AGREEMENT AND PLAN OF MERGER

Exhibit 2.1

EXECUTION COPY

AGREEMENT AND PLAN OF MERGER

by and among

THE DRESS BARN, INC.,

THAILAND ACQUISITION CORP.

and

TWEEN BRANDS, INC.

June 24, 2009

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AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (this “ Agreement ”) is made as of June 24, 2009, by and among The Dress Barn, Inc., a Connecticut corporation (“ Parent ”), Thailand Acquisition Corp., a Delaware corporation and a wholly owned Subsidiary of Parent (“ Merger Sub ”), and Tween Brands, Inc., a Delaware corporation (the “ Company ”). Capitalized terms used and not otherwise defined in this Agreement have the meanings set forth in Article IX.

RECITALS

WHEREAS, the Board of Directors of each of the Company and Parent deems it advisable and in the best interests of each such corporation and its stockholders that the Company and Parent engage in a business combination;

WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the Company have approved and declared advisable this Agreement, the merger of Merger Sub with and into the Company (the “ Merger ”) and the other transactions contemplated by this Agreement, upon the terms and subject to the conditions set forth in this Agreement, and the respective Boards of Directors of each of the Company and Merger Sub have unanimously determined to recommend to their respective stockholders the adoption of this Agreement, subject to the terms and conditions hereof and in accordance with the provisions of the General Corporation Law of the State of Delaware (as amended, the “ DGCL ”); and

WHEREAS, the Merger is intended to qualify as a “reorganization” as described in Section 368 of the Code, and this Agreement is intended to constitute a “plan of reorganization” within the meaning of the Treasury Regulations promulgated under Section 368 of the Code.

NOW, THEREFORE, in consideration of the premises, representations and warranties and mutual covenants contained in this Agreement and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, do hereby agree as follows:

ARTICLE I

THE MERGER

1.1 The Merger . Upon the terms and subject to satisfaction or waiver of the conditions set forth in this Agreement, and in accordance with the DGCL, at the Effective Time, 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 as the surviving corporation after the Merger (the “ Surviving Corporation ”).

1.2 Closing . The closing of the Merger (the “ Closing ”) shall take place on the second Business Day after the satisfaction or waiver of the conditions (excluding conditions that, by their nature, cannot be satisfied until the Effective Time and will in fact be satisfied at the Effective Time) set forth in Article VII, unless this Agreement has been theretofore terminated pursuant to its terms or unless another time or date is agreed to in writing by the parties hereto (the date and time of the Closing being referred to in this Agreement as the “ Closing Date ”). The Closing shall be held at the offices of Proskauer Rose LLP, 1585 Broadway, New York, New York 10036, unless another place is agreed to in writing by the parties hereto. As soon as practicable on the Closing Date, the Company shall cause the Merger to be consummated by filing a certificate of merger relating to the Merger (the “ Certificate of Merger ”) with the Secretary of State of the State of Delaware, in such form as required by, and executed in accordance with the relevant provisions of, the DGCL (the date and time of such filing, or if a later date and time are specified in such filing, such specified later date and time, being the “ Effective Time ”).

1.3 Effect of the Merger . At the Effective Time, the effect of the Merger shall be as provided in the applicable provisions of the DGCL. Without limiting the generality of the foregoing, at the Effective Time, except as otherwise provided in this Agreement, all the property, rights, privileges, 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.

1.4 Certificate of Incorporation and Bylaws . Subject to Section 6.9 hereof:

(a) At the Effective Time, the Amended and Restated Certificate of Incorporation of the Company shall be amended so as to read in its entirety as set forth in Exhibit A hereto and, as so amended, shall be the Amended and Restated Certificate of Incorporation of the Surviving Corporation until thereafter changed or amended as provided therein or by applicable Law.

(b) At the Effective Time, the bylaws of Merger Sub, as in effect immediately prior to the Effective Time, shall be the bylaws of the Surviving Corporation and shall read in their entirety as set forth in Exhibit B hereto until thereafter changed or amended as provided therein or by applicable Law.

1.5 Directors and Officers . The directors of Merger Sub immediately prior to the Effective Time shall be the initial directors of the Surviving Corporation, each to hold office in accordance with the certificate 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 in accordance with the certificate of incorporation and bylaws of the Surviving Corporation.

