ACQUISITION AGREEMENT

AMONG

ALLOY, INC.,

DODGER ACQUISITION CORP.

AND

DELIA*S CORP.

Dated as of July 30, 2003

ACQUISITION AGREEMENT

     ACQUISITION AGREEMENT dated as of July 30, 2003, by and among ALLOY, INC., a Delaware corporation (?Parent?), DODGER ACQUISITION CORP., a Delaware corporation and an indirect wholly owned subsidiary of Parent (?Sub?), and DELIA*S CORP., a Delaware corporation (the ?Company?).

     WHEREAS the Board of Directors of each of the Company and Sub has approved and declared advisable, and the Board of Directors of Parent has approved, this Agreement and the merger of Sub with and into the Company, upon the terms and subject to the conditions set forth in this Agreement (such transactions being referred to hereinafter as the ?Merger?);

     WHEREAS, concurrently with the execution and delivery of this Agreement and as a condition and inducement to the willingness of Parent and Sub to enter into this Agreement, certain holders of Class A Common Stock, par value $0.01 per share (the ?Company Common Stock?), of the Company have each entered into a Tender and Stockholder Support Agreement in the form attached hereto as Annex A (the ?Support Agreement?) dated as of the date hereof pursuant to which such holders have agreed to vote their shares of Company Common Stock in the manner set forth therein; and

     WHEREAS Parent, Sub and the Company wish to make certain representations, warranties, covenants and agreements in connection with the Merger and also to prescribe various conditions to the Merger.

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

ARTICLE I

THE OFFER AND MERGER

     SECTION 1.01. THE OFFER. As promptly as practicable, but in no event later than August 6, 2003, Sub shall commence an offer to purchase for cash (the ?Offer?) all of the Company?s issued and outstanding shares of Company Common Stock, at a price of $0.928 per share, net to the seller in cash, subject to the tender of not less than a majority of the Outstanding Shares (as defined below)(the ?Minimum Condition?). The obligation of Sub to commence the Offer and to accept for payment and to pay for any shares tendered shall be subject to the additional conditions set forth in Annex B hereto. Sub shall not decrease the offer price or number of shares tendered for or increase the Minimum Condition without the prior written consent of the Company.

     SECTION 1.02. COMPANY ACTIONS. The Company consents to the Offer and represents that (a) its Board of Directors (at a meeting duly called and held) consents to the Offer and has resolved to recommend acceptance of the Offer and approval and adoption of this Agreement by its Stockholders (as defined in Section 8.03 below) and (b) Peter J. Solomon Company, L.P. has delivered to the Board of Directors of the Company its opinion that the consideration to be paid in the Offer and the Merger is fair to the holders of Company Common Stock. The Company agrees to file contemporaneously with the commencement of the Offer

with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 (the ?Schedule 14D-9?), containing such recommendations. In connection with the Offer, the Company will promptly furnish Sub with mailing labels, security position listings and any available listing or computer file containing the names and addresses of the record holders of Company Common Stock as of a recent date and shall furnish Sub with such information and assistance as Sub or its agents may reasonably request in communicating the Offer to the Stockholders of the Company.

     SECTION 1.03. THE MERGER. Upon the terms and subject to the conditions set forth in this Agreement, and in reliance upon the representations, warranties, covenants and agreements set forth herein, and in accordance with the General Corporation Law of the State of Delaware (the ?DGCL?), Sub shall be merged with and into the Company at the Effective Time (as defined in Section 1.05). At the Effective Time, the separate corporate existence of Sub shall cease and the Company shall continue as the surviving corporation (the ?Surviving Corporation?) in the Merger and as a wholly-owned subsidiary of Parent and shall succeed to and assume all the rights and obligations of Sub in accordance with the DGCL.

     SECTION 1.04. CLOSING. Upon the terms and subject to the conditions set forth in this Agreement, the closing of the Merger (the ?Closing?) will take place at 11:00 a.m., New York time, on the second business day after the satisfaction or (to the extent permitted by Applicable Laws (as defined below)) waiver of the conditions set forth in Article VI (other than those that by their terms cannot be satisfied until the time of the Closing), at the offices of Katten Muchin Zavis Rosenman, 575 Madison Avenue, New York, NY 10022, or at such other time, date or place agreed to in writing by Parent and the Company; provided, however, that if all the conditions set forth in Article VI shall not have been satisfied or (to the extent permitted by Applicable Laws) waived on such second business day, then the Closing will take place on the first business day on which all such conditions shall have been satisfied or (to the extent permitted by Applicable Laws) waived. The date on which the Closing occurs is referred to in this Agreement as the ?Closing Date?.

