AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER

among

CLAIRE’S STORES, INC.,

BAUBLE HOLDINGS CORP.

and

BAUBLE ACQUISITION SUB, INC.

Dated as of March 20, 2007

TABLE OF CONTENTS

Exhibits:

INDEX OF DEFINED TERMS

AGREEMENT AND PLAN OF MERGER

     AGREEMENT AND PLAN OF MERGER, dated as of March 20, 2007 (this “ Agreement ”), among Bauble Holdings Corp., a Delaware corporation (“ Parent ”), Bauble Acquisition Sub, Inc., a Florida corporation and a direct wholly-owned subsidiary of Parent (“ Merger Sub ”), and Claire’s Stores, Inc., a Florida corporation (the “ Company ”).

     WHEREAS, the Board of Directors of the Company has unanimously (i) determined that it is fair to, and in the best interests of, the Company and the shareholders of the Company, and declared it advisable, to enter into this Agreement with Parent and Merger Sub providing for the merger (the “ Merger ”) of Merger Sub with and into the Company in accordance with the Florida Business Corporation Act of the State of Florida (the “ FBCA ”), upon the terms and subject to the conditions set forth herein, (ii) adopted this Agreement in accordance with the FBCA, upon the terms and subject to the conditions set forth herein, and (iii) resolved to recommend the approval of this Agreement by the shareholders of the Company;

     WHEREAS, the Boards of Directors of Parent and Merger Sub have each adopted, and the Board of Directors of Merger Sub has declared it advisable for Merger Sub to enter into, this Agreement providing for the Merger in accordance with the FBCA, upon the terms and subject to the conditions set forth herein; and

     WHEREAS, concurrently with the execution of this Agreement, and as a condition and inducement to Parent’s willingness to enter into this Agreement, certain shareholders of the Company are entering into a shareholders agreement with Parent (the “ Shareholders Agreement ”) pursuant to which such shareholders have irrevocably agreed, among other things, to vote or cause to be voted in favor of the approval of this Agreement all Shares (as defined below) beneficially owned by such shareholders in accordance with and subject to the terms set forth in the Shareholders Agreement.

     NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements herein contained, and intending to be legally bound hereby, Parent, Merger Sub and the Company hereby agree as follows:

ARTICLE I

THE MERGER

     SECTION 1.1 The Merger . Upon the terms and subject to the conditions of this Agreement and in accordance with the FBCA, at the Effective Time (as defined below), Merger Sub shall be merged with and into the Company. As a result of the Merger, the separate corporate existence of Merger Sub shall cease and the Company shall continue under the name “Claire’s Stores, Inc.” as the surviving corporation of the Merger (the “Surviving Corporation”).

     SECTION 1.2 Closing; Effective Time . Subject to the provisions of Article VII, the closing of the Merger (the “Closing”) shall take place at the offices of Simpson Thacher &

Bartlett LLP, 425 Lexington Avenue, New York, New York, as soon as practicable, but in no event later than the third business day after the satisfaction or waiver of the conditions set forth in Article VII (excluding conditions that, by their terms, cannot be satisfied until the Closing); provided, however, that notwithstanding the satisfaction or waiver of the conditions set forth in Article VII, Parent and Merger Sub shall not be required to effect the Closing until the earlier of (a) a date during the Marketing Period specified by Parent on no less than three business days’ notice to the Company and (b) the final day of the Marketing Period (or the Closing may be consummated at such other place or on such other date as Parent and the Company may mutually agree). The date on which the Closing actually occurs is hereinafter referred to as the “Closing Date”. At the Closing, the parties hereto shall cause the Merger to be consummated by filing articles of merger (the “Articles of Merger”) with the Secretary of State of the State of Florida, in such form as required by, and executed in accordance with, the relevant provisions of the FBCA (the date and time of the filing of the Articles of Merger with the Secretary of State of the State of Florida, or such later time as is specified in the Articles of Merger and as is agreed to by the parties hereto, being hereinafter referred to as the “Effective Time”) and shall make all other filings or recordings required under the FBCA or other applicable law in connection with the Merger.

     SECTION 1.3 Effects of the Merger . The Merger shall have the effects set forth herein and in the applicable provisions of the FBCA. Without limiting the generality of the foregoing and subject thereto, at the Effective Time, all the property, rights, privileges, immunities, powers and franchises of the Company and Merger Sub shall vest in the Surviving Corporation and all debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities and duties of the Surviving Corporation.

     SECTION 1.4 Articles of Incorporation; Bylaws .

     (a) At the Effective Time, and without any further action on the part of the Company and Merger Sub, the articles of incorporation of the Company shall be amended in the Merger so as to read in its entirety as is set forth on Exhibit A annexed hereto, and, as so amended, shall be the articles of incorporation of the Surviving Corporation until thereafter amended in accordance with its terms and as provided by law.

     (b) At the Effective Time, and without any further action on the part of the Company and Merger Sub, the bylaws of the Company shall be amended in the Merger so as to read in their entirety in the form as is set forth in Exhibit B annexed hereto, and, as so amended, shall be the bylaws of the Surviving Corporation until thereafter amended in accordance with their terms, the articles of incorporation of the Surviving Corporation and as provided by law.

     SECTION 1.5 Directors and Officers . The directors of the Company immediately prior to the Effective Time shall submit their resignations to be effective as of the Effective Time. Immediately after the Effective Time, Parent shall take the necessary action to cause the directors of Merger Sub immediately prior to the Effective Time to be the directors of the Surviving Corporation, each to hold office in accordance with the articles of incorporation and bylaws of the Surviving Corporation. The officers of the Company immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation, each to hold office until the earlier of their resignation or removal.

ARTICLE II

EFFECT OF THE MERGER ON THE CAPITAL STOCK

     SECTION 2.1 Conversion of Securities . At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company or the holders of any of the following securities:

     (a) Each share of Class A Common Stock, par value $0.05 per share, of the Company (the “ Class A Common Stock ”) and Common Stock, par value $0.05 per share, of the Company (the “ Common Stock ” and together with the Class A Common Stock, the “ Company Common Stock ”) issued and outstanding immediately prior to the Effective Time, other than any shares of Class A Common Stock (“ Class A Shares ”) or shares of Common Stock (“ Common Shares ” and together with the Class A Shares, the “ Shares ”) to be canceled pursuant to Section 2.1(b) and any Class A Dissenting Shares, shall be converted into the right to receive $33.00 in cash (the “ Merger Consideration ”) payable to the holder thereof, without interest, upon surrender of such Shares in the manner provided in Section 2.4, less any required withholding taxes;

     (b) Each Share held in the treasury of the Company and each Share owned directly or indirectly by Parent, Merger Sub or any wholly owned subsidiary of the Company immediately prior to the Effective Time shall be canceled and shall cease to exist without any conversion thereof and no payment or distribution shall be made with respect thereto; and

     (c) Each share of common stock of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into one share of common stock of the Surviving Corporation.