1.6 Tax Consequences . The parties hereto intend for the Merger to qualify as a “reorganization” within the meaning of Section 368(a) of the Code. The parties hereto adopt this Agreement as a plan of reorganization within the meaning of Treasury Regulations Section 1.368-2(g). Neither Parent, the Company nor any other party to this Agreement shall take a position on any Tax Return or other statement or report to any government or taxing authority inconsistent with such intention unless required to do so by applicable Tax Law.

ARTICLE II

EFFECT ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS

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)  Conversion Generally . Subject to Section 2.2(e), each share of common stock, par value $.01 per share, of the Company (“ Company Common Stock ”), issued and outstanding immediately prior to the Effective Time (other than any shares of Company Common Stock to be cancelled pursuant to Section 2.1(b) or Section 2.1(e)) shall be converted into the right to receive 0.47 (as may be adjusted pursuant to this Section 2.1, the “ Exchange Ratio ”) validly issued, fully paid and nonassessable shares of Parent Common Stock (unless the aggregate number of shares of Parent Common Stock to be issued in the Merger pursuant to this Section 2.1 would exceed 19.99% of Parent’s issued and outstanding shares of Parent Common Stock immediately prior to the Effective Time (19.99% of such issued and outstanding shares rounded down to the nearest whole share, the “ Maximum Share Number ”), in which case the Exchange Ratio shall be reduced to the minimum extent necessary such that the number of shares of Parent Common Stock issuable in the Merger pursuant to this Section 2.1 equals the Maximum Share Number) (the “ Merger Consideration ”). Parent hereby covenants and agrees that between the date of this Agreement and the Effective Time or the earlier termination of this Agreement, it will not redeem, repurchase or otherwise retire any previously outstanding shares of Parent Common Stock. All such shares of Company Common Stock shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, and each certificate previously representing any such shares shall thereafter represent the right to receive the Merger Consideration payable in respect of such shares of Company Common Stock.

(b)  Parent-Owned Shares . All shares of Company Common Stock owned by Parent or Merger Sub or any of their respective wholly owned Subsidiaries, if any, shall be cancelled and shall cease to exist and no Merger Consideration or other consideration shall be delivered in exchange therefor.

(c)  Merger Sub . Each share of common stock, par value $.01 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall continue as one share of common stock, par value $.01 per share, of the Surviving Corporation, which shall constitute the only shares of common stock of the Surviving Corporation.

(d)  Change in Shares . If, between the date of this Agreement and the Effective Time, the outstanding shares of Company Common Stock or Parent Common Stock shall have been changed into, or exchanged for, a different number of shares or a different class, by reason of any stock dividend, subdivision, reclassification, reorganization, recapitalization, split, combination, contribution or exchange of shares, the Merger Consideration and any adjustments or payments to be made under Section 2.4 and any other number or amount contained herein that is based upon the price of Parent Common Stock, including the Measurement Price, or the number of shares of Company Common Stock or Parent Common Stock, as the case may be, shall be correspondingly adjusted to provide the holders of Company Common Stock, Company Options and other awards under the Company Equity Plans, the same economic effect as contemplated by this Agreement prior to such event; provided that with respect to outstanding Company Options and other awards made under the Company Equity Plans, any such adjustments shall be made only to the extent required under the applicable Company Equity Plan.

(e)  Cancellation of Treasury Shares . Each share of Company Common Stock held in the Company treasury and each share of Company Common Stock, if any, owned by any wholly owned Subsidiary of the Company immediately prior to the Effective Time shall be cancelled and extinguished without any conversion thereof.

2.2 Exchange of Certificates .

(a)  Exchange Agent . Parent and/or Merger Sub shall deposit, or shall cause to be deposited, with American Stock Transfer & Trust Co. or another bank or trust company designated by Parent and reasonably acceptable to the Company (the “ Exchange Agent ”), for the benefit of the holders of shares of Company Common Stock, for exchange, in accordance with this Article II, through the Exchange Agent, (i) at or prior to the Effective Time, the Merger Consideration, including sufficient certificates representing shares of Parent Common Stock pursuant to Section 2.1(a) and (ii) from time to time after the Effective Time, cash sufficient to make payments in lieu of fractional shares in accordance with Section 2.2(e), in respect of shares of Company Common Stock for which Certificates have been properly delivered to the Exchange Agent. The shares of Parent Common Stock and cash amounts so deposited with the Exchange Agent, together with any dividends or distributions received by the Exchange Agent with respect to such shares, are referred to collectively as the “ Exchange Fund .” Any portion of the Exchange Fund that remains unclaimed by the former stockholders of the Company 180 days after the Effective Time shall be returned to Parent and such security holders shall thereafter look only to Parent for payment of the Merger Consideration, cash in lieu of fractional shares of Parent Common Stock and any dividends or distributions with respect to such shares of Parent Common Stock after the Effective Time, without any interest thereon.