     SECTION 1.05. EFFECTIVE TIME. Upon the terms and subject to the conditions set forth in this Agreement, as soon as practicable after the Closing and on the Closing Date, a certificate of merger (in any such case, the ?Certificate of Merger?) shall be duly prepared, executed and acknowledged by the parties in accordance with the relevant provisions of the DGCL and filed with the Secretary of State of the State of Delaware. The Merger shall become effective upon the filing of the Certificate of Merger with the Secretary of State of the State of Delaware or at such subsequent time or date as Parent and the Company shall specify in the Certificate of Merger. The time at which the Merger becomes effective in accordance with the foregoing is referred to in this Agreement as the ?Effective Time?.

     SECTION 1.06. EFFECTS OF THE MERGER. The Merger shall have the effects set forth in Section 259 of the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time all the property, rights, privileges, powers and franchises of the Company and Sub shall be vested in the Surviving Corporation, and all debts, liabilities and duties of the Company and Sub shall become the debts, liabilities and duties of the Surviving Corporation.

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     SECTION 1.07. CERTIFICATE OF INCORPORATION AND BY-LAWS.

     (a)  The Certificate of Incorporation of the Company as in effect immediately prior to the Effective Time shall be amended in its entirety as provided in Annex G attached hereto and incorporated herein by reference, and, as so amended, shall be the Certificate of Incorporation of the Surviving Corporation until thereafter changed or amended as provided therein or by Applicable Laws.

     (b)  The By-laws of the Company as in effect immediately prior to the Effective Time shall be amended as provided in Annex H attached hereto and incorporated herein by reference, and, as so amended, shall be the By-laws of the Surviving Corporation until thereafter changed or amended as provided therein or by Applicable Laws.

     SECTION 1.08. DIRECTORS. The directors of Sub immediately prior to the Effective Time shall be the directors of the Surviving Corporation until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be.

     SECTION 1.09. OFFICERS. The officers of Sub immediately prior to the Effective Time shall be the officers of the Surviving Corporation until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be.

     SECTION 1.10. ADDITIONAL ACTIONS. If, at any time after the Effective Time, the Surviving Corporation shall consider or be advised that consistent with the terms of this Agreement any further assignments or assurances in law or any other acts are necessary or desirable (a) to vest, perfect or confirm, of record or otherwise, in the Surviving Corporation, title to and possession of any property or right of either constituent corporation acquired or to be acquired by reason of, or as a result of, the Merger, or (b) otherwise to carry out the purposes of this Agreement, then, subject to the terms and conditions of this Agreement, each such constituent corporation and its officers and directors shall be deemed to have granted to the Surviving Corporation an irrevocable power of attorney to execute and deliver all such deeds, assignments and assurances in law and to do all acts necessary or proper to vest, perfect or confirm title to and possession of such property or rights in the Surviving Corporation and otherwise to carry out the purposes of this Agreement; and the officers and directors of the Surviving Corporation are fully authorized in the name of either constituent corporation to take any and all such action.

     SECTION 1.11. BOARD OF DIRECTORS AND COMMITTEES; SECTION 14(F).

     (a)  Promptly upon the purchase by Sub of Company Common Stock pursuant to the Offer and from time to time thereafter, Parent shall be entitled to designate up to such number of directors, rounded up to the next whole number on the board of directors of the Company (the ?Company Board?) that equals the product of (i) the total number of directors on the Company Board (giving effect to the election of any additional directors pursuant to this Section 1.11) and (ii) the percentage that the number of shares of Company Common Stock owned by Parent, Sub and their affiliates (including shares of Company Common Stock purchased pursuant to the Offer) bears to the total number of Outstanding Shares, and the Company shall upon request by Parent, subject to the provisions of Section 1.11(b), promptly either increase the size of the Company Board (and shall, if necessary, amend the Company?s bylaws to permit such an increase) or use its best efforts to secure the resignation of such number of directors as is

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necessary to enable Parent?s designees to be elected to the Company Board and shall cause Parent?s designees to be so elected; provided, however, that at all times prior to the Effective Time, the Company Board shall include at least two members who are not designees of Parent. Promptly upon request by Parent, the Company will, subject to the provisions of Section 1.11(b), use its best efforts to cause persons designated by Parent to constitute the same percentage as the number of Parent?s designees to the Company Board bears to the total number of directors on the Company Board on (i) each committee of the Company Board, (ii) each board of directors or similar governing body or bodies of each subsidiary of the Company designated by Parent, and (iii) each committee of each such board or body.

