pay any person more than $5,000 in connection with undertaking commercially reasonable efforts for purposes of Section 2.05 of this Agreement.

(b) Termination Fees and Company Acquisition Proposal Expense Reimbursement. In recognition of the efforts, expenses and other opportunities foregone by each of the Company and Parent while structuring and pursuing the transactions contemplated by this Agreement:

(i) The Company agrees to pay a fee (the “Company Termination Fee”) to Parent’s designees in the amount of $3,900,000 if (A) Parent terminates this Agreement pursuant to Section 10.01(c)(i) or (B) the Company terminates this Agreement pursuant to Section 10.01(d)(i).

(ii) The Company agrees to pay Parent up to $2,500,000 as reimbursement (the “Company Acquisition Proposal Expense Reimbursement”) for expenses actually incurred by Parent or its Affiliates relating to the transactions contemplated by this Agreement (including, but not limited to, reasonable fees and expenses of Parent’s counsel, accountants, financial advisors and financing sources), in the event that (x) the Company or Parent terminates this Agreement pursuant to (A) Section 10.01(b)(i) (but solely if the Company Stockholder Approval shall not have been obtained prior to such termination), (B) Section 10.01(b)(iii) or (C) Section 10.01(c)(ii) and (y) prior to such termination (in the case of termination pursuant to Section 10.01(b)(i) or Section 10.01(c)(ii)) or the Company Stockholder Meeting (in the case of termination pursuant to Section 10.01(b)(iii)), a Company Acquisition Proposal shall have been publicly disclosed and not withdrawn, or otherwise publicly known (provided, however, that for purposes of this clause (ii), each reference to “20%” in the definition of Company Acquisition Proposal shall be deemed to be a reference to “50%”); provided, however, that in the event that within twelve (12) months following the date of such termination, the Company shall have entered into a definitive agreement with respect to or recommended to its stockholders a Company Acquisition Proposal or a Company Acquisition Proposal shall have been consummated (regardless of whether such Company Acquisition Proposal is made before or after termination of this Agreement or is the same Company Acquisition Proposal referred to in clause (y) above), then the Company agrees to pay to Parent the Company Termination Fee, provided, further, that the amount of the Company Termination Fee payable pursuant to this Section 11.04(b)(ii) shall be reduced by any amount paid by the Company to Parent in respect of the Company Acquisition Proposal Expense Reimbursement pursuant to this Section 11.04(b)(ii);

provided, however, that no Company Acquisition Proposal Expense Reimbursement or Company Termination Fee shall be payable by the Company pursuant to clause (i) or (ii) above if at the time of such termination Parent or Merger Subsidiary is in material breach of its or their obligations under this Agreement.

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(iii) Parent agrees to pay a fee (the “Parent Termination Fee”) to the Company in the amount of $5,800,000 if:

(A) the Company or Parent terminates this Agreement pursuant to Section 10.01(b)(i) and: (i) all of the conditions to Closing set forth in Section 9.01 and Section 9.02 (other than (x) the condition set forth in Section 9.02(e) and (y) those other conditions that, by their nature, cannot be satisfied until the Closing Date, but, in the case of clause (y), which conditions would be satisfied if the Closing Date were the date of such termination) have been satisfied or waived on or prior to the date of such termination; and (ii) all conditions have been satisfied under the Debt Financing and full proceeds of the Debt Financing (subject to the maximum leverage ratio set forth in the Debt Financing Commitment) would be available to be drawn down by Parent if Parent funded the Equity Commitment at Closing;

(B) the Company terminates this Agreement pursuant to Section 10.01(d)(ii);

provided, however, that no Parent Termination Fee shall be payable by Parent pursuant to this clause (iii) if at the time of such termination the Company is in material breach of its or their obligations under this Agreement.

(c) Payment.

(i) The payment of the Company Acquisition Proposal Expense Reimbursement shall be paid by wire transfer of immediately available funds within ten (10) Business Days of the event giving rise to the payment of the Company Acquisition Proposal Expense Reimbursement pursuant to Section 11.04(b)(ii).

(ii) The payment of the Company Termination Fee shall be made by wire transfer of immediately available funds by the Company within two (2) Business Days following the termination of this Agreement in the case of Section 11.04(b)(i)(A) and within two (2) Business Days of the event giving rise to the payment of the Company Termination Fee in the case of Section 11.04(b)(ii), but shall be due simultaneously with such termination if pursuant to Section 11.04(b)(i)(B). For the avoidance of doubt, any payment to be made by the Company under Section 11.04(b) shall be payable only once to the Parent’s designees with respect to Section 11.04(b) and not in duplication even though such payment may be payable under one or more provisions hereof or on more occasion pursuant to the same subsection of this Section 11.04.

(iii) The payment of the Parent Termination Fee shall be made by wire transfer of immediately available funds by Parent to the Company within two (2) Business Days following the termination of this Agreement in the case of a termination by the Company and concurrently with such termination in the case of a termination by Parent.

(d) Other Costs and Expenses. Each party hereto acknowledges that the agreements contained in this Section 11.04 are an integral part of the transactions contemplated by this Agreement and that, without these agreements, the other party would not have entered into this

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Agreement. Accordingly, if a party fails promptly to pay any amount due pursuant to this Section 11.04 when due, such party shall also pay any costs and expenses incurred by the other party in connection with a legal action to enforce this Agreement that results in a judgment against such party for such amount, together with interest on the amount of any unpaid fee, cost or expense at the publicly announced prime rate of Citibank, N.A. from the date such fee, cost or expense was required to be paid to (but excluding) the payment date.

(e) Exclusive Remedy. The parties acknowledge that the agreements contained in this Section 11.04 are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, the parties would not enter into this Agreement. Except as provided in Section 11.04(b) and Section 11.04(d), respectively, the payments required to be made by the Company or Parent, as applicable, pursuant to Section 11.04(b) shall not be in lieu of liability for damages incurred in the event of a breach of this agreement, but otherwise shall constitute the sole and exclusive remedy of Company or Parent, as applicable, in connection with any termination of this Agreement.

(f) No-Vote Expense Reimbursement. In recognition of the efforts, expenses and other opportunities foregone by Parent while structuring and pursuing the transactions contemplated by this Agreement, the Company agrees to pay the Parent up to $2,500,000 as reimbursement (the “No-Vote Expense Reimbursement”) for expenses actually incurred by Parent or its Affiliates relating to the transactions contemplated by this Agreement (including, but not limited to, reasonable fees and expenses of Parent’s counsel, accountants, financial advisors and financing sources), in the event of the termination of this Agreement pursuant to Section 10.01(b)(iii), to which the provisions of Section 11.04(b)(ii) do not apply. The expenses payable pursuant to this Section 11.04(f) shall be paid by wire transfer of immediately available funds within ten (10) Business Days following such termination of this Agreement pursuant to Section 10.01(b)(iii). The payment of the No-Vote Expense Reimbursement pursuant to this Section 11.04(f) shall not relieve the Company of any obligation to pay the Company Termination Fee pursuant to Section 11.04(b), provided, however, that the Company Termination Fee shall be reduced by any amount paid by the Company to Parent’s designees pursuant to this Section 11.04(f).

Section 11.05 Disclosure Schedule and SEC Document References. The parties hereto agree that any reference in a particular Section of the Company Disclosure Schedule or any Company SEC Document filed after January 31, 2010 and prior to the date hereof shall be deemed to be an exception to (or, as applicable, a disclosure for purposes of) (i) the representations and warranties (or covenants, as applicable) of the Company that are contained in the corresponding Section of this Agreement and (ii) any other representations and warranties of the Company that is contained in this Agreement if the relevance of that reference as an exception to (or a disclosure for purposes of) such representations and warranties would be reasonably apparent to a reasonable person who has read that reference and such representations and warranties, without any independent knowledge on the part of the reader regarding the matter(s) so disclosed. The inclusion of any information in the Company Disclosure Schedule or in any Company SEC Document filed after January 31, 2009, as applicable, shall not be deemed to be an admission or acknowledgment, in and of itself, that such information is required by the terms hereof to be disclosed, is material, has resulted in or would result in a Material Adverse Effect or is outside the ordinary course of business.

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Section 11.06 Binding Effect; Benefit; Assignment.

(a) The provisions of this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. Except as provided in Section 7.02 and Section 11.13 (relating to the Company’s actions on behalf of its stockholders), no provision of this Agreement is intended to confer any rights, benefits, remedies, obligations or liabilities hereunder upon any Person other than the parties hereto and their respective successors and assigns.

(b) No party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of each other party hereto, except that Parent or Merger Subsidiary may transfer or assign its rights and obligations under this Agreement, in whole or from time to time in part, to (i) one or more of their Affiliates at any time and (ii) after the Effective Time, to any Person; provided, however, that such transfer or assignment shall not relieve Parent or Merger Subsidiary of its obligations hereunder or enlarge, alter or change any obligation of any other party hereto or due to Parent or Merger Subsidiary. Any assignment in violation of the foregoing shall be null and void.

Section 11.07 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflicts of law rules of such state.

Section 11.08 Jurisdiction. The parties hereto agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby (whether brought by any party or any of its Affiliates or against any party or any of its Affiliates) shall be brought in the Delaware Chancery Court or, if such court shall not have jurisdiction, any federal court located in the State of Delaware or other Delaware state court, and each of the parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Each party agrees that service of process on such party as provided in Section 11.01 shall be deemed effective service of process on such party.

Section 11.09 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 11.10 Counterparts; Effectiveness. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when each party hereto shall have received a counterpart hereof signed by all of the other parties hereto. Until and unless each party has received a counterpart hereof signed by the other party hereto, this Agreement shall have no effect and no party shall have any right or

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obligation hereunder (whether by virtue of any other oral or written agreement or other communication). Signatures to this Agreement transmitted by facsimile transmission, by electronic mail in PDF form, or by any other electronic means designed to preserve the original graphic and pictorial appearance of a document, will be deemed to have the same effect as physical delivery of the paper document bearing the original signatures.

Section 11.11 Entire Agreement. This Agreement, the Confidentiality Agreement and the Voting Agreement constitute the entire agreement between the parties with respect to the subject matter of this Agreement and supersedes all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter of this Agreement.

Section 11.12 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other Governmental Authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such a determination, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.

Section 11.13 Specific Performance. The parties recognize and agree that if for any reason any of the provisions of this Agreement are not performed by the Company in accordance with their specific terms or are otherwise breached, immediate and irreparable harm or injury would be caused for which money damages would not be an adequate remedy. Accordingly, each party agrees that, in addition to other remedies, prior to any termination of this Agreement pursuant to Section 10.01, Parent and Merger Subsidiary shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or equity. In the event that any action shall be brought in equity to enforce the provisions of the Agreement, the Company shall not allege, and hereby waives the defense, that there is an adequate remedy at Law. The parties further acknowledge that the Company shall not be entitled to an injunction or injunctions to prevent breaches of this Agreement by Parent or Merger Subsidiary or to enforce specifically the terms and provisions of this Agreement and that the Company’s sole and exclusive remedy with respect to any such breach shall be the remedy available to the Company set forth in Section 11.04.

[Signature Page Follows.]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date set forth on the cover page of this Agreement.

ALLOY, INC.
By:	/s/ Gina DiGioia
Name:	Gina DiGioia
Title:	Secretary
ALLOY MEDIA HOLDINGS, L.L.C.
By:	/s/ Andrew Vogel
Name:	Andrew Vogel
Title:	Vice President and Secretary
LEXINGTON MERGER SUB INC.
By:	/s/ Andrew Vogel
Name:	Andrew Vogel
Title:	Vice President and Secretary

[Agreement and Plan of Merger Signature Page]

EX-4.1

Exhibit 4.1

AMENDMENT NO. 1 TO STOCKHOLDER RIGHTS AGREEMENT

This AMENDMENT NO. 1 TO STOCKHOLDER RIGHTS AGREEMENT (this “Amendment No. 1”) is made and entered into as of June 23, 2010, by and between Alloy, Inc., a Delaware corporation (the “Company”), and American Stock Transfer & Trust Company, as Rights Agent (the “Rights Agent”). Capitalized terms used but not herein defined shall have the meanings ascribed thereto in the Stockholder Rights Agreement, dated as of April 14, 2003, by and between the Company and the Rights Agent (the “Rights Agreement”).

WHEREAS, the Company and the Rights Agent have heretofore executed and entered into the Rights Agreement;

WHEREAS, the Company proposes to enter into an Agreement and Plan of Merger (as it may be amended from time to time, the “Merger Agreement”), dated as of June 23, 2010, by and among Alloy Media Holdings, L.L.C., a Delaware limited liability company (“Parent”), Lexington Merger Sub Inc., a Delaware corporation (“Merger Subsidiary”), and the Company, pursuant to which, among other things, Merger Subsidiary will be merged with and into the Company, the separate corporate existence of Merger Subsidiary will cease, and the Company will continue as the surviving corporation (the “Merger”);

WHEREAS, the Company’s Board of Directors or an authorized committee thereof has approved the Merger Agreement;

WHEREAS, the Company’s Board of Directors or an authorized committee thereof has determined that, in connection with the Merger Agreement, it is necessary and desirable to amend the Rights Agreement to exempt the Merger Agreement, the execution thereof and the transactions contemplated thereby, including, without limitation, the Merger, from the application of the Rights Agreement, in each case as set forth in this Amendment No. 1; and

WHEREAS, (i) pursuant to Section 27 of the Rights Agreement, the Company may in its sole and absolute discretion, and the Rights Agent shall if the Company so directs, supplement or amend any provision of the Rights Agreement in any respect without the approval of any holders of the Rights for so long as the Rights are then redeemable; (ii) pursuant to Section 23 of the Rights Agreement, the Rights are redeemable, by action of the Board of Directors, at any time prior to a Section 11(a)(ii) Event; (iii) no Section 11(a)(ii) Event has occurred and therefore the Rights are redeemable; (iv) pursuant to Section 27 of the Rights Agreement, an appropriate officer of the Company has delivered a certificate to the Rights Agent stating that the proposed supplements and amendments to the Rights Agreement set forth in this Amendment No. 1 are in compliance with Section 27 of the Rights Agreement; and (v) pursuant to the terms of the Rights Agreement and in accordance with Section 27 thereof, the Company has directed that the Rights Agreement should be amended and supplemented as set forth in this Amendment No. 1 immediately prior to the execution of the Merger Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereby agree as follows:

1. Amendments to Rights Agreement.

a. The definition of “Acquiring Person” in Section 1(a) of the Rights Agreement is amended by inserting the following sentence at the end of Section 1(a):

“Notwithstanding anything in this Section 1(a) to the contrary, none of Alloy Media Holdings, L.L.C., a Delaware limited liability company (“Parent”), Lexington Merger Sub Inc., a Delaware corporation (“Merger Subsidiary”), or any of their respective Affiliates or Associates, either individually, collectively or in any combination, shall be deemed to be an “Acquiring Person” solely by virtue of, or as a result of: (A) the approval, execution, delivery, adoption or performance of the Agreement and Plan of Merger, dated as of June 23, 2010, by and among Parent, Merger Subsidiary and the Company (as it may be amended from time to time, the “Merger Agreement”), (B) the consummation of the Merger (as defined in the Merger Agreement), (C) the public announcement of any of the foregoing, or (D) any combination of the foregoing (such actions described in this sentence, the “Permitted Events”).”

b. The definition of “Beneficial Owner” in Section 1(e) of the Rights Agreement is amended by inserting the following subclause (iv) at the end of Section 1(e):

“(iv) Notwithstanding anything in this Section 1(e) to the contrary, none of Parent, Merger Subsidiary or any of their respective Affiliates or Associates, either individually, collectively or in any combination, shall be deemed a Beneficial Owner of, or to beneficially own, any securities solely by virtue of, or as a result of, any Permitted Event.”

c. The definition of “Stock Acquisition Date” in Section 1(jj) of the Rights Agreement is amended to add the following sentence at the end thereof:

“Notwithstanding anything in this Agreement to the contrary, a Stock Acquisition Date shall not be deemed to have occurred solely by virtue of, or as a result of, any Permitted Event.”

d. Section 3(a) of the Rights Agreement is amended to add the following sentence at the end thereof:

“Notwithstanding anything in this Agreement to the contrary, a Distribution Date shall not be deemed to have occurred and nothing in this Rights Agreement shall be construed to give any holder of Rights or any

other Person any legal or equitable rights, remedies or claims under this Rights Agreement solely by virtue of, or as a result of, any Permitted Event.”

e. Section 7(a) of the Rights Agreement is modified, amended and restated as follows:

“Except as otherwise provided herein, the registered holder of any Rights Certificate may exercise the Rights evidenced thereby in whole or in part at any time after the Distribution Date upon surrender of the Rights Certificate, with the form of election to purchase on the reverse side thereof and the certificate contained therein completed and duly executed, to the Rights Agent at the office of the Rights Agent designated for such purpose, together with payment of the Purchase Price with respect to the total number of one one-hundredths of a share of Preferred Stock (or other securities, cash or assets, as the case may be) as to which such surrendered Rights are then exercisable, at or prior to the earliest of (i) the time immediately prior to the Effective Time (as defined in the Merger Agreement) (the “Effective Time”), but only if the Effective Time shall occur, (ii) the Final Expiration Date, (iii) the time at which the Rights are redeemed as provided in Section 23 hereof (the “Redemption Date”) or (iv) the time at which such Rights are exchanged as provided in Section 24 hereof (the earliest of (i), (ii), (iii) or (iv) being herein referred to as the “Expiration Date”). Except for those provisions herein which expressly survive the termination of this Rights Agreement, this Rights Agreement shall terminate at such time as the Rights are no longer exercisable hereunder.”

f. Section 11(a)(ii) of the Rights Agreement is amended to add the following sentence at the end thereof:

“Notwithstanding the foregoing or anything in this Agreement to the contrary, a Section 11(a)(ii) Event shall not be deemed to have occurred solely by virtue of, or as a result of, any Permitted Event, and the provisions of this Section 11(a)(ii) and rights hereunder shall not be deemed to be triggered solely by virtue of, or as a result of, any Permitted Event.”

g. Section 13(a) of the Rights Agreement is amended to add the following sentence at the end thereof:

“Notwithstanding the foregoing or anything in this Agreement to the contrary, a Section 13 Event shall not be deemed to have occurred solely by virtue of, or as a result of, any Permitted Event, and the provisions of this Section 13(a) and rights hereunder shall not be deemed to be triggered solely by virtue of, or as a result of, any Permitted Event.

h. Section 13(b) of the Rights Agreement is amended to add the following sentence at the end thereof:

“Notwithstanding the foregoing or anything in this Agreement to the contrary, none of Parent, Merger Subsidiary or any of their respective Affiliates or Associates, either individually, collectively or in any combination, shall be deemed a Principal Party solely by virtue of, or as a result of, any Permitted Event.”

i. A new Section 35 is added to read in its entirety as follows:

“Section 35. TERMINATION. Notwithstanding anything herein to the contrary, immediately prior to the Effective Time, but only if the Effective Time shall occur, (i) this Agreement shall be terminated and be without further force or effect, (ii) none of the parties to this Agreement will have any rights, obligations or liabilities hereunder and (iii) the holders of the Rights shall not be entitled to any benefits, rights or other interests under this Agreement; provided, however, that notwithstanding the foregoing, Sections 18 and 20 hereof shall survive the termination of this Agreement.”

2. Severability. If any term, provision, covenant or restriction of this Amendment No. 1 is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Amendment No. 1 and of the Rights Agreement, shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

3. Waiver of Notice. The Rights Agent and the Company hereby waive any notice requirement under the Rights Agreement pertaining to the matters covered by this Amendment No. 1.

4. Effectiveness. In accordance with Section 27 of the Rights Agreement, since there is no supplement or amendment of Sections 18, 19, 20 or 21 of the Rights Agreement, this Amendment No. 1 shall be effective upon execution by the Company as of the date first written above, whether or not executed by the Rights Agent, and shall be in full force and effect prior to the execution of the Merger Agreement. To the extent that the terms and provisions of the Rights Agreement do not conflict with the terms and provisions of this Amendment No. 1, then such terms and provisions shall remain in full force and legal effect. To the extent that there is a conflict between the terms and provisions of the Rights Agreement and this Amendment No. 1, the terms and provisions of this Amendment No. 1 shall govern for purposes of the subject matter of this Amendment No. 1 only. If for any reason the Merger Agreement is terminated, then the Company shall promptly notify the Rights Agent of such termination.

5. Governing Law. This Amendment No. 1 shall be deemed to be a contract made under the internal laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts made and to be performed entirely within such State.

6. Counterparts. This Amendment No. 1 may be executed in any number of counterparts (including by facsimile), each of which shall be an original and all of which shall constitute one and the same document.

[Signature Page Follows.]

IN WITNESS WHEREOF, the parties have caused this Amendment No. 1 to be duly executed as of the day and year first above written.

ALLOY, INC.
By:	/s/ Gina DiGioia
Name:	Gina DiGioia
Title:	Secretary
AMERICAN STOCK TRANSFER AND TRUST COMPANY
By:
Name:
Title:

EX-99.1

Exhibit 99.1

June 23, 2010

Alloy Media Holdings, L.L.C.

Lexington Merger Sub Inc.

c/o ZM Capital Management, L.L.C.

19 West 44th Street, 18th Floor

New York, NY 10036

Attention: Andrew Vogel

$40,000,000 Senior Secured Term Loan and Revolving Credit Facility

Ladies and Gentlemen:

Alloy Media Holdings, L.L.C., a Delaware limited liability company (“Holdings”) has advised Bank of America, N.A. (“Bank of America”), RBS Citizens, N.A. and The Private Bank that Holdings intends to acquire (the “Acquisition”) all of the stock or assets of Alloy, Inc., a Delaware corporation (the “Company”) pursuant to the Agreement and Plan of Merger, dated as of June 23, 2010 (the “Purchase Agreement”), by and among the Company, Holdings and Lexington Merger Sub Inc., a Delaware corporation (“Merger Co” and collectively with Holdings, “you”). Our understanding is that the Acquisition will be effected through the merger of Merger Co, a newly-created wholly-owned subsidiary of Holdings, into the Company, with the Company being the surviving corporation. After giving effect to the Acquisition, Holdings will be a holding company that directly owns all of the equity interests in the Company. Holdings and the Company are hereinafter referred to collectively as the “Relevant Entities.”

You have also advised Bank of America and Banc of America Securities LLC (“BAS”) that you intend to finance the Acquisition, costs and expenses related to the Transaction (as hereinafter defined) and the ongoing working capital and other general corporate purposes of the Company and its subsidiaries after consummation of the Acquisition from the following sources (and that no financing other than the financing described herein will be required in connection with the Transaction): (a) at least $35,000,000 of cash will be contributed (the “Equity Contribution”) to Holdings or the Company by ZM Capital Management, L.L.C., its affiliates and co-investors (the “Equity Investors”) in exchange for units of Holdings, (b) at least $10,000,000 of units in Holdings will consist of rollover equity by the sellers (including the value of unvested restricted shares of common stock of the Company cancelled in exchange for units of Holdings pursuant to a Consent to Restricted Stock Cancellation executed by the holder of such unvested restricted shares) (the “Rollover Equity”) (it being understood that cash contributed by the Equity Investors in excess of $35,000,000 may, at the election of Holdings, constitute Rollover Equity for the purposes of this clause (b)), and (c) up to $40,000,000 in senior secured credit facilities (the “Senior Credit Facilities”) of the Borrower (as defined in the Summary of Terms referred to below), comprised of (i) term loan facilities aggregating up to $22,500,000 (the “Term Loan”) and (ii) a revolving credit facility of up to $17,500,000 (of which no more than $7,500,000 shall be funded at closing, unless adjusted as described in the Summary of Terms) (the “Revolver”). The Acquisition, the Equity Contribution, the funding of the Senior Credit Facilities and all related transactions are hereinafter collectively referred to as the “Transaction.” Allocation of the Senior Credit Facilities as between the Revolver and the Term Loan may be adjusted as described in the Summary of Terms.

In connection with the foregoing, (a) Bank of America is pleased to advise you of its commitment to provide $16,000,000 of the Senior Credit Facilities and to act as the sole administrative agent (in such capacity, the “Administrative Agent”) for the Senior Credit Facilities, (b) RBS Citizens, N.A. is pleased to advise you of its commitment to provide $14,000,000 of the Senior Credit Facilities and (c) The Private Bank (collectively with RBS Citizens, N.A. and Bank of America, the “Commitment Parties”) is pleased to advise you of its commitment to provide $10,000,000 of the Senior Credit Facilities, in each case upon

and subject to the terms and conditions set forth in this letter (this “Commitment Letter”) and in the Summary of Terms and Conditions attached as Exhibit A hereto and incorporated herein by this reference (the “Summary of Terms”; capitalized terms used but not defined herein shall have the same meanings as specified in the Summary of Terms). The commitments of the Commitment Parties in respect of the Term Loan and the Revolver shall be amounts equivalent to their respective ratable share of the aggregate commitments with respect to the Senior Credit Facilities.

The commitments of the Commitment Parties hereunder are subject only to the satisfaction of each of the following conditions precedent and the conditions set forth under “Conditions Precedent to Closing” in Exhibit A hereto: (a) there shall be no competing offering, placement or arrangement of any debt securities or bank financing entered into by or on behalf of Holdings, the Company or any of their respective subsidiaries, (b) the negotiation, execution and delivery of definitive documentation for the Senior Credit Facilities consistent with the Summary of Terms and (c) for any other provisions of the Facilities Documentation not addressed in this Commitment Letter, the Summary of Terms and the Fee Letters, negotiated in good faith, customary for transactions of this type and reasonably satisfactory to the Lead Arranger and you (the “Facilities Documentation”).

Notwithstanding anything in this Commitment Letter, the Fee Letters, the Facilities Documentation or any other letter agreement or other undertaking concerning the financing of the Transaction to the contrary, (a) the only representations relating to the Company, its subsidiaries and its businesses the accuracy of which shall be a condition to the availability of the Senior Credit Facilities on the Closing Date pursuant to clause (iii) of the “Conditions Precedent to Closing” in Exhibit A shall be (i) the representations made by or with respect to the Company and its subsidiaries in the Purchase Agreement as are material to the interests of the Lenders, but only to the extent that you have the right to terminate your obligations under the Purchase Agreement as a result of a breach of such representations in the Purchase Agreement (the “Purchase Agreement Representations”), (ii) the Specified Representations (as hereinafter defined) (which shall be true in all respects), and (iii) the Additional Representations (as hereinafter defined) (which shall be true in all material respects) and (b) the terms of the Facilities Documentation shall be in a form such that they do not impair the availability of the Senior Credit Facilities on the Closing Date if the conditions set forth in the preceding paragraph and the “Conditions Precedent to Closing” in Exhibit A are satisfied. For purposes hereof, “Specified Representations” means the representations and warranties relating to corporate status, corporate power and authority to enter into the Facilities Documentation, due authorization, execution, delivery and enforceability of the Facilities Documentation, no conflicts of Facilities Documentation with any charter documents, Federal Reserve margin regulations, and solvency of the Company and its subsidiaries taken as a whole. For purposes hereof, “Additional Representations” means the representations and warranties relating to no conflicts of Facilities Documentation with, or required consents under, laws or material agreements (other than consents that have been obtained), the U.S.A. Patriot Act, the Investment Company Act and, subject to clause (i) of the “Conditions Precedent to Closing” in Exhibit A, the creation, validity, priority and perfection of the security interests granted in the intended collateral.