(b)  Exchange Procedures . Promptly (and in any event no more than five Business Days) after the Effective Time, Parent shall instruct the Exchange Agent to mail to each holder of record of a certificate or certificates, which immediately prior to the Effective Time represented outstanding shares of Company Common Stock (the “ Certificates ”) (i) a 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 Exchange Agent) and (ii) instructions for use in effecting the surrender of the Certificates in exchange for the Merger Consideration payable in respect of the shares of Company Common Stock formerly represented by such Certificates. Upon surrender of a Certificate for cancellation to the Exchange Agent together with such letter of transmittal, properly completed and duly executed, and such other documents as may be reasonably required pursuant to such instructions, (1) the holder of such Certificate shall be entitled to receive in exchange therefor the Merger Consideration payable in respect of the shares of Company Common Stock formerly represented by such Certificate and cash in lieu of any fractional share of Parent Common Stock, and (2) the Certificate so surrendered shall forthwith be cancelled. In the event of a transfer of ownership of shares of Company Common Stock that is not registered in the transfer records of the Company, the Merger Consideration payable in respect of such shares of Company Common Stock may be paid to a transferee if the Certificate formerly representing such shares of Company Common Stock is presented to the Exchange Agent, accompanied by all documents required to evidence and effect such transfer and by evidence that any applicable stock transfer Taxes have been paid. Until surrendered as contemplated by this Section 2.2, 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 payable in respect of the shares of Company Common Stock formerly represented by such Certificate, cash in lieu of any fractional shares of Parent Common Stock to which such holder is entitled pursuant to Section 2.2(e) and any dividends or other distributions to which such holder is entitled pursuant to Section 2.2(c), in each case, without any interest thereon.

(c)  Distributions with Respect to Unexchanged Shares of Parent Common Stock . No dividends or other distributions declared or made with respect to shares of Parent Common Stock, with a record date after the Effective Time, shall be paid to the holder of any unsurrendered Certificate, unless and until the holder of such Certificate shall surrender such Certificate. Subject to the effect of abandoned property, escheat or other applicable Laws, following surrender of any such Certificate, there shall be paid to such holder of the certificates representing whole shares of Parent Common Stock issuable in exchange therefor, without interest, (i) promptly, the amount of dividends or other distributions with a record date at or after the Effective Time theretofore paid with respect to such whole shares of Parent Common Stock and (ii) at the appropriate payment date, the amount of dividends or other distributions, with a record date at or after the Effective Time but prior to such surrender and a payment date subsequent to such surrender, payable with respect to such whole shares of Parent Common Stock.

(d)  Further Rights in Company Common Stock . The Merger Consideration issued upon conversion of a share of Company Common Stock in accordance with the terms of this Agreement together with cash in lieu of any fractional shares of Parent Common Stock and any dividends or other distributions with a record date at or after the Effective Time to which each holder is entitled shall be deemed to have been issued in full satisfaction of all rights pertaining to such share of Company Common Stock.

(e)  Fractional Shares . No certificates or scrip representing fractional shares of Parent Common Stock will be issued upon the surrender for exchange of Certificates, but in lieu thereof each holder of Company Common Stock who would otherwise be entitled to a fraction of a share of Parent Common Stock upon surrender for exchange of Company Common Stock (after aggregating all fractional shares of Parent Common Stock to be received by such holder) shall receive an amount of cash (rounded down to the nearest whole cent), without interest, equal to the product of such fraction multiplied by the Measurement Price. Such payment shall occur as soon as practicable after the determination of the amount of cash, if any, to be paid to each holder of Company Common Stock with respect to any fractional shares and following compliance by such holder with the exchange procedures set forth in Section 2.2(b) and in the letter of transmittal. No dividend or distribution with respect to Parent Common Stock shall be payable on or with respect to any fractional share and such fractional share interests shall not entitle the owner thereof to any rights of a stockholder of Parent.