     (d) Except as set forth in Sections 2.1(b) and (c) and Section 2.5, (i) at the Effective Time, all Shares (including Restricted Shares) shall cease to be outstanding, shall automatically be cancelled and shall cease to exist and (ii) the holders of certificates (the “ Certificates ”) or book entry shares (“ Book-Entry Shares ”) which immediately prior to the Effective Time represented such Shares (including Restricted Shares) shall cease to have any rights with respect thereto, except the right to receive, upon surrender of such Certificates or Book-Entry Shares in accordance with Section 2.3, the Merger Consideration.

     SECTION 2.2 Treatment of Options, Restricted Shares, Stock Units, and Deferred Compensation Plans .

     (a) The Company shall take all action necessary such that, immediately prior to the Effective Time, each option to purchase Shares (an “ Option ”), other than any Rollover Securities, granted under any Company Plan that, in each case, is outstanding and unexercised as of the Effective Time (whether vested or unvested) shall be canceled, and the holder thereof shall be entitled to receive from the Surviving Corporation on the 15 ^th business day following the Effective Time, in consideration for such cancellation, an amount in cash equal to the product of (A) the number of Shares previously subject to such Option and (B) the excess, if any, of the Merger Consideration over the exercise price per Share previously subject to such Option, less

any required withholding taxes (the “ Option Cash Payment ”). As of the Effective Time, all Options (other than any Rollover Securities) shall no longer be outstanding and shall automatically cease to exist and each holder of an Option (other than any Rollover Securities) shall cease to have any rights with respect thereto, except the right to receive the Option Cash Payment.

     (b) The Company shall take all action necessary to provide that each Share granted subject to vesting or other lapse restrictions pursuant to any Company Stock Plan (collectively, “ Restricted Shares ”) which is outstanding immediately prior to the Effective Time shall vest and become free of such restrictions as of the Effective Time and at the Effective Time the holder thereof shall, subject to this Article II, be entitled to receive the Merger Consideration with respect to each such Restricted Share, less any required withholding taxes (the “ Restricted Stock Payment ”). As of the Effective Time, all Restricted Shares shall no longer be outstanding and shall automatically cease to exist and each holder of a Restricted Share shall cease to have any rights with respect thereto, except the right to receive the Restricted Stock Payment.

     (c) The Company shall take all action necessary to provide that, immediately prior to the Effective Time, each award of a right under any Company Stock Plan (other than awards of Options or Restricted Shares, the treatment of which is specified in Section 2.2(a) and Section 2.2(b), respectively) entitling the holder thereof to Shares or cash equal to or based on the value of Shares (such awards, collectively, “ Stock Units ”) which, in each case, is outstanding as of the Effective Time (whether vested or unvested), other than any Rollover Securities, shall be canceled by the Company and the holder thereof shall be entitled to receive from the Surviving Corporation on the 15 ^th business day following the Effective Time, in consideration for such cancellation, an amount in cash equal to the product of (A) the number of Shares previously subject to such Stock Unit and (B) the Merger Consideration (or, if the Stock Unit provides for payments to the extent the value of the Shares exceed a specified reference price, the amount, if any, by which the value of the Merger Consideration exceeds such reference price), less any required withholding taxes (the “ Stock Unit Payment ”). In the case of any Stock Units with respect to which the amount of the award is contingent upon performance level achievement for periods continuing after the Effective Time, the number of Shares subject to such Stock Units shall be determined on the basis of deemed “plan” level performance achievement (as defined in the relevant Company Stock Plan or award agreement) for such periods. As of the Effective Time, all Stock Units (other than any Rollover Securities) shall no longer be outstanding and shall automatically cease to exist and each holder of a Stock Unit (other than any Rollover Securities) shall cease to have any rights with respect thereto, except the right to receive the Stock Unit Payment.

     (d) Notwithstanding Section 2.2(a) and (c) above, to the extent agreed by Parent and the holder of an Option or a Stock Unit between the date of this Agreement and the Effective Time, (i) Options may be converted into options to purchase shares of common stock (or other equity interests) of Parent or the Surviving Corporation and/or other consideration in a manner that does not exceed the intrinsic value of the converted Option (in lieu of the treatment described under Section 2.2(a)) and (ii) Stock Units may be converted into equity-based awards of Parent or the Surviving Corporation and/or other consideration with an equal fair market value (in lieu of the treatment described under Section 2.2(c)) (the Options and Stock Units referred to in the foregoing clauses (i) and (ii), as applicable, “ Rollover Securities ”).

     (e) All account balances under the Company’s 1999 Management Deferred Compensation Plan and 2005 Management Deferred Compensation Plan (collectively, the “ Deferred Compensation Plans ”) and all previously deferred annual bonus payments (including both the employee “holdback” portions and the Company matching contributions thereon) will be paid out in cash to participants therein by the Company or the Surviving Corporation on the 15 ^th business day following the Effective Time, less any required withholding taxes.

     SECTION 2.3 Surrender of Shares .

     (a) Prior to the Effective Time, Parent shall designate a paying agent (the “ Paying Agent ”) reasonably acceptable to the Company for the payment of the Merger Consideration as provided in Section 2.1(a). At the Effective Time, Parent or the Surviving Corporation shall deposit (or cause to be deposited) with the Paying Agent sufficient funds to make all payments pursuant to Section 2.3(b). Such funds may be invested by the Paying Agent as directed by Parent or, after the Effective Time, the Surviving Corporation; provided that (a) no such investment or losses thereon shall affect the Merger Consideration payable to the holders of Company Common Stock and following any losses Parent or the Surviving Corporation shall promptly provide (or cause to be provided) additional funds to the Paying Agent for the benefit of the shareholders of the Company in the amount of any such losses and (b) such investments shall be in short-term obligations of the United States of America with maturities of no more than 30 days or guaranteed by the United States of America and backed by the full faith and credit of the United States of America or in commercial paper obligations rated A-1 or P-1 or better by Moody’s Investors Service, Inc. or Standard & Poor’s Corporation, respectively. Any interest or income produced by such investments will be payable to the Surviving Corporation or Parent, as Parent directs.

     (b) Promptly after the Effective Time, the Surviving Corporation shall cause to be mailed to each record holder, as of the Effective Time, of a Certificate or a Book-Entry Share (other than Certificates or Book-Entry Shares representing Shares to be canceled pursuant to Section 2.1(b) or the Class A Dissenting Shares), a form of letter of transmittal (which shall be in customary form and shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates to the Paying Agent or, in the case of Book-Entry Shares, upon adherence to the procedures set forth in the letter of transmittal) and instructions for use in effecting the surrender of the Certificates or, in the case of Book-Entry Shares, the surrender of such Shares for payment of the Merger Consideration therefor. Upon surrender to the Paying Agent of a Certificate or of Book-Entry Shares, together with such letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, and such other documents as may be required pursuant to such instructions, the holder of such Certificate or Book-Entry Shares shall be entitled to receive in exchange therefor cash in an amount equal to the Merger Consideration for each Share formerly represented by such Certificate or Book-Entry Shares (less any required withholding taxes) and such Certificate or book-entry shall then be canceled. No interest shall be paid or accrued for the benefit of holders of the Certificates or Book-Entry Shares on the Merger Consideration payable in respect of the Certificates or Book-Entry Shares. If payment of the Merger Consideration is to be made to a person other than the person in whose name the surrendered Certificate is registered, it shall be a condition of payment that the Certificate so surrendered shall be properly endorsed or shall be otherwise in proper form for transfer and that the person requesting such

payment shall have paid any transfer and other taxes required by reason of the payment of the Merger Consideration to a person other than the registered holder of the Certificate surrendered or shall have established to the satisfaction of the Surviving Corporation that such tax either has been paid or is not applicable. Until surrendered as contemplated by, and in accordance with, this Section 2.3(b), each Certificate and each Book-Entry Share (other than Certificates or Book-Entry Shares representing Shares to be canceled pursuant to Section 2.1(b) or the Class A Dissenting Shares) shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the applicable Merger Consideration as contemplated by this Article II.