You represent and warrant that (a) all financial projections concerning Holdings, the Company and its subsidiaries that have been or are hereafter made available to the Commitment Parties by you or any of your representatives (or on your or their behalf) or by the Company or any of its representatives (or on their behalf) (the “Projections”) have been or will be prepared in good faith based upon assumptions that are believed by you to be reasonable at the time made and at the time the Projections are made available to you and (b) all written Information concerning you and to the best of your knowledge, the Company and its subsidiaries, other than Projections and information of a general economic or industry nature, which has been or is hereafter made available to the Commitment Parties by you or any of your representatives (or on your or their behalf) in connection with any aspect of the Transaction, when furnished and taken as a whole, is and will be complete and correct in all material respects and does not

and will not, when furnished and taken as a whole, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein not materially misleading. You agree that if at any time prior to the Closing Date any of the representations in the preceding sentence would be incorrect in any material respect if the Information and Projections were being furnished, and such representations were being made, at such time, then you will promptly supplement, or cause to be supplemented, the Information and Projections so that such representations will be correct in all material respects at such time. In issuing these commitments, the Commitment Parties are and will be using and relying on the Information without independent verification thereof.

You acknowledge that (a) BAS and/or Bank of America on your behalf will make available Information Materials to the other Commitment Parties by posting the Information Materials on IntraLinks or another similar electronic system and (b) certain Commitment Parties (such Lenders, “Public Lenders”; all other Commitment Parties, “Private Lenders”) may have personnel that do not wish to receive material non-public information (within the meaning of the United States federal securities laws, “MNPI”) with respect to the Relevant Entities, their respective affiliates or any other entity, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such entities’ securities. If requested, you will assist us in preparing an additional version of the Information Materials not containing MNPI (the “Public Information Materials”) to be distributed to prospective Public Lenders.

Before distribution of any Information Materials (a) to prospective Private Lenders, you shall provide Bank of America and BAS with a customary letter authorizing the dissemination of the Information Materials and (b) to prospective Public Lenders, you shall provide Bank of America and BAS with a customary letter authorizing the dissemination of the Public Information Materials and confirming the absence of MNPI therefrom. In addition, at the request of BAS or Bank of America, you shall identify Public Information Materials by clearly and conspicuously marking the same as “PUBLIC”.

You agree that BAS and/or Bank of America on your behalf may distribute the following documents to all prospective Lenders, unless you advise BAS and Bank of America in writing (including by email) within a reasonable time prior to their intended distributions that such material should only be distributed to prospective Private Lenders: (a) administrative materials for Commitment Parties such as lender meeting invitations and funding and closing memoranda, (b) notifications of changes to Senior Credit Facilities’ terms and (c) other materials intended for Commitment Parties after the initial distribution of the Information Materials, including drafts and final versions of definitive documents with respect to the Senior Credit Facilities. If you advise us that any of the foregoing items should be distributed only to Private Lenders, then BAS and Bank of America will not distribute such materials to Public Lenders without further discussions with you. You agree (whether or not any Information Materials are marked “PUBLIC”) that Information Materials made available to prospective Public Lenders in accordance with this Commitment Letter shall not contain MNPI.

By executing this Commitment Letter, you agree to reimburse the Commitment Parties from time to time on demand for all reasonable out-of-pocket fees and expenses (including, but not limited to, (a) the reasonable and documented fees, disbursements and other charges of Goulston & Storrs, P.C., as counsel to the Commitment Parties and (b) due diligence expenses) incurred in connection with the Senior Credit Facilities, the syndication thereof and the preparation of the definitive documentation therefor, and the other transactions contemplated thereby.

You agree to indemnify and hold harmless the Commitment Parties and each of their affiliates and their respective officers, directors, employees, agents, advisors and other representatives (each an “Indemnified Party”) from and against (and will reimburse each Indemnified Party as the same are incurred for) any and all claims, damages, losses, liabilities and expenses (including, without limitation,

the reasonable fees, disbursements and other charges of counsel) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of (including, without limitation, in connection with any investigation, litigation or proceeding or preparation of a defense in connection therewith) (a) any aspect of the Transaction or (b) the Senior Credit Facilities, or any use made or proposed to be made with the proceeds thereof, except to the extent such claim, damage, loss, liability or expense is found in a final, nonappealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s bad faith, gross negligence or willful misconduct. In the case of an investigation, litigation or proceeding to which the indemnity in this paragraph applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by you, your equityholders or creditors or an Indemnified Party, whether or not an Indemnified Party is otherwise a party thereto and whether or not any aspect of the Transaction is consummated. You also agree that no Indemnified Party shall have any liability (whether direct or indirect, in contract or tort or otherwise) to you or your subsidiaries or affiliates or to your or their respective equity holders or creditors arising out of, related to or in connection with any aspect of the Transaction, other than for direct or actual damages determined in a final, nonappealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s bad faith, gross negligence or willful misconduct. Notwithstanding any other provision of this Commitment Letter, no Indemnified Party shall be liable for any damages arising from the use by others of information or other materials obtained through electronic telecommunications or other information transmission systems, other than for direct or actual damages resulting from the gross negligence or willful misconduct of such Indemnified Party as determined by a final and nonappealable judgment of a court of competent jurisdiction.

This Commitment Letter, the fee letter between you and RBS Citizens, N.A. of even date herewith, the fee letter between you and The Private Bank of even date herewith and the fee letter among you, Bank of America and BAS of even date herewith (collectively, the “Fee Letters”) and the contents hereof and thereof are confidential and, except for disclosure hereof or thereof on a confidential basis to the Equity Investors, you and the Equity Investors’ respective accountants, attorneys and other professional advisors retained by you in connection with the Transaction or pursuant to the order of any court or administrative agency in any pending legal or administrative proceeding, or otherwise as required by applicable law or compulsory legal process based on the reasonable advice of your legal counsel (in which case you agree to inform us promptly thereof), may not be disclosed in whole or in part to any person or entity without our prior written consent; provided, however, it is understood and agreed that you may disclose (a) this Commitment Letter (including the Summary of Terms) and each of the Fee Letters (redacted in a manner reasonably satisfactory to the relevant Commitment Party) on a confidential basis to the board of directors and advisors of the Sellers and the Company in connection with their consideration of the Transaction, (b) after your acceptance of this Commitment Letter and the Fee Letters, the Commitment Letter in filings with the Securities and Exchange Commission and other applicable regulatory authorities and stock exchanges and (c) the fees contained in the Fee Letters as part of a generic disclosure of aggregate sources and uses for the Transaction to the extent customary or required in marketing materials or in any public filings with the Securities and Exchange Commission, provided that the relevant Commitment Party shall have reasonable approval rights of such disclosure. The Commitment Parties hereby notify you that pursuant to the requirements of the USA PATRIOT Act, Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the “Act”), each of them is required to obtain, verify and record information that identifies you, which information includes your name and address and other information that will allow the Commitment Parties, as applicable, to identify you in accordance with the Act.

The Commitment Parties shall use all confidential information provided to them by or on behalf of you hereunder solely for the purpose of providing the services which are the subject of this Commitment Letter and otherwise in connection with the Transaction and shall treat confidentially all such information; provided, however, that nothing herein shall prevent any of the Commitment Parties from disclosing any such information (i) pursuant to the order of any court or administrative agency or in any

pending legal or administrative proceeding, or otherwise as required by applicable law or compulsory legal process (in which case the Commitment Parties agree to inform you promptly thereof prior to such disclosure to the extent not prohibited by law, rule or regulation), (ii) upon the request or demand of any regulatory authority having jurisdiction over the Commitment Parties, or any of their respective affiliates, (iii) to the extent that such information becomes publicly available other than by reason of disclosure in violation of this agreement by the Commitment Parties, (iv) to the Commitment Parties’ affiliates, employees, legal counsel, independent auditors and other experts or agents who need to know such information in connection with the Transaction and are informed of the confidential nature of such information, (v) to the extent that such information is received by the Commitment Parties from a third party that is not to the Commitment Parties’ knowledge subject to confidentiality obligations to you or (vi) to the extent that such information is independently developed by the Commitment Parties. The Commitment Parties agree that they will not furnish confidential information obtained from you to the Sellers or the Company.

You acknowledge that the Commitment Parties and/or their affiliates provide various services to the Company. You agree to such continued services by the Commitment Parties and further agree not to assert any claim you might allege based on any actual or potential conflicts of interest that might be asserted to arise or result from, on the one hand, any such services provided by a Commitment Party to the Company, and, on the other hand, our relationship with you as described and referred to herein.

You acknowledge that the Commitment Parties or their affiliates may also be providing financing or other services to other parties whose interests may conflict with yours. The Commitment Parties agree that they will not furnish confidential information obtained from you to any of their other customers and that they will treat confidential information relating to you, the Company and your and their respective affiliates with the same degree of care as they treat their own confidential information. The Commitment Parties further advise you that they will not make available to you confidential information that they have obtained or may obtain from any other customer. In connection with the services and transactions contemplated hereby, you agree that the Commitment Parties are permitted to access, use and share with any of their bank or non-bank affiliates, agents, advisors (legal or otherwise) or representatives any information concerning you, the Company or any of your or its respective affiliates that is or may come into the possession of the Commitment Parties or any of such affiliates.

In connection with all aspects of each transaction contemplated by this Commitment Letter, you acknowledge and agree, and acknowledge your affiliates’ understanding, that: (a) (i) the services described herein regarding the Senior Credit Facilities are arm’s-length commercial transactions between you and your affiliates, on the one hand, and the Commitment Parties, on the other hand, (ii) you have consulted your own legal, accounting, regulatory and tax advisors to the extent you have deemed appropriate, and (iii) you are capable of evaluating, and understand and accept, the terms, risks and conditions of the transactions contemplated hereby; (b) (i) each Commitment Party has been, is, and will be acting solely as a principal and, except as otherwise expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for you, any of your affiliates or any other person or entity and (ii) no Commitment Party has any obligation to you or your affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein; and (c) the Commitment Parties and their respective affiliates may be engaged in a broad range of transactions that involve interests that differ from yours and those of your affiliates, and the Commitment Parties have no obligation to disclose any of such interests to you or your affiliates. To the fullest extent permitted by law, you hereby waive and release any claims that you may have against the Commitment Parties with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated by this Commitment Letter.

The compensation, indemnification, waiver, release and confidentiality provisions contained herein and in the Fee Letters shall remain in full force and effect regardless of whether any definitive documentation for the Senior Credit Facilities shall be executed and delivered, and notwithstanding the termination of this Commitment Letter or any commitment or undertaking of the Commitment Parties hereunder.

This Commitment Letter and the Fee Letters may be executed in counterparts which, taken together, shall constitute an original. Delivery of an executed counterpart of this Commitment Letter or the Fee Letters by telecopier, facsimile or electronic transmission (e.g. “pdf” or “tiff”) shall be effective as delivery of a manually executed counterpart thereof.

This Commitment Letter (including the Summary of Terms) and the Fee Letters shall be governed by, and construed in accordance with, the laws of the State of New York; provided, however, that the interpretation of the definition of “Material Adverse Effect” (as defined in the Purchase Agreement) (and whether or not a Material Adverse Effect has occurred) in this Commitment Letter and Summary of Terms shall be governed by and construed in accordance with, the laws of the State of Delaware, regardless of the laws that might otherwise govern applicable principles of conflicts of law thereof. Each of you and the Commitment Parties hereby irrevocably waives any and all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to this Commitment Letter (including the Summary of Terms), the Fee Letters, the Transaction and the other transactions contemplated hereby and thereby or the actions of the Commitment Parties in the negotiation, performance or enforcement hereof.

This Commitment Letter (including the Summary of Terms) and the Fee Letters embody the entire agreement and understanding among the Commitment Parties, you and your affiliates with respect to the Senior Credit Facilities and supersedes all prior agreements and understandings relating to the specific matters hereof. No party has been authorized by the Commitment Parties to make any oral or written statements that are inconsistent with this Commitment Letter.

Neither this Commitment Letter (including the attachments hereto) nor the Fee Letters may be amended or any term or provision hereof or thereof waived or modified except by an instrument in writing signed by each of the parties hereto or thereto, as the case may be.

This Commitment Letter is not assignable without the prior written consent of each party hereto and is intended to be solely for the benefit of the parties hereto and the Indemnified Parties.

This Commitment Letter (including the Summary of Terms) will become the binding agreement of the Commitment Parties upon your acceptance of this letter and returning an executed copy of this letter to the Commitment Parties. Thereafter, all commitments and undertakings of the Commitment Parties hereunder will expire on the earliest of (a) December 31, 2010, unless the Closing Date occurs on or prior thereto, (b) the closing of the Acquisition without the use of the Senior Credit Facilities and (c) the termination of the Purchase Agreement in accordance with its terms.

[THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

We are pleased to have the opportunity to work with you in connection with this important financing.

Very truly yours,
BANK OF AMERICA, N.A.
By:	/s/ Richard M. Williams
Name:	Richard M. Williams
Title:	SVP
BANC OF AMERICA SECURITIES LLC
By:	/s/ Richard M. Williams
Name:	Richard M. Williams
Title:	SVP
RBS CITIZENS, N.A.
By:	/s/ Anthony Solvaggio
Name:	Anthony Solvaggio
Title:	Vice President
THE PRIVATE BANK
By:	/s/ Andre Nel
Name:	Andre Nel
Title:	Managing Director

Signature Page to Commitment Letter

ACCEPTED AND AGREED TO

AS OF THE DATE FIRST ABOVE WRITTEN:

ALLOY MEDIA HOLDINGS, L.L.C.
By:	/s/ Andrew Vogel
Name:	Andrew Vogel
Title:	Vice President and Secretary

LEXINGTON MERGER SUB INC.
By:	/s/ Andrew Vogel
Name:	Andrew Vogel
Title:	Vice President and Secretary

Signature Page to Commitment Letter

EXHIBIT A

SUMMARY OF TERMS

Alloy Media Holdings, L.L.C.

Lexington Merger Sub Inc.

Set forth below is a summary of the principal terms and conditions for the Senior Credit Facilities. Capitalized terms used but not defined shall have the meanings set forth in the Commitment Letter to which this Exhibit A is attached or, if not defined in the Commitment Letter, in Appendix A attached hereto.

BORROWER:	Initially, MergerCo or the Company and, following the Acquisition, the survivor thereof (the “Borrower”).
SPONSOR:	ZM Capital Management, L.L.C. (the “Sponsor”).
ADMINISTRATIVE AGENT:	Bank of America, N.A. (the “Administrative Agent” or “Bank of America”) will act as sole and exclusive administrative agent.
SOLE LEAD ARRANGER AND BOOK MANAGER:	Bank of America Securities, LLC (“BAS”).
LENDERS:	Bank of America, N.A. (“Bank of America”), RBS Citizens, N.A. and The Private Bank (collectively, the “Lenders”).
GUARANTORS:	Unlimited guaranty (the “Guarantees”) of payment and performance by Holdings and each wholly owned domestic subsidiary (other than any disregarded entity substantially all of the assets of which consist of equity interests of one or more non-U.S. subsidiaries) of the Borrower (the “Guarantors”). Notwithstanding the foregoing, subsidiaries may be excluded from the guarantee requirements to the extent mutually agreed in the Facilities Documentation in circumstances where the Borrower and the Administrative Agent agree that the cost of providing such a Guarantee is excessive in relation to the benefit afforded the Lenders thereby.
CREDIT FACILITY:	Up to $40,000,000 in total aggregate amount (the “Senior Credit Facilities”), to be comprised of: Up to $17,500,000 Revolving Credit Facility (the “Revolver” and the loans thereunder, the “Revolving Loans”), subject to the borrowing base. Advances under the Revolver will be limited to the lesser of (a) up to 85% of Eligible Accounts Receivable and (b) the then-unutilized commitments under the Revolver. The borrowing base shall be calculated on a monthly basis. “Eligible Accounts Receivable” will mean the aggregate accounts receivable and unbilled receivables as shown on the Borrower’s consolidated monthly balance sheet, but will not include the Ineligible Receivables. Drawings under the Revolver on the Closing Date will not exceed $7,500,000 (or, if the Revolver is increased or decreased in size pursuant to the last paragraph of this section, drawings on the Closing Date will not exceed an amount such that at least $10,000,000 of the Revolver remains undrawn as of such date). $10,000,000 sublimit under the Revolver for the issuance of standby letters of credit (the “Letter of Credit Facility”) by Bank of America, N.A. or other Lenders satisfactory to the Borrower and the Administrative Agent (in such capacity, the “Issuing Lender”). Up to $22,500,000 Term Loan Facility (the “Term Loan” and, together with the Revolving Loans, the “Loans”)

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	At the election of the Borrower, facility sizes may change prior to the Closing Date to maintain the aggregate facility size by increasing or decreasing the Revolver by $2,500,000 (it being understood that the Term Loan would decrease or increase by such amount such that the aggregate size of the Senior Credit Facilities would remain unchanged).
CLOSING:	“Closing Date” shall mean the date of the consummation of the Acquisition, but in any event, not later than December 31, 2010.
PURPOSE:	The proceeds of the Senior Credit Facilities shall be used for the acquisition of the Company, working capital, and other general corporate purposes.
INTEREST RATE:	Performance Pricing: Loans under the Senior Credit Facilities shall bear interest at a rate equal to the Eurodollar Rate plus the Applicable Eurodollar Margin or the Base Rate plus the Applicable Base Rate Margin, as elected by the Borrower. The Applicable Eurodollar Margin and the Applicable Base Rate Margin shall be determined in accordance with the Performance Pricing Grid set forth below based on the ratio of Consolidated Funded Debt to Consolidated EBITDA (“Consolidated Leverage Ratio”) of the Borrower and its consolidated subsidiaries. The calculation and any change in the Applicable Eurodollar Margin or the Applicable Base Rate Margin, as the case may be, shall take place on the first day of the month immediately following the receipt of financial information for the preceding fiscal quarter; provided, that if such financial information is not delivered when due under the terms of the Facilities Documentation, then five (5) days following the due date for such financial information, the Loans will bear interest based upon the highest level set forth below for so long as the required financial information remains outstanding. The Applicable Eurodollar Margin and the Applicable Base Rate Margin are as follows:

Consolidated Leverage Ratio	Applicable Eurodollar Margin	Applicable Base Rate Margin
< 2.0x to 1.0	4.00%	2.50%
> 2.0x to 1.0	4.50%	3.00%

“Base Rate Loans” means Loans bearing interest based upon the Base Rate. “Eurodollar Loans” means Loans bearing interest based upon the Eurodollar Rate. There shall be no Eurodollar Rate or Base Rate floor. Upon the request of the Lenders holding a majority of the Term Loan and the revolving credit commitments, while any payment or financial covenant Event of Default exists, the Borrower shall pay interest on the principal amount of all outstanding Obligations under the Senior Credit Facilities at a fluctuating interest rate per annum equal to the Default Rate.

INTEREST CALCULATION AND PAYMENTS :

All calculations of interest and fees shall be made on the basis of actual number of days elapsed in a 360-day year (or 365/366 days in the case of Base Rate Loans). The Borrower may select interest periods of one, two, three, six or (to the extent consented to by all Lenders) nine or twelve months for Eurodollar Loans. In the case of Eurodollar Loans, interest shall be payable at the end of the selected interest period, but no less frequently than quarterly. In the case of Base Rate Loans, interest shall be payable quarterly in arrears.

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LETTER OF CREDIT FEES:	Letter of credit fees shall be payable quarterly in arrears and will be equal to the Applicable Eurodollar Margin on a per annum basis.
COMMITMENT FEE:	The Borrower agrees to pay to Bank of America, as agent, quarterly in arrears an unused commitment fee in the amount of 0.50% per annum of the difference between the maximum amount of the Revolver and the daily average principal amount outstanding under the Revolver for the preceding quarterly period.
REPAYMENT/ MATURITY:	The Term Loan and the Revolver shall each mature five (5) years from the Closing Date. The Term Loan shall be subject to quarterly amortization (quarterly allocation of annual amounts to be agreed in the Facilities Documentation) of principal based upon the annual amounts set forth below (with proportionate increases or decreases, as the case may be, if the Term Loan is increased or decreased): Year 1       $3,600,000 Year 2       $4,500,000 Year 3       $4,500,000 Year 4       $4,500,000 Year 5       $5,400,000
OPTIONAL PREPAYMENTS:	Loans may be prepaid and commitments may be reduced by the Borrower in minimum amounts to be agreed upon without premium or penalty (other than Eurodollar breakage costs). Optional prepayments of the Term Loan shall be applied to installments thereof as directed by the Borrower. Optional prepayments of the Term Loan may not be reborrowed.
MANDATORY PREPAYMENTS:	100% of net cash proceeds from the sale of subsidiaries and other permitted asset sales that occur outside the ordinary course of business (subject to customary reinvestment rights and exceptions to be mutually agreed). 100% of proceeds from insurance settlements from casualty losses and other extraordinary receipts (subject to customary reinvestment rights and exceptions to be mutually agreed). All mandatory prepayments shall be applied first to Revolving Loans to the extent of the borrowing base sold from such sales, and remaining proceeds from such sales shall be applied to the Term Loan. Mandatory prepayments of the Term Loan shall be applied ratably to all remaining Term Loan installments.
SECURITY/ COLLATERAL:	Subject to clause (i) of the Conditions Precedent to Closing set forth below, the Term Loan, the Revolver and the Guarantees will be secured by (a) a perfected, first-priority pledge of the equity interests held by the Borrower or any Guarantor (which pledge, in the case of any foreign subsidiary, shall be limited to 100% of the non-voting capital stock and 66% of the voting capital stock of first-tier foreign subsidiaries) and (b) perfected, first-priority security interests in, and mortgages on, substantially all other tangible and intangible property of the Borrower and the Guarantors (including but not limited to accounts receivable, inventory, equipment, general intangibles (including contract rights), investment property, intellectual property, owned real property, intercompany notes and proceeds of the foregoing) (the items described in clauses (a) and (b) above, collectively, the “Collateral”).

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	Notwithstanding anything to the contrary set forth in the preceding paragraph, the Collateral shall exclude the following: (i) any fee owned real property with a value of less than an amount to be agreed (with all required mortgages being permitted to be delivered post-closing in accordance with clause (i) of the Conditions Precedent to Closing set forth below), (ii) motor vehicles and other assets subject to certificates of title, letter of credit rights and commercial tort claims, in each case, with a value of less than an amount to be agreed, (iii) (1) the equity interests of and other assets of joint ventures permitted under the Facilities Documentation to the extent and for so long as the granting of security interests in such equity interests and assets would be prohibited by shareholder or similar contracts governing such joint ventures and (2) all contracts, licenses, permits and equipment subject to a purchase money security interest or equipment lease (“Encumbered Equipment”) to the extent the grant of a security interest therein is prohibited by the terms of such contracts, license, permits and applicable equipment leases or equipment financing, in each case after giving effect to the applicable Uniform Commercial Code, other applicable law and principles of equity and (iv) those assets as to which the Administrative Agent and the Borrower reasonably agree that the cost of obtaining such a security interest or perfection thereof is excessive in relation to the benefit to the Lenders of the security to be afforded thereby. The foregoing described in clauses (i) through (iv) are, collectively, the “Excluded Assets.” It is agreed that (x) account control agreements, if any, shall be entered into after the Closing Date and (y) no leasehold mortgages shall be required.
REPRESENTATIONS AND WARRANTIES:	The Facilities Documentation will contain representations and warranties with respect to: (i) due organization, valid existence and good standing, (ii) corporate power, due authorization/enforceability of the Facilities Documentation, (iii) accuracy and completeness of specified financial statements and other information and no material adverse change, (iv) no violation of law, contracts or organizational documents, (v) no required material governmental or third party approvals or consents, (vi) compliance with environmental laws, (vii) no material litigation, (viii) filing of all material tax returns and payment of taxes, (ix) use of proceeds, (x) compliance with laws (including the U.S.A. Patriot Act and margin regulations), (xi) valid title to property and assets (including, intellectual property and licenses), free and clear of liens, charges and other encumbrances, (xii) status under Investment Company Act, (xiii) ERISA matters, (xiv) validity, priority and perfection of security interests, (xv) solvency, (xvi) insurance matters and (xvii) subsidiaries, in each of the foregoing cases, with such materiality and other exceptions, qualifications and thresholds as are customary in documentation for transactions of the type contemplated hereby to be mutually agreed upon in the Facilities Documentation.
CONDITIONS PRECEDENT TO CLOSING:	The effectiveness of the Senior Credit Facilities on the Closing Date and the initial funding thereunder will be subject only to (a) the conditions precedent set forth in the fourth paragraph of the Commitment Letter and (b) the following: (i) All actions, filings, recordations and searches necessary to establish that the Administrative Agent will have perfected first priority security interests in the Collateral shall have been taken (it being understood that to the extent any security interest in the intended Collateral (other than any Collateral the security interest in which may be perfected by the filing of a UCC financing statement, a USPTO filing or the delivery of certificates evidencing equity interests) is not provided on the Closing Date after the Borrower’s use of commercially reasonable efforts to do so, the provision of such perfected security interest(s) shall not constitute a condition precedent to the availability of the Senior Credit Facilities on the Closing Date but shall be required to be delivered after the Closing Date pursuant to arrangements to be mutually agreed). BAS shall have received the results of recent lien searches in each relevant jurisdiction with respect to the Borrower and the Guarantors. The Borrower

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and the Guarantors shall have delivered to the Administrative Agent Accord 25 certificates naming the Administrative Agent, on behalf of the Lenders, as an additional insured or loss payee, as the case may be, under property and general liability insurance policies to be maintained with respect to the properties of the Borrower and its subsidiaries forming part of the Collateral, and the Borrower and the Guarantors shall use commercially reasonable efforts to deliver all necessary endorsements evidencing the foregoing.

(ii) The Administrative Agent shall have received customary opinions of counsel to the Borrower and the Guarantors and such corporate resolutions, charter documents, certificates as to corporate authority, incumbency and signature and other customary closing documents as the Administrative Agent shall reasonably require.