(f)  No Liability . None of Parent, the Surviving Corporation or the Company shall be liable to any holder of shares of Company Common Stock for the Merger Consideration (or dividends or distributions with respect thereto) or any cash amounts from the Exchange Fund delivered to a public official pursuant to any abandoned property, escheat or other applicable Law.

(g)  Lost Certificates . If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by Parent, the posting by such Person of a bond, in such reasonable amount as Parent may direct, as indemnity against any claim that may be made against it with respect to such Certificate, the Exchange Agent shall pay in exchange for such lost, stolen or destroyed Certificate the Merger Consideration payable in respect of the shares of Company Common Stock formerly represented by such Certificate and any cash in lieu of fractional shares of Parent Common Stock to which the holder thereof is entitled pursuant to Section 2.2(e) and any dividends or other distributions to which such holder is entitled pursuant to Section 2.2(c), in each case, without any interest thereon.

(h)  Withholding . Parent, the Surviving Corporation or the Exchange Agent shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of Company Common Stock, any holder of a Company Option or any holder of a Company Restricted Share such amounts as Parent, the Surviving Corporation or the Exchange Agent are required to deduct and withhold under the Code, or any Tax Law, with respect to the making of such payment. In accordance with the terms of the Company Equity Plans, Parent, the Surviving Corporation or the Exchange Agent shall permit holders of Company Restricted Shares to satisfy applicable withholding amounts under the Code by having Parent, the Surviving Corporation or the Exchange Agent withhold such amounts from the consideration otherwise payable in respect of the Company Restricted Shares pursuant to this Agreement. To the extent that amounts are so withheld by Parent, the Surviving Corporation or the Exchange Agent, such withheld amounts (or the value thereof) shall be promptly remitted to the applicable taxing authorities in accordance with the Code or other applicable Tax Law and shall be treated for all purposes of this Agreement as having been paid to the holder of Company Common Stock, the holder of a Company Option or the holder of a Company Restricted Share, as applicable, in respect of whom such deduction and withholding was made by Parent, the Surviving Corporation or the Exchange Agent.

2.3 Stock Transfer Books . At 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 of Company Common Stock theretofore outstanding on the records of the Company. From and after the Effective Time, the holders of Certificates representing shares of Company Common Stock outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such shares of Company Common Stock except as otherwise provided in this Agreement or by Law. On or after the Effective Time, any Certificates presented to the Exchange Agent or Parent for any reason shall solely represent the right to receive the Merger Consideration payable in respect of the shares of Company Common Stock formerly represented by such Certificates, any cash in lieu of fractional shares of Parent Common Stock to which the holders thereof are entitled pursuant to Section 2.2(e) and any dividends or other distributions to which the holders thereof are entitled pursuant to Section 2.2(c), in each case, without any interest thereon.

2.4 Company Options and Other Equity Awards .

(a) (i) Each outstanding and unexercised employee and director option granted by the Company to purchase shares of Company Common Stock (each, a “ Company Option ”) shall be cancelled as of the Effective Time in exchange for the right of the holder thereof to receive from Parent or the Surviving Corporation, in accordance with this Section 2.4, a lump sum cash payment (without interest) in the amount of the consideration described below, if any, with respect to each such Company Option and shall no longer represent the right to purchase Common Stock or any other equity securities of the Company, Merger Sub, Parent, the Surviving Corporation or any other Person or to purchase any other securities or assets, and (ii) as of the Effective Time, the Company Equity Plans shall be terminated. As used in this Agreement, the term “ Company Equity Plans ” means the plans set forth in Section 2.4(a) of the Company Disclosure Letter. At the Effective Time, each Company Option issued by the Company that is outstanding and remains unexercised at that time will be cancelled and converted into the right to receive an amount in cash equal to (A) the amount, if any, by which (x) the Exchange Ratio multiplied by the Measurement Price (the “ Measurement Value ”) exceeds (y) the per share exercise price of such Company Option, multiplied by (B) the number of shares of Common Stock issuable upon exercise of such Company Option in full (whether such Company Option is vested or unvested, but not to the extent it has theretofore been exercised) (with the aggregate amount of such payment rounded to the nearest cent). After the Effective Time, any such cancelled Company Option shall no longer be exercisable by the former holder thereof, but shall only entitle such holder to the payment described in the preceding sentence. As of the Effective Time, any Company Option with an exercise price equal to or greater than an amount equal to the Measurement Value shall be cancelled without consideration and be of no further force and effect. Parent and the Surviving Corporation shall use their reasonable best efforts to provide the lump sum cash payments required pursuant to this Section 2.4(a) within 10 Business Days following the Effective Time.