     (c) At any time following the date that is twelve months after the Effective Time, the Surviving Corporation shall be entitled to require the Paying Agent to deliver to it any funds (including any interest received with respect thereto) which have been made available to the Paying Agent and which have not been disbursed to holders of Certificates or Book-Entry Shares and thereafter such holders shall be entitled to look to the Surviving Corporation (subject to abandoned property, escheat or other similar laws) only as general creditors thereof with respect to the Merger Consideration payable (without interest) upon due surrender of their Certificates or Book-Entry Shares. The Surviving Corporation shall pay all charges and expenses, including those of the Paying Agent, in connection with the exchange of Shares for the Merger Consideration. None of Parent, Merger Sub, the Company, Surviving Corporation or the Paying Agent shall be liable to any person in respect of any cash delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. The Merger Consideration paid in accordance with the terms of this Article II in respect of Certificates or Book-Entry Shares that have been surrendered in accordance with the terms of this Agreement shall be deemed to have been paid in full satisfaction of all rights pertaining to the Shares represented thereby.

     (d) After the Effective Time, the stock transfer books of the Company shall be closed and thereafter there shall be no further registration of transfers of Shares that were outstanding prior to the Effective Time. After the Effective Time, Certificates or Book-Entry Shares presented to the Surviving Corporation for transfer shall be canceled and exchanged for the consideration provided for, and in accordance with the procedures set forth in, this Article II.

     (e) Notwithstanding anything in this Agreement to the contrary, Parent, Surviving Corporation and the Paying Agent shall be entitled to deduct and withhold from the consideration otherwise payable to any former holder of Shares pursuant to this Agreement any amount as may be required to be deducted and withheld with respect to the making of such payment under applicable Tax (as defined below) laws. To the extent that amounts are so properly withheld by Parent, the Surviving Corporation or the Paying Agent, as the case may be, and are paid over to the appropriate Governmental Entity in accordance with applicable law, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the Shares in respect of which such deduction and withholding was made by Parent, the Surviving Corporation or the Paying Agent, as the case may be.

     (f) In the event that any Certificate shall have been lost, stolen or destroyed, upon the holder’s compliance with the replacement requirements established by the Paying Agent, including, if necessary, the posting by the holder of a bond in customary amount as

indemnity against any claim that may be made against it with respect to the Certificate, the Paying Agent will deliver in exchange for the lost, stolen or destroyed Certificate the applicable Merger Consideration payable in respect of the Shares represented by such Certificate pursuant to this Article II.

     SECTION 2.4 Adjustments . Without limiting the other provisions of this Agreement, if at any time during the period between the date of this Agreement and the Effective Time, any change in the number of outstanding Shares (or securities convertible or exchangeable into or exercisable for Shares) shall occur as a result of a reclassification, recapitalization, stock split (including a reverse stock split), or combination, exchange or readjustment of shares, merger or any stock dividend or stock distribution with a record date during such period, the Merger Consideration shall be correspondingly adjusted to reflect such change.

     SECTION 2.5 Dissenting Shares .

     (a) Notwithstanding anything in this Agreement to the contrary and unless otherwise provided by applicable law, each share of Class A Common Stock which is issued and outstanding immediately prior to the Effective Time and which is owned by a shareholder who, pursuant to Section 607.1301, et seq., of the FBCA duly, timely and validly exercises and perfects his, her or its appraisal rights with respect to his, her or its shares of Class A Common Stock (the “ Class A Dissenting Shares ”) shall not be converted into the right to receive, or be exchangeable for, the Merger Consideration, but, instead, the holder thereof shall be entitled to payment in cash from the Surviving Corporation of the appraised value of such Dissenting Shares in accordance with the provisions of Section 607.1301, et seq., of the FBCA. If any such holder shall have failed to duly, timely and validly exercise or perfect or shall have effectively withdrawn or lost such appraisal rights, each share of Class A Common Stock of such holder shall cease to be deemed a Class A Dissenting Share and each such share shall automatically be converted into and shall thereafter be exchangeable only for the right to receive the Merger Consideration (without interest) as provided in this Agreement. The Company shall give Parent (i) reasonable notice of any notice received by the Company of an intent to demand the fair value or a demand for the fair value of any shares of Class A Common Stock, withdrawals and attempted withdrawals of such notices and any other notices or instruments delivered pursuant to Section 607.1301, et. seq., of the FBCA and received by the Company and (ii) the opportunity to direct all negotiations and proceedings with respect to the exercise of such appraisal rights (or offers or attempts to settle same). The Company shall not, except with the prior written consent of the Parent or as otherwise required by Law, make any payment with respect to any such exercise of appraisal rights or offer to settle or settle any such demands.

     (b) Except as set forth in Section 2.5(a) with respect to Class A Shares, no holder of shares of Common Stock nor any other person will have any appraisal or dissenters’ rights with respect to any shares of Common Stock, pursuant to the FBCA or any other provision of Law, in connection with the Merger, the approval and adoption of this Agreement or any of the transactions contemplated hereby.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company hereby represents and warrants to Parent and Merger Sub that, (i) except as set forth on the Company Disclosure Schedule delivered by the Company to the Parent and Merger Sub prior to the execution of this Agreement (the “ Company Disclosure Schedule ”), it being understood and agreed that each item in a particular section of the Company Disclosure Schedule applies only to such section and to any other section to which its relevance is reasonably apparent and (ii) other than with respect to Sections 3.3, 3.7(a) and 3.7(b), except as disclosed in the Filed SEC Reports (as defined below) filed prior to the date of this Agreement (excluding any disclosures set forth in any “risk factor” section thereof or in any section related to forward-looking statements to the extent that they are predictive or forward-looking in nature):