(iii) The Purchase Agreement Representations and the Additional Representations shall be true and correct in all material respects and the Specified Representations shall be true and correct in all respects.

(iv) There shall not have occurred since January 31, 2010, a Company Material Adverse Effect (as defined in the Purchase Agreement), except (x) as disclosed in any Company SEC Document (as defined in the Purchase Agreement) filed after January 31, 2009 and before the date of the Purchase Agreement, other than disclosure in such Company SEC Documents referred to in the “Risk Factors” and “Forward Looking Statements” sections thereof or any other disclosures in the Filed Company SEC Documents (as defined in the Purchase Agreement) which are forward-looking in nature, or (y) as set forth in the Company Disclosure Schedule (as defined in the Purchase Agreement).

(v) Payment of all fees and expenses then due and payable under the Commitment Letter and the Fee Letter.

(vi) Holdings shall be capitalized with no less than (x) $35,000,000 of equity from the Sponsor, its affiliates and co-investors (“Funded Equity”), and (y) no less than $10,000,000 of rollover equity from selling stockholders and key management of the Company (including the value of unvested restricted shares of common stock of the Company cancelled in exchange for units of Holdings pursuant to a Consent to Restricted Stock Cancellation executed by the holder of such unvested restricted shares) (it being understood that cash equity contributed by the Equity Investors and any other co-investors in excess of $35,000,000 may, at the election of Holdings, constitute “Rollover Equity” for purposes of determining satisfaction of clause (y) of this condition) (“Rollover Equity”).

(vii) On a pro forma basis after consummation of all transactions to occur on the Closing Date, (x) the Consolidated Leverage Ratio of the Borrower and its consolidated subsidiaries shall not exceed 2.90 to 1.00 (it being agreed that the calculation of Consolidated Leverage Ratio of the Borrower and its consolidated subsidiaries shall be based on the four fiscal quarter period ended at least forty-five days prior to the Closing Date) and (y) the Consolidated Funded Debt to Capitalization Ratio of the Borrower and its consolidated subsidiaries shall not be greater than 0.45 to 1.00.

(viii) The Acquisition shall be consummated pursuant to the Purchase Agreement, substantially concurrently with the funding of the Senior Credit Facilities (and, in any event, within the same Business Day), and (x) no condition precedent to the Acquisition contained in the Purchase Agreement will be waived by Holdings or Merger Co., and (y) the Purchase Agreement shall not have otherwise been amended or supplemented, in each case, in a manner materially adverse to the Lenders as reasonably determined by the Administrative Agent without the consent of the Commitment Parties.

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	The Facilities Documentation shall not contain any conditions precedent other than the conditions precedent set forth in the fourth paragraph of the Commitment Letter and this “Conditions Precedent to Closing” section of this Summary of Terms.
CONDITIONS PRECEDENT TO ALL LOANS:	After the Closing Date, the making of Revolving Loans or the issuance of letters of credit shall be conditioned upon (i) all representations and warranties being true and correct in all material respects (and in all respects if qualified by materiality) and (ii) no event of default having occurred or be continuing under the Senior Credit Facilities or resulting from such Revolving Loan.
NEGATIVE COVENANTS:	The Facilities Documentation will contain restrictions on: (i) incurring additional debt, (ii) pledging or mortgaging or encumbering of assets, (iii) investments (including a basket for joint ventures in an amount to be agreed in the Facilities Documentation), (iv) disposal of assets (except for sales of non-core subsidiaries and assets so long as, following any such sale, (x) the Borrower is in pro forma compliance with the financial covenants and (y) the Borrower’s outstanding Revolving Loans do not exceed the then-applicable borrowing base as adjusted to reflect such subsidiary or asset disposition on a pro forma basis), (v) mergers and acquisitions or other fundamental corporate changes, (vi) changes in the nature of business, (vii) advances to third parties, (viii) payment of dividends/distributions and repurchases of stock (except the Borrower and Holdings shall be permitted to pay dividends to fund reimbursement of expenses of the Sponsor and its affiliates pursuant to the management agreement and following prepayment of the Term Loan in full and subject to pro-forma covenant compliance, the Borrower and Holdings shall be permitted to make unlimited dividends), (ix) payment of management fees during the continuance of an Event of Default, (x) increasing the amount of management fees payable under the management agreement in effect on the Closing Date, (xi) negative pledges and dividend blockers in other agreements, (xii) transactions with or payments to affiliates (except, (x) so long as no Event of Default exists or would result therefrom, for (A) payment of a $1.5 million transaction fee to the Sponsor or one of its affiliates on the Closing Date, (B) payment of management fees to the Sponsor or one of its affiliates not to exceed $750,000 in any fiscal year and (C) the payment of the operating fee to Gerry Leybourne and Bill Jemas up to an aggregate amount not to exceed $1 million in any fiscal year and (y) reimbursement of expenses of the Sponsor and its affiliates pursuant to the management agreement subject to a cap, if any, to be mutually agreed in the Facilities Documentation), (xiii) changes in fiscal year, (xiv) sale leaseback transactions, (xv) passive holding company, (xvi) no changes to the terms of, or prepayment of, any permitted subordinated indebtedness, (xvii) no amendment of certificate of incorporation or other organizational documents in a manner that is materially adverse to the Lenders as reasonably determined by the Administrative Agent, and (xviii) no changes in accounting procedures or practices of the Borrower and its subsidiaries, in each of the foregoing cases, with such materiality and other exceptions, qualifications and thresholds as are customary in documentation for transactions of the type contemplated hereby to be mutually agreed upon in the Facilities Documentation. It is agreed that the Facilities Documentation will not contain “cash dominion” or cash management requirements.

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FINANCIAL COVENANTS:	Financial covenants to be limited to: Minimum Consolidated Fixed Charge Coverage Ratio. Maintain on a consolidated basis a Consolidated Fixed Charge Coverage Ratio of at least 1.15x through January 31, 2013 and 1.25x thereafter, provided, however, that after the Term Loan has been repaid in full, the minimum Consolidated Fixed Charge Coverage Ratio shall be at least 1.25x prior to the payment of any dividend to Holdings’ equity holders funded by Revolving Loans or cash flows of the Borrower. Maximum Consolidated Leverage Ratio. Maintain a Consolidated Leverage Ratio not exceeding 3.50x through October 31, 2011, 3.25x for the four fiscal quarter period ending on January 31, 2012, 3.00x through October 31, 2012 and 2.75x thereafter. The financial covenants will be calculated as of the last day of each fiscal quarter with respect to the Borrower and its subsidiaries on a consolidated basis for the four fiscal quarters then ending, beginning with the first full fiscal quarter of the Borrower completed following the Closing Date for which financial statements are available. Calculations will allow for pro forma calculations for acquisitions/dispositions, including the Transactions and transaction and other expenses associated with the disposition of the Frontline business.
REPORTING REQUIREMENTS:	Financial Information from Borrower. The Borrower shall provide, or cause to be provided, to the Administrative Agent financial statements substantially consistent in form and content with those most recently provided to the Administrative Agent prior to the Closing Date and collateral reports in form and content reasonably acceptable to the Administrative Agent: within 90 days of the Borrower’s fiscal year end for the Borrower’s annual financial statements and within 45 days of the period’s end for the Borrower’s quarterly financial statements. Within 20 days of each month end, the Borrower’s signed Collateral Borrowing Base Certificate as of the preceding month end together with supporting documentation to include a listing and aging of accounts receivable and accounts payable as of the preceding month end.
AFFIRMATIVE COVENANTS:	The Facilities Documentation will contain affirmative covenants with respect to: (i) compliance with laws and regulations (including, without limitation, ERISA and environmental laws), (ii) payment of taxes, (iii) maintenance of appropriate and adequate insurance, (iv) preservation of corporate existence, rights (charter and statutory), franchises, permits, licenses and approvals, (v) visitation and inspection rights, (vi) keeping of proper books in accordance with generally accepted accounting principles, (vii) maintenance of properties, (viii) payment of obligations, (ix) compliance with material contracts and performance of leases, related documents and other agreements, in each case except to the extent failure to comply or perform could not reasonably be expected to have a material adverse effect, (x) further assurances as to perfection and priority of security interests, (xi) additional guarantors and additional collateral, (xii) use of proceeds, and (xiii) customary reporting requirements and such other financial and other reporting as the Administrative Agent shall reasonably request), in each of the foregoing cases, with such materiality and other exceptions, qualifications and thresholds as are customary in documentation for transactions of the type contemplated hereby to be mutually agreed upon in the Facilities Documentation. In addition, the Borrower shall use its commercially reasonable efforts to obtain a landlord waiver with respect to the Borrowers’ headquarters in a form reasonably acceptable to the Administrative Agent within 90 days following the Closing Date, and, if the Borrower is unable to obtain such

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	landlord waiver after using its commercially reasonable efforts, then the Borrower shall provide the Administrative Agent with such reasonable assurances as the Administrative Agent may request that the Borrower’s books and records (or backup copies thereof) would be accessible to the Administrative Agent outside of the premises (i) following termination or expiration of the lease, and (ii) during enforcement proceedings following an Event of Default whether or not the Borrowers’ landlords were to provide access to the premises.
EVENTS OF DEFAULT:	The Facilities Documentation shall contain the following Events of Default (with notice provisions, grace periods and thresholds customary in documentation for transactions of the type contemplated hereby to be mutually agreed but in any event not including grace periods for nonpayment of principal or certain bankruptcy or insolvency events): (i) nonpayment of principal, interest, fees or other amounts, (ii) violation of covenants, (iii) any representation or warranty proving to have been inaccurate in any material respect when made or confirmed (except for representations or warranties qualified as to materiality, as to which any inaccuracy will be an event of default), (iv) cross-default to other material indebtedness, (v) bankruptcy and other insolvency events, (vi) actual or asserted invalidity of any loan documentation or security interests, (vii) change in control (to be defined), (viii) material monetary judgments, and (ix) customary ERISA defaults.
ASSIGNMENTS:	Each Lender will be permitted to make assignments of Loans and Loan commitments in a minimum amount equal to $1,000,000 to other financial institutions approved by the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower, which approvals shall not be unreasonably withheld or delayed; provided, however, that approval of the Borrower shall not be required in connection with assignments to other Lenders or to any affiliate of a Lender. Each Lender will also have the right, without consent of the Borrower or the Administrative Agent, to assign as security all or part of its rights under the loan documentation to any Federal Reserve Bank.
VOTING RIGHTS:	Consents, waivers and amendments will require the consent of Lenders holding more than 50% of all of the sum of the aggregate Term Loans and the revolving credit commitments (the “Required Lenders”), provided that the following shall require the consent of each Lender directly affected thereby: (i) any increase in such Lender’s revolving credit commitment or term loan commitment, (ii) decreases in interest rates and fees payable to such Lender (other than waiver of the default rate applicable thereto) or reductions in or forgiveness of principal due to such Lender, (iii) postponement of any date fixed for payment or the final maturity date fixed for payment and (iv) release of all or substantially all of the collateral (but not including releases of collateral pursuant to permitted dispositions, which shall be released automatically). The Facilities Documentation will contain customary provisions for replacing non-consenting Lenders in connection with amendments and waivers requiring the consent of all Lenders or of all Lenders directly affected thereby so long as the Required Lenders shall have consented thereto.
INDEMNIFICATION:	The Borrower will indemnify and hold harmless the Administrative Agent, the Lead Arranger, each Lender and their respective affiliates and their directors, officers, employees, agents and advisors from and against all losses, claims, damages, liabilities and expenses arising out of or relating to the Senior Credit Facilities, the Transaction, the Borrower’s use of loan proceeds or the commitments, including, but not limited to, reasonable attorneys’ fees and settlement costs; provided that no indemnified person will be indemnified for its bad faith, gross negligence, or willful misconduct as determined in a final, non-appealable judgment by a court of competent jurisdiction. This indemnification shall survive and continue for the benefit of all such persons or entities.

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GOVERNING LAW/WAIVER OF JURY TRIAL:	State of New York. All parties will submit to venue in New York and Borrower and Guarantors will waive its right to a trial by jury.
EXPENSES:	Effective upon execution of the Commitment Letter, the Borrower will pay (a) all reasonable and documented out-of-pocket costs and expenses of the Administrative Agent and BAS associated with the preparation, execution, delivery and administration of all documentation executed in connection with the Senior Credit Facilities (including the reasonable fees, disbursements and other charges of one counsel to the Administrative Agent and BAS taken as a whole) whether or not the Senior Credit Facilities is closed, and (b) all reasonable and invoiced out-of-pocket expenses of the Administrative Agent and the Lenders (including the fees, disbursements and other charges of one counsel to the Administrative Agent and one separate counsel for the Lenders taken as a whole) in connection with the enforcement of the Facilities Documentation.
COST AND YIELD PROTECTION:	Customary for transactions and facilities of this type, including, without limitation, in respect of breakage or redeployment costs incurred in connection with prepayments, changes in capital adequacy and capital requirements or their interpretation, illegality, unavailability, reserves without proration or offset and payments free and clear of withholding or other taxes.
DEFAULTING LENDERS:	The Facilities Documentation will contain customary provisions relating to “defaulting” Lenders (including provisions relating to providing cash collateral to support letters of credit, the suspension of voting rights, rights to receive certain fees, and termination or assignment of commitments or loans of such Lenders).

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Appendix A

Certain Defined Terms

“Attributable Indebtedness” means, on any date, (a) in respect of any Capitalized Lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease or similar payments under the relevant lease or other applicable agreement or instrument that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease or other agreement or instrument were accounted for as a Capitalized Lease and (c) all Synthetic Debt of such Person.

“Base Rate” means for any day a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate (the meaning of such term to be mutually agreed in the Facilities Documentation) plus 1/2 of 1%, (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America, N.A. as its “prime rate” and (c) the Eurodollar Rate plus 1.50%. The “prime rate” is a rate set by Bank of America, N.A. based upon various factors including Bank of America’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such prime rate announced by Bank of America, N.A. shall take effect at the opening of business on the day specified in the public announcement of such change.

“Capital Expenditures” means, for any period, the additions to property, plant and equipment and other capital expenditures of the Borrower and its consolidated subsidiaries that are (or are required to be) set forth in a consolidated statement of cash flows of the Borrower for such period prepared in accordance with GAAP; provided that the term “Capital Expenditures” shall not include, without duplication, (i) interest capitalized during such period and (ii) additions resulting from Permitted Acquisitions (the meaning of such term to be mutually agreed in the Facilities Documentation).

“Capitalized Leases” means all leases that have been or should be, in accordance with GAAP, recorded as capitalized leases.

“Consolidated EBITDA” means, with respect to any specified Person for any period, Consolidated Net Income for such Person for such period plus

(a) without duplication and to the extent deducted in determining such Consolidated Net Income for such period, the sum of:

(i) Consolidated Interest Charges (and solely for purposes of calculating the Consolidated Fixed Charge Coverage Ratio, other fixed charges enumerated in the denominator of the definition of “Consolidated Fixed Charge Coverage Ratio”) of the Borrower and its subsidiaries for such period and, to the extent not reflected in such total interest expense, increased by payments made in respect of hedging obligations or other derivative instruments entered into for the purpose of hedging interest rate risk, minus any payments received in respect of such hedging obligations or other derivative instruments,

(ii) consolidated tax expense of the Borrower and its subsidiaries based on income, profits or capital, including state, franchise, capital and similar taxes and withholding taxes paid or accrued during such period (less historical tax expense attributable to disposed assets and any taxes on capital gains),

(iii) all amounts attributable to depletion, depreciation and amortization expense of the Borrower and its subsidiaries for such period,

(iv) any Non-Cash Charges,

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(v) costs associated with the Transaction made or incurred by the Borrower and its subsidiaries in connection with the Transaction for such period that are paid, accrued or reserved for within 150 days of the consummation of the Transaction, subject to a cap, if any, to be mutually agreed in the Facilities Documentation,

(vi) any restructuring charges (including restructuring costs related to acquisitions after the Closing Date and to closure or consolidation of facilities) for such period in an aggregate amount not to exceed $10,000,000 (reduced by the amount added back pursuant to clause (vii) below),

(vii) extraordinary losses and unusual or non-recurring charges, severance, relocation costs and curtailments or modifications to pension and post-retirement employee benefit plans in an aggregate amount not to exceed $10,000,000 (reduced by the amount added back pursuant to clause (vi) above),

(viii) cash expenses incurred during such period in connection with an acquisition permitted by the Senior Credit Facilities to the extent that such expenses are reimbursed in cash during such period pursuant to indemnification provisions of any agreement relating to such transaction,

(ix) to the extent expressly permitted under the Facilities Documentation, annual management fees that are permitted to be paid to the Sponsor or any affiliate of the Sponsor under the transactions with affiliate covenant to be included in the Facilities Documentation,

(x) the amount of any minority interest expense consisting of subsidiary income attributable to minority equity interests of third parties in any non-wholly owned subsidiary to the extent (and not to exceed the amount of) Indebtedness owed by such subsidiary is included in Consolidated Funded Debt (in the case of the Consolidated Leverage Ratio), and fixed charges enumerated in the denominator of the definition of “Consolidated Fixed Charge Coverage Ratio” of such subsidiary is included in such fixed charges of the Borrower (in the case of the Consolidated Fixed Charge Coverage Ratio),

(xi) to the extent expressly permitted under the Facilities Documentation, the amount of the operating partner fee payable to Gerry Laybourne and Bill Jemas that is permitted to be paid to such Persons under the transactions with affiliate covenant to be included in the Facilities Documentation,

(xii) net losses (if any) from discontinued operations

(xiii) public company expense eliminations in an aggregate amount not to exceed $1,900,000 solely for those fiscal periods (and in such amounts) set forth in the Facilities Documentation

(xiv) transaction expenses, fees and any costs associated with acquisitions/dispositions including the Frontline divestiture, minus

(b) without duplication and, in the case of clause (ii) below, to the extent included in determining such Consolidated Net Income,

(i) any cash payments made during such period in respect of Non-Cash Charges described in clause (a)(iv) taken in a prior period or taken in such period,

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(ii) any non-cash items of income for such period (other than the accrual of revenue or recording of receivables in the ordinary course of business),

(iii) extraordinary gains and unusual or non-recurring gains, and

(iv) net gains (if any) from discontinued operations

; provided that in no event shall any charge, expense or loss relating to write-downs, write-offs or reserves with respect to current assets be added back.

“Consolidated Fixed Charge Coverage Ratio” means, at any date of determination, the ratio of (a) Consolidated EBITDA to (b) the sum of (i) cash Consolidated Interest Charges, (ii) the aggregate principal amount of all regularly scheduled principal payments, redemptions or similar acquisitions for value of outstanding debt for borrowed money, but excluding (x) any such payments to the extent refinanced through the incurrence of additional Indebtedness otherwise expressly permitted under the Facilities Documentation and (y) following the payment in full of the Term Loan, any such historical payments with respect to the Term Loan, (iii) the aggregate amount of all dividends paid to Holdings’ equity holders funded by Revolving Loans or cash flows of the Borrower, (iv) consolidated cash tax expense of the Borrower and its subsidiaries based on income, profits or capital, including state, franchise, capital and similar taxes and withholding taxes paid during such period (less historical tax expense attributable to disposed assets and any taxes on capital gains), and (v) the aggregate amount actually paid by the Borrower and its subsidiaries during such period on account of Capital Expenditures (excluding the principal amount of Indebtedness (other than any Loans) incurred in connection with such expenditures).

“Consolidated Funded Debt” means, as of any date of determination, the aggregate amount of all Indebtedness for borrowed money and Attributable Indebtedness of the Borrower and its subsidiaries determined on a consolidated basis in accordance with GAAP (excluding, for the avoidance of doubt, (i) undrawn letters of credit, (ii) performance and surety bonds, (iii) deferred revenue and (iv) undrawn commitments under the Revolver).

“Consolidated Funded Debt to Capitalization Ratio” means, as of any date of determination, the ratio of (a) Consolidated Funded Debt to (b) the sum of (i) Consolidated Funded Debt, (ii) Funded Equity and (iii) Rollover Equity.

“Consolidated Interest Charges” means, as of any date of determination, the sum of (a) all interest, premium payments, debt discount, fees, charges and related expenses in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets, in each case to the extent treated as interest in accordance with GAAP, and (b) the portion of rent expense under Capitalized Leases that is treated as interest in accordance with GAAP, in each case, of or by the Borrower and its subsidiaries on a consolidated basis.

“Consolidated Net Income” means, with respect to any specified Person for any period, the aggregate of the net income attributable to such specified Person and its subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that:

(1) the net income (and net loss) of any other Person (other than a subsidiary of the Borrower) in which the Borrower or any of its subsidiaries has an ownership interest will be excluded, except to the extent that any such net income is actually received in cash by the Borrower or a subsidiary of the Borrower in the form of dividends or similar distributions in respect of such period,

(2) the cumulative effect of a change in accounting principles will be excluded,

(3) the amortization of any premiums, fees or expenses incurred in connection with the Transactions or any amounts required or permitted by Accounting Principles Board

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Opinions Nos. 16 (including non-cash write-ups and non-cash charges relating to inventory and fixed assets, in each case arising in connection with the Transaction) and 17 (including non-cash charges relating to intangibles and goodwill) and FAS 141 (R), in each case in connection with the Transaction, will be excluded,

(4) any gain or loss, together with any related provision for taxes on such gain or loss, realized in connection with: (a) any sales of assets out of the ordinary course of business (it being understood that a sale of assets comprising discontinued operations shall be deemed a sale of assets out of the ordinary course of business); or (b) the disposition of any securities by such Person or any of its subsidiaries or the extinguishment of any Indebtedness of such Person or any of its subsidiaries will be excluded,

(5) all unrealized gains and losses relating to hedging transactions and mark-to-market of Indebtedness denominated in foreign currencies resulting from the application of FAS 52 shall be excluded,

(6) the net income for such period of any subsidiary (other than a subsidiary Guarantor) shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that subsidiary of its net income is not at the date of determination permitted without any prior governmental approval (which has not been obtained) or, directly or indirectly, by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule, or governmental regulation applicable to that subsidiary or its stockholders, except to the extent such restriction with respect to the payment of dividends or similar distributions has been legally waived, and

(7) Consolidated Net Income shall be reduced by the amount of any Permitted Holding Company Operating Expenses.

“Default Rate” means (a) when used with respect to Obligations other than Letter of Credit Fees, an interest rate equal to (i) the Base Rate plus (ii) the Applicable Base Rate Margin applicable to Base Rate Loans plus (iii) 2% per annum; provided, however, that with respect to a Eurodollar Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Eurodollar Margin) otherwise applicable to such Loan plus 2% per annum.

“Eurodollar Rate” means, for any Interest Period with respect to a Eurodollar Loan, the rate per annum equal to (i) the BBA LIBOR as published by Reuters (or such other commercially available source providing quotations of BBA LIBOR as may be designated by Agent from time to time) at approximately 11:00 a.m., London time, two London banking days prior to the commencement of such Interest Period (the meaning of such term to be mutually agreed in the Facilities Documentation), for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period or, (ii) if such rate is not available at such time for any reason, the rate per annum determined by the Administrative Agent to be the rate at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the Eurodollar Loan being made, continued or converted and with a term equivalent to such Interest Period would be offered by Bank of America’s London Branch to major banks in the London interbank eurodollar market at their request at approximately 11:00 a.m. (London time) two London banking days prior to the commencement of such Interest Period; provided, that for any interest calculation with respect to a Base Rate Loan (as specified in clause (c) of the definition of “Base Rate”) on any date, the Eurodollar Rate for such date shall be calculated utilizing an Interest Period of one month.

“Guarantee” means, as to any Person, any (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness

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or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part) or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding meaning.

“Indebtedness” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:

(a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments,

(b) all reimbursement obligations of such Person as an account party arising under letters of credit (including standby and commercial), bankers’ acceptances and bank guaranties (to the extent unreimbursed),

(c) net obligations of such Person under any Swap Contract (the meaning of such term to be mutually agreed in the Facilities Documentation),

(d) all obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business and not past due for more than 90 days after the date on which such trade account was created and accrued obligations incurred in the ordinary course of business),

(e) indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse, but limited, in the event such secured obligations are non-recourse to such Person, to the fair value of such property,

(f) the principal portion of all Attributable Indebtedness,

(g) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of Disqualified Equity Interests (the meaning of such term to be mutually agreed in the Facilities Documentation), and

(h) all Guarantees of such Person in respect of any of the foregoing.

For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person. The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value (the meaning of such term to be mutually agreed in the Facilities Documentation) thereof as of such date. Notwithstanding anything herein to the contrary, Indebtedness shall not include (i) trade payables and accrued expenses, in each case payable directly or through a bank clearing arrangement and arising in the ordinary course of business, (ii) deferred or prepaid revenue, (iii) purchase price holdbacks in respect of a portion of the purchase price of an asset to satisfy

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warranty or other unperformed obligations of the respective seller, (iv) all intercompany Indebtedness having a term not exceeding 364 days (inclusive of any roll-over or extensions of terms) and made in the ordinary course of business and (v) earn-outs with respect to (x) acquisitions entered into after the Closing Date that are due and payable after the maturity date of the Senior Credit Facilities and (y) acquisitions entered into prior to the Closing Date and set forth on a schedule to the Facilities Documentation.

“Ineligible Receivables” means the following:

(a) Receivables that do not arise out of sales of goods or rendering of services in the ordinary course of the Borrower’s or the relevant subsidiary’s business,

(b) Receivables payable other than in Dollars,

(c) Receivables owing from any Person that is an affiliate of the Borrower,

(d) Receivables more than 120 days past original invoice date,

(e) Receivables owing from any Person that (i) has disputed liability for any receivable owing from such Person or (ii) has otherwise asserted any claim, demand or liability against the Borrower or any of its subsidiaries, whether by action, suit, counterclaim or otherwise; provided that for purposes of subclause (e)(i), such receivables shall be excluded only to the extent of the amounts being disputed by such Person at any date of determination,

(f) Receivables owing from any Person that shall take or be the subject of any insolvency action or proceeding,

(g) Receivables arising out of sales to account debtors outside the United States unless such receivables are fully backed by an irrevocable letter of credit on terms, and issued by a financial institution, acceptable to the Administrative Agent and such irrevocable letter of credit is in the possession of the Administrative Agent,

(h) Receivables arising out of sales on a bill-and-hold, guaranteed sale, sale-or-return, sale on approval or consignment basis or subject to any right of return, setoff or charge back,

(i) Receivables in respect of which the Facilities Documentation, after giving effect to the related filings of financing statements that have then been made, if any, does not or has ceased to create a valid and perfected first priority lien or security interest in favor of the Administrative Agent, on behalf of the Lenders, or

(j) Ineligible Unbilled Receivables.