     (b)  The Company?s obligations to appoint Parent?s designees to the Company Board shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. The Company shall promptly take all actions required pursuant to Section 14(f) and Rule 14f-1 in order to fulfill its obligations under this Section 1.11 and shall include in the Schedule 14D-9 or a separate Rule 14f-1 Statement provided to shareholders such information with respect to the Company and its officers and directors as is required under Section 14(f) and Rule 14f-1. Parent or Sub will supply to the Company in writing and be solely responsible for any information with respect to either of them and their nominees, officers, directors and affiliates required by Section 14(f) and Rule 14f-1.

ARTICLE II

CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES

     SECTION 2.01. MERGER CONSIDERATION; CONVERSION AND CANCELLATION OF SECURITIES.

     (a)  The per share consideration payable by Parent with respect to all outstanding shares of capital stock of the Company immediately prior to the Effective Time, including those shares deemed to be outstanding pursuant to the exercise of Company Stock Options (as defined below) as set forth in Section 5.06(a)(i) and those shares deemed to be outstanding pursuant to the exercise of the warrants as set forth in Section 2.01(b)(iv) (collectively, the ?Outstanding Shares?) shall be equal to $0.928 per share (the ?Per Share Amount?).

     (b)  At the Effective Time, by virtue of the Merger and without any action on the part of the holder of any securities of the Company, Parent or Sub:

	(i) CAPITAL STOCK OF SUB. Each issued and outstanding share of common stock of Sub immediately prior to the Effective Time shall be automatically converted into and become one fully paid and nonassessable share of common stock of the Surviving Corporation.
	(ii) CANCELLATION OF TREASURY STOCK AND PARENT-OWNED STOCK. Each share of Company Common Stock that is directly owned by the Company (as treasury stock), Parent or Sub immediately prior to the Effective Time, and each share of Class B common stock, par value $0.01 per share, of the Company (the ?Class B Common?), outstanding immediately prior to the Effective Time, shall

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	automatically be canceled and shall cease to exist and no consideration shall be delivered in exchange therefor.
	(iii) CONVERSION OF COMPANY COMMON STOCK. Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than shares canceled pursuant to Section 2.01(b)(ii) and Appraisal Shares), including all accrued and unpaid dividends thereon, shall be automatically converted into and become the right to receive the Per Share Amount. At the Effective Time, all such shares of Company Common Stock shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each holder of a certificate that immediately prior to the Effective Time represented any such shares of Company Common Stock shall cease to have any rights with respect thereto, except the right to only the Per Share Amount, without interest.
	(iv) TREATMENT OF CONVERTIBLE SECURITIES. Other than the Company Stock Options, which shall be treated in accordance with Section 5.06, and the outstanding warrants to purchase up to 650,000 shares of Company Common Stock, each of which shall be amended to (i) permit the net-exercise thereof and (ii) provide that if not exercised prior to the Effective Time shall be cancelled (all of which shares shall be deemed outstanding for purposes of calculating the number of Outstanding Shares), all outstanding options (whether vested or unvested), warrants, rights, calls, commitments or agreements of any character to which the Company or any subsidiary is a party or by which it is bound, calling for the issuance of shares of capital stock of the Company, and all securities convertible into or exercisable or exchangeable for, or representing the right to purchase or otherwise receive, directly or indirectly, any such capital stock, or other arrangement to acquire, at any time or under any circumstance, capital stock of the Company or any such other securities (the ?Convertible Securities?) that, as of the Effective Time have not been exercised or converted, as applicable, shall be cancelled and shall no longer be exercisable, exchangeable or convertible, as applicable.