     SECTION 3.1 Organization and Qualification; Subsidiaries . Each of the Company and its subsidiaries is duly organized, validly existing and in good standing (with respect to jurisdictions that recognize the concept of good standing) under the laws of the jurisdiction of its organization and has all requisite corporate or similar power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted, except, in the case of any subsidiary of the Company, where any such failure to be so organized, existing or in good standing or to have such power or authority would not, individually or in the aggregate, have a Material Adverse Effect (as defined below). Each of the Company and its subsidiaries is duly qualified or licensed to do business in each jurisdiction where the character of its properties owned, leased or operated by it or the nature of its activities makes such qualification or licensing necessary, except for any such failure to be so qualified or licensed or in good standing which would not, individually or in the aggregate, have a Material Adverse Effect. “ Material Adverse Effect ” means any change, effect or circumstance that is, or would reasonably be expected to be, individually or in the aggregate, materially adverse to the business, condition (financial or otherwise) or results of operations of the Company and its subsidiaries taken as a whole, other than any change, effect or circumstance resulting from (i) changes in general economic, financial market or geopolitical conditions, (ii) general changes or developments in any of the industries in which the Company or its subsidiaries operate, (iii) the announcement of this Agreement and the transactions contemplated hereby, including any termination of, reduction in or similar negative impact on relationships, contractual or otherwise, with any customers, suppliers, distributors, partners or employees of the Company and its subsidiaries to the extent due to the announcement and performance of this Agreement or the identity of Parent, or the performance of this Agreement and the transactions contemplated hereby, including compliance with the covenants set forth herein, (iv) any actions required under this Agreement to obtain any approval or authorization under applicable antitrust or competition laws for the consummation of the Merger, (v) changes in any applicable laws or regulations or applicable accounting regulations or principles or interpretations thereof, (vi) any outbreak or escalation of hostilities or war or any act of terrorism, or (vii) any failure by the Company to meet any published analyst estimates or expectations of the Company’s revenue, earnings or other financial performance or results of operations for any period, in and of itself, or any failure by the Company to meet its internal or published projections, budgets, plans or forecasts of its revenues, earnings or other financial performance or results of operations, in and of itself (it being understood that the facts or occurrences giving rise or contributing to such failure that are

not otherwise excluded from the definition of a “Material Adverse Effect” may be taken into account in determining whether there has been a Material Adverse Effect); provided that, in the case of the immediately preceding clauses (i), (ii), (v) and (vi), such changes, effects or circumstances do not affect the Company or its subsidiaries disproportionately relative to other similarly situated companies operating in the same industries.

     SECTION 3.2 Articles of Incorporation and Bylaws . The Company has heretofore furnished or otherwise made available to Parent a complete and correct copy of the amended and restated articles of incorporation, as amended to date (the “ Articles of Incorporation ”), and the amended and restated bylaws (the “ Bylaws ”) of the Company as currently in effect. The Articles of Incorporation of the Company and the Bylaws are in full force and effect and no other organizational documents are applicable to or binding upon the Company. The Company is not in violation of any provisions of its Articles of Incorporation or Bylaws.

     SECTION 3.3 Capitalization

     (a) The authorized capital stock of the Company consists of (i) 40,000,000 Class A Shares, (ii) 300,000,000 Common Shares, and (ii) 1,000,000 shares of preferred stock, par value $1.00 per share (the “ Preferred Stock ”), of which (x) 100,000 of such shares are designated as Series A Junior Participating Preferred Stock and have been reserved for issuance upon the exercise of the rights distributed to the holders of Company Common Stock pursuant to the Company’s Rights Agreement, dated as of May 30, 2003 (the “ Rights Plan ”), between the Company and Wachovia Bank, N.A., as Rights Agent (the rights issued to holders of Company Common Stock pursuant to the Rights Plan are known as the “ Company Rights ”). As of March 15, 2007, (i) 4,865,973 shares of Class A Common Stock were issued and outstanding, all of which were validly issued, fully paid and nonassessable and were issued free of preemptive rights, (ii) 88,215,801 shares of Common Stock were issued and outstanding, all of which were validly issued, fully paid and nonassessable and were issued free of preemptive rights, (iii) no shares of Preferred Stock were outstanding, and (iv) an aggregate of 1,091,063 Common Shares were subject to or otherwise deliverable (including in the form of cash equal to or based on the value of Common Shares) in connection with outstanding Stock Units or the exercise of outstanding Options issued pursuant to the Company’s Amended and Restated 1996 Incentive Compensation Plan and the Amended and Restated 2005 Incentive Compensation Plan (the “ Company Stock Plans ”), of which 617,063 Common Shares were subject to or otherwise deliverable in connection with Stock Units granted pursuant to the Company’s 2006 Long Term Incentive Plan and 2007 Long Term Incentive Plan under the Company Stock Plans. From the close of business on March 15, 2007 until the date of this Agreement, no options to purchase shares of Company Common Stock or Preferred Stock have been granted and no shares of Company Common Stock or Preferred Stock have been issued, except for Shares issued pursuant to the exercise of Options in accordance with their terms (and the issuance of Company Rights attached to such Shares). Except as set forth above, as of the date of this Agreement, (A) there are not outstanding or authorized any (I) shares of capital stock or other voting securities of the Company, (II) securities of the Company convertible into or exchangeable for shares of capital stock or voting securities of the Company or (III) options or other rights to acquire from the Company and no 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

(collectively, “ Company Securities ”), (B) there are no outstanding obligations of the Company to repurchase, redeem or otherwise acquire any Company Securities and (C) there are no other options, calls, warrants or other rights, agreements, arrangements or commitments of any character (or securities or other rights entitling the holder thereof to cash equal to or based on the value of capital stock of the Company) relating to the issued or unissued capital stock of the Company to which the Company is a party.

     (b) All shares of the Company’s subsidiaries are owned by the Company or another wholly-owned subsidiary of the Company free and clear of all security interests, liens, claims, pledges, agreements, limitations in voting rights, charges or other encumbrances of any nature whatsoever. Except for the Company’s subsidiaries, the Company does not own any capital stock of or other equity interest in, or any interest convertible into or exercisable or exchangeable for any capital stock of or other equity interest in, any other person. Each of the outstanding shares of capital stock of each of the Company’s subsidiaries is duly authorized, validly issued, fully paid and nonassessable, except where any such failure to be duly authorized, validly issued, fully paid and nonassessable does not, individually or in the aggregate, have a Material Adverse Effect. Section 3.3 of the Company Disclosure Schedule sets forth a true and complete list of each subsidiary of the Company and its jurisdiction of incorporation or organization.

     (c) Except as would not, individually or in the aggregate, have a Material Adverse Effect, each Option and Stock Unit (i) was granted in all material respects in compliance with (A) all applicable Laws and (B) all of the material terms and conditions of the Company Stock Plan pursuant to which it was issued, (ii) qualifies for the tax and accounting treatment afforded to such Option and Stock Unit in the Company’s tax returns and the Company’s financial statements, respectively and (iii) has a per share exercise price determined in accordance with the applicable Benefit Plan and, to the extent required pursuant to the terms of the applicable Company Stock Plan, that was equal to the fair market value of a Share (determined in accordance with the applicable Company Stock Plan) on the applicable date on which the related grant was by its terms to be effective.