“Ineligible Unbilled Receivables” means either of the following, at the election of the Borrower in its sole discretion prior to the Closing Date, as reflected in the Facilities Documentation:

(a) Any unbilled receivables more than forty-five (45) days past the date on which revenue was last recognized with respect thereto, or

(b) Unbilled receivables in excess of $9,411,765.

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).

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“Non-Cash Charges” means (a) losses on asset sales, disposals or abandonments, (b) any impairment charge or asset write-off or write-down related to intangible assets, goodwill, long-lived assets, and investments in debt and equity securities pursuant to GAAP, (c) all losses from investments recorded using the equity method, (d) stock-based awards compensation expense and (e) other non-cash charges (provided that if any non-cash charges, expenses and write-downs referred to in this clause (e) represent an accrual or reserve for potential cash items in any future period, the cash payment in respect thereof in such future period shall be subtracted from Consolidated EBITDA to such extent, and excluding amortization of a prepaid cash item that was paid in a prior period).

“Permitted Holding Company Operating Expenses” means ordinary course holding company operating expenses in an aggregate amount not to exceed a cap, if any, to be mutually agreed in the Facilities Documentation in any fiscal year.

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, governmental authority or other entity.

“Synthetic Debt” means, with respect to any Person as of any date of determination thereof, all obligations of such Person in respect of transactions entered into by such Person that are intended to function primarily as a borrowing of funds (including any minority interest transactions that function primarily as a borrowing) but are not otherwise included in the definition of “Indebtedness” or as a liability on the consolidated balance sheet of such Person and its subsidiaries in accordance with GAAP.

“Synthetic Lease Obligation” means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property (including sale and leaseback transactions), in each case, creating obligations that do not appear on the balance sheet of such Person but which, upon the application of any Debtor Relief Laws (the meaning of such term to be mutually agreed in the Facilities Documentation) to such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).

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EX-99.2

Exhibit 99.2

EXECUTION COPY

ZM CAPITAL, L.P.

c/o ZM Capital Management, L.L.C.

19 West 44th Street, 18th Floor

New York, NY 10036

Attention: Andrew Vogel

June 23, 2010

Alloy Media Holdings, L.L.C.

c/o ZM Capital Management, L.L.C.

19 West 44th Street, 18th Floor

New York, NY 10036

Attn: Andrew Vogel

Telecopy: 212-223-1384

Ladies and Gentlemen:

This letter agreement sets forth the commitment of the undersigned (the “Equity Provider”), subject to the terms and conditions contained herein, to purchase the equity of Alloy Media Holdings, L.L.C., a newly formed limited liability company organized under the laws of the State of Delaware (“Parent”). It is contemplated that, pursuant to the Agreement and Plan of Merger (as amended, restated, supplemented or otherwise modified from time to time, the “Merger Agreement”) entered into concurrently herewith by and among Alloy, Inc. (the “Company”), Parent and Lexington Merger Sub Inc., the Company will become a wholly owned subsidiary of Parent (the “Merger”). Each capitalized term used but not defined herein shall have the meaning ascribed to it in the Merger Agreement, except as otherwise provided.

This letter agreement is one of a series of substantially identical equity commitment letters (such other letters, the “Other Equity Commitments”) with others being made by each of Rosemont Solebury Co-Investment Fund, L.P., Rosemont Solebury Co-Investment Fund (Offshore), L.P., NPE Caspian I B, L.P., Hudson River Co-Investment Fund, L.P. and Private Equity Direct Partnership II (OP), LP (collectively, the “Other Investors” and together with the Equity Provider, the “Investors”) to Parent on the date hereof. If Parent enters into any similar equity commitment on substantially the terms hereof with any other co-investors after the date hereof, such co-investor shall be deemed an “Other Investor” and such equity commitment shall be deemed an “Other Equity Commitment” for purposes of this letter agreement.

1. Commitment. The Equity Provider hereby commits, subject to the terms and conditions set forth herein, on the Closing Date prior to the Effective Time, to purchase up to an amount of equity of Parent for an aggregate cash purchase price equal to $20 million (but not less than $15 million) (the “Commitment” and together with the Other Equity Commitments, the “Investor Commitments”) and otherwise for the same class of securities and purchase price per unit as is being purchased by the Other Investors (other than that class of units apportioned to ZM in accordance with their closing fee) in accordance with the terms of the Other Equity Commitments; provided, however, that the Equity Provider shall not, under any circumstances,

be obligated to contribute more than the Commitment to Parent. In the event Parent does not require the full amount of the Commitment in order to consummate the Merger, the amount to be funded under this letter agreement may be reduced by Parent.

2. Conditions. The obligation of the Equity Provider to fund the Commitment shall be subject to (i) the satisfaction or waiver by Parent (in the manner determined by the Equity Provider as managing member of Parent) of the conditions to Parent’s obligations to consummate the transactions contemplated by the Merger Agreement, (ii) the substantially simultaneous closing of the financing under the Debt Commitment Letter, (iii) the substantially simultaneous closing of an amount equal to the aggregate contributions contemplated by the Other Equity Commitments (as may be reduced pursuant to the terms hereof), (iv) the substantially simultaneous consummation of the Merger in accordance with the terms of the Merger Agreement; provided, that the Merger Agreement is not amended to increase the merger consideration above $9.80 per share and (v) the entry into definitive agreements (including a limited liability company agreement) reflecting the terms and conditions set forth in the Alloy Media Holdings, L.L.C. Limited Liability Company Agreement Term Sheet attached to the Interim Investors Agreement and otherwise in form and substance reasonably satisfactory to the Equity Provider and the other parties thereto.

3. Specific Performance. The parties agree that irreparable damage would occur in the event that any of the provisions of this letter agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that Parent shall be entitled to an injunction or injunctions to prevent breaches and/or threatened breaches of this letter agreement by Equity Provider and to enforce specifically against Equity Provider the terms and provisions of this letter agreement, this being in addition to any other remedy which Parent is entitled at law or in equity. Parent shall have the right to specific performance of this letter agreement without having to prove actual damages and without the necessity of posting any bond or other security or having to establish that monetary relief would not provide an adequate remedy.

4. No Modification; Entire Agreement. No amendment, modification or waiver of any provision hereof shall be enforceable unless approved by Parent and the Equity Provider in writing. This letter agreement and that certain Interim Investors Agreement of even date herewith (the “Interim Investors Agreement”) by and among Parent and the Investors contain the entire agreement between the parties and supersedes all prior agreements, understandings and statements, written or oral, between the Equity Provider or any of its Affiliates existing on the date hereof, on the one hand, and Parent or any of its Affiliates existing on the date hereof, on the other, with respect to the subject matter hereof and the transactions contemplated hereby. No transfer of any of Equity Provider’s rights or obligations hereunder shall be permitted without the prior written consent of Parent. Any purported transfer in violation of the preceding sentence shall be null and void.

5. Governing Law; Jurisdiction. This letter agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other

2

jurisdiction) that would cause the application of laws of any jurisdictions other than those of the State of Delaware. Each of the parties to this letter agreement (a) consents to submit itself to the personal jurisdiction of the Court of Chancery of the State of Delaware in any action or proceeding arising out of or relating to this letter agreement, (b) agrees that all claims in respect of such action or proceeding may be heard and determined only in such court, (c) agrees that it shall not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from such court, and (d) agrees not to bring any action or proceeding arising out of or relating to this letter agreement in any other court. Each of the parties hereto waives any defense of inconvenient forum to the maintenance of any such action or proceeding so brought and waives any bond, surety or other security that might be required of any other party with respect thereto.

6. WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS LETTER AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS LETTER AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS LETTER AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS EXPRESSED ABOVE.

7. Counterparts. This letter agreement may be executed in any number of counterparts (including by facsimile), each such counterpart when executed being deemed to be an original instrument, and all such counterparts shall together constitute one and the same agreement.

8. No Third Party Beneficiaries. The parties hereby agree that their respective representations, warranties and covenants set forth herein are solely for the benefit of the other party hereto and its successors and permitted assigns, in accordance with and subject to the terms of this letter agreement, and this letter agreement is not intended to, and does not, confer upon any Person other than the parties hereto and their respective successors and permitted assigns any rights or remedies hereunder or any rights under any provision of this letter agreement.

9. Confidentiality. This Agreement shall be treated as confidential and is being provided to the Equity Provider and each of the Other Investors solely in connection with the Merger. This Agreement may not be used, circulated, quoted or otherwise referred to in any document by the Investors or their Affiliates except with the prior written consent of Parent in each instance; provided that no such written consent is required for any disclosure of the

3

existence or contents of this Agreement to the legal, financial and accounting advisors to Parent, Merger Subsidiary and each of the Investors, or any of their respective limited partners, or the extent required by the Merger Agreement, applicable law, by the applicable rules of any national securities exchange, in connection with any SEC filing relating to the Merger or in connection with any litigation relating to the Merger, the Merger Agreement and the transactions contemplated thereby and hereby, or to the extent the information is already publicly available, other than as a result of a breach of this Agreement by such Investor or its Affiliates.

10. Termination. This letter agreement, and the obligation of the Equity Provider to fund the Commitment, will terminate automatically and immediately upon the earliest to occur of (a) the Closing (at which time the obligation shall be discharged but subject to the performance of such obligations), (b) the termination of the Merger Agreement in accordance with its terms and (c) December 15, 2010; provided, however, that in each case, the Equity Provider shall continue to have liability for breaches of this Agreement prior to the termination of this Agreement.

11. Side Letters. Parent agrees that it has not entered into nor will enter into a side letter or similar agreement with any Other Investor that has the effect of establishing rights or otherwise benefiting such Other Investor in a manner more favorable in any respect than the rights and benefits established in favor of the Equity Provider pursuant to the terms hereof, the Alloy Media Holdings, L.L.C. Limited Liability Company Agreement Term Sheet and the Interim Investors Agreement, unless the Equity Provider will be entitled to the same rights and benefits granted under each such side letter or similar agreement. Any such side letter or similar agreement shall be provided to the Equity Provider immediately upon execution by the parties thereto.

[Remainder of page intentionally left blank]

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Sincerely,
ZM CAPITAL, L.P.
By:	ZM Capital Partners, L.L.C., its general partner
By:	/s/ Andrew Vogel
Name:	Andrew Vogel
Title:	Managing Member

[Signature Page to the ZM Capital, L.P. Commitment Letter]

Agreed to and accepted:

ALLOY MEDIA HOLDINGS, L.L.C.
By:	/s/ Andrew Vogel
Name:	Andrew Vogel
Title:	Vice President and Secretary

[Signature Page to the ZM Capital, L.P. Commitment Letter]

EX-99.3

Exhibit 99.3

EXECUTION COPY

PRIVATE EQUITY DIRECT PARTNERSHIP II (QP), LP

c/o GenSpring Family Offices

303 Peachtree Street NE, 2nd Floor

Atlanta, GA 30308

Attention: Hayley Haley

June 23, 2010

Alloy Media Holdings, L.L.C.

c/o ZM Capital Management, L.L.C.

19 West 44th Street, 18th Floor

New York, NY 10036

Attn: Andrew Vogel

Telecopy: 212-223-1384

Ladies and Gentlemen:

This letter agreement sets forth the commitment of the undersigned (the “Equity Provider”), subject to the terms and conditions contained herein, to purchase the equity of Alloy Media Holdings, L.L.C., a newly formed limited liability company organized under the laws of the State of Delaware (“Parent”). It is contemplated that, pursuant to the Agreement and Plan of Merger (as amended, restated, supplemented or otherwise modified from time to time, the “Merger Agreement”) entered into concurrently herewith by and among Alloy, Inc. (the “Company”), Parent and Lexington Merger Sub Inc., the Company will become a wholly owned subsidiary of Parent (the “Merger”). Each capitalized term used but not defined herein shall have the meaning ascribed to it in the Merger Agreement, except as otherwise provided.

This letter agreement is one of a series of substantially identical equity commitment letters (such other letters, the “Other Equity Commitments”) with others being made by each of Rosemont Solebury Co-Investment Fund, L.P., Rosemont Solebury Co-Investment Fund (Offshore), L.P., Hudson River Co-Investment Fund, L.P. and NPE Caspian I B, L.P. (collectively, the “Other Investors” and together with the Equity Provider, the “Investors”) to Parent on the date hereof. If Parent enters into any similar equity commitment on substantially the terms hereof with any other co-investors after the date hereof, such co-investor shall be deemed an “Other Investor” and such equity commitment shall be deemed an “Other Equity Commitment” for purposes of this letter agreement.

1. Commitment. The Equity Provider hereby commits, subject to the terms and conditions set forth herein, on the Closing Date prior to the Effective Time, to purchase an amount of equity of Parent for an aggregate cash purchase price equal to $2.5 million (the “Commitment” and together with the Other Equity Commitments, the “Investor Commitments”) and otherwise for the same class of securities and purchase price per unit as is being purchased by (a) ZM Capital, L.P. (other than that class of units apportioned to ZM in accordance with their closing fee) and (b) the Other Investors in accordance with the terms of the Other Equity Commitments; provided, however, that the Equity Provider shall not, under any circumstances,

be obligated to contribute more than the Commitment to Parent. In the event Parent does not require the full amount of the Commitment in order to consummate the Merger, the amount to be funded under this letter agreement may be reduced by Parent.

2. Conditions. The obligation of the Equity Provider to fund the Commitment shall be subject to (i) the satisfaction or waiver by Parent (in the manner determined by ZM Capital, L.P. as managing member of Parent) of the conditions to Parent’s obligations to consummate the transactions contemplated by the Merger Agreement, (ii) the substantially simultaneous closing of the financing under the Debt Commitment Letter, (iii) the substantially simultaneous closing of an amount equal to the aggregate contributions contemplated by the Other Equity Commitments (as may be reduced pursuant to the terms hereof), (iv) the substantially simultaneous consummation of the Merger in accordance with the terms of the Merger Agreement; provided, that the Merger Agreement is not amended to increase the merger consideration above $9.80 per share, (v) the entry into definitive agreements (including a limited liability company agreement) reflecting the terms and conditions set forth in the Alloy Media Holdings, L.L.C. Limited Liability Company Agreement Term Sheet attached to the Interim Investors Agreement and otherwise in form and substance reasonably satisfactory to the Equity Provider and the other parties thereto and (vi) the purchase by ZM Capital, L.P. of an amount of equity of Parent for an aggregate purchase price of at least $15 million and otherwise for the same class of securities and purchase price per unit as is being purchased by the Investors (other than that class of units apportioned to ZM in accordance with their closing fee).

3. Specific Performance. The parties agree that irreparable damage would occur in the event that any of the provisions of this letter agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that Parent shall be entitled to an injunction or injunctions to prevent breaches and/or threatened breaches of this letter agreement by Equity Provider and to enforce specifically against Equity Provider the terms and provisions of this letter agreement, this being in addition to any other remedy which Parent is entitled at law or in equity. Parent shall have the right to specific performance of this letter agreement without having to prove actual damages and without the necessity of posting any bond or other security or having to establish that monetary relief would not provide an adequate remedy.

4. No Modification; Entire Agreement. No amendment, modification or waiver of any provision hereof shall be enforceable unless approved by Parent and the Equity Provider in writing. This letter agreement and that certain Interim Investors Agreement of even date herewith (the “Interim Investors Agreement”) by and among Parent and the Investors contain the entire agreement between the parties and supersedes all prior agreements, understandings and statements, written or oral, between the Equity Provider or any of its Affiliates existing on the date hereof, on the one hand, and Parent or any of its Affiliates existing on the date hereof, on the other, with respect to the subject matter hereof and the transactions contemplated hereby. No transfer of any of Equity Provider’s rights or obligations hereunder shall be permitted without the prior written consent of Parent. Any purported transfer in violation of the preceding sentence shall be null and void.

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5. Governing Law; Jurisdiction. This letter agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of laws of any jurisdictions other than those of the State of Delaware. Each of the parties to this letter agreement (a) consents to submit itself to the personal jurisdiction of the Court of Chancery of the State of Delaware in any action or proceeding arising out of or relating to this letter agreement, (b) agrees that all claims in respect of such action or proceeding may be heard and determined only in such court, (c) agrees that it shall not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from such court, and (d) agrees not to bring any action or proceeding arising out of or relating to this letter agreement in any other court. Each of the parties hereto waives any defense of inconvenient forum to the maintenance of any such action or proceeding so brought and waives any bond, surety or other security that might be required of any other party with respect thereto.

6. WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS LETTER AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS LETTER AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS LETTER AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS EXPRESSED ABOVE.

7. Counterparts. This letter agreement may be executed in any number of counterparts (including by facsimile), each such counterpart when executed being deemed to be an original instrument, and all such counterparts shall together constitute one and the same agreement.

8. No Third Party Beneficiaries. The parties hereby agree that their respective representations, warranties and covenants set forth herein are solely for the benefit of the other party hereto and its successors and permitted assigns, in accordance with and subject to the terms of this letter agreement, and this letter agreement is not intended to, and does not, confer upon any Person other than the parties hereto and their respective successors and permitted assigns any rights or remedies hereunder or any rights under any provision of this letter agreement.

9. Confidentiality. This Agreement shall be treated as confidential and is being provided to the Equity Provider and each of the Other Investors solely in connection with

3

the Merger. This Agreement may not be used, circulated, quoted or otherwise referred to in any document by the Investors or their Affiliates except with the prior written consent of Parent in each instance; provided that no such written consent is required for any disclosure of the existence or contents of this Agreement to the legal, financial and accounting advisors to Parent, Merger Subsidiary and each of the Investors, or any of their respective limited partners, or the extent required by the Merger Agreement, applicable law, by the applicable rules of any national securities exchange, in connection with any SEC filing relating to the Merger or in connection with any litigation relating to the Merger, the Merger Agreement and the transactions contemplated thereby and hereby, or to the extent the information is already publicly available, other than as a result of a breach of this Agreement by such Investor or its Affiliates.

10. Termination. This letter agreement, and the obligation of the Equity Provider to fund the Commitment, will terminate automatically and immediately upon the earliest to occur of (a) the Closing (at which time the obligation shall be discharged but subject to the performance of such obligations), (b) the termination of the Merger Agreement in accordance with its terms and (c) December 15, 2010, and the Equity Provider shall have the right to terminate this letter agreement in the event the Commitment is reduced below $2 million by Parent as contemplated by Section 1 of this letter agreement; provided, however, that in each case, the Equity Provider shall continue to have liability for breaches of this Agreement prior to the termination of this Agreement.

11. Side Letters. Parent agrees that neither it nor its Affiliates (including without limitation, ZM Capital, L.P. and any of its Affiliates) have entered into nor will enter into a side letter or similar agreement with any Other Investor that has the effect of establishing rights or otherwise benefiting such Other Investor in a manner more favorable in any respect than the rights and benefits established in favor of the Equity Provider pursuant to the terms hereof, the Alloy Media Holdings, L.L.C. Limited Liability Company Agreement Term Sheet and the Interim Investors Agreement, unless the Equity Provider will be entitled to the same rights and benefits granted under each such side letter or similar agreement. Any such side letter or similar agreement shall be provided to the Equity Provider immediately upon execution by the parties thereto.

[Remainder of page intentionally left blank]

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Sincerely,
PRIVATE EQUITY DIRECT PARTNERSHIP II (QP), LP
By:	AMA Private Equity Partnership, LP, its general partner
By:	/s/ Jeffrey McNeill
Name:	Jeffrey McNeill
Title:	Vice President

[Signature Page to the GenSpring Family Offices Commitment Letter]

Agreed to and accepted:
ALLOY MEDIA HOLDINGS, L.L.C.
By:	/s/ Andrew Vogel
Name:	Andrew Vogel
Title:	Vice President and Secretary

[Signature Page to the GenSpring Family Offices Commitment Letter]

EX-99.4

Exhibit 99.4

EXECUTION COPY

HUDSON RIVER CO-INVESTMENT FUND, L.P.

c/o Hamilton Lane Advisors, L.L.C.

One Presidential Blvd, 4^th Floor

Bala Cynwyd, PA 19004

Attention: Robert W. Cleveland, General Counsel

June 23, 2010

Alloy Media Holdings, L.L.C.

c/o ZM Capital Management, L.L.C.

19 West 44th Street, 18th Floor

New York, NY 10036

Attn: Andrew Vogel

Telecopy: 212-223-1384

Ladies and Gentlemen:

This letter agreement sets forth the commitment of the undersigned (the “Equity Provider”), subject to the terms and conditions contained herein, to purchase the equity of Alloy Media Holdings, L.L.C., a newly formed limited liability company organized under the laws of the State of Delaware (“Parent”). It is contemplated that, pursuant to the Agreement and Plan of Merger (as amended, restated, supplemented or otherwise modified from time to time, the “Merger Agreement”) entered into concurrently herewith by and among Alloy, Inc. (the “Company”), Parent and Lexington Merger Sub Inc., the Company will become a wholly owned subsidiary of Parent (the “Merger”). Each capitalized term used but not defined herein shall have the meaning ascribed to it in the Merger Agreement, except as otherwise provided.

This letter agreement is one of a series of substantially identical equity commitment letters (such other letters, the “Other Equity Commitments”) with others being made by each of Rosemont Solebury Co-Investment Fund, L.P., Rosemont Solebury Co-Investment Fund (Offshore), L.P., NPE Caspian I B, L.P. and Private Equity Direct Partnership II (QP), LP (collectively, the “Other Investors” and together with the Equity Provider, the “Investors”) to Parent on the date hereof. If Parent enters into any similar equity commitment on substantially the terms hereof with any other co-investors after the date hereof, such co-investor shall be deemed an “Other Investor” and such equity commitment shall be deemed an “Other Equity Commitment” for purposes of this letter agreement.

1. Commitment. The Equity Provider hereby commits, subject to the terms and conditions set forth herein, on the Closing Date prior to the Effective Time, to purchase an amount of equity of Parent for an aggregate cash purchase price equal to $9 million (the “Commitment” and together with the Other Equity Commitments, the “Investor Commitments”) and otherwise for the same class of securities and purchase price per unit as is being purchased by (a) ZM Capital, L.P. (other than that class of units apportioned to ZM in accordance with their closing fee) and (b) the Other Investors in accordance with the terms of the Other Equity Commitments; provided, however, that the Equity Provider shall not, under any circumstances,

be obligated to contribute more than the Commitment to Parent. In the event Parent does not require the full amount of the Commitment in order to consummate the Merger, the amount to be funded under this letter agreement may be reduced by Parent.

2. Conditions. The obligation of the Equity Provider to fund the Commitment shall be subject to (i) the satisfaction or waiver by Parent (in the manner determined by ZM Capital, L.P. as managing member of Parent) of the conditions to Parent’s obligations to consummate the transactions contemplated by the Merger Agreement, (ii) the substantially simultaneous closing of the financing under the Debt Commitment Letter, (iii) the substantially simultaneous closing of an amount equal to the aggregate contributions contemplated by the Other Equity Commitments (as may be reduced pursuant to the terms hereof), (iv) the substantially simultaneous consummation of the Merger in accordance with the terms of the Merger Agreement; provided, that the Merger Agreement is not amended to increase the merger consideration above $9.80 per share, (v) the entry into definitive agreements (including a limited liability company agreement) reflecting the terms and conditions set forth in the Alloy Media Holdings, L.L.C. Limited Liability Company Agreement Term Sheet attached to the Interim Investors Agreement and otherwise in form and substance reasonably satisfactory to the Equity Provider and the other parties thereto and (vi) the purchase by ZM Capital, L.P. of an amount of equity of Parent for an aggregate purchase price of at least $15 million and otherwise for the same class of securities and purchase price per unit as is being purchased by the Investors (other than that class of units apportioned to ZM in accordance with their closing fee).

3. Specific Performance. The parties agree that irreparable damage would occur in the event that any of the provisions of this letter agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that Parent shall be entitled to an injunction or injunctions to prevent breaches and/or threatened breaches of this letter agreement by Equity Provider and to enforce specifically against Equity Provider the terms and provisions of this letter agreement, this being in addition to any other remedy which Parent is entitled at law or in equity. Parent shall have the right to specific performance of this letter agreement without having to prove actual damages and without the necessity of posting any bond or other security or having to establish that monetary relief would not provide an adequate remedy.

4. No Modification; Entire Agreement. No amendment, modification or waiver of any provision hereof shall be enforceable unless approved by Parent and the Equity Provider in writing. This letter agreement and that certain Interim Investors Agreement of even date herewith (the “Interim Investors Agreement”) by and among Parent and the Investors contain the entire agreement between the parties and supersedes all prior agreements, understandings and statements, written or oral, between the Equity Provider or any of its Affiliates existing on the date hereof, on the one hand, and Parent or any of its Affiliates existing on the date hereof, on the other, with respect to the subject matter hereof and the transactions contemplated hereby. No transfer of any of Equity Provider’s rights or obligations hereunder shall be permitted without the prior written consent of Parent. Any purported transfer in violation of the preceding sentence shall be null and void.

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5. Governing Law; Jurisdiction. This letter agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of laws of any jurisdictions other than those of the State of Delaware. Each of the parties to this letter agreement (a) consents to submit itself to the personal jurisdiction of the Court of Chancery of the State of Delaware in any action or proceeding arising out of or relating to this letter agreement, (b) agrees that all claims in respect of such action or proceeding may be heard and determined only in such court, (c) agrees that it shall not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from such court, and (d) agrees not to bring any action or proceeding arising out of or relating to this letter agreement in any other court. Each of the parties hereto waives any defense of inconvenient forum to the maintenance of any such action or proceeding so brought and waives any bond, surety or other security that might be required of any other party with respect thereto.

6. WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS LETTER AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS LETTER AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS LETTER AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS EXPRESSED ABOVE.

7. Counterparts. This letter agreement may be executed in any number of counterparts (including by facsimile), each such counterpart when executed being deemed to be an original instrument, and all such counterparts shall together constitute one and the same agreement.

8. No Third Party Beneficiaries. The parties hereby agree that their respective representations, warranties and covenants set forth herein are solely for the benefit of the other party hereto and its successors and permitted assigns, in accordance with and subject to the terms of this letter agreement, and this letter agreement is not intended to, and does not, confer upon any Person other than the parties hereto and their respective successors and permitted assigns any rights or remedies hereunder or any rights under any provision of this letter agreement.

9. Confidentiality. This Agreement shall be treated as confidential and is being provided to the Equity Provider and each of the Other Investors solely in connection with

3

the Merger. This Agreement may not be used, circulated, quoted or otherwise referred to in any document by the Investors or their Affiliates except with the prior written consent of Parent in each instance; provided that no such written consent is required for any disclosure of the existence or contents of this Agreement to the legal, financial and accounting advisors to Parent, Merger Subsidiary and each of the Investors, or any of their respective limited partners, or the extent required by the Merger Agreement, applicable law, by the applicable rules of any national securities exchange, in connection with any SEC filing relating to the Merger or in connection with any litigation relating to the Merger, the Merger Agreement and the transactions contemplated thereby and hereby, or to the extent the information is already publicly available, other than as a result of a breach of this Agreement by such Investor or its Affiliates.