(b) Each share of Company Common Stock, or outstanding restricted share unit representing the right to receive a share of Company Common Stock, subject to vesting or other lapse restrictions pursuant to any of the Company Equity Plans (each, a “ Company Restricted Share ”) that is outstanding immediately prior to the Effective Time shall vest in full and become free of such restrictions as of the Effective Time in accordance with the terms of the Company Equity Plans and, at the Effective Time, the holder thereof shall be entitled to receive the Merger Consideration with respect to each such Company Restricted Share in accordance with Section 2.1, cash in lieu of fractional shares of Parent Common Stock to which such holder is entitled pursuant to Section 2.2(e) and any dividend or other distributions to which such holder is entitled. To the extent shares of Company Common Stock have not previously been issued in respect of outstanding restricted share unit awards that are Company Restricted Shares, such shares of Company Common Stock shall be issued no later than immediately prior to the Effective Time.

(c) Prior to the Effective Time, the Company and its Subsidiaries, as applicable, shall use their reasonable best efforts to take any and all actions necessary, including obtaining necessary consents and/or amending and/or interpreting any provisions of the Company Equity Plans or agreements governing the terms and conditions of the Company Options, to effectuate the provisions of this Section 2.4 (including approval of the Board of Directors of the Company or an authorized committee thereof).

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

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as set forth on the disclosure letter delivered to Parent and Merger Sub by the Company on or prior to the date of the execution of this Agreement (the “ Company Disclosure Letter ”) and except as disclosed in the Annual Report on Form 10-K of the Company for the year ended January 31, 2009 (the “ Company Form 10-K ”) and the Quarterly Reports on Form 10-Q and the Current Reports on Form 8-K, in each case, filed from the date of the filing of the Company Form 10-K to the date of this Agreement (other than disclosures in the “Risk Factors” or “Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995” sections of such reports and except as expressly provided in Section 3.6 of the Company Disclosure Letter), the Company hereby represents and warrants to Parent and Merger Sub that:

3.1 Organization and Qualification . The Company is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware, and the Company has all requisite corporate power and authority and all authorizations, licenses and Permits necessary to own and operate its properties and to carry on its businesses as now conducted. Except as set forth on Section 3.1 of the Company Disclosure Letter, the Company is qualified to do business and in good standing in every jurisdiction in which its ownership of property or the conduct of its businesses as now conducted requires it to qualify, except where the failure to be so qualified as a foreign corporation would not have, either individually or in the aggregate, a Company Material Adverse Effect, and all such jurisdictions are set forth on Section 3.1 of the Company Disclosure Letter. The Company has made available to Parent a complete and correct copy of the certificate or articles of incorporation and bylaws, each as amended to date, of the Company and each of its Subsidiaries. Neither the Company nor any of its Subsidiaries is in violation of any of the provisions of their respective certificate or articles of incorporation or bylaws (or equivalent organizational documents).

3.2 Subsidiaries . Neither the Company nor any of its Subsidiaries owns or holds the right to acquire any stock, partnership interest, joint venture interest or other equity ownership interest in any other Person. There are no contractual obligations of the Company or any of its Subsidiaries to make any loan to, or any investment (in the form of a capital contribution or otherwise) in, any Subsidiary of the Company or any other Person. Each Subsidiary of the Company is either wholly owned by the Company or a Subsidiary or Subsidiaries of the Company as indicated on Section 3.2 of the Company Disclosure Letter. Each outstanding share of capital stock of or other equity interest in each of the Company’s Subsidiaries is owned by the Company or a wholly owned Subsidiary of the Company, free and clear of any Liens, except Permitted Liens. Section 3.2 of the Company Disclosure Letter sets forth the name, jurisdiction of incorporation or formation, jurisdictions of qualification as a foreign corporation and the authorized and outstanding capital stock of each Subsidiary of the Company. Except as set forth on Section 3.2 of the Company Disclosure Letter, each Subsidiary of the Company is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, has all requisite corporate power and authority and all authorizations, licenses and Permits necessary to own its properties and to carry on its businesses and is qualified to do business and in good standing in every jurisdiction in which its ownership of property or the conduct of its businesses requires it to qualify, except where the failure to be qualified as a foreign corporation would not have, either individually or in the aggregate, a Company Material Adverse Effect.