     SECTION 3.4 Authority . The Company has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action and no other corporate proceedings on the part of the Company are necessary to authorize the execution, delivery and performance of this Agreement or to consummate the transactions so contemplated (other than a legal and valid approval of this Agreement in accordance with the FBCA by the holders of at least a majority of the combined voting power of the issued and outstanding Shares (the “ Company Requisite Vote ”), and the filing with the Department of State of the State of Florida of the Articles of Merger as required by the FBCA). This Agreement has been duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery hereof by Parent and Merger Sub, constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally and general

equitable principles (whether considered in a proceeding in equity or at law). The Board of Directors of the Company, by resolutions duly adopted prior to the execution of this Agreement, has unanimously (i) determined that the Merger is fair to, and in the best interests of, the Company and the shareholders of the Company, and declared advisable this Agreement and the transactions contemplated by this Agreement (including the Merger), (ii) adopted this Agreement in accordance with the FBCA and (iii) resolved to recommend the approval of this Agreement by the shareholders of the Company and to submit this Agreement for approval by the shareholders of the Company. The only vote of the shareholders of the Company required to approve this Agreement and approve the transactions contemplated hereby is the Company Requisite Vote.

     SECTION 3.5 No Conflict; Required Filings and Consents .

     (a) The execution, delivery and performance of this Agreement by the Company do not and will not, directly or indirectly, (i) conflict with or violate the Articles of Incorporation or Bylaws of the Company, (ii) assuming that all consents, approvals and authorizations contemplated by clauses (i) through (v) of subsection (b) below have been obtained, and all filings described in such clauses have been made, conflict with or violate any law, rule, regulation, order, judgment or decree applicable to the Company or any of its subsidiaries or by which its or any of their respective properties are bound or (iii) result in any breach or violation of or constitute a default (or an event which with or without notice or lapse of time or both would become a default) or result in the loss of a benefit under, or give rise to any right of termination, cancellation, amendment or acceleration of, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit or other instrument or obligation (each, a “ Contract ”) to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries or its or any of their respective properties are bound or affected, except, in the case of clauses (ii) and (iii), for any such conflict, violation, breach, default, loss, right or other occurrence which would not, individually or in the aggregate, have a Material Adverse Effect.

     (b) The execution, delivery and performance of this Agreement by the Company and the consummation of the Merger by the Company do not and will not require any consent, approval, authorization or permit of, action by, filing with or notification to, any governmental or regulatory (including stock exchange) authority, agency, court, commission, or other governmental body (each, a “ Governmental Entity ”), except for (i) applicable requirements of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”) and the rules and regulations promulgated thereunder (including the filing of the Proxy Statement (as defined below)), the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “ HSR Act ”), and state securities, takeover and “blue sky” laws, (ii) the applicable requirements of the New York Stock Exchange, (iii) the filing with the Secretary of State of the State of Florida of the Articles of Merger as required by the FBCA, (iv) the applicable requirements of antitrust or other competition laws of jurisdictions other than the United States or investment laws relating to foreign ownership (“ Foreign Antitrust Laws ”) and (v) any such consent, approval, authorization, permit, action, filing or notification the failure of which to make or obtain would not (A) prevent or materially delay the Company from performing its obligations under this Agreement in any material respect or (B) individually or in the aggregate, have a Material Adverse Effect.

     SECTION 3.6 Compliance . (a) Neither the Company nor any of its subsidiaries is in violation of any law, rule, regulation, order, judgment or decree applicable to the Company or any of its subsidiaries or by which its or any of their respective properties are bound, except for any such violation which would not, individually or in the aggregate, have a Material Adverse Effect, and (b) the Company and its subsidiaries have all permits, licenses, authorizations, exemptions, orders, consents, approvals and franchises (“Licenses”) from Governmental Entities required to conduct their respective businesses as now being conducted, except for any such Licenses the absence of which would not, individually or in the aggregate, have a Material Adverse Effect.

     SECTION 3.7 SEC Filings; Financial Statements; Undisclosed Liabilities .

     (a) The Company has filed all forms, reports, statements, certifications and other documents (including all exhibits, amendments and supplements thereto) required to be filed by it with the Securities and Exchange Commission (the “ SEC ”) since January 1, 2004 (all such forms, reports, statements, certificates and other documents filed since January 1, 2004, collectively, the “ SEC Reports ” and all such SEC Reports filed by the Company and publicly available prior to the date of this Agreement, the “ Filed SEC Reports ”). No subsidiary of the Company is required to file, or files, any form, report or other document with the SEC. Each of the SEC Reports, as amended prior to the date of this Agreement, complied in all material respects with the applicable requirements of the Securities Act of 1933, as amended (the “ Securities Act ”) and the rules and regulations promulgated thereunder and the Exchange Act and the rules and regulations promulgated thereunder, each as in effect on the date so filed. None of the SEC Reports contained, when filed as finally amended prior to the date of this Agreement, any untrue statement of a material fact or omitted to state a material fact required to be stated or incorporated by reference therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. To the knowledge of the Company, as of the date of this Agreement, there are no unresolved SEC comments.

     (b) The audited consolidated financial statements of the Company (including any related notes thereto) included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 28, 2006 filed with the SEC have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto) and fairly present in all material respects the consolidated financial position of the Company and its subsidiaries at the respective dates thereof and the consolidated statements of operations and comprehensive income, cash flows and changes in shareholders’ equity for the periods indicated. The unaudited consolidated financial statements of the Company (including any related notes thereto) for all interim periods included in the Company’s quarterly reports on Form 10-Q filed with the SEC since January 29, 2006 have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto) and fairly present in all material respects the consolidated financial position of the Company and its subsidiaries at of the respective dates thereof and the consolidated statements of operations and comprehensive income and cash flows for the periods indicated (subject to normal and recurring year-end adjustments).

     (c) Since the enactment of the Sarbanes-Oxley Act of 2002 (the “ Sarbanes-Oxley Act ”), the Company, in all material respects, has been and is in compliance with (A) the applicable provisions of the Sarbanes-Oxley Act and (B) the applicable listing and corporate governance rules and regulations of the NYSE.

     (d) The Company has designed disclosure controls and procedures (as such terms are defined in Rule 13a-15(e) under the Exchange Act), as required by Rule 13a-15(a) under the Exchange Act to ensure that material information relating to the Company, including its subsidiaries, is made known to the Co-Chief Executive Officers and the Chief Financial Officer of the Company by others within those entities.

     (e) The Company has disclosed, based on its most recent evaluation prior to the date of this Agreement, to the Company’s auditors and the audit committee of the Company’s Board of Directors (A) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect in any material respect the Company’s ability to record, process, summarize and report financial information and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting.