10. Termination. This letter agreement, and the obligation of the Equity Provider to fund the Commitment, will terminate automatically and immediately upon the earliest to occur of (a) the Closing (at which time the obligation shall be discharged but subject to the performance of such obligations), (b) the termination of the Merger Agreement in accordance with its terms and (c) December 15, 2010, and the Equity Provider shall have the right to terminate this letter agreement in the event the Commitment is reduced below $6.0 million by Parent as contemplated by Section 1 of this letter agreement; provided, however, that in each case, the Equity Provider shall continue to have liability for breaches of this Agreement prior to the termination of this Agreement.

11. Side Letters. Parent agrees that neither it nor its Affiliates (including without limitation, ZM Capital, L.P. and any of its Affiliates) have entered into nor will enter into a side letter or similar agreement with any Other Investor that has the effect of establishing rights or otherwise benefiting such Other Investor in a manner more favorable in any respect than the rights and benefits established in favor of the Equity Provider pursuant to the terms hereof, the Alloy Media Holdings, L.L.C. Limited Liability Company Agreement Term Sheet and the Interim Investors Agreement, unless the Equity Provider will be entitled to the same rights and benefits granted under each such side letter or similar agreement. Any such side letter or similar agreement shall be provided to the Equity Provider immediately upon execution by the parties thereto.

[Remainder of page intentionally left blank]

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Sincerely,
HUDSON RIVER CO-INVESTMENT FUND, L.P.
By:	Hamilton Lane New York Co-Investment LLC, its general partner
By:	/s/ Robert W. Cleveland
Name:	Robert W. Cleveland
Title:	Vice President

[Signature Page to the Hudson River Co-Investment Fund, L.P. Commitment Letter]

Agreed to and accepted:

ALLOY MEDIA HOLDINGS, L.L.C.
By:	/s/  Andrew Vogel
Name:	Andrew Vogel
Title:	Vice President and Secretary

[Signature Page to the Hudson River Co-Investment Fund, L.P. Commitment Letter]

EX-99.5

Exhibit 99.5

EXECUTION COPY

NPE CASPIAN I B, L.P.

c/o Natixis Caspian Private Equity

745 Fifth Avenue, 28th Floor

New York, NY 10151

Attention: Nitin Gupta

June 23, 2010

Alloy Media Holdings, L.L.C.

c/o ZM Capital Management, L.L.C.

19 West 44th Street, 18th Floor

New York, NY 10036

Attn: Andrew Vogel

Telecopy: 212-223-1384

Ladies and Gentlemen:

This letter agreement sets forth the commitment of the undersigned (the “Equity Provider”), subject to the terms and conditions contained herein, to purchase the equity of Alloy Media Holdings, L.L.C., a newly formed limited liability company organized under the laws of the State of Delaware (“Parent”). It is contemplated that, pursuant to the Agreement and Plan of Merger (as amended, restated, supplemented or otherwise modified from time to time, the “Merger Agreement”) entered into concurrently herewith by and among Alloy, Inc. (the “Company”), Parent and Lexington Merger Sub Inc., the Company will become a wholly owned subsidiary of Parent (the “Merger”). Each capitalized term used but not defined herein shall have the meaning ascribed to it in the Merger Agreement, except as otherwise provided.

This letter agreement is one of a series of substantially identical equity commitment letters (such other letters, the “Other Equity Commitments”) with others being made by each of Rosemont Solebury Co-Investment Fund, L.P., Rosemont Solebury Co-Investment Fund (Offshore), L.P., Hudson River Co-Investment Fund, L.P. and Private Equity Direct Partnership II (QP), LP (collectively, the “Other Investors” and together with the Equity Provider, the “Investors”) to Parent on the date hereof. If Parent enters into any similar equity commitment on substantially the terms hereof with any other co-investors after the date hereof, such co-investor shall be deemed an “Other Investor” and such equity commitment shall be deemed an “Other Equity Commitment” for purposes of this letter agreement.

1. Commitment. The Equity Provider hereby commits, subject to the terms and conditions set forth herein, on the Closing Date prior to the Effective Time, to purchase an amount of equity of Parent for an aggregate cash purchase price equal to $8 million (the “Commitment” and together with the Other Equity Commitments, the “Investor Commitments”) and otherwise for the same class of securities and purchase price per unit as is being purchased by (a) ZM Capital, L.P. (other than that class of units apportioned to ZM in accordance with their closing fee) and (b) the Other Investors in accordance with the terms of the Other Equity Commitments; provided, however, that the Equity Provider shall not, under any circumstances,

be obligated to contribute more than the Commitment to Parent. In the event Parent does not require the full amount of the Commitment in order to consummate the Merger, the amount to be funded under this letter agreement may be reduced by Parent.

2. Conditions. The obligation of the Equity Provider to fund the Commitment shall be subject to (i) the satisfaction or waiver by Parent (in the manner determined by ZM Capital, L.P. as managing member of Parent) of the conditions to Parent’s obligations to consummate the transactions contemplated by the Merger Agreement, (ii) the substantially simultaneous closing of the financing under the Debt Commitment Letter, (iii) the substantially simultaneous closing of an amount equal to the aggregate contributions contemplated by the Other Equity Commitments (as may be reduced pursuant to the terms hereof), (iv) the substantially simultaneous consummation of the Merger in accordance with the terms of the Merger Agreement; provided, that the Merger Agreement is not amended to increase the merger consideration above $9.80 per share, (v) the entry into definitive agreements (including a limited liability company agreement) reflecting the terms and conditions set forth in the Alloy Media Holdings, L.L.C. Limited Liability Company Agreement Term Sheet attached to the Interim Investors Agreement and otherwise in form and substance reasonably satisfactory to the Equity Provider and the other parties thereto and (vi) the purchase by ZM Capital, L.P. of an amount of equity of Parent for an aggregate purchase price of at least $15 million and otherwise for the same class of securities and purchase price per unit as is being purchased by the Investors (other than that class of units apportioned to ZM in accordance with their closing fee).

3. Specific Performance. The parties agree that irreparable damage would occur in the event that any of the provisions of this letter agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that Parent shall be entitled to an injunction or injunctions to prevent breaches and/or threatened breaches of this letter agreement by Equity Provider and to enforce specifically against Equity Provider the terms and provisions of this letter agreement, this being in addition to any other remedy which Parent is entitled at law or in equity. Parent shall have the right to specific performance of this letter agreement without having to prove actual damages and without the necessity of posting any bond or other security or having to establish that monetary relief would not provide an adequate remedy.

4. No Modification; Entire Agreement. No amendment, modification or waiver of any provision hereof shall be enforceable unless approved by Parent and the Equity Provider in writing. This letter agreement and that certain Interim Investors Agreement of even date herewith (the “Interim Investors Agreement”) by and among Parent and the Investors contain the entire agreement between the parties and supersedes all prior agreements, understandings and statements, written or oral, between the Equity Provider or any of its Affiliates existing on the date hereof, on the one hand, and Parent or any of its Affiliates existing on the date hereof, on the other, with respect to the subject matter hereof and the transactions contemplated hereby. No transfer of any of Equity Provider’s rights or obligations hereunder shall be permitted without the prior written consent of Parent. Any purported transfer in violation of the preceding sentence shall be null and void.

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5. Governing Law; Jurisdiction. This letter agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of laws of any jurisdictions other than those of the State of Delaware. Each of the parties to this letter agreement (a) consents to submit itself to the personal jurisdiction of the Court of Chancery of the State of Delaware in any action or proceeding arising out of or relating to this letter agreement, (b) agrees that all claims in respect of such action or proceeding may be heard and determined only in such court, (c) agrees that it shall not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from such court, and (d) agrees not to bring any action or proceeding arising out of or relating to this letter agreement in any other court. Each of the parties hereto waives any defense of inconvenient forum to the maintenance of any such action or proceeding so brought and waives any bond, surety or other security that might be required of any other party with respect thereto.

6. WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS LETTER AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS LETTER AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS LETTER AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS EXPRESSED ABOVE.

7. Counterparts. This letter agreement may be executed in any number of counterparts (including by facsimile), each such counterpart when executed being deemed to be an original instrument, and all such counterparts shall together constitute one and the same agreement.

8. No Third Party Beneficiaries. The parties hereby agree that their respective representations, warranties and covenants set forth herein are solely for the benefit of the other party hereto and its successors and permitted assigns, in accordance with and subject to the terms of this letter agreement, and this letter agreement is not intended to, and does not, confer upon any Person other than the parties hereto and their respective successors and permitted assigns any rights or remedies hereunder or any rights under any provision of this letter agreement.

9. Confidentiality. This Agreement shall be treated as confidential and is being provided to the Equity Provider and each of the Other Investors solely in connection with

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the Merger. This Agreement may not be used, circulated, quoted or otherwise referred to in any document by the Investors or their Affiliates except with the prior written consent of Parent in each instance; provided that no such written consent is required for any disclosure of the existence or contents of this Agreement to the legal, financial and accounting advisors to Parent, Merger Subsidiary and each of the Investors, or any of their respective limited partners, or the extent required by the Merger Agreement, applicable law, by the applicable rules of any national securities exchange, in connection with any SEC filing relating to the Merger or in connection with any litigation relating to the Merger, the Merger Agreement and the transactions contemplated thereby and hereby, or to the extent the information is already publicly available, other than as a result of a breach of this Agreement by such Investor or its Affiliates.

10. Termination. This letter agreement, and the obligation of the Equity Provider to fund the Commitment, will terminate automatically and immediately upon the earliest to occur of (a) the Closing (at which time the obligation shall be discharged but subject to the performance of such obligations), (b) the termination of the Merger Agreement in accordance with its terms and (c) December 15, 2010, and the Equity Provider shall have the right to terminate this letter agreement in the event the Commitment is reduced below $4 million by Parent as contemplated by Section 1 of this letter agreement; provided, however, that in each case, the Equity Provider shall continue to have liability for breaches of this Agreement prior to the termination of this Agreement.

11. Side Letters. Parent agrees that neither it nor its Affiliates (including without limitation, ZM Capital, L.P. and any of its Affiliates) have entered into nor will enter into a side letter or similar agreement with any Other Investor that has the effect of establishing rights or otherwise benefiting such Other Investor in a manner more favorable in any respect than the rights and benefits established in favor of the Equity Provider pursuant to the terms hereof, the Alloy Media Holdings, L.L.C. Limited Liability Company Agreement Term Sheet and the Interim Investors Agreement, unless the Equity Provider will be entitled to the same rights and benefits granted under each such side letter or similar agreement. Any such side letter or similar agreement shall be provided to the Equity Provider immediately upon execution by the parties thereto.

[Remainder of page intentionally left blank]

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Sincerely,
NPE CASPIAN I B, L.P.
By:	NPE Caspian GP, L.P., its general partner
By:	Natixis Caspian Private Equity, LLC, its general partner
By:	/s/  Satyan Malhotra
Name:	Satyan Malhotra
Title:	COO-CFO

[Signature Page to the Natixis Caspian Equity Commitment Letter

Agreed to and accepted:

ALLOY MEDIA HOLDINGS, L.L.C.
By:	/s/  Andrew Vogel
Name:	Andrew Vogel
Title:	Vice President and Secretary

[Signature Page to the Natixis Caspian Equity Commitment Letter]

EX-99.6

Exhibit 99.6

EXECUTION COPY

ROSEMONT SOLEBURY CO-INVESTMENT FUND, L.P.

ROSEMONT SOLEBURY CO-INVESTMENT FUND (OFFSHORE), L.P.

c/o Rosemont Capital, LLC

401 Greenwich Street, 4^th Floor

New York, NY 10013

Attention: Jonathan Kelly

June 23, 2010

Alloy Media Holdings, L.L.C.

c/o ZM Capital Management, L.L.C.

19 West 44th Street, 18th Floor

New York, NY 10036

Attn: Andrew Vogel

Telecopy: 212-223-1384

Ladies and Gentlemen:

This letter agreement sets forth the commitment of the undersigned (the “Equity Provider”), subject to the terms and conditions contained herein, to purchase the equity of Alloy Media Holdings, L.L.C., a newly formed limited liability company organized under the laws of the State of Delaware (“Parent”). It is contemplated that, pursuant to the Agreement and Plan of Merger (as amended, restated, supplemented or otherwise modified from time to time, the “Merger Agreement”) entered into concurrently herewith by and among Alloy, Inc. (the “Company”), Parent and Lexington Merger Sub Inc., the Company will become a wholly owned subsidiary of Parent (the “Merger”). Each capitalized term used but not defined herein shall have the meaning ascribed to it in the Merger Agreement, except as otherwise provided.

This letter agreement is one of a series of substantially identical equity commitment letters (such other letters, the “Other Equity Commitments”) with others being made by each of NPE Caspian I B, L.P., Hudson River Co-Investment Fund, L.P. and Private Equity Direct Partnership II (QP), LP (collectively, the “Other Investors” and together with the Equity Provider, the “Investors”) to Parent on the date hereof. If Parent enters into any similar equity commitment on substantially the terms hereof with any other co-investors after the date hereof, such co-investor shall be deemed an “Other Investor” and such equity commitment shall be deemed an “Other Equity Commitment” for purposes of this letter agreement.

1. Commitment. The Equity Provider hereby commits, subject to the terms and conditions set forth herein, on the Closing Date prior to the Effective Time, to purchase an amount of equity of Parent for an aggregate cash purchase price equal to $5 million (the “Commitment” and together with the Other Equity Commitments, the “Investor Commitments”) and otherwise for the same class of securities and purchase price per unit as is being purchased by (a) ZM Capital, L.P. (other than that class of units apportioned to ZM in accordance with their closing fee) and (b) the Other Investors in accordance with the terms of the Other Equity Commitments; provided, however, that the Equity Provider shall not, under any circumstances,

be obligated to contribute more than the Commitment to Parent. In the event Parent does not require the full amount of the Commitment in order to consummate the Merger, the amount to be funded under this letter agreement may be reduced by Parent.

2. Conditions. The obligation of the Equity Provider to fund the Commitment shall be subject to (i) the satisfaction or waiver by Parent (in the manner determined by ZM Capital, L.P. as managing member of Parent) of the conditions to Parent’s obligations to consummate the transactions contemplated by the Merger Agreement, (ii) the substantially simultaneous closing of the financing under the Debt Commitment Letter, (iii) the substantially simultaneous closing of an amount equal to the aggregate contributions contemplated by the Other Equity Commitments (as may be reduced pursuant to the terms hereof), (iv) the substantially simultaneous consummation of the Merger in accordance with the terms of the Merger Agreement; provided, that the Merger Agreement is not amended to increase the merger consideration above $9.80 per share, (v) the entry into definitive agreements (including a limited liability company agreement) reflecting the terms and conditions set forth in the Alloy Media Holdings, L.L.C. Limited Liability Company Agreement Term Sheet attached to the Interim Investors Agreement and otherwise in form and substance reasonably satisfactory to the Equity Provider and the other parties thereto and (vi) the purchase by ZM Capital, L.P. of an amount of equity of Parent for an aggregate purchase price of at least $15 million and otherwise for the same class of securities and purchase price per unit as is being purchased by the Investors (other than that class of units apportioned to ZM in accordance with their closing fee).

3. Specific Performance. The parties agree that irreparable damage would occur in the event that any of the provisions of this letter agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that Parent shall be entitled to an injunction or injunctions to prevent breaches and/or threatened breaches of this letter agreement by Equity Provider and to enforce specifically against Equity Provider the terms and provisions of this letter agreement, this being in addition to any other remedy which Parent is entitled at law or in equity. Parent shall have the right to specific performance of this letter agreement without having to prove actual damages and without the necessity of posting any bond or other security or having to establish that monetary relief would not provide an adequate remedy.

4. No Modification; Entire Agreement. No amendment, modification or waiver of any provision hereof shall be enforceable unless approved by Parent and the Equity Provider in writing. This letter agreement and that certain Interim Investors Agreement of even date herewith (the “Interim Investors Agreement”) by and among Parent and the Investors contain the entire agreement between the parties and supersedes all prior agreements, understandings and statements, written or oral, between the Equity Provider or any of its Affiliates existing on the date hereof, on the one hand, and Parent or any of its Affiliates existing on the date hereof, on the other, with respect to the subject matter hereof and the transactions contemplated hereby. No transfer of any of Equity Provider’s rights or obligations hereunder shall be permitted without the prior written consent of Parent. Any purported transfer in violation of the preceding sentence shall be null and void.

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5. Governing Law; Jurisdiction. This letter agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of laws of any jurisdictions other than those of the State of Delaware. Each of the parties to this letter agreement (a) consents to submit itself to the personal jurisdiction of the Court of Chancery of the State of Delaware in any action or proceeding arising out of or relating to this letter agreement, (b) agrees that all claims in respect of such action or proceeding may be heard and determined only in such court, (c) agrees that it shall not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from such court, and (d) agrees not to bring any action or proceeding arising out of or relating to this letter agreement in any other court. Each of the parties hereto waives any defense of inconvenient forum to the maintenance of any such action or proceeding so brought and waives any bond, surety or other security that might be required of any other party with respect thereto.

6. WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS LETTER AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS LETTER AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS LETTER AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS EXPRESSED ABOVE.

7. Counterparts. This letter agreement may be executed in any number of counterparts (including by facsimile), each such counterpart when executed being deemed to be an original instrument, and all such counterparts shall together constitute one and the same agreement.

8. No Third Party Beneficiaries. The parties hereby agree that their respective representations, warranties and covenants set forth herein are solely for the benefit of the other party hereto and its successors and permitted assigns, in accordance with and subject to the terms of this letter agreement, and this letter agreement is not intended to, and does not, confer upon any Person other than the parties hereto and their respective successors and permitted assigns any rights or remedies hereunder or any rights under any provision of this letter agreement.

9. Confidentiality. This Agreement shall be treated as confidential and is being provided to the Equity Provider and each of the Other Investors solely in connection with

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the Merger. This Agreement may not be used, circulated, quoted or otherwise referred to in any document by the Investors or their Affiliates except with the prior written consent of Parent in each instance; provided that no such written consent is required for any disclosure of the existence or contents of this Agreement to the legal, financial and accounting advisors to Parent, Merger Subsidiary and each of the Investors, or any of their respective limited partners, or the extent required by the Merger Agreement, applicable law, by the applicable rules of any national securities exchange, in connection with any SEC filing relating to the Merger or in connection with any litigation relating to the Merger, the Merger Agreement and the transactions contemplated thereby and hereby, or to the extent the information is already publicly available, other than as a result of a breach of this Agreement by such Investor or its Affiliates.

10. Termination. This letter agreement, and the obligation of the Equity Provider to fund the Commitment, will terminate automatically and immediately upon the earliest to occur of (a) the Closing (at which time the obligation shall be discharged but subject to the performance of such obligations), (b) the termination of the Merger Agreement in accordance with its terms and (c) December 15, 2010, and the Equity Provider shall have the right to terminate this letter agreement in the event the Commitment is reduced below $5 million by Parent as contemplated by Section 1 of this letter agreement; provided, however, that in each case, the Equity Provider shall continue to have liability for breaches of this Agreement prior to the termination of this Agreement.

11. Side Letters. Parent agrees that neither it nor its Affiliates (including without limitation, ZM Capital, L.P. and any of its Affiliates) have entered into nor will enter into a side letter or similar agreement with any Other Investor that has the effect of establishing rights or otherwise benefiting such Other Investor in a manner more favorable in any respect than the rights and benefits established in favor of the Equity Provider pursuant to the terms hereof, the Alloy Media Holdings, L.L.C. Limited Liability Company Agreement Term Sheet and the Interim Investors Agreement, unless the Equity Provider will be entitled to the same rights and benefits granted under each such side letter or similar agreement. Any such side letter or similar agreement shall be provided to the Equity Provider immediately upon execution by the parties thereto.

[Remainder of page intentionally left blank]

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Sincerely,
ROSEMONT SOLEBURY CO- INVESTMENT FUND, L.P.
By:	/s/  Jonathan Lee Kelly
Name:	Jonathan Lee Kelly
Title:	Principal
ROSEMONT SOLEBURY CO- INVESTMENT FUND (OFFSHORE), L.P.
By:	/s/  Jonathan Lee Kelly
Name:	Jonathan Lee Kelly
Title:	Principal

[Signature Page to the Rosemont Solebury Capital Management, LLC Commitment Letter]

Agreed to and accepted:
ALLOY MEDIA HOLDINGS, L.L.C.
By:	/s/  Andrew Vogel
Name:	Andrew Vogel
Title:	Vice President and Secretary

[Signature Page to the Rosemont Solebury Capital Management, LLC Commitment Letter]

EX-99.7

Exhibit 99.7

EXECUTION COPY

LIMITED GUARANTEE

LIMITED GUARANTEE, dated as of June 23, 2010 (this “Limited Guarantee”), by ZM Capital, L.P. (the “Guarantor”) in favor of Alloy, Inc. (the “Guaranteed Party”).

1. LIMITED GUARANTEE. To induce the Guaranteed Party to enter into that certain Agreement and Plan of Merger, dated as of June 23, 2010 (as amended, restated, supplemented or otherwise modified from time to time pursuant to the terms thereof, the “Merger Agreement”), by and among the Guaranteed Party, Merger Subsidiary and Parent (the “Buyer”), pursuant to which and subject to the terms and conditions of which the Guaranteed Party will become a wholly owned subsidiary of the Buyer (the “Merger”), the Guarantor, intending to be legally bound, hereby absolutely, irrevocably and unconditionally guarantees to the Guaranteed Party, on the terms and conditions set forth herein the due and punctual payment as and when due of the payment obligations of Buyer with respect to the Buyer Termination Fee (the “Obligations”), provided that notwithstanding anything to the contrary contained in this Limited Guarantee, in no event shall the Guarantor’s aggregate liability under this Limited Guarantee exceed $5.8 million, less the portion of the foregoing amounts, if any, indefeasibly paid to the Guaranteed Party by the Buyer, Merger Subsidiary or any other Person that is not rescinded or otherwise returned, (the “Cap”), it being understood that this Limited Guarantee may not be enforced without giving effect to the Cap. The Guaranteed Party hereby agrees that in no event shall the Guarantor be required to pay any amount to the Guaranteed Party under, in respect of, or in connection with this Limited Guarantee, the Voting Agreement, the Rollover Commitment Letters, the Merger Agreement or the transactions contemplated hereby and thereby other than as expressly set forth herein. All payments hereunder shall be made in lawful money of the United States, in immediately available funds. Each capitalized term used but not defined herein shall have the meaning ascribed to it in the Merger Agreement, except as otherwise provided.

If the Buyer fails to pay the Obligations when due, then all of the Guarantor’s liabilities to the Guaranteed Party hereunder in respect of such Obligations shall, at the Guaranteed Party’s option, become immediately due and payable and the Guaranteed Party may at any time and from time to time, at the Guaranteed Party’s option, take any and all actions available hereunder or under applicable law to collect the Obligations from the Guarantor. In furtherance of the foregoing, the Guarantor acknowledges that the Guaranteed Party may, in its sole discretion, bring and prosecute a separate action or actions against the Guarantor for the full amount of the Obligations (subject to the Cap) regardless of whether any action is brought against the Buyer.

The Guarantor agrees to pay on demand all reasonable and documented out-of-pocket expenses (including reasonable fees and expenses of counsel) incurred by the Guaranteed Party in connection with the enforcement of its rights hereunder if the Guarantor fails or refuses to make any payment to the Guaranteed Party hereunder when due and payable and it is judicially determined that the Guarantor is required to make such payment hereunder; provided that the amounts payable by the Guarantor pursuant to this paragraph shall not be considered in determining the Guarantor’s aggregate liability under this Limited Guarantee for purposes of the Cap.

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2. NATURE OF GUARANTEE. The Guarantor’s liability hereunder is absolute, unconditional, irrevocable and continuing irrespective of any modification, amendment or waiver of or any consent to departure from the Merger Agreement that may be agreed to by the Buyer or Merger Subsidiary. In the event that any payment to the Guaranteed Party in respect of the Obligations is rescinded or must otherwise be returned for any reason whatsoever, the Guarantor shall remain liable hereunder with respect to the Obligations (subject to the Cap) as if such payment had not been made. This Limited Guarantee is an unconditional and continuing guarantee of payment and not of collection, and the Guaranteed Party shall not be required to proceed against the Buyer or Merger Subsidiary before proceeding against the Guarantor hereunder.

3. CHANGES IN OBLIGATION, CERTAIN WAIVERS. The Guarantor agrees that the Guaranteed Party may, in its sole discretion, at any time and from time to time, without notice to or further consent of the Guarantor, extend the time of payment of the Obligations, and may also make any agreement with the Buyer or Merger Subsidiary for the extension or renewal thereof, in whole or in part, without in any way impairing or affecting the Guarantor’s obligations under this Limited Guarantee or affecting the validity or enforceability of this Limited Guarantee. The Guarantor agrees that the obligations of the Guarantor hereunder shall not be released or discharged, in whole or in part, or otherwise affected by (a) the failure or delay on the part of the Guaranteed Party to assert any claim or demand or to enforce any right or remedy against the Buyer or Merger Subsidiary; (b) any change in the time, place or manner of payment of any of the Obligations, or any rescission, waiver, compromise, consolidation, or other amendment or modification of any of the terms or provisions of the Merger Agreement made in accordance with the terms thereof; (c) the addition or substitution of any entity or other Person now or hereafter liable with respect to the Obligations or otherwise interested in the transactions contemplated by the Merger Agreement; (d) any change in the corporate existence, structure or ownership of the Buyer, Merger Subsidiary or any Person now or hereafter liable with respect to the Obligations or otherwise interested in the transactions contemplated by the Merger Agreement; (e) the existence of any claim, set-off or other right which the Guarantor may have at any time against the Buyer, Merger Subsidiary or the Guaranteed Party or any of their respective Affiliates, whether in connection with the Obligations or otherwise except as provided herein; (f) the adequacy of any other means the Guaranteed Party may have of obtaining payment related to the Obligations; (g) any insolvency, bankruptcy, reorganization or other similar proceeding affecting the Buyer, Merger Subsidiary or any other Person now or hereafter liable with respect to the Obligations or otherwise interested in the transactions contemplated by the Merger Agreement; and (h) any discharge of the Guarantor as a matter of applicable law (other than as a result of, and to the extent of, payment of the Obligations in accordance with the terms of the Merger Agreement). To the fullest extent permitted by applicable law, the Guarantor hereby expressly waives any and all rights or defenses arising by reason of any applicable law which would otherwise require any election of remedies by the Guaranteed Party. The Guarantor waives promptness, diligence, notice of the acceptance of this Limited Guarantee and of the Obligations, presentment, demand for payment, notice of non-performance, default, dishonor and protest, notice of the Obligations incurred and all other notices of any kind, all defenses which may be available by virtue of any valuation, stay, moratorium or other similar applicable law now or hereafter in effect, all suretyship defenses

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generally (other than fraud by the Guaranteed Party or any of its Affiliates or defenses to the payment of the Obligations that are available to Buyer under the Merger Agreement or breach by the Guaranteed Party of this Limited Guarantee), and any right to require the marshalling of assets of Buyer or Merger Subsidiary or any other Person interested in the transactions contemplated by the Merger Agreement. The Guarantor acknowledges that it will receive substantial direct and indirect benefits from the transactions contemplated by the Merger Agreement and that the waivers, agreements, covenants, obligations and other terms in this Limited Guarantee are knowingly made and agreed to in contemplation of such benefits. The Guaranteed Party hereby covenants and agrees that it shall not institute, directly or indirectly, and shall cause its Affiliates not to institute, directly or indirectly, any proceeding or bring any other claim arising under, in respect of or in connection with the Merger Agreement or the transactions contemplated thereby, against the Guarantor or any Non-Recourse Party (as defined in Section 10 herein), except for claims against the Guarantor under this Limited Guarantee (subject to the limitations described herein) and claims under the Mutual Non-Disclosure Agreement, dated December 30, 2009 (the “Confidentiality Agreement”). The Guarantor hereby covenants and agrees that it shall not assert, directly or indirectly, in any proceeding that this Limited Guarantee is illegal, invalid or unenforceable in accordance with its terms.