     (c)  APPRAISAL RIGHTS. Notwithstanding anything in this Agreement to the contrary, shares (the ?Appraisal Shares?) of Company Common Stock issued and outstanding immediately prior to the Effective Time that are held by any holder who is entitled to demand and properly demands appraisal of such shares pursuant to, and who otherwise complies in all respects with, the provisions of Section 262 of the DGCL (?Section 262?) shall not be converted into the right to receive the Per Share Amount as provided in Section 2.01(b)(iii), but instead such holder shall be entitled to payment of the fair value of such shares in accordance with the provisions of Section 262. Such holders of Appraisal Shares shall be entitled only to those rights granted under Section 262. At the Effective Time, all Appraisal Shares shall automatically be canceled and shall cease to exist or be outstanding, and each holder of certificates representing Appraisal Shares shall cease to have any rights with respect thereto, except the right to receive the fair value of such shares in accordance with the provisions of Section 262. Notwithstanding the foregoing, if any such holder shall fail to perfect or otherwise shall waive, withdraw or lose the right to appraisal under Section 262 or a court of competent jurisdiction shall determine that such holder is not entitled to the relief provided by Section 262, then the right of such holder to be paid the fair value of such holder?s Appraisal Shares under Section 262 shall cease to exist and such Appraisal Shares shall be treated as if they had been converted at the Effective Time into, and shall have become, the right to receive only the Per Share Amount as provided in Section

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2.01(b)(iii). The Company shall serve prompt notice to Parent of any demands for appraisal of any shares of Company Common Stock, and Parent shall have the right to participate in and, subject to Applicable Laws, direct all negotiations and proceedings with respect to such demands. The Company shall not, without the prior written consent of Parent, make any payment with respect to, or settle or offer to settle, any such demands, or agree to do any of the foregoing.

     SECTION 2.02. INTENTIONALLY OMITTED.

     SECTION 2.03. EXCHANGE OF CERTIFICATES.

     (a)  PAYING AGENT. Prior to the Effective Time, Parent shall designate a bank or trust company reasonably acceptable to the Company and having at least $50,000,000.00 in capital, surplus and undivided profits, to act as paying agent (the ?Paying Agent?) for the payment of the Merger Consideration (as defined below) and shall deposit, or cause the Surviving Corporation to deposit, in trust with the Paying Agent, on a timely basis, as and when needed after the Effective Time, cash necessary to pay the Per Share Amount for the Outstanding Shares (such cash being hereinafter referred to as the ?Exchange Fund?).

     (b)  EXCHANGE PROCEDURE. As soon as reasonably practicable after the Effective Time, the Paying Agent shall mail to each holder of record of an outstanding certificate or outstanding certificates (?Certificates?) which immediately prior to the Effective Time represented outstanding shares of Company Common Stock whose shares were converted into the right to receive the Per Share Amount or any higher price paid for any share of Company Common Stock pursuant to the Offer (the ?Merger Consideration?) with respect thereto pursuant to Section 2.01, (i) a form of letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates held by such person shall pass, only upon proper delivery of the Certificates to the Paying Agent and shall be in customary form and have such other provisions as Parent may reasonably specify) and (ii) instructions for use in effecting the surrender of the Certificates in exchange for the Merger Consideration with respect thereto. Upon surrender of a Certificate for cancellation to the Paying Agent or to such other agent or agents as may be appointed by Parent, together with such letter of transmittal, duly completed and validly executed, and such other documents as may reasonably be required by the Paying Agent, the holder of such Certificate shall be entitled to receive in exchange therefor the amount of cash, and the Certificate so surrendered shall forthwith be canceled. Upon a transfer of ownership of Company Common Stock that is not registered in the transfer records of the Company, the proper amount of cash may be issued and paid as described in the previous sentence in exchange therefor to a person other than the person in whose name the Certificate so surrendered is registered if such Certificate shall be properly endorsed or otherwise be in proper form for transfer and the person requesting such issuance shall pay any transfer or other taxes required by reason of the payment of cash to a person other than the registered holder of such Certificate or establish to the satisfaction of Parent that such tax has been paid or is not applicable. Until surrendered as contemplated by this Section 2.03(b), each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the Merger Consideration that the holder thereof has the right to receive pursuant to the provisions of this Article II. No interest shall be paid or shall accrue on any cash payable upon surrender of any Certificate.

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     (c)  INTENTIONALLY OMITTED.

     (d)  NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All cash paid upon the surrender for exchange of Certificates in accordance with the terms of this Article II shall be deemed to have been issued and paid in full satisfaction of all rights pertaining to the shares of Company Common Stock formerly represented by such Certificates. At the close of business on the day on which the Effective Time occurs the stock transfer books of the Company shall be closed, and there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the shares of Company Common Stock that were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to the Surviving Corporation or the Paying Agent for transfer or any other reason, they shall be canceled and exchanged as provided in this Article II, except as otherwise provided by Applicable Law.