     (f) Except (a) as reflected, accrued or reserved against in the financial statements (including the notes thereto) included in the Company’s Annual Report on Form 10-K filed prior to the date of this Agreement for the year ended January 28, 2006, (b) for liabilities or obligations incurred in the ordinary course of business consistent with past practice since January 28, 2006, (c) for liabilities or obligations which have been discharged or paid in full prior to the date of this Agreement and (d) for liabilities or obligations incurred pursuant to the transactions contemplated by this Agreement, neither the Company nor any of its subsidiaries has any liabilities, commitments or obligations, asserted or unasserted, known or unknown, absolute or contingent, whether or not accrued, matured or un-matured or otherwise, of a nature required by generally accepted accounting principles to be reflected in a consolidated balance sheet or the notes thereto, other than those which have not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

     SECTION 3.8 Absence of Certain Changes or Events . Since January 28, 2006, except as expressly contemplated by this Agreement, the Company and its subsidiaries have conducted their business in all material respects in the ordinary course consistent with past practice and, since such date, there has not been: (i) any change, event or occurrence which has had a Material Adverse Effect; (ii) prior to the date of this Agreement, any declaration, setting aside or payment of any dividend or other distribution in cash, stock, property or otherwise in respect of the Company’s or any of its subsidiaries’ capital stock, except for (x) regular quarterly cash dividends on Company Common Stock and (y) any dividend or distribution by a wholly-owned subsidiary of the Company; (iii) prior to the date of this Agreement, any redemption, repurchase or other acquisition of any shares of capital stock of the Company of any of its subsidiaries, other than pursuant to the Company’s stock repurchase program disclosed in the Filed SEC Reports; (iv) prior to the date of this Agreement, (x) any granting by the Company or any of its subsidiaries to any of their directors, officers or employees of any increase in compensation or fringe benefits, except for increases in the ordinary course of business with

respect to employees who are not directors or executive officers or as required under any Company Plan, (y) any granting by the Company or any of its subsidiaries to any director, officer or employee of the right to receive any severance or termination pay not provided for under any Company Plan, or (z) any entry by the Company or any of its subsidiaries into any employment, consulting or severance agreement or arrangement with any director, officer or employee of the Company or its subsidiaries, except for any Company Plan and any offers of employment in the ordinary course of business to employees who are not directors or executive officers, or any material amendment of any Company Plan; (v) prior to the date of this Agreement, any material change by the Company in its accounting principles, except as may be required to conform to changes in statutory or regulatory accounting rules or generally accepted accounting principles or regulatory requirements with respect thereto; or (vi) prior to the date of this Agreement, any material Tax election made by the Company or any of its subsidiaries or any settlement or compromise of any material Tax liability by the Company or any of its subsidiaries.

     SECTION 3.9 Absence of Litigation . There are no suits, claims, actions, proceedings, arbitrations, mediations or investigations pending or, to the knowledge of the Company, threatened against the Company or any of its subsidiaries, other than any such suit, claim, action, proceeding, arbitration, mediation or investigation that would not, individually or in the aggregate, have a Material Adverse Effect. As of the date of this Agreement, neither the Company nor any of its subsidiaries nor any of their respective properties is or are subject to any order, writ, judgment, injunction, decree or award except for those that would not, individually or in the aggregate, have a Material Adverse Effect. As of the date of this Agreement, there are no SEC inquiries or investigations, other governmental inquiries or investigations or internal investigations pending or, to the knowledge of the Company, threatened, in each case regarding any accounting practices of the Company or any of its subsidiaries or any malfeasance by any executive officer of the Company.

     SECTION 3.10 Employee Benefit Plans .

     (a)  Section 3.10(a) of the Company Disclosure Schedule contains a true and complete list, as of the date of this Agreement, of each material Company Plan. As used herein, the term “ Company Plan ” shall mean each “ employee benefit plan ” (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”), but excluding any plan that is a “multiemployer plan,” as defined in Section 3(37) of ERISA (“ Multiemployer Plan ”)), and each other director and employee plan, program, agreement or arrangement, vacation or sick pay policy, Company owned life insurance policy, fringe benefit plan, and compensation, severance or employment agreement contributed to, sponsored or maintained by the Company or any of its subsidiaries as of the date of this Agreement for the benefit of any current, former or retired employee, officer, consultant, independent contractor or director of the Company or any of its subsidiaries (collectively, the “ Company Employees ”).

     (b) With respect to each material Company Plan, the Company has made available to Parent a current, accurate and complete copy thereof (or, if a plan is not written, a written description thereof) and, to the extent applicable, (i) any related trust agreement or other funding instrument, (ii) the most recent determination letter, if any, received from the Internal Revenue Service (the “ IRS ”), (iii) any summary plan description and (iv) for the most recent year (A) the Form 5500 and attached schedules, (B) audited financial statements and (C) actuarial

valuation reports, if any; provided , however, that, with respect to any material Company Plan that is maintained primarily for the benefit of Company Employees based outside of the United States (a “ Non-U.S. Plan ”), the Company will make such material Non-U.S. Plans available to Parent within 20 business days following the date of this Agreement.

     (c) Except as would not, individually or in the aggregate, have a Material Adverse Effect, each Company Plan has been established and administered in accordance with its terms and in compliance with the applicable provisions of ERISA, the Internal Revenue Code of 1986, as amended (the “ Code ”), and other applicable laws, rules and regulations.

     (d) Neither the Company nor any of its subsidiaries, nor any entity that is required to be aggregated with the Company under Section 414 of the Code (an “ ERISA Affiliate ”) has any liability or contributes (or has at any time contributed) or had an obligation to contribute to any Multiemployer Plan.

     (e) Except as would not, individually or in the aggregate, have a Material Adverse Effect, with respect to each Company Plan, as of the date of this Agreement, no material actions, suits or claims (other than routine claims for benefits in the ordinary course) are pending or, to the knowledge of the Company, threatened.

     (f) (i) Neither the Company nor its ERISA Affiliates has incurred any material liability under Title IV of ERISA that has not been satisfied in full, and (ii) to the knowledge of the Company, no condition exists that presents a risk to the Company of incurring any such material liability other than liability for premiums due the Pension Benefit Guaranty Corporation (which premiums have been or are expected to be paid when due).

     (g) Except as would not, individually or in the aggregate, have a Material Adverse Effect, each Company Plan which is intended to be qualified under Section 401(a) of the Code is so qualified and has received a determination letter to that effect from the Internal Revenue Service and, to the knowledge of the Company, no circumstances exist which would reasonably be expected to materially adversely affect such qualification or exemption.

     (h) The execution, delivery of and performance by the Company of its obligations under the transactions contemplated by this Agreement will not (either alone or upon occurrence of any additional or subsequent events) (i) entitle any current or former director, employee, contractor or consultant of the Company to severance pay or any other payment, (ii) accelerate the time of payment, funding, or vesting, or increase the amount of compensation due to any such individual, (iii) result in any prohibited transaction described in Section 406 of ERISA or Section 4975 of the Code for which an exemption is not available, or (iv) result in “excess parachute payments” within the meaning of Section 280G(b)(1) of the Code.

     (i) Except as would not, individually or in the aggregate, have a Material Adverse Effect, each Company Plan that is a “nonqualified deferred compensation plan” (as defined under Section 409A(d)(1) of the Code) has been operated and administered in good faith compliance with Section 409A of the Code since January 1, 2005.