4. NO SUBROGATION. The Guarantor hereby unconditionally and irrevocably agrees not to exercise any rights that it may now have or hereafter acquire against Parent, Merger Subsidiary or any other Person liable with respect to any of the Obligations that arise from the existence, payment, performance or enforcement of the Guarantor’s obligations under or in respect of this Limited Guarantee or any other agreement in connection therewith, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of the Company against Parent, Merger Subsidiary or such other Person, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from Parent, Merger Subsidiary or such other Person, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right, unless and until the Obligations and any other amounts that may be payable under this Limited Guarantee shall have been paid in full in cash. If any amount shall be paid to the Guarantor in violation of the immediately preceding sentence at any time prior to the satisfaction in full of the Obligations and any other amounts that may be payable under this Limited Guarantee, such amount shall be received and held in trust for the benefit of the Company, shall be segregated from other property and funds of the Guarantor and shall forthwith be paid or delivered to the Company in the same form as so received (with any necessary endorsement or assignment) to be credited and applied to the Obligations and any other amounts that may be payable under this Limited Guarantee, in accordance with the terms of the Merger Agreement and herewith, whether matured or unmatured, or to be held as collateral for the Obligations or other amounts payable under this Limited Guarantee thereafter arising.

5. NO WAIVER; CUMULATIVE RIGHTS. For so long as this Limited Guarantee shall remain in effect in accordance with Section 9 hereof, no failure to exercise, and no delay in exercising, any right, remedy or power hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy or power hereunder preclude any

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other or future exercise of any right, remedy or power hereunder. Each and every right, remedy and power hereby granted to the Guaranteed Party shall be cumulative and not exclusive of any other, and may be exercised by the Guaranteed Party at any time or from time to time. The Guaranteed Party shall not have any obligation to proceed at any time or in any manner against, or exhaust any or all of the Guaranteed Party’s rights against, the Buyer, Merger Subsidiary or any other Person now or hereafter liable for any Obligation or interested in the transactions contemplated by the Merger Agreement prior to proceeding against the Guarantor.

6. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby represents and warrants that:

(a) it has all requisite power and authority to execute, deliver and perform this Limited Guarantee; the execution, delivery and performance of this Limited Guarantee have been duly and validly authorized by all necessary action, and do not contravene any provision of the Guarantor’s charter, partnership agreement, operating agreement or similar organizational documents, or any applicable law or contractual restriction binding on the Guarantor or its assets; and the Person executing and delivering this Limited Guarantee on behalf of the Guarantor is duly authorized to do so;

(b) all consents, approvals, authorizations, permits of, filings with and notifications to, any governmental entity necessary for the due execution, delivery and performance of this Limited Guarantee by the Guarantor have been obtained or made and all conditions thereof have been duly complied with, and no other action by, and no notice to or filing with, any governmental entity is required in connection with the execution, delivery or performance of this Limited Guarantee;

(c) this Limited Guarantee constitutes a legal, valid and binding obligation of the Guarantor enforceable against the Guarantor in accordance with its terms, subject to (i) the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar applicable laws affecting creditors’ rights generally, and (ii) general equitable principles (whether considered in a proceeding in equity or at law); and

(d) the Guarantor has the financial capacity to pay and perform its obligations under this Limited Guarantee, and all funds necessary for the Guarantor to fulfill its obligations under this Limited Guarantee shall be available to the Guarantor (or its permitted assignee pursuant to Section 7 hereof) for so long as this Limited Guarantee shall remain in effect in accordance with Section 9 hereof.

7. NO ASSIGNMENT. Neither this Limited Guarantee nor any right or obligation hereunder may be assigned by any party (by operation of law or otherwise) without the prior written consent of the other party, except that, without the prior written consent of the Guaranteed Party, this Limited Guarantee may be assigned, in whole or in part, by the Guarantor to one or more of its Affiliates or to one or more investment funds sponsored or managed by the Guarantor or one or more of its Affiliates; provided, that any such assignment will not release the Guarantor from its obligations hereunder. Any attempted assignment in violation of this section shall be null and void.

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8. NOTICES. All notices, requests, claims, demands and other communications hereunder shall be given by the means specified in the Merger Agreement (and shall be deemed given as specified therein), as follows:

if to the Guarantor:

ZM Capital, L.P.

c/o ZM Capital Management, L.L.C.

19 West 44th Street, 18th Floor

New York, NY 10036

Attn: Andrew Vogel

Telecopy: 212-223-1384

with a copy to (which alone shall not constitute notice):

Simpson Thacher & Bartlett LLP

1999 Avenue of the Stars – 29^th Floor

Los Angeles, CA 90067

Attention: Daniel Clivner

Facsimile: (310) 407-7502

If to the Guaranteed Party, as provided in the Merger Agreement.

9. CONTINUING GUARANTEE. This Limited Guarantee may not be revoked or terminated and shall remain in full force and effect and shall be binding on the Guarantor, its successors and permitted assigns until the Obligations have been paid in full. Notwithstanding the foregoing, this Limited Guarantee shall terminate and the Guarantor shall have no further obligations under this Limited Guarantee as of the earliest of (i) the Closing in accordance with the terms of the Merger Agreement, including payment of the Merger Consideration, (ii) the valid termination of the Merger Agreement in accordance with its terms under circumstances set forth in the Merger Agreement in which Buyer would not be obligated to pay the Buyer Termination Fee, (iii) the twelve (12) month anniversary of any other termination of the Merger Agreement in accordance with its terms, except as to a claim for payment of any Obligation presented by the Company to Buyer, Merger Subsidiary or the Guarantor on or prior to such twelve (12) month anniversary; provided, that such claim shall set forth in reasonable detail the basis for such claim and the Guarantor shall not be required to pay any claim not submitted on or before the twelve (12) month anniversary of such termination of the Merger Agreement, in which case such claim shall survive until the earlier of (A) the payment or satisfaction in full of the full amount of the Obligations (as the same may be finally determined by a court of competent jurisdiction or mutually agreed by the parties) and (B) the determination by a court of competent jurisdiction that no amounts are payable hereunder, and (iv) the payment to the Guaranteed Party by any combination of Buyer and/or the Guarantor of the full amount of the

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Obligations. If any payment or payments made by Buyer or Merger Subsidiary or any part thereof, are subsequently invalidated, declared to be fraudulent or preferential, set aside or are required to be repaid to a trustee, receiver, or any other person under any bankruptcy act, state or federal law, common law or equitable cause, then to the extent of such payment or payments, the obligations or part thereof hereunder intended to be satisfied shall be revived and continued in full force and effect as if said payment or payments had not been made. Notwithstanding any other term or provision of this Limited Guarantee, in the event that the Guaranteed Party or any of its Affiliates asserts in any litigation or other proceeding that the provisions of Section 1 hereof limiting the Guarantor’s liability to the Cap or any other provisions of this Limited Guarantee are illegal, invalid or unenforceable in whole or in part, or asserting any theory of liability against the Guarantor or any Non-Recourse Party with respect to the transactions contemplated by the Merger Agreement other than liability of the Guarantor under this Limited Guarantee (as limited by the provisions of Section 1) or under the Confidentiality Agreement, then (x) the obligations of the Guarantor under this Limited Guarantee shall terminate ab initio and shall thereupon be null and void, (y) if the Guarantor has previously made any payments under this Limited Guarantee, it shall be entitled to recover such payments from the Guaranteed Party, and (z) neither the Guarantor, nor any Non-Recourse Parties shall have any liability to the Guaranteed Party or any of its Affiliates with respect to the Merger Agreement or the transactions contemplated by the Merger Agreement or under this Limited Guarantee; provided that if the Guarantor asserts in any litigation or other proceeding that this Limited Guarantee is illegal, invalid or unenforceable in whole or in part, or assets any theory of liability against the Guaranteed Party, then, to the extent the Guaranteed Party prevails in such litigation or proceeding, the Guarantor shall immediately pay on demand all reasonable fees and documented out-of-pocket expenses (including reasonable fees and expenses of counsel) of the Guaranteed Party in connection with such litigation or proceeding.

10. NO RECOURSE. Notwithstanding anything that may be expressed or implied in this Limited Guarantee or any document or instrument delivered in connection herewith, by its acceptance of the benefits of this Limited Guarantee, the Guaranteed Party covenants, agrees and acknowledges that no Person other than the Guarantor has any obligation hereunder and that, notwithstanding that the Guarantor and/or certain investment managers, managers or general partners of it or its Affiliates may be partnerships or limited liability companies, the Guaranteed Party has no right of recovery under this Limited Guarantee, or any claim based on such obligations against, and no personal liability shall attach to, the former, current or future equity holders, controlling persons, directors, officers, employees, agents, Affiliates (other than the Guarantor or any assignee under Section 7), members, managers or general or limited partners of the Guarantor or Buyer, or any former, current or future equity holder, controlling person, director, officer, employee, general or limited partner, member, manager, Affiliate (other than the Guarantor or any assignee under Section 7) or agent of any of the foregoing (collectively, each of the foregoing but not including the Buyer, the Merger Subsidiary or their respective assignees themselves, a “Non-Recourse Party”), through Buyer or otherwise, whether by or through attempted piercing of the corporate veil, by or through a claim by or on behalf of Buyer against any Non-Recourse Party, by the enforcement of any assessment or by any legal or equitable proceeding, by virtue of any statute, regulation or applicable law, or otherwise, and the Guaranteed Party further covenants, agrees and acknowledges that the only rights of recovery

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that the Guaranteed Party has in respect of the Merger Agreement or the transactions contemplated thereby against any Non-Recourse Party are its rights (i) to recover from the Guarantor (but not any Non-Recourse Party) under and to the extent expressly provided in this Limited Guarantee and subject to the Cap and the other limitations described herein and (ii) under the Confidentiality Agreement. The Guaranteed Party acknowledges and agrees that Buyer has no assets other than certain contract rights and cash in a de minimis amount and that no additional funds are expected to be contributed to Buyer unless and until the Closing occurs. Other than with respect to a claim brought under the Confidentiality Agreement, recourse against the Guarantor under and pursuant to the terms of this Limited Guarantee shall be the sole and exclusive remedy of the Guaranteed Party and all of its Affiliates against the Guarantor and the Non-Recourse Parties in respect of any liabilities or obligations arising under, or in connection with, the Merger Agreement or the transactions contemplated thereby, including by piercing of the corporate veil or a claim by or on behalf of Buyer. The Guaranteed Party hereby covenants and agrees that it shall not institute, and it shall cause its Affiliates not to institute, any proceeding or bring any other claim arising under, or in connection with, the Merger Agreement or the transactions contemplated thereby against the Guarantor or any Non-Recourse Party except for claims against the Guarantor under this Limited Guarantee and claims under the Confidentiality Agreement. Nothing set forth in this Limited Guarantee shall confer or give or shall be construed to confer or give to any Person other than the Guaranteed Party (including any Person acting in a representative capacity) any rights or remedies against any Person including the Guarantor, except as expressly set forth herein.

11. GOVERNING LAW; JURISDICTION. This Limited Guarantee shall be governed by and construed in accordance with the internal laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of laws of any jurisdictions other than those of the State of Delaware. Each of the parties to this Limited Guarantee (a) consents to submit itself to the personal jurisdiction of the Court of Chancery of the State of Delaware in any action or proceeding arising out of or relating to this Limited Guarantee, (b) agrees that all claims in respect of such action or proceeding may be heard and determined only in such court, (c) agrees that it shall not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from such court, (d) agrees not to bring any action or proceeding arising out of or relating to this Limited Guarantee in any other court, and (e) agrees that service of process upon such party in any action or proceeding shall be effective under any manner permitted under the laws of the State of Delaware. Each of the parties hereto waives any defense of inconvenient forum to the maintenance of any such action or proceeding so brought and waives any bond, surety or other security that might be required of any other party with respect thereto.

12. WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS LIMITED GUARANTEE IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS LIMITED GUARANTEE. EACH PARTY CERTIFIES AND

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ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS LIMITED GUARANTEE BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS EXPRESSED ABOVE.

13. COUNTERPARTS. This Limited Guarantee may be executed in any number of counterparts (including by facsimile and via email by .pdf delivery), each such counterpart when executed being deemed to be an original instrument, and all such counterparts shall together constitute one and the same agreement.

14. NO THIRD PARTY BENEFICIARIES. Except as provided in Section 10, the parties hereby agree that their respective representations, warranties and covenants set forth herein are solely for the benefit of the other party hereto and its successors and permitted assigns, in accordance with and subject to the terms of this Limited Guarantee, and this Limited Guarantee is not intended to, and does not, confer upon any Person other than the parties hereto and their respective successors and permitted assigns any rights or remedies hereunder, including the right to rely upon the representations and warranties set forth herein.

15. CONFIDENTIALITY. This Limited Guarantee shall be treated as confidential and is being provided to the Guaranteed Party solely in connection with the Merger. This Limited Guarantee may not be used, circulated, quoted or otherwise referred to in any document by the Guaranteed Party or its Affiliates except with the prior written consent of the Guarantor in each instance; provided that no such written consent is required for any disclosure of the existence of this Limited Guarantee to the legal, financial and accounting advisors to the Guaranteed Party, or to the extent required by applicable law, by the applicable rules of any national securities exchange, in connection with any SEC filing relating to the Merger or in connection with any litigation relating to the Merger, the Merger Agreement and the transactions contemplated thereby and hereby.

16. MISCELLANEOUS.

(a) This Limited Guarantee contains the entire agreement between the parties relative to the subject matter hereof and supersedes all prior agreements and undertakings between the parties with respect to the subject matter hereof. No amendment, modification or waiver of any provision hereof shall be enforceable unless approved by the Guaranteed Party and the Guarantor in writing.

(b) Any term or provision hereof that is prohibited or unenforceable in any situation in the agreed-upon jurisdiction shall be ineffective solely to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof; provided, however, that this Limited Guarantee may not be enforced without giving effect to the limitation of the amount payable hereunder to the Cap provided in Section 1 hereof and the provisions of Sections 9 and 10 and this Section 16(b).

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(c) When a reference is made in this Limited Guarantee to a Section, such reference shall be to a Section of this Limited Guarantee unless otherwise indicated. The headings contained in this Limited Guarantee are for reference purposes only and shall not affect in any way the meaning or interpretation of this Limited Guarantee. Whenever the words “include,” “includes” or “including” are used in this Limited Guarantee, they shall be deemed to be followed by the words “without limitation”. The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Limited Guarantee shall refer to this Limited Guarantee as a whole and not to any particular provision of this Limited Guarantee. The definitions contained in this Limited Guarantee are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term. References to a “person” will be interpreted broadly to include, without limitation, any individual, corporation, company, group, partnership, limited liability company, other entity or any governmental representative or authority, as well as such person’s permitted successors and assigns.

(d) All parties acknowledge that each party and its counsel have reviewed this Limited Guarantee and that any rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Limited Guarantee.

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the Guarantor has caused this Limited Guarantee to be duly executed and delivered as of the date first written above.

GUARANTOR:
ZM CAPITAL, L.P.
By:	ZM Capital Partners, L.L.C., its general partner

By:	/s/  Andrew Vogel
Name:	Andrew Vogel
Title:	Managing Member

[Signature Page to Limited Guarantee]

IN WITNESS WHEREOF, the Guaranteed Party has caused this Limited Guarantee to be duly executed and delivered as of the date first written above.

GUARANTEED PARTY:
ALLOY, INC.
By:	/s/  Gina DiGioia
Name:	Gina DiGioia
Title:	Secretary

[Signature Page to Limited Guarantee]

EX-99.8

Exhibit 99.8

EXECUTION VERSION

STOCKHOLDER VOTING AGREEMENT

This STOCKHOLDER VOTING AGREEMENT (this “Agreement”), is entered into as of June 23, 2010, by and among Alloy Media Holdings, L.L.C., a Delaware limited liability company (the “Buyer”), the stockholders listed on the signature pages hereto (each a “Stockholder” and collectively, the “Stockholders”), and, solely for the purposes of Section 4.4 hereof, Alloy, Inc., a Delaware corporation (the “Company”).

W I T N E S S E T H:

WHEREAS, the Buyer, Lexington Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of the Buyer (the “Merger Subsidiary”), and the Company, are entering into an Agreement and Plan of Merger, dated as of the date hereof (as it may be amended from time to time in accordance with its terms, the “Merger Agreement”), providing for, among other things, the merger of the Merger Subsidiary with and into the Company with the Company surviving the merger as a wholly owned subsidiary of the Buyer, on the terms and subject to the conditions set forth therein (capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Merger Agreement); and

WHEREAS, as of the date hereof, each Stockholder is the record and/or beneficial owner of the number of shares of Company Stock set forth on Attachment A hereto (together with any shares of Company Stock or other voting capital stock of Company acquired after the date hereof, whether upon the exercise of warrants, options, conversion of convertible securities or otherwise, collectively, the “Owned Shares”); and

WHEREAS, as a condition to the willingness of the Buyer to enter into the Merger Agreement, the Buyer has required that the Stockholders agree, and in order to induce the Buyer to enter into the Merger Agreement the Stockholders are willing, to enter into this Agreement.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration given to each party hereto, the receipt of which is hereby acknowledged, the parties agree as follows:

1. Agreement to Vote; Irrevocable Proxy; Non-Solicitation Provisions.

1.1 Agreement to Vote. Each Stockholder hereby agrees that, during the time this Agreement is in effect, at any meeting of the stockholders of the Company, however called, or any adjournment or postponement thereof, or in connection with any written consent of the stockholders of the Company, such Stockholder shall cause the Owned Shares to be counted as present for purposes of establishing a quorum and be present (in person or by proxy) and vote or consent (or cause to be voted or consented) all of its Owned Shares (i) in favor of the adoption of the Merger Agreement and any actions reasonably required in furtherance thereof and hereof and (ii) against any Company Acquisition Proposal. The Buyer acknowledges that the voting covenant set forth herein and in the proxy granted pursuant to Section 1.2 of this Agreement shall not be effective for any other purpose and each Stockholder retains the right to vote in any manner on all other matters.

1.2 Irrevocable Proxy. Solely with respect to the matters described in Section 1.1, for so long as this Agreement has not terminated in accordance with Section 5.1, each Stockholder hereby irrevocably appoints the Buyer (or any nominee of the Buyer) as the Stockholders’ lawful agent, attorney and proxy with full power of substitution and resubstitution, for and in the name, place and stead of the Stockholder, to the full extent of such Stockholder’s voting rights with respect to such Stockholder’s Owned Shares (which proxy is irrevocable and which appointment is coupled with an interest, including for purposes of Section 212 of the Delaware General Corporation Law) to vote all such Stockholder’s Owned Shares solely on the matters described in Section 1.1, and in accordance therewith. Each Stockholder represents that any proxies previously granted in respect of the Owned Shares are not irrevocable, and hereby revokes any proxies previously granted that would otherwise conflict with the proxy contemplated pursuant to this Section 1.2 and agrees to execute any further agreement or form reasonably necessary or appropriate to confirm and effectuate the grant of the proxy contained herein. The proxy granted by this Section 1.2 shall automatically terminate upon the valid termination of this Agreement in accordance with Section 5.1. Each Stockholder hereby acknowledges that the irrevocable proxy set forth in this Section 1.2 is given in connection with the execution of the Merger Agreement, and that such irrevocable proxy is given to secure the performance of the duties of such Stockholder under this Agreement. Each Stockholder hereby further acknowledges that the irrevocable proxy is coupled with an interest and may under no circumstances be revoked. Each Stockholder hereby ratifies and confirms all that such irrevocable proxy may lawfully do or cause to be done by virtue hereof. To the extent that such Stockholder is the beneficial but not the record owner of any Owned Shares, such Stockholder shall cause the record owner of any such Owned Shares to vote and grant a proxy with respect to such Owned Shares in the same manner as described above. Notwithstanding anything to the contrary contained in this Agreement, the foregoing provisions of this Section 1.2 shall not apply to Simcoe Service Company, LLC or to Simcoe Opportunity Partners, L.P., which shall, in lieu of compliance with such provisions, execute and deliver to the Buyer, or cause to be executed and delivered to the Buyer, within five business days after receipt, solely with respect to its Owned Shares as of the record date for the special meeting, any proxy card sent to the stockholders of the Company soliciting proxies with respect to the Merger Agreement, it being understood that nothing herein shall prevent Simcoe Service Company, LLC or Simcoe Opportunity Partners, L.P. from revoking such proxy card upon the termination of this Agreement.

2. Representations and Warranties of Stockholders. Each Stockholder hereby represents and warrants to the Buyer, on a several and not joint basis, as follows:

2.1 Due Organization. Such Stockholder, if a corporation or other entity, has been duly organized, is validly existing and is in good standing under the laws of the state of its formation or organization.

2.2 Power; Due Authorization; Binding Agreement. Such Stockholder has full legal capacity, power and authority to execute and deliver this Agreement, to perform his, her or its obligations hereunder and to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by such Stockholder and constitutes a valid and binding agreement of such Stockholder, enforceable against such Stockholder in accordance with its terms, except to the extent that enforceability may be subject

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to the effect of any applicable bankruptcy, reorganization, insolvency, moratorium or other similar laws affecting or relating to the enforcement of creditors rights generally and to general principles of equity.

2.3 Ownership of Shares. On the date hereof, the Owned Shares set forth opposite such Stockholder’s name on Attachment A hereto are, and any Owned Shares acquired after the date hereof will be, owned of record and/or beneficially owned by such Stockholder in the manner reflected thereon and include all of the Owned Shares owned of record and/or beneficially owned by such Stockholder. Such Stockholder has (and, with respect to shares acquired after the date hereof, will have) the sole power to vote (or cause to be voted or consents to be executed) and the sole power to dispose (or cause to be disposed), in each case with respect to all of the Owned Shares with no limitations, qualifications or restrictions on such rights, subject to (a) applicable securities laws and the terms of this Agreement and (b) if such Stockholder is a married individual and resides in a State with community property laws, the community property interest of his or her spouse to the extent applicable under such community property law, in which case such spouse has executed and delivered to the Buyer a spousal consent hereto.

2.4 No Conflicts. The execution and delivery of this Agreement by such Stockholder does not, and the performance of the terms of this Agreement by such Stockholder will not, (a) require such Stockholder to obtain a permit from, or the authorization, consent or approval of, or make any filing with or notification to, any Governmental Authority, except for any amendment required to be made to Schedule 13D as a result of this agreement, (b) require the consent or approval of any other person or entity pursuant to any agreement, obligation or instrument binding on such Stockholder or his, her or its properties and assets, (c) result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any third party right of termination, cancellation, material modification or acceleration) under any of the terms, conditions or provisions of any note, loan agreement, bond, mortgage, indenture, license, contract, commitment, arrangement, understanding, agreement or other instrument or obligation of any kind to which the Stockholder is a party or by which the Stockholder or the Owned Shares may be bound or (d) conflict with or violate any organizational document or law, rule, regulation, order, judgment or decree applicable to such Stockholder or pursuant to which any of his, her or its properties or assets are bound. The Owned Shares are not, and with respect to Owned Shares acquired after the date hereof, will not be, with respect to the voting or transfer thereof, subject to any other agreement, including any voting agreement, stockholders agreement, irrevocable proxy or voting trust that would adversely affect the ability of the Stockholder to perform its obligations hereunder.

2.5 No Encumbrances. Except as permitted by this Agreement, such Stockholder’s Owned Shares and the certificates representing such shares are now, and at all times during the term hereof will be, held by the Stockholder, or by a nominee or custodian for the benefit of the Stockholder, free and clear of all encumbrances, proxies, voting trusts or agreements, understandings or arrangements or any other rights whatsoever that would adversely affect the ability of the Stockholder to perform its obligations hereunder.

2.6 No Finder’s Fees. No broker, investment banker, financial advisor or other person is entitled to any broker’s, finder’s, financial adviser’s or other similar fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of the Stockholder.

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2.7 Reliance by Buyer. The Stockholders understand and acknowledge that Buyer and the Merger Subsidiary are entering into the Merger Agreement in reliance upon the Stockholder’s execution, delivery and performance of this Agreement.

2.8 Absence of Litigation. There are no Actions pending or, to the knowledge of the Stockholder, threatened against or affecting the Stockholder or any of its Affiliates before or by any Governmental Authority that could reasonably be expected to impair the ability of the Stockholder to perform his, her or its obligations hereunder.

3. Representations and Warranties of the Buyer. The Buyer hereby represents and warrants to the Stockholders as follows:

3.1 Power; Due Authorization; Binding Agreement. The Buyer is a limited liability company duly organized, validly existing and in good standing under the laws of its jurisdiction of formation. The Buyer has full power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation by the Buyer of the transactions contemplated hereby have been duly and validly authorized by all necessary action on the part of the Buyer, and no other proceedings on the part of the Buyer are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by the Buyer and constitutes a valid and binding agreement of the Buyer, except that enforceability may be subject to the effect of any applicable bankruptcy, reorganization, insolvency, moratorium or other similar laws affecting or relating to the enforcement of creditors rights generally and to general principles of equity.