     (e)  INTENTIONALLY OMITTED.

     (f)  TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund that remains undistributed to the holders of the Certificates for twelve months after the Effective Time shall be delivered to Parent, upon demand, and any holders of the Certificates who have not theretofore complied with this Article II shall thereafter look only to Parent for, and, subject to Section 2.03(g), Parent shall remain liable for, payment of their claim for Merger Consideration.

     (g)  NO LIABILITY. None of Parent, Sub, the Company or the Paying Agent shall be liable to any person in respect cash from the Exchange Fund in each case delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. If any Certificates shall not have been surrendered prior to two years after the Effective Time (or immediately prior to such earlier date on which any Merger Consideration would otherwise escheat to or became the property of any Governmental Entity (as defined in Section 3.01(d)), any such Merger Consideration in respect thereof shall, to the extent permitted by Applicable Laws, become the property of the Surviving Corporation, free and clear of all claims or interest of any person previously entitled thereto.

     (h)  INVESTMENT OF EXCHANGE FUND. The Paying Agent shall invest any cash included in the Exchange Fund, as directed by Parent, on a daily basis; provided, however, that such investments shall be solely in (i) obligations of or guaranteed by the United States of America and backed by the full faith and credit of the Unites States of America or (ii) commercial paper obligations rated A-1 or P-1 or better by Moody?s Investors Service, Inc. or Standard & Poor?s Corporation, respectively. All interest or other income resulting from such investments shall be paid to Parent.

     (i)  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 together with an indemnity reasonably acceptable to Parent and, if required by the Parent, the posting by such person of a bond in such reasonable amount as the Parent may direct as indemnity against any claim that may be made against it on account of the alleged loss, theft or destruction of any such Certificate, the Paying Agent will issue in exchange for such lost, stolen or destroyed Certificate, the Merger Consideration.

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     (j)  WITHHOLDING RIGHTS. Parent, Sub or the Paying Agent shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of Certificates such amounts as Parent, Sub or the Paying Agent is required to deduct and withhold with respect to the making of such payment under the Code (as defined below), or any other provision of domestic or foreign (whether national, federal, state, provincial, local or otherwise) tax law. To the extent that amounts are so withheld and paid over to the appropriate taxing authority by Parent, Sub or the Paying Agent, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the Certificates in respect of which such deduction and withholding was made by Parent, Sub or the Paying Agent.

     (k)  TERMINATION PRIOR TO EFFECTIVE TIME. In the event this Agreement is terminated without the occurrence of the Effective Time, Parent shall, or shall cause the Paying Agent to, return promptly any Certificates theretofore submitted or delivered to the Paying Agent, without charge to the person who submitted such Certificates.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

     SECTION 3.01. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set forth on the disclosure schedule (with specific reference to the Section or Subsection of this Agreement to which the information stated in such disclosure relates, provided that any fact, item, contract, agreement, document or instrument listed or described, and any information disclosed, in any section thereof shall be deemed listed, described and disclosed in all other applicable sections even though not expressly set forth in such other section(s), provided that the Company shall use its reasonable best efforts to number all exceptions noted in the attached sections to correspond to the applicable section of this Agreement to which such exception refers) delivered by the Company to Parent prior to the execution of this Agreement (the ?Company Disclosure Schedule?), the Company represents and warrants to Parent and Sub as follows:

     (a)  ORGANIZATION, STANDING AND POWER. Each of the Company and its subsidiaries (as defined in Section 8.03) (i) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (ii) has all requisite corporate, company or partnership power and authority to carry on its business as now being conducted and (iii) is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership, leasing or operation of its properties makes such qualification or licensing necessary, other than (except in the case of clause (i) above with respect to the Company) where the failure to be so organized, existing, qualified or licensed or in good standing individually or in the aggregate could not reasonably be expected to have a material adverse effect (as defined in Section 8.03) on the Company. The Company has made available to Parent true and complete copies of its Second Restated Certificate of Incorporation (as amended, the ?Certificate of Incorporation?) and Amended and Restated By-laws (the ?By-Laws?) and the certificate of incorporation and by-laws (or similar organizational documents) of each of its subsidiaries, in each case as amended to the date of this Agreement. The Company has made available to Parent and its representatives true and complete copies of the minutes of all meetings of the stockholders, the Board of Directors and each committee of the Board of Directors of the Company held since incorporation of the Company. Neither the

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