     (j) Except as would not, individually or in the aggregate, have a Material Adverse Effect, all contributions to Company Plans that were required to be made under such

Company Plans have been made, and all benefits accrued under any unfunded Company Plan have been paid, accrued or otherwise adequately reserved to the extent required by, and in accordance with, generally accepted accounting principles, and the Company has performed all material obligations required to be performed under all Company Plans. Except as would not, individually or in the aggregate, have a Material Adverse Effect, with respect to each Company Plan that is funded wholly or partially through an insurance policy, all premiums required to have been paid as of the date of this Agreement under the insurance policy have been paid.

     (k) Except as would not, individually or in the aggregate, have a Material Adverse Effect, the Non-U.S. Plans have been operated in accordance, and are in compliance, in all material respects, with all applicable Laws and have been operated in accordance, and are in compliance, with their respective terms.

     SECTION 3.11 Labor and Employment Matters .

     (a) Neither the Company nor any subsidiary is a party to any collective bargaining agreement with any labor organization or other representative of any Company Employees, nor is any such agreement presently being negotiated by the Company. Except as would not, individually or in the aggregate, have a Material Adverse Effect, there are no unfair labor practice complaints pending against the Company or any subsidiary before the National Labor Relations Board or any other labor relations tribunal or authority, domestic or foreign. Except as would not, individually or in the aggregate, have a Material Adverse Effect, there are no strikes, work stoppages, slowdowns, lockouts, material arbitrations or material grievances, or other material labor disputes pending or, to the knowledge of the Company, threatened in writing against or involving the Company or any of its subsidiaries.

     (b) Except as would not, individually or in the aggregate, have a Material Adverse Effect, (i) each individual that renders services to the Company who is classified by the Company as (A) an independent contractor or other non-employee status or (B) an exempt or non-exempt employee, is properly so classified for all purposes and (ii) the Company has paid or properly accrued in the ordinary course of business all wages and compensation due to Company Employees, including all overtime pay, vacations or vacation pay, holidays or holiday pay, sick days or sick pay, and bonuses.

     (c) Except as would not, individually or in the aggregate, have a Material Adverse Effect, during the preceding two (2) years, the Company has not effectuated a “plant closing” (as defined in Worker Adjustment and Retraining Notification Act, “ WARN ”) or a “mass lay-off” (as defined in WARN), in either case affecting any site of employment or facility of the Company, except in accordance with WARN.

     SECTION 3.12 Insurance . Except as would not, individually or in the aggregate, have a Material Adverse Effect, all material insurance policies of the Company and its subsidiaries (a) are in full force and effect and provide insurance in such amounts and against such risks as is sufficient to comply with applicable law, (b) neither the Company nor any of its subsidiaries is in breach or default, and neither the Company nor any of its subsidiaries has taken any action or failed to take any action which, with notice or the lapse of time, would constitute such a breach or default, or permit termination or modification of, any of such insurance policies

and (c) no notice of cancellation or termination has been received with respect to any such policy, other than such notices which are received in the ordinary course of business.

     SECTION 3.13 Properties .

     (a) Except as would not, individually or in the aggregate, have a Material Adverse Effect, the Company or one of its subsidiaries has good title to all the properties and assets reflected in the latest audited balance sheet included in the SEC Reports as being owned by the Company or one of its subsidiaries or acquired after the date thereof that are material to the Company’s business on a consolidated basis (except properties sold or otherwise disposed of since the date thereof in the ordinary course of business consistent with past practice), free and clear of all claims, liens, charges, security interests or encumbrances of any nature whatsoever.

     (b) Except as would not, individually or in the aggregate, have a Material Adverse Effect: (i) each lease or license pursuant to which the Company and its subsidiaries leases or licenses any real property (the “ Leases ”) is a valid and binding on the Company and each of its subsidiaries party thereto and, to the knowledge of the Company, each other party thereto and is in full force and effect; (ii) there is no breach or default under any Lease by the Company or any of its subsidiaries or, to the knowledge of the Company, any other party thereto; (iii) no event has occurred that with or without the lapse of time or the giving of notice or both would constitute a breach or default under any Lease by the Company or any of its subsidiaries or, to the knowledge of the Company, any other party thereto; and (iv) the Company or one of its subsidiaries that is either the tenant or licensee named under the Lease has a good and valid leasehold interest in each parcel of real property which is subject to a Lease and is in possession of the properties purported to be leased or licensed thereunder.

     (c) Section 3.13(c) of the Company Disclosure Schedule lists the real property owned in fee by the Company or any of its Subsidiaries (the “ Owned Real Property ”). Except as would not, individually or in the aggregate, have a Material Adverse Effect: (i) the Company or one of its Subsidiaries has good and marketable fee simple title to the Owned Real Property and to all of the buildings, structures and other improvements thereon free and clear of all claims, liens, charges, security interests or encumbrances of any nature whatsoever; (ii) neither the Company nor any of its Subsidiaries has leased, licensed or otherwise granted any person the right to use or occupy the Owned Real Property which lease, license or grant is currently in effect or collaterally assigned or granted any other security interest in the Owned Real Property which assignment or security interest is currently in effect; (iii) there are no outstanding agreements, options, rights of first offer or rights of first refusal on the part of any party to purchase any Owned Real Property; and (iv) there is not pending or, to the knowledge of the Company, threatened any condemnation proceedings related to any of the Owned Real Property.

     SECTION 3.14 Tax Matters .

     (a) Except as would not, individually or in the aggregate, have a Material Adverse Effect: (i) all Tax Returns required to be filed or provided (taking into account applicable extensions) by the Company or any of its subsidiaries have been properly filed or provided and all such Tax Returns are true, complete and accurate; (ii) all Taxes due (without regard to extensions) from the Company or any of its subsidiaries have been paid; (iii) the

Company and its subsidiaries have each made all estimated Tax payments required to be made by it (including such payments as may be necessary to avoid the imposition of penalties); and (iv) all amounts required to have been collected or withheld from any payment by the Company or any of its subsidiaries have been duly collected or withheld, and has been duly remitted or deposited in accordance with law.

     (b) Neither the Company nor any of its subsidiaries has received written notice of any claim with respect to any liability for Taxes of the Company or any of its subsidiaries or with respect to any failure by the Company or any of its subsidiaries to properly prepare or file any Tax Returns, which claim remains unpaid or unsettled. No written claim has been made by any Governmental Entity in any jurisdiction in which the Company or any subsidiary does not currently file Tax Returns that the Company or such subsidiary may be subject to Tax in that jurisdiction. There is no pending or threatened action, audit, proceeding or investigation relating to Taxes of the Company or any of its subsidiaries or compliance with Tax Return requirements by the Company or any of its subsidiaries.

     (c) Neither the Company nor any of its subsidiaries (i) has been a member of a group filing Tax Returns on a consolidated, combined, unitary or similar basis (other than a consolidated group of which the Company was the common parent), (ii) has any liability for Taxes of any person (other than the Company, or any subsidiary of the Company) under Treasury regulations section 1.1502-6 (or any similar provision of state, local or foreign law), as a transferee or successor, by contract or otherwise or (iii) is a party to, bound by or has any liability under any Tax sharing, allocation or indemnification agreement or arrangement.