3.3 Authorization; Valid and Binding Agreement .

(a) The Company has all necessary corporate power and authority to execute and deliver this Agreement and each other certificate, agreement, document and instrument to be executed and delivered by the Company in connection with the transactions contemplated by this Agreement (collectively, the “ Company Transaction Documents ”) and to perform its obligations hereunder and thereunder and to consummate, on the terms and subject to the conditions hereof and thereof, the transactions contemplated hereby and thereby, subject in the case of the consummation of the Merger to the adoption of this Agreement by the holders of a majority of the outstanding shares of Company Common Stock on the record date for the Stockholders’ Meeting (the “ Company Stockholder Approval ”). All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement and each of the Company Transaction Documents and the performance of all obligations of the Company hereunder and thereunder has been taken, subject only to obtaining the Company Stockholder Approval. This Agreement and each of the Company Transaction Documents have been duly executed and delivered by the Company or, in the case of any Company Transaction Document to be executed and delivered hereafter, each such Company Transaction Document will have been duly executed and delivered as of the Closing Date. This Agreement and each of the Company Transaction Documents each constitute or, in the case of any Company Transaction Documents to be executed hereafter, each such Company Transaction Document will constitute a legal, valid and binding obligation of the Company and, assuming due authorization, execution and delivery by Parent and Merger Sub, will be enforceable against the Company in accordance with its terms, except as enforceability may be limited by bankruptcy Laws, other similar Laws affecting creditors’ rights and general principles of equity affecting the availability of specific performance and other equitable remedies. As of the date of this Agreement, the Board of Directors of the Company, subject to Section 6.2, has unanimously approved and declared advisable this Agreement and recommended that the Company’s stockholders adopt this Agreement (the “ Board Recommendation ”).

(b) Except as set forth on Section 3.3(b) of the Company Disclosure Letter, neither the execution, delivery or performance of this Agreement and the Company Transaction Documents by the Company nor the consummation of the Merger by the Company or any of its Subsidiaries will, directly or indirectly (with or without the giving of notice or the passage of time or both), (i) require any consent, approval or other action of any Person under any Company Contract or any lease governing any material Company Leased Real Property, (ii) (A) violate, result in a breach of, conflict with or entitle any Governmental Entity or any other Person to accelerate the maturity or performance under, amend, call a default under, exercise any remedy under, modify, rescind, suspend or terminate or (B) create any material obligation on the part of the Company or any of its Subsidiaries that it was not obligated to perform immediately before such Company Transaction Document was executed under, any term of any such Company Contract or any Law (assuming, as to the Surviving Corporation, that it was a party thereto immediately before this Agreement was executed), (iii) violate or result in the material breach of any term of the certificate or articles of incorporation or bylaws or other organizational documents or resolution of the Board of Directors, any committee of the Board of Directors, stockholders or comparable bodies of the Company or any of its Subsidiaries or (iv) result in the amendment, creation, imposition or modification of any Lien other than a Permitted Lien upon or with respect to any of the material properties or assets that the Company or any of its Subsidiaries owns, uses or purports to own or use.

3.4 Governmental Filings; No Violations . Except for (a) the applicable requirements, if any, of state securities or “blue sky” laws (“ Blue Sky Laws ”), (b) the pre-merger notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder (the “ HSR Act ”), (c) filings under the Exchange Act and the Securities Act, (d) any filings required under the rules and regulations of the NYSE and (e) the filing of the Certificate of Merger pursuant to the DGCL, the execution and delivery of this Agreement and each of the Company Transaction Documents by the Company and the consummation of the transactions contemplated hereby and thereby do not (i) require any material authorization, consent, approval, exemption or other action by or notice to any court or Governmental Entity, (ii) conflict with or result in a material breach of the provisions of the Company’s or any of its Subsidiary’s certificate or articles of incorporation or bylaws or other organizational documents, or (iii) conflict with or result in a material breach of any Law to which the Company or any of its Subsidiaries is subject.