3.2 No Conflicts. The execution and delivery of this Agreement by the Buyer does not, and the performance of the terms of this Agreement by the Buyer will not, (a) require the Buyer to obtain the consent or approval of, or make any filing with or notification to, any Governmental Authority or (b) conflict with or violate any organizational document or law, rule, regulation, order, judgment or decree applicable to the Buyer or pursuant to which any of its or its subsidiaries’ property or assets are bound.

4. Certain Covenants of the Stockholders. Each Stockholder hereby covenants and agrees with the Buyer as follows:

4.1 Restriction on Transfer. Each Stockholder hereby agrees, while this Agreement is in effect, not to, other than as may be required by a court order or as otherwise expressly contemplated by this Agreement or the Merger Agreement, (a) sell, transfer, pledge, encumber (except as set forth on Attachment A or due to this Agreement), assign or otherwise dispose of (including, without limitation, by gift, merger, consolidation or reorganization), or enter into any contract, option or other agreement providing for the sale, transfer, pledge, encumbrance, assignment or other disposition of or any interest in, or limitation on the voting rights of, or otherwise transfer (any such action, a “Transfer”) any of the Owned Shares, (b) enter

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into any contract, option or other agreement or understanding with respect to any Transfer of any or all of the Owned Shares or any interest therein, (c) grant any proxies or powers of attorney or other authorization in or with respect to the Owned Shares, deposit any Owned Shares into a voting trust or enter into a voting agreement or arrangement with respect to any Owned Shares (except as set forth on Attachment A or due to this Agreement), or (d) take any other action, that would in any way restrict, limit or interfere in any material respect with the performance of its obligations hereunder. The foregoing restrictions on Transfer shall not prohibit (i) exercise by such Stockholder of any Company Stock Options or (ii) any Transfers to any member of such Stockholder’s immediate family or for estate planning or charitable purposes or to an affiliate of such Stockholder provided the Stockholder complies with the other provisions of this Agreement and the transferee agrees to be bound by the provisions of this Agreement with respect to such transferred Owned Shares in a written instrument reasonably satisfactory to the Buyer. If any involuntary Transfer of any of the Owned Shares shall occur (including, but not limited to, a sale by a Stockholder’s trustee in any bankruptcy, or a sale to a purchaser at any creditor’s or court sale or any sale or transfer by operation of law, including, without limitation, by will or intestacy), the transferee (which term, as used herein, shall include any and all transferees and subsequent transferees of the initial transferee) shall take and hold such Owned Shares subject to all of the restrictions, liabilities and rights under this Agreement, which shall continue in full force and effect until valid termination of this Agreement.

4.2 Additional Shares. Each Stockholder hereby agrees, while this Agreement is in effect, that any shares of Company Stock acquired of record and/or beneficially by such Stockholder after the date hereof shall be subject to the terms of this Agreement as though owned by such Stockholder on the date hereof.

4.3 No Limitations on Actions. Each Stockholder signs this Agreement solely in his, her or its capacity as the record and/or beneficial owner, as applicable, of the Owned Shares; any trustee who signs this Agreement on behalf of a Stockholder that is a trust is signing only in his, her or its fiduciary capacity and not as an individual; this Agreement shall not limit or otherwise affect the actions of such Stockholder or any affiliate, employee or designee of such Stockholder or any of his, her or its affiliates in any other capacity, including such person’s capacity, if any, as an officer of the Company or a member of the board of directors of the Company; and nothing herein shall limit or affect the Company’s rights in connection with the Merger Agreement. Notwithstanding anything herein to the contrary, a Stockholder may negotiate a voting agreement with a third party that has made a Company Acquisition Proposal, but solely in circumstances where the Company is permitted to enter into discussions with such third party pursuant to Section 6.03 of the Merger Agreement, and may agree to enter into such a voting agreement but solely upon a termination of this Agreement.

4.4 No Contrary Transfer; Change in Company Stock. The Stockholder shall not request that the Company register the transfer (book-entry or otherwise) of any certificate or uncertificated interest representing any of the Owned Shares, and the Company shall not recognize any such transfer, unless such transfer is made in compliance with this Agreement. In the event of a stock dividend or distribution, or any change in the Company Stock by reason of any stock dividend, split-up, recapitalization, combination, exchange of shares or the like, the term “Owned Shares” as used in this Agreement shall refer to and include the Owned Shares as well as all such stock dividends and distributions and any shares into which or for which any or all of the Owned Shares may be changed or exchanged or which are received in such transaction.

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4.5 No Appraisal Rights. Each Stockholder hereby waives any rights of appraisal or rights to dissent from the Merger or the adoption of the Merger Agreement that such Stockholder may have under applicable law and shall not permit any such rights of appraisal or rights of dissent to be exercised with respect to any Owned Shares.

5. Miscellaneous.

5.1 Termination of this Agreement. This Agreement shall terminate upon the earliest to occur of (i) the Effective Time and (ii) the termination of the Merger Agreement by any party thereto in accordance with its terms. In addition, the Stockholders may terminate this agreement (as to such Stockholder) upon written notice to the Company and the Buyer within 5 Business Days following any amendment to the Merger Agreement that (i) decreases the amount of Merger Consideration which such Stockholder shall have the right to receive in the Merger or (ii) changes any of the Merger Consideration from cash to non-cash consideration.

5.2 Effect of Termination. In the event of termination of this Agreement pursuant to Section 5.1, this Agreement shall become void and of no effect with no liability on the part of any party hereto; provided, however, no such termination shall relieve any party hereto from any liability for any willful breach of this Agreement occurring prior to such termination; and provided, further, that upon payment of any termination fee pursuant to Section 11.04(b)(i) of the Merger Agreement no Stockholder shall have any further liability with respect to this Agreement or the transactions contemplated hereby.

5.3 Non-Survival. The representations and warranties made herein shall not survive the termination of this Agreement.

5.4 Entire Agreement; Assignment. This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all other prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof. Nothing in this Agreement, express or implied, is intended to or shall confer upon any other person or entity not a party hereto any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. This Agreement shall not be assigned by operation of law or otherwise without the prior written consent of the parties and shall be binding upon and inure solely to the benefit of each party hereto.

5.5 Amendments. This Agreement may not be amended, altered, supplemented, waived or otherwise modified except upon the execution and delivery of a written agreement executed by each of the parties hereto.

5.6 Notices. Any notice, request, claim, demand and other communication required to be given hereunder shall be in writing, and sent by facsimile transmission (provided that any notice received by facsimile transmission or otherwise at the addressee’s location on any Business Day after 5:00 p.m. (addressee’s local time) shall be deemed to have been received at 9:00 a.m. (addressee’s local time) on the next Business Day), by reliable overnight delivery service (with proof of service), hand delivery or certified or registered mail (return receipt requested and first-class postage prepaid), addressed as follows:

If to the Stockholders: to the respective addresses and fax numbers shown on the signature pages for each Stockholder.

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If to the Buyer:

Alloy Media Holdings, L.L.C.

c/o ZM Capital Management, L.L.C.

19 West 44^th Street, 18^th Floor

New York, NY 10036

Attn: Andrew Vogel

Fax: (212) 223-1384

with copy to:

Simpson Thacher & Bartlett LLP

1999 Avenue of the Stars – 29^th Floor

Los Angeles, CA 90067

Attn: Daniel Clivner

Fax: (310) 407-7502

or to such other address as any party shall specify by written notice so given, and such notice shall be deemed to have been delivered as of the date so telecommunicated, personally delivered or received. Any party to this Agreement may notify any other party of any changes to the address or any of the other details specified in this paragraph; provided, however, that such notification shall only be effective on the date specified in such notice or two Business Days after the notice is given, whichever is later. Rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was given shall be deemed to be receipt of the notice as of the date of such rejection, refusal or inability to deliver.

5.7 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to conflicts of laws principles that would result in the application of the law of any other state. Each of the parties to this Agreement (a) consents to submit itself to the personal jurisdiction of the Court of Chancery of the State of Delaware in any action or proceeding arising out of or relating to this Agreement or any of the transactions contemplated by this Agreement, (b) agrees that all claims in respect of such action or proceeding may be heard and determined only in such court, (c) agrees that it shall not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from such court, and (d) agrees not to bring any action or proceeding arising out of or relating to this Agreement or any of the transactions contemplated by this Agreement in any other court. Each of the parties hereto waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety or other security that might be required of any other party with respect thereto. To the fullest extent permitted by law, any party hereto may make service on another party by sending or delivering a copy of the process to the party to be served at the address and in the manner provided for the giving of notices in Section 5.6. Nothing in this Section 5.7, however, shall affect the right of any party to serve legal process in any other manner permitted by law.

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5.8 Specific Performance. The parties agree that irreparable damage would occur in the event that any covenant, obligation or agreement set forth in this Agreement were not performed in accordance with its specific terms or were otherwise breached. Each Stockholder agrees that, in the event of any breach by such Stockholder of any covenant, obligation or agreement contained in this Agreement, such failure to perform or breach will cause the Buyer to sustain damages for which it would not have an adequate remedy at law for money damages, and thus the Buyer shall be entitled (in addition to any other remedy that may be available to it, including monetary damages) to (a) a decree or order of specific performance to enforce the observance and performance of such covenant or agreement, and (b) an injunction restraining such breach. Each Stockholder further agrees that neither the Buyer nor any other person or entity shall be required to obtain, furnish or post any bond or similar instrument in connection with or as a condition to obtaining any remedy referred to in this Section 5.8, and each Stockholder irrevocably waives any right it may have to require the obtaining, furnishing or posting of any such bond or similar instrument.

5.9 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties hereto and delivered to the other parties, it being understood that all parties need not sign the same counterpart. This Agreement may be executed and delivered by facsimile transmission.

5.10 Descriptive Headings. The descriptive headings used 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.

5.11 Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. If the final judgment of a court of competent jurisdiction declares that any term or provision hereof is invalid or unenforceable, the parties hereto agree that the court making such determination shall have the power to limit the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified. In the event such court does not exercise the power granted to it in the prior sentence, the parties hereto agree to replace such invalid or unenforceable term or provision with a valid and enforceable term or provision that will achieve, to the extent possible, the economic, business and other purposes of such invalid or unenforceable term.

5.12 No Obligation to Exercise Options. Notwithstanding any provision in this Agreement to the contrary, nothing in this Agreement shall obligate any Stockholder to exercise any Company Stock Option or other right to acquire shares of Company Stock.

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5.13 Further Assurances. From time to time, at the other party’s request and without further consideration, each party hereto shall execute and deliver such additional documents and take all such further lawful action as may be necessary to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement.

5.14 Remedies Cumulative. All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party.

5.15 No Waiver. The failure of any party hereto to exercise any right, power or remedy provided under this Agreement or otherwise available in respect hereof at law or in equity, or to insist upon compliance by any other party hereto with its obligations hereunder, and any custom or practice of the parties at variance with the terms hereof, shall not constitute a waiver by such party of its right to exercise any such or other right, power or remedy or to demand such compliance.

5.16 No Third Party Beneficiaries. This Agreement is not intended to be for the benefit of, and shall not be enforceable by, any person or entity who or which is not a party hereto.

5.17 Binding Agreement. This Agreement and the obligations hereunder shall attach to the Owned Shares and shall be binding upon any person or entity to which legal or beneficial ownership of the Owned Shares shall pass, whether by operation of law or otherwise, including, without limitation, the Stockholder’s administrators or successors. Notwithstanding any transfer of Owned Shares, the transferor shall remain liable for the performance of all obligations of the transferor under this Agreement.

5.18 Fees and Expenses. Except as otherwise expressly set forth in this Agreement, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring the cost or expense whether or not the Merger is consummated.

5.19 Independent Nature of Stockholders’ Obligations. Notwithstanding anything to the contrary contained herein, the representations, warranties, covenants and agreements of each Stockholder under this Agreement are several and not joint with those of any other Stockholder, and no Stockholder shall be responsible in any way for any of the representations, warranties, covenants or agreements of any other Stockholder hereunder. Nothing contained herein, and no action taken by any Stockholder pursuant thereto, shall be deemed to constitute the Stockholders as a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption that the Stockholders are in any way acting in concert or as a group. Notwithstanding anything to the contrary contained herein, nothing contained in this Agreement shall prevent Simcoe Service Company, LLC or Simcoe Opportunity Partners, L.P. from Transferring any of its Owned Shares at any time or from time to time after the date hereof other than in compliance with Section 4.1, and this Agreement shall not apply to any such Owned Shares Transferred by Simcoe Service Company, LLC or Simcoe Opportunity Partners, L.P.

[REMAINDER OF PAGE INTENTIONALLY BLANK]

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IN WITNESS WHEREOF, the parties hereto have caused this Stockholder Voting Agreement to be duly executed as of the day and year first above written.

ALLOY MEDIA HOLDINGS, L.L.C.
By:	/s/  Andrew Vogel
Name:	Andrew Vogel
Title:	Vice President and Secretary

[Signature Page to Stockholder Voting Agreement]

/s/  Matthew C. Diamond
MATTHEW C. DIAMOND
Address:	c/o   Alloy, 151 W. 26th St.,
NY NY 10001

Fax: 212 244 4311

[Signature Page to Stockholder Voting Agreement]

/s/  James K. Johnson, Jr.
JAMES K. JOHNSON, JR.
Address:	c/o  Alloy, Inc.
151 W. 26th St. NY, NY 10001

Fax: 212-244-4311

[Signature Page to Stockholder Voting Agreement]

SIMCOE PARTNERS, L.P.
Address:	110 East 42nd Street, Suite 1100 New York, New York 10017 Attn: Jeffrey Jacobowitz

By:	Simcoe Management Company, LLC, its general partner
By:	/s/  Jeffrey Jacobowitz
Name:	Jeffrey Jacobowitz
Title:	Manager

[Signature Page to Stockholder Voting Agreement]

SIMCOE SERVICE COMPANY, LLC
Address:	c/o Simcoe Partners, L.P. 110 East 42nd Street, Suite 1100 New York, New York 10017
	Attn: Jeffrey Jacobowitz

By:	/s/  Jeffrey Jacobowitz
Name:	Jeffrey Jacobowitz
Title:	Manager

[Signature Page to Stockholder Voting Agreement]

SIMCOE OPPORTUNITY PARTNERS, L.P.
By:	Simcoe Management Company, LLC, its general partner

By:	/s/  Jeffrey Jacobowitz
Name:	Jeffrey Jacobowitz
Title:	Manager

Address:	110 East 42nd St., Suite 1100
	New York, NY 10017

Fax: 212-401-4756

[Signature Page to Stockholder Voting Agreement]

/s/  Jeffrey Jacobowitz
JEFFREY JACOBOWITZ
Address:	110 East 42nd St., Suite 1100
	New York, NY 10017

Fax: 212-401-4756

[Signature Page to Stockholder Voting Agreement]

SRB MANAGEMENT, L.P.
By:	BC Advisors, LLC, its general partner

By:	/s/   Steven Becker
Name:	Steven Becker
Title:	Member

Address: 300 Crescent Court, Suite 1111 Dallas, TX 75201

Fax: 214-756-6079

[Signature Page to Stockholder Voting Agreement]

BD MEDIA INVESTORS LP
By:	SRB Management, L.P., its general partner
By:	BC Advisors, LLC, its general partner

By:	/s/   Steven Becker
Name:	Steven Becker
Title:	Member

Address: 300 Crescent Court, Suite 1111 Dallas, TX 75201

Fax: 214-756-6079

[Signature Page to Stockholder Voting Agreement]

SRB GREENWAY OPPORTUNITY FUND, (QP), L.P.
By:	SRB Management, L.P., its general partner
By:	BC Advisors, LLC, its general partner

By:	/s/ Steven Becker
Name:	Steven Becker
Title:	Member

Address:	300 Crescent Court, Suite 1111
	Dallas, TX 75201

Fax: 214-756-6079

[Signature Page to Stockholder Voting Agreement]

SRB GREENWAY OPPORTUNITY FUND, L.P.
By:	SRB Management, L.P., its general partner
By:	BC Advisors, LLC, its general partner

By:	/s/ Steven Becker
Name:	Steven Becker
Title:	Member

Address:	300 Crescent Court, Suite 1111
	Dallas, TX 75201

Fax: 214-756-6079

[Signature Page to Stockholder Voting Agreement]

BC ADVISORS, LLC
By:	/s/ Steven Becker
Name:	Steven Becker
Title:	Member

Address:	300 Crescent Court, Suite 1111
	Dallas, TX 75201

Fax: 214-756-6079

[Signature Page to Stockholder Voting Agreement]

/s/ Steven R. Becker

STEVEN R. BECKER

Address:	300 Crescent Court, Suite 1111
	Dallas, TX 75201

Fax: 214-756-6079

[Signature Page to Stockholder Voting Agreement]

/s/ Matthew A. Drapkin
MATTHEW A. DRAPKIN
Address:	152 W. 57 Street, 35th Floor
	New York NY 10019

Fax: 214-765-6079

[Signature Page to Stockholder Voting Agreement]

ALLOY, INC. (solely for purposes of Section 4.4)
By:	/s/ Gina DiGioia
Name:	Gina DiGioia
Title:	Secretary

[Signature Page to Stockholder Voting Agreement]

ATTACHMENT A

Details of Ownership:

Shares	Entity or Individual Name
824,187	Matthew C. Diamond
750,566	James K. Johnson, Jr.
420,000	Simcoe Opportunity Partners, L.P.
202,250	Simcoe Partners, L.P.
27,750	Simcoe Service Company, LLC
4,635	Jeffrey Jacobowitz
678,537	BD Media Investors LP
264,369	SRB Greenway Opportunity Fund (QP), L.P.
32,214	SRB Greenway Opportunity Fund, L.P.
4,635	Matthew A. Drapkin

Scheduled Voting Agreements:

That Agreement, dated as of April 15, 2010, by and among Alloy, Inc., Matthew A. Drapkin and the other individuals and entities signatories thereto.

That Agreement, dated as of April 15, 2010, by and among Alloy, Inc., Jeffrey Jacobowitz and the other individuals and entities signatories hereto

EX-99.9

Exhibit 99.9

EXECUTION COPY

TERMINATION AGREEMENT

This TERMINATION AGREEMENT (this “Agreement”) is entered into as of June 23, 2010, by and among Alloy, Inc., a Delaware corporation (the “Company”), and the individuals and entities listed on the signature pages hereto (collectively, the “Stockholders”).

RECITALS

A. The Stockholders, the Company and the other parties thereto are parties to that certain Agreement, dated as of April 15, 2010 (the “Stockholders Agreement”).

B. The Company has entered into an Agreement and Plan of Merger, dated as of the date hereof (as it may be amended from time to time, the “Merger Agreement”), by and among Alloy Media Holdings, L.L.C., a Delaware limited liability company (“Parent”), Lexington Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of Parent (“Merger Sub”) and the Company, pursuant to which Merger Sub will be merged with and into the Company (the “Merger”) and the Company shall continue as the surviving entity following the Merger.

C. The Stockholders, the Company and the other parties thereto desire to terminate the Stockholders Agreement upon the effectiveness of the Merger (the “Effective Time”).

D. The Stockholders desire to enter into that Voting Agreement by and among Alloy Media Holdings, L.L.C., a Delaware limited liability company, the Stockholders, and, solely for the purposes of Section 4.4 of that Voting Agreement, the Company (the “Voting Agreement”).

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Termination of Stockholders Agreement. The Stockholders, the Company and the other parties thereto hereby agree to terminate the Stockholders Agreement, including any and all annexes or exhibits thereto, as of the Effective Time. The provisions of the Stockholders Agreement shall not survive its termination, and shall have no further force from and after the Effective Date, nor shall any party to the Stockholders Agreement have any surviving obligations, rights or duties thereunder.

2. Waiver of Voting Restrictions. Notwithstanding anything to the contrary contained in Section 5(b) of the Stockholders Agreement, the Stockholders may enter into the Voting Agreement and such entry will not constitute a breach of the Stockholders Agreement.

3. Amendments. No amendment, change, modification or termination of this Agreement or any part hereof shall be effective or binding unless made in writing and signed by each party hereto.

4. Severability. Should any provision of this Agreement be declared or be determined to be illegal, invalid or otherwise unenforceable, the validity of the remaining parts, terms and provisions hereof will not be affected thereby but such will remain valid and enforceable, and said illegal or invalid parts, terms or provisions shall be deemed not to be a part of this Agreement.

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5. Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns.

6. Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, and all of which when taken together shall constitute one and the same instrument as if the parties hereto had executed the same instrument.

7. Entire Agreement. This Agreement constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes any and all prior agreements, understandings and representations, whether written or oral, related to the subject matter hereof.

8. Governing Law. This Agreement shall be governed in all respects, including validity, interpretation and effect, by the laws of the State of Delaware applicable to contracts executed and to be performed wholly within such state, without giving effect to the choice of law principles of such state.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the date first above written.

ALLOY, INC.
By:	/s/ Gina DiGioia
Name:	Gina DiGioia
Title:	Secretary

Signature Page to Termination Agreement

SRB MANAGEMENT, L.P.
	By:	BC Advisors, LLC, its general partner
		By:	/s/ Steven Becker
		Name:	Steven Becker
		Title:	Member
BD MEDIA INVESTORS LP
	By:	SRB Management, L.P., its general partner
		By:	BC Advisors, LLC, its general partner
			By:	/s/ Steven Becker
			Name:	Steven Becker
			Title:	Member
SRB GREENWAY OPPORTUNITY FUND, (QP), L.P.
	By:	SRB Management, L.P., its general partner
		By:	BC Advisors, LLC, its general partner
			By:	/s/ Steven Becker
			Name:	Steven Becker
			Title:	Member
SRB GREENWAY OPPORTUNITY FUND, L.P.
	By:	SRB Management, L.P., its general partner
		By:	BC Advisors, LLC, its general partner
			By:	/s/ Steven Becker
			Name:	Steven Becker
			Title:	Member

Signature Page to Termination Agreement

BC ADVISORS, LLC
By:	/s/ Steven Becker
Name:	Steven Becker
Title:	Member
STEVEN R. BECKER
/s/ Steven R. Becker
MATTHEW A. DRAPKIN
/s/ Matthew A. Drapkin

Signature Page to Termination Agreement

EX-99.10

Exhibit 99.10

EXECUTION COPY

TERMINATION AGREEMENT

This TERMINATION AGREEMENT (this “Agreement”) is entered into as of June 23, 2010, by and among Alloy, Inc., a Delaware corporation (the “Company”), and the individuals and entities listed on the signature pages hereto (collectively, the “Stockholders”).

RECITALS

A. The Stockholders, the Company and the other parties thereto are parties to that certain Agreement, dated as of April 15, 2010 (the “Stockholders Agreement”).

B. The Company has entered into an Agreement and Plan of Merger, dated as of the date hereof (as it may be amended from time to time, the “Merger Agreement”), by and among Alloy Media Holdings, L.L.C., a Delaware limited liability company (“Parent”), Lexington Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of Parent (“Merger Sub”) and the Company, pursuant to which Merger Sub will be merged with and into the Company (the “Merger”) and the Company shall continue as the surviving entity following the Merger.

C. The Stockholders, the Company and the other parties thereto desire to terminate the Stockholders Agreement upon the effectiveness of the Merger (the “Effective Time”).

D. The Stockholders desire to enter into that Voting Agreement by and among Alloy Media Holdings, L.L.C., a Delaware limited liability company, the Stockholders, and, solely for the purposes of Section 4.4 of that Voting Agreement, the Company (the “Voting Agreement”).

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Termination of Stockholders Agreement. The Stockholders, the Company and the other parties thereto hereby agree to terminate the Stockholders Agreement, including any and all annexes or exhibits thereto, as of the Effective Time. The provisions of the Stockholders Agreement shall not survive its termination, and shall have no further force from and after the Effective Date, nor shall any party to the Stockholders Agreement have any surviving obligations, rights or duties thereunder.

2. Waiver of Voting Restrictions. Notwithstanding anything to the contrary contained in Section 5(b) of the Stockholders Agreement, the Stockholders may enter into the Voting Agreement and such entry will not constitute a breach of the Stockholders Agreement.

3. Amendments. No amendment, change, modification or termination of this Agreement or any part hereof shall be effective or binding unless made in writing and signed by each party hereto.

4. Severability. Should any provision of this Agreement be declared or be determined to be illegal, invalid or otherwise unenforceable, the validity of the remaining parts, terms and provisions hereof will not be affected thereby but such will remain valid and enforceable, and said illegal or invalid parts, terms or provisions shall be deemed not to be a part of this Agreement.

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5. Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns.

6. Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, and all of which when taken together shall constitute one and the same instrument as if the parties hereto had executed the same instrument.

7. Entire Agreement. This Agreement constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes any and all prior agreements, understandings and representations, whether written or oral, related to the subject matter hereof.

8. Governing Law. This Agreement shall be governed in all respects, including validity, interpretation and effect, by the laws of the State of Delaware applicable to contracts executed and to be performed wholly within such state, without giving effect to the choice of law principles of such state.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the date first above written.

ALLOY, INC.
By:	/s/ Gina DiGioia
Name:	Gina DiGioia
Title:	Secretary

Signature Page to Termination Agreement

SIMCOE PARTNERS, L.P.
By:	Simcoe Management Company, LLC, its general partner
	By:	/s/ Jeffrey Jacobowitz
	Name:	Jeffrey Jacobowitz
	Title:	Manager
SIMCOE OPPORTUNITY PARTNERS, L.P.
By:	Simcoe Management Company, LLC, its general partner
	By:	/s/ Jeffrey Jacobowitz
	Name:	Jeffrey Jacobowitz
	Title:	Manager
SIMCOE SERVICE COMPANY, LLC
By:	/s/ Jeffrey Jacobowitz
Name:	Jeffrey Jacobowitz
Title:	Manager
SIMCOE MANAGEMENT COMPANY, LLC
By:	/s/ Jeffrey Jacobowitz
Name:	Jeffrey Jacobowitz
Title:	Manager
JEFFREY JACOBOWITZ
/s/ Jeffrey Jacobowitz

Signature Page to Termination Agreement

EX-99.11

Exhibit 99.11

Execution Version

PROJECT LEXINGTON

SUMMARY OF EMPLOYMENT AND EQUITY TERMS

MATTHEW C. DIAMOND (PRESIDENT & CEO)

GENERAL TERMS
Term	•       Three years (the “Initial Term”). •       Automatic one year renewals unless one party gives the other 90 days notice of non-renewal.
Title and Duties	President and CEO. Senior-most officer of Alloy, Inc. (the “Company”), reporting solely to the Board of Directors (the “Board”) of the Company or, in the event the Board creates the position of executive chair and such position is held by Strauss Zelnick or Geraldine Laybourne (in either case, the “Executive Chair”), to the Executive Chair. Responsibilities, duties and authorities commensurate with position of presidents and CEOs customarily exercised by a person holding such position in a company of the size and nature of the Company. Member of the Board of the Company.1
Base Salary	$600,000 subject to annual review by the Board for potential increases (but not decreases).