     (d) There is no outstanding request, with respect to the Company or any of its subsidiaries, for any extension of time within which to pay any Taxes or file or provide any Tax Returns. There is no outstanding waiver, with respect to the Company or any of its subsidiaries, of any statute of limitations for the assessment or collection of any Taxes. There are no requests for rulings in respect of Taxes in relation to the Company or any of its subsidiaries that are pending with any Governmental Entity. Neither the Company nor any of its subsidiaries have received a ruling from any Governmental Entity regarding Taxes which remains in effect. Neither the Company nor any of its subsidiaries has entered into an agreement regarding Taxes which remains in effect with any Governmental Entity.

     (e) Neither the Company nor any of its subsidiaries is required to include in income any adjustment under Section 481(a) of the Code or any similar provision of state, local or foreign law by reason of a change in accounting method. The entity classifications of the subsidiaries of the Company for United States federal income tax purposes are as set forth in Section 3.14 of the Company Disclosure Schedule.

     (f) The Company has not been the “distributing corporation” (within the meaning of Section 355(e)(2) of the Code) with respect to a transaction described in Section 355 of the Code.

     SECTION 3.15 Proxy Statement . None of the information supplied or to be supplied by the Company for inclusion or incorporation by reference in the proxy statement to be sent to the shareholders of the Company in connection with the Shareholders Meeting (such

proxy statement, as amended or supplemented, the “ Proxy Statement ”) will, at the date it is first mailed to the shareholders of the Company and at the time of the Shareholders Meeting, contain any untrue 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 the light of the circumstances under which they are made, not misleading. The Proxy Statement will, at the time of the Shareholders Meeting, comply as to form in all material respects with the requirements of the Exchange Act and the rules and regulations promulgated thereunder. Notwithstanding the foregoing, the Company makes no representation or warranty with respect to any information supplied by Parent or Merger Sub or any of their respective representatives which is contained or incorporated by reference in the Proxy Statement.

     SECTION 3.16 Opinion of Financial Advisors . Each of Goldman, Sachs & Co. and Peter J. Solomon Company, L.P. (together, the “Financial Advisors”) has delivered to the Board of Directors of the Company its written opinion (or an oral opinion to be confirmed in writing), dated as of the date of this Agreement, that, as of such date, the Merger Consideration is fair, from a financial point of view, to the holders of the Company Common Stock.

     SECTION 3.17 Brokers . No broker, finder or investment banker (other than the Financial Advisors) is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by and on behalf of the Company or any of its subsidiaries. The Company has made available to Parent complete and correct copies of the agreements between the Company and each of the Financial Advisors pursuant to which such firms would be entitled to any payments relating to this Agreement, the Merger or the other transactions contemplated by this Agreement, and such agreements are the only agreements providing for the payment of any consideration to the Financial Advisors with respect to this Agreement, the Merger or the other transactions contemplated by this Agreement.

     SECTION 3.18 Takeover Statutes; Rights Plans .

     (a) Assuming the accuracy of the representations and warranties of Parent and Merger Sub set forth in Section 4.9, no “fair price”, “moratorium”, “control share acquisition”, “business combination” or other similar antitakeover statute or regulation (including Sections 607.0901 and 607.0902 of FBCA) enacted under state or federal laws in the United States applicable to the Company (collectively, the “ Anti-Takeover Statutes ”) is applicable to the Merger or the other transactions contemplated hereby.

     (b) Prior to the date of this Agreement, the Company has amended the Rights Plan in accordance with its terms (i) to render the Rights Plan inapplicable to the transactions contemplated by this Agreement and (ii) so that the Company Rights will expire immediately prior to the Effective Time, provided that no Distribution Date (as defined in the Rights Plan) or Shares Acquisition Date (as defined in the Rights Plan) shall have occurred.

     SECTION 3.19 Intellectual Property .

     (a) Section 3.19(a) of the Company Disclosure Schedule lists all material registrations and applications for registration of Company Owned Intellectual Property and

material unregistered Intellectual Property owned by the Company. “ Company Owned Intellectual Property ” means Intellectual Property that is owned by the Company or any of its subsidiaries. “ Intellectual Property ” means trademarks, trade names, trade dress, logos, corporate names, domain names, service marks, including all goodwill associated therewith, copyright rights, together with translations, adaptations, derivations and combinations thereof, and patents, trade secrets, confidential business information (including inventions, formulae, data, improvements, know-how, material computer programs documentation, processes, methodologies, customer and supplier lists, pricing and cost information and business and marketing plans and proposals), computer software (including data and related documentation, but excluding off-the-shelf software), and applications, registrations and renewals for any of the foregoing.

     (b) Except as would not, individually or in the aggregate, have a Material Adverse Effect, the Company and its subsidiaries own or have the right to use all Intellectual Property necessary for their businesses as currently conducted free and clear of all liens.

     (c) To the knowledge of the Company, the Company Owned Intellectual Property does not infringe or violate the Intellectual Property of any third party and is not being infringed by any third party, except as would not, individually or in the aggregate, have a Material Adverse Effect.

     (d) The Company and its subsidiaries have taken reasonable efforts to protect and maintain their material Intellectual Property. Except as would not, individually or in the aggregate, have a Material Adverse Effect, neither the Company nor any of its subsidiaries are a party to any claim, suit or other action, and to the knowledge of the Company, no claim, suit or other action is threatened in writing against any of them, that challenges the validity, enforceability or ownership of, or the right to use, sell or license any Company Owned Intellectual Property.

     (e) To the knowledge of the Company: (i) all computer software used internally by the Company and its subsidiaries is owned by the Company or the relevant subsidiary or used pursuant to a license or other lawful right to use it; (ii) the Company and its subsidiaries possess such working copies of all of the computer software, including object and source codes and all related manuals, licenses and other documentation, as are necessary for the current conduct of the businesses of the Company and its subsidiaries; and (iii) the computer software and other information technology used to operate the business have not suffered any material error, breakdown, failure or security breach in the last twelve months which has caused disruption or damage to the business of any of the Company or its subsidiaries, except in the case of clauses (ii) and (iii), as would not, individually or in the aggregate, have a Material Adverse Effect.

     SECTION 3.20 Environmental Matters .

     (a) Except as would not, individually or in the aggregate, have a Material Adverse Effect: (i) the Company and each of its subsidiaries comply and have complied with all applicable Environmental Laws (as defined below), have no liability under Environmental Law and possess and have possessed and comply and have complied with all applicable

Environmental Permits (as defined below) required under such Environmental Laws; (ii) there are no Materials of Environmental Concern (as defined below) at, in or under or that have been Released to or from any property currently or formerly owned, leased or operated by the Company or any of its subsidiaries, under circumstances that have resulted in or would reasonably be expected to result in liability of the Company or any of its subsidiaries under any applicable Environmental Law; (iii) neither the Company nor any of its subsidiaries has received any written notification alleging that it is liable for, or request for information pursuant to section 104(e) of the Comprehensive Environmental Response, Compensation and Liability Act or similar state statute, concerning any Release or threatened Release of Materials of Environmental Concern at any location except, with respect to any such notification or request for information concerning any such release or threatened release, to the extent such matter has been resolved with the appropriate