¹ If ZM not investing directly in the Company, “Board” will be the board of directors of the top-level holding company through which ZM invests, management’s equity will be in such holding company and such holding company will guarantee obligations of the Company under the employment agreement.

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Bonus Opportunity	Target: $350,000 as long as Budget (EBITDA less capital expenditures) is at least $7.5 million. Otherwise ZM and Executive will set a lower target in good faith, but not lower than $125,000. 50% of target bonus for achieving 90% of Budget; 100% of target bonus for achieving 100% of Budget (pro rata sliding scale in between 90% and 100%); additional bonus of 4% of incremental EBITDA less capital expenditures over Budget with a maximum amount of $500,000 for such additional bonus. Notwithstanding the foregoing, Executive’s 2010 bonus will be calculated and paid in accordance with the Company’s bonus plan currently applicable to Executive and with the Company’s past practices with respect to Executive. Pursuant to such 2010 plan, Executive is eligible to receive between 75% and 150% of his base salary for 2010 (at the rate in effect prior to the commencement of the Initial Term, i.e., $450,000, which is hereafter referred to as the “Old Base Salary”) as a bonus, with the bonus paid being equal to the midpoint of such bonus range (i.e., 112.5% of the Old Base Salary) if actual performance is equal to the average of 2009 EBITDA and 2010 Board budget, in each case, after Frontline adjustment (with such average, which is hereafter referred to as the “Average Adjusted EBITDA” being equal to the amount set forth on Schedule A hereto). The actual bonus payable to Executive will increase (up to a maximum of 150% of the Old Base Salary) or decrease (down to a minimum of 75% of the Old Base Salary, below which no bonus will be paid) from the midpoint, in each case proportionally based on actual performance above or below Average Adjusted EBITDA. For purposes of determining the level of achievement of the applicable performance goals, EBITDA will be calculated on a consistent basis with the 2010 Board budget and such calculation will exclude any impact upon EBITDA resulting from the consummation of the transactions contemplated by the Agreement and Plan of Merger by and among the Company, Alloy Media Holdings, L.L.C. and Lexington Merger Sub Inc.
M&A Bonus	Bonus of between $250,000 to $1 million for sales of non-core assets (which sales occur after the closing of ZM’s acquisition of the Company) for realized after-tax cash proceeds to Company of between $12.6 million and $46.3 million (bonus amount for performance between such amounts determined by linear interpolation); subject to Executive’s continued employment at such time; provided, that the bonus shall also be payable if Executive is terminated without Cause or quits for Good Reason prior to the third anniversary of the closing of ZM’s investment in the Company. Subject to IRC Section 409A, such bonus may accrue if (i) the Company is in default under its credit agreement or (ii) the payment of such bonus would cause or would be reasonably expected to cause (A) the Company to be in default under its credit agreement, or (B) a liquidity issue for the Company, and will become payable at such time as the Board determines in good faith that such circumstance no longer exists. The bonus will accrue with interest compounded annually at the prime rate reported by the Wall Street Journal.
Exit Bonus	$1 million profits interest award that will vest if ZM achieves 2.5x cash on cash return on ZM’s cash investment (calculated after giving effect to such distribution) and structured as “profits interest” for partnership purposes, which is granted at closing of ZM’s acquisition, subject to Executive’s continued employment at such time or if Executive is terminated without Cause or quits for Good Reason within 18 months prior to the date of such achievement.

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EQUITY COMPENSATION
Equity Grants	•       Grant 11% of the fully diluted equity of the Company as options, profits interests or equivalent equity instruments (the “Company Equity”) as determined by the Board or the Compensation Committee of the Board (to the extent such committee is formed), with recommendations from Executive and James Johnson for amount of equity to be granted to each other member of the management team. The Company Equity will have an exercise price or threshold equity value equal to fair market value on the date of grant and with such other terms to be determined in accordance with this term sheet. Company Equity arrangement will provide for customary adjustments in the event of capital changes of the Company and its affiliates. Executive’s Allocation: •       Grant 3.5% of the equity to Executive as Company Equity; 50% will be time-based vesting and 50% will be performance-based vesting.
Vesting2	Time-based Company Equity: •       3 years (1/3 on each anniversary of the grant date). •       Fully vest upon a change of control. Performance-based Company Equity: •       If change of control occurs before the third anniversary of the closing, the Company Equity will vest upon achievement of a 25% IRR on ZM’s cash investment; if change of control occurs after the third anniversary, the Company Equity vests upon achievement of a 2.0x cash on cash return on ZM’s cash investment (all calculated after giving effect to the vesting) (the “Performance Goal”).
Vesting (Termination w/o Cause or quit for Good Reason)	Time-based Company Equity: •       Fully vest upon termination without Cause or Executive quits for Good Reason Performance-based Company Equity: •       Will vest after Executive’s termination without Cause or Executive quits for Good Reason only if the Performance Goal is achieved.
Life of Company Equity (if options)	•       10 years.
Exercisable after Termination (if options)	Vested Company Equity shall (to the extent applicable): •       remain exercisable for 12 months following termination for death or disability; •       not remain exercisable following termination for Cause; or •       remain exercisable for 3 months following termination for any other reason.

² If equity is structured as options, Executive will have the ability to net exercise options.

3

Additional Equity	$3 million additional pool of equity for key employees once ZM achieves a 5x cash on cash return on its cash investment, subject to the key employee’s continued employment with the Company at such time or if the key employee is terminated without cause (or, if applicable, quits for good reason) within the 6 month period prior to the date of such achievement. Executive and James Johnson may recommend employee allocations to the Board, which may include allocations to Executive and Mr. Johnson, to be determined by the Board or the Compensation Committee (to the extent such committee is formed) at such time.
Rollover	Executive will exchange at least 470,007 shares of common stock of the Company held by Executive immediately prior to the transaction (the “Rollover Equity”), into fully vested and nonforfeitable equity of the Company on the same basis and on the same terms and conditions as ZM subject to the Management Stockholders Agreement described below. Such investment will be structured as a tax-free rollover to the extent possible.3
Management Stockholders Agreement	All Company Equity and Rollover Equity issued to or held by Executive, including, if applicable, any shares held following the exercise of any option (the “Management Shares”) will be subject to a Management Stockholders Agreement, which will provide for call rights, tag-along rights, drag-along rights, pre-emptive rights (on Rollover Equity only) and customary registration rights and restrictions on affiliate transactions (it being understood that (i) the Management Stockholders Agreement shall permit the Executive to transfer Company Equity and Rollover Equity for estate planning purposes and (ii) subject to customary exceptions, no other investor in the Company shall be entitled to greater minority shareholder protections (e.g., tag-along rights, registration rights) than the protections provided to the Executive in the Management Stockholders Agreement.
SEVERANCE BENEFITS
Severance for termination without Cause or by Executive with Good Reason	•       Severance equal to (i) 100% of base salary paid over the 12 month period following the date of termination, plus (ii) the bonus paid to Executive for the year prior to the year of termination (the “Severance Payments”); •       Accrued Rights4; •       Company-paid health care coverage for 12 months; and •       No duty to mitigate; no offset. If there is a change of control of the Company such that the Performance Goal for the performance-based Company Equity is achieved and all Company Equity fully vests, then only the Accrued Rights will be payable upon a termination without Cause or for Good Reason following such change in control.

³ Executive should review rollover structure with his own tax advisor to understand the tax consequences of such rollover.

⁴ “Accrued Rights” means the portion of base salary as accrued prior to the date of termination and that has not yet been paid, any bonus or incentive compensation for any completed performance period that has been earned but has not yet been paid, an amount equal to the value of accrued, but unused and unpaid time off (calculated at the base salary amount), accrued benefits under any Company employee benefits plan and the amount of any expenses properly incurred by executive on behalf of the Company prior to the termination date and not yet reimbursed.

4

Definition of “Good Reason” “Good Reason” means the occurrence of any of the following, without Executive’s prior written consent:   (i) the Company’s failure to employ Executive in his current position or a substantially similar position, without regard to title, such that his duties and responsibilities are materially diminished without his consent; provided, that his duties, authority or responsibilities shall not be 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;   (ii) a material diminution in Executive’s authority, duties or responsibilities either directly or indirectly by requiring him to report to anyone other than the Board or the Executive Chair of the Board, as applicable;   (iii) a material reduction in Executive’s base salary without his consent;   (iv) Executive being required to relocate to a principal place of employment more than 50 miles from his principal place of employment with the Company in New York, New York; or   (v) any action or inaction by the Company that constitutes a material breach of his employment agreement.   Executive is required to provide notice of any such condition to the Board within 15 days of the initial occurrence of the condition, and the Company will then have 30 days to cure. Executive’s termination for Good Reason must occur within 180 days following the initial existence of one or more of the conditions set forth above.

5

Definition of “Cause”

“Cause” means: (i) Executive’s indictment for a felony, either in connection with the performance of his duties or which otherwise adversely affects the business activities, reputation, goodwill or image of the Company; (ii) willful gross neglect or willful malfeasance by Executive in the performance of his duties under the employment agreement; (iii) willful failure to substantially perform assigned duties other than due to disability; (iv) Executive’s breach in any material respect of his employment agreement or any applicable non-competition and confidentiality agreement, which breach is not cured within any applicable cure period; or (v) Executive repeatedly (i.e. on more than one occasion) being under the influence of drugs or alcohol (other than over-the-counter or prescription medicine or other medically-related drugs to the extent they are taken in accordance with their directions or under the supervision of a physician) during the performance of Executive’s duties to the Company or any of its subsidiaries, or, while under the influence of such drugs or alcohol, engaging in grossly inappropriate conduct during the performance of Executive’s duties to the Company. Notwithstanding any other provision to the contrary, if Executive’s employment is terminated for Cause due to indictment for a felony but thereafter said indictment is dismissed or Executive is acquitted by a court of law, then promptly following such acquittal or dismissal, Executive shall be entitled to receive all of the payments and benefits Executive is entitled to receive hereunder upon a termination by the Company without Cause, other than the Severance Payments. For purposes of determining whether any conduct constitutes willful gross neglect or willful 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 a determination that Cause exists is made and approved by a majority of the members of the Board other than Executive.

Release of Claims; Compliance with Restrictive Covenants

Executive’s entitlement to severance (excluding Accrued Rights) is conditioned upon (i) the execution (and non-revocation) of a release of claims in favor of the Company (in a form attached to the employment agreement) within 45 days following the date of termination, and (ii) Executive’s continued compliance with the restrictive covenants. No severance payments will commence until at least the 46th day following termination.

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280G Provision	In the event that severance and other payments and benefits provided to Executive constitute “parachute payments” within the meaning of IRC Section 280G of the tax code and would be subject to the excise tax imposed by the tax code, then such benefits will either be delivered in full or reduced to the amount that would not trigger the excise tax, whichever results in Executive receiving the greatest amount of benefits on an after-tax basis. In addition, subject to Executive’s cooperation, the Company shall use commercially reasonable efforts to seek equity holder approval that satisfies the requirements of IRC Section 280G(b)(5)(B) of the severance and other benefits that would, but for such approval, be treated as “parachute payments” such that, to the extent such amounts are approved by the equity holders of the Company, Executive would not be subject to the excise tax.
TERMINATION BY REASON OF DEATH OR DISABILITY
Benefits	•       Accrued Rights plus an amount equal to the pro-rata bonus for the year in which such termination occurs.
TERMINATION FOR CAUSE OR RESIGNATION WITHOUT GOOD REASON
Benefits	•       Accrued Rights.
OTHER BENEFITS5
Vacation	Executive will be entitled to paid time off 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 time off in each fiscal 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.
Attorney’s Fees	The Company shall reimburse to Executive, or pay directly, upon submission to the Company of a statement for services providing a general description of services (which may be redacted to preserve attorney-client privilege) and a breakdown of hours and fees by lawyer, the amount payable by Executive to an attorney of Executive’s choice that Executive has retained to advise Executive with regard to the negotiation and execution of this term sheet, the employment agreement and all other related agreements; provided, however, that (i) the fees charged by such attorney are computed at such attorney’s standard hourly rates, and (ii) such reimbursement or payment shall not exceed, in the aggregate, $25,000.
RESTRICTIVE COVENANTS
Confidentiality	Perpetual.
Ownership of IP	Work product belongs to the Company.
Non-competition and non-solicitation	1 year non-compete and a 1 year employee and customer non-solicit provision post-termination.

⁵ Fringe benefits, reimbursement of business expenses, indemnification and D&O insurance (which is at least as favorable as the D&O insurance covering ZM) will be addressed in the employment agreement on terms substantially similar to what Executive is currently entitled.

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CHOICE OF LAW, VENUE AND SECTION 409A
Choice of Law & Venue	New York law governs employment agreement and disputes will be brought in federal district court located in New York City.
Section 409A	The definitive employment agreement and other arrangements referenced herein will include provisions required to comply with Section 409A of the tax code.

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EX-99.12

Exhibit 99.12

Execution Version

PROJECT LEXINGTON

SUMMARY OF EMPLOYMENT AND EQUITY TERMS

JAMES K. JOHNSON, JR. (CHIEF OPERATING OFFICER)

GENERAL TERMS
Term	•        Three years (the “Initial Term”). •        Automatic one year renewals unless one party gives the other 90 days notice of non-renewal.
Title and Duties	Chief Operating Officer. A senior officer of Alloy, Inc. (the “Company”), reporting solely to the Board of Directors (the “Board”) of the Company or, in the event the Board creates the position of executive chair and such position is held by Strauss Zelnick or Geraldine Laybourne (in either case, the “Executive Chair”), to the Executive Chair. Responsibilities, duties and authorities commensurate with position of chief operating officers customarily exercised by a person holding such position in a company of the size and nature of the Company. Member of the Board of the Company.1
Base Salary	$600,000 subject to annual review by the Board for potential increases (but not decreases).

¹ If ZM not investing directly in the Company, “Board” will be the board of directors of the top-level holding company through which ZM invests, management’s equity will be in such holding company and such holding company will guarantee obligations of the Company under the employment agreement.

1

Bonus Opportunity	Target: $350,000 as long as Budget (EBITDA less capital expenditures) is at least $7.5 million. Otherwise ZM and Executive will set a lower target in good faith, but not lower than $125,000. 50% of target bonus for achieving 90% of Budget; 100% of target bonus for achieving 100% of Budget (pro rata sliding scale in between 90% and 100%); additional bonus of 4% of incremental EBITDA less capital expenditures over Budget with a maximum amount of $500,000 for such additional bonus. Notwithstanding the foregoing, Executive’s 2010 bonus will be calculated and paid in accordance with the Company’s bonus plan currently applicable to Executive and with the Company’s past practices with respect to Executive. Pursuant to such 2010 plan, Executive is eligible to receive between 75% and 150% of his base salary for 2010 (at the rate in effect prior to the commencement of the Initial Term, i.e., $450,000, which is hereafter referred to as the “Old Base Salary”) as a bonus, with the bonus paid being equal to the midpoint of such bonus range (i.e., 112.5% of the Old Base Salary) if actual performance is equal to the average of 2009 EBITDA and 2010 Board budget, in each case, after Frontline adjustment (with such average, which is hereafter referred to as the “Average Adjusted EBITDA” being equal to the amount set forth on Schedule A hereto). The actual bonus payable to Executive will increase (up to a maximum of 150% of the Old Base Salary) or decrease (down to a minimum of 75% of the Old Base Salary, below which no bonus will be paid) from the midpoint, in each case proportionally based on actual performance above or below Average Adjusted EBITDA. For purposes of determining the level of achievement of the applicable performance goals, EBITDA will be calculated on a consistent basis with the 2010 Board budget and such calculation will exclude any impact upon EBITDA resulting from the consummation of the transactions contemplated by the Agreement and Plan of Merger by and among the Company, Alloy Media Holdings, L.L.C. and Lexington Merger Sub Inc.
M&A Bonus	Bonus of between $250,000 to $1 million for sales of non-core assets (which sales occur after the closing of ZM’s acquisition of the Company) for realized after-tax cash proceeds to Company of between $12.6 million and $46.3 million (bonus amount for performance between such amounts determined by linear interpolation); subject to Executive’s continued employment at such time; provided, that the bonus shall also be payable if Executive is terminated without Cause or quits for Good Reason prior to the third anniversary of the closing of ZM’s investment in the Company. Subject to IRC Section 409A, such bonus may accrue if (i) the Company is in default under its credit agreement or (ii) the payment of such bonus would cause or would be reasonably expected to cause (A) the Company to be in default under its credit agreement, or (B) a liquidity issue for the Company, and will become payable at such time as the Board determines in good faith that such circumstance no longer exists. The bonus will accrue with interest compounded annually at the prime rate reported by the Wall Street Journal.
Exit Bonus	$1 million profits interest award that will vest if ZM achieves 2.5x cash on cash return on ZM’s cash investment (calculated after giving effect to such distribution) and structured as “profits interest” for partnership purposes, which is granted at closing of ZM’s acquisition, subject to Executive’s continued employment at such time or if Executive is terminated without Cause or quits for Good Reason within 18 months prior to the date of such achievement.

2

EQUITY COMPENSATION
Equity Grants	•       Grant 11% of the fully diluted equity of the Company as options, profits interests or equivalent equity instruments (the “Company Equity”) as determined by the Board or the Compensation Committee of the Board (to the extent such committee is formed), with recommendations from Executive and Matthew Diamond for amount of equity to be granted to each other member of the management team. The Company Equity will have an exercise price or threshold equity value equal to fair market value on the date of grant and with such other terms to be determined in accordance with this term sheet. Company Equity arrangement will provide for customary adjustments in the event of capital changes of the Company and its affiliates. Executive’s Allocation: •       Grant 3.5% of the equity to Executive as Company Equity; 50% will be time-based vesting and 50% will be performance-based vesting.
Vesting2	Time-based Company Equity: •       3 years (1/3 on each anniversary of the grant date). •       Fully vest upon a change of control. Performance-based Company Equity: •       If change of control occurs before the third anniversary of the closing, the Company Equity will vest upon achievement of a 25% IRR on ZM’s cash investment; if change of control occurs after the third anniversary, the Company Equity vests upon achievement of a 2.0x cash on cash return on ZM’s cash investment (all calculated after giving effect to the vesting) (the “Performance Goal”).
Vesting (Termination w/o Cause or quit for Good Reason)	Time-based Company Equity: •       Fully vest upon termination without Cause or Executive quits for Good Reason Performance-based Company Equity: •       Will vest after Executive’s termination without Cause or Executive quits for Good Reason only if the Performance Goal is achieved.
Life of Company Equity (if options)	•       10 years.
Exercisable after Termination (if options)	Vested Company Equity shall (to the extent applicable): •       remain exercisable for 12 months following termination for death or disability; •       not remain exercisable following termination for Cause; or •       remain exercisable for 3 months following termination for any other reason.

² If equity is structured as options, Executive will have the ability to net exercise options.

3

Additional Equity	$3 million additional pool of equity for key employees once ZM achieves a 5x cash on cash return on its cash investment, subject to the key employee’s continued employment with the Company at such time or if the key employee is terminated without cause (or, if applicable, quits for good reason) within the 6 month period prior to the date of such achievement. Executive and Matthew Diamond may recommend employee allocations to the Board, which may include allocations to Executive and Mr. Diamond, to be determined by the Board or the Compensation Committee (to the extent such committee is formed) at such time.
Rollover	Executive will exchange at least 438,196 shares of common stock of the Company held by Executive immediately prior to the transaction (the “Rollover Equity”), into fully vested and nonforfeitable equity of the Company on the same basis and on the same terms and conditions as ZM subject to the Management Stockholders Agreement described below. Such investment will be structured as a tax-free rollover to the extent possible.3
Management Stockholders Agreement	All Company Equity and Rollover Equity issued to or held by Executive, including, if applicable, any shares held following the exercise of any option (the “Management Shares”) will be subject to a Management Stockholders Agreement, which will provide for call rights, tag-along rights, drag-along rights, pre-emptive rights (on Rollover Equity only) and customary registration rights and restrictions on affiliate transactions (it being understood that (i) the Management Stockholders Agreement shall permit the Executive to transfer Company Equity and Rollover Equity for estate planning purposes and (ii) subject to customary exceptions, no other investor in the Company shall be entitled to greater minority shareholder protections (e.g., tag-along rights, registration rights) than the protections provided to the Executive in the Management Stockholders Agreement.
SEVERANCE BENEFITS
Severance for termination without Cause or by Executive with Good Reason	•       Severance equal to (i) 100% of base salary paid over the 12 month period following the date of termination, plus (ii) the bonus paid to Executive for the year prior to the year of termination (the “Severance Payments”); •       Accrued Rights4; •       Company-paid health care coverage for 12 months; and •       No duty to mitigate; no offset. If there is a change of control of the Company such that the Performance Goal for the performance-based Company Equity is achieved and all Company Equity fully vests, then only the Accrued Rights will be payable upon a termination without Cause or for Good Reason following such change in control.

³ Executive should review rollover structure with his own tax advisor to understand the tax consequences of such rollover.

⁴ “Accrued Rights” means the portion of base salary as accrued prior to the date of termination and that has not yet been paid, any bonus or incentive compensation for any completed performance period that has been earned but has not yet been paid, an amount equal to the value of accrued, but unused and unpaid time off (calculated at the base salary amount), accrued benefits under any Company employee benefits plan and the amount of any expenses properly incurred by executive on behalf of the Company prior to the termination date and not yet reimbursed.

4

Definition of “Good Reason” “Good Reason” means the occurrence of any of the following, without Executive’s prior written consent:   (i) the Company’s failure to employ Executive in his current position or a substantially similar position, without regard to title, such that his duties and responsibilities are materially diminished without his consent; provided, that his duties, authority or responsibilities shall not be 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;   (ii) a material diminution in Executive’s authority, duties or responsibilities either directly or indirectly by requiring him to report to anyone other than the Board or the Executive Chair of the Board, as applicable;   (iii) a material reduction in Executive’s base salary without his consent;   (iv) Executive being required to relocate to a principal place of employment more than 50 miles from his principal place of employment with the Company in New York, New York; or   (v) any action or inaction by the Company that constitutes a material breach of his employment agreement.   Executive is required to provide notice of any such condition to the Board within 15 days of the initial occurrence of the condition, and the Company will then have 30 days to cure. Executive’s termination for Good Reason must occur within 180 days following the initial existence of one or more of the conditions set forth above.

5

Definition of “Cause”

“Cause” means: (i) Executive’s indictment for a felony, either in connection with the performance of his duties or which otherwise adversely affects the business activities, reputation, goodwill or image of the Company; (ii) willful gross neglect or willful malfeasance by Executive in the performance of his duties under the employment agreement; (iii) willful failure to substantially perform assigned duties other than due to disability; (iv) Executive’s breach in any material respect of his employment agreement or any applicable non-competition and confidentiality agreement, which breach is not cured within any applicable cure period; or (v) Executive repeatedly (i.e. on more than one occasion) being under the influence of drugs or alcohol (other than over-the-counter or prescription medicine or other medically-related drugs to the extent they are taken in accordance with their directions or under the supervision of a physician) during the performance of Executive’s duties to the Company or any of its subsidiaries, or, while under the influence of such drugs or alcohol, engaging in grossly inappropriate conduct during the performance of Executive’s duties to the Company. Notwithstanding any other provision to the contrary, if Executive’s employment is terminated for Cause due to indictment for a felony but thereafter said indictment is dismissed or Executive is acquitted by a court of law, then promptly following such acquittal or dismissal, Executive shall be entitled to receive all of the payments and benefits Executive is entitled to receive hereunder upon a termination by the Company without Cause, other than the Severance Payments. For purposes of determining whether any conduct constitutes willful gross neglect or willful 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 a determination that Cause exists is made and approved by a majority of the members of the Board other than Executive.

Release of Claims; Compliance with Restrictive Covenants

Executive’s entitlement to severance (excluding Accrued Rights) is conditioned upon (i) the execution (and non-revocation) of a release of claims in favor of the Company (in a form attached to the employment agreement) within 45 days following the date of termination, and (ii) Executive’s continued compliance with the restrictive covenants. No severance payments will commence until at least the 46th day following termination.

6

280G Provision	In the event that severance and other payments and benefits provided to Executive constitute “parachute payments” within the meaning of IRC Section 280G of the tax code and would be subject to the excise tax imposed by the tax code, then such benefits will either be delivered in full or reduced to the amount that would not trigger the excise tax, whichever results in Executive receiving the greatest amount of benefits on an after-tax basis. In addition, subject to Executive’s cooperation, the Company shall use commercially reasonable efforts to seek equity holder approval that satisfies the requirements of IRC Section 280G(b)(5)(B) of the severance and other benefits that would, but for such approval, be treated as “parachute payments” such that, to the extent such amounts are approved by the equity holders of the Company, Executive would not be subject to the excise tax.
TERMINATION BY REASON OF DEATH OR DISABILITY
Benefits	•       Accrued Rights plus an amount equal to the pro-rata bonus for the year in which such termination occurs.
TERMINATION FOR CAUSE OR RESIGNATION WITHOUT GOOD REASON
Benefits	•       Accrued Rights.
OTHER BENEFITS5
Vacation	Executive will be entitled to paid time off 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 time off in each fiscal 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.
Attorney’s Fees	The Company shall reimburse to Executive, or pay directly, upon submission to the Company of a statement for services providing a general description of services (which may be redacted to preserve attorney-client privilege) and a breakdown of hours and fees by lawyer, the amount payable by Executive to an attorney of Executive’s choice that Executive has retained to advise Executive with regard to the negotiation and execution of this term sheet, the employment agreement and all other related agreements; provided, however, that (i) the fees charged by such attorney are computed at such attorney’s standard hourly rates, and (ii) such reimbursement or payment shall not exceed, in the aggregate, $25,000.
RESTRICTIVE COVENANTS
Confidentiality	Perpetual.
Ownership of IP	Work product belongs to the Company.
Non-competition and non- solicitation	1 year non-compete and a 1 year employee and customer non-solicit provision post-termination.

⁵ Fringe benefits, reimbursement of business expenses, indemnification and D&O insurance (which is at least as favorable as the D&O insurance covering ZM) will be addressed in the employment agreement on terms substantially similar to what Executive is currently entitled.

7

CHOICE OF LAW, VENUE AND SECTION 409A
Choice of Law & Venue	New York law governs employment agreement and disputes will be brought in federal district court located in New York City.
Section 409A	The definitive employment agreement and other arrangements referenced herein will include provisions required to comply with Section 409A of the tax code.

8