3.5 Capital Stock . The authorized capital stock of the Company consists of (a) 50,000,000 shares of preferred stock, of which, as of the date of this Agreement, no shares are issued and outstanding and (b) 100,000,000 shares of Company Common Stock, of which, as of the date of this Agreement, 24,822,019 shares are issued and outstanding and there are outstanding restricted share units representing 358,181 shares of Company Common Stock, which shares shall be issued and outstanding immediately prior to the Effective Time. As of the date of this Agreement, there are outstanding Company Options to purchase an aggregate of 1,889,840 shares of Company Common Stock. All issued shares of Company Common Stock have been duly authorized and are validly issued, fully paid and nonassessable. Other than pursuant to the Company Equity Plans, there is no outstanding, and there has not been reserved for issuance any: (i) share of capital stock or other voting securities of the Company or its Subsidiaries; (ii) security of the Company or its Subsidiaries convertible into or exchangeable for shares of capital stock or voting securities of the Company or its Subsidiaries; (iii) Company Option or other right or option to acquire from the Company or its Subsidiaries, or obligation of the Company or its Subsidiaries to issue, any shares of capital stock, voting securities or security convertible into or exchangeable for shares of capital stock or voting securities of the Company or its Subsidiaries, as the case may be; or (iv) equity equivalent interest in the ownership or earnings of the Company or its Subsidiaries or other similar right (the items in clauses (i) through (iv) collectively, “ Company Securities ”). There is no outstanding obligation of the Company or its Subsidiaries to repurchase, redeem or otherwise acquire any Company Security. There is no stockholder agreement, voting trust or other agreement or understanding to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries are bound relating to the voting, purchase, transfer or registration of any shares of capital stock of the Company or any of its Subsidiaries or preemptive rights with respect thereto.

3.6 Company SEC Reports .

(a) The Company has timely filed with or otherwise furnished (as applicable) to the Securities and Exchange Commission (the “ SEC ”) all forms, reports, schedules, statements, certifications and other documents required to be filed or furnished by it under the Securities Act or the Exchange Act since February 2, 2008 (such documents, as supplemented or amended since the time of filing, and together with all information incorporated by reference therein, the “ Company SEC Reports ”). No Subsidiary of the Company is required to make any filings with the SEC. As of their respective dates, the Company SEC Reports, including any financial statements or schedules included or incorporated by reference therein, at the time filed (i) complied as to form in all material respects with the applicable requirements of the Securities Act and the Exchange Act, and the rules and regulations of the SEC promulgated thereunder applicable to such Company SEC Reports, and (ii) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

(b) The Company maintains a system of internal control over financial reporting (as defined in Rule 13a-15 under the Exchange Act) that has been designed to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

(c) The Company maintains a system of “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) necessary in order for the Chief Executive Officer and Chief Financial Officer of the Company to engage in the review and evaluation process mandated by the Exchange Act and the rules promulgated thereunder. The Company’s “disclosure controls and procedures” are reasonably designed to ensure that all information (both financial and non-financial) required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that all such information is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure and to make the certifications of the Chief Executive Officer and Chief Financial Officer of the Company required under the Exchange Act with respect to such reports.

(d) Since February 2, 2008, the Company has not received any oral or written notification of a (x) “significant deficiency” or (y) “material weakness” in the Company’s internal controls over financial reporting. The terms “significant deficiency” and “material weakness” shall have the meanings assigned to them in the Statements of Auditing Standards 112, as in effect on the date hereof.

(e) The Company has provided or made available to Parent copies of all correspondence sent to or received from the SEC by the Company or its Subsidiaries or their respective counsel or accountants since February 2, 2008. As of the date hereof, there are no outstanding or unresolved comments in comment letters received from the SEC staff with respect to any Company SEC Reports.

(f) The audited consolidated financial statements included in the Company Form 10-K and the unaudited consolidated interim financial statements included in the Company’s quarterly report on Form 10-Q for the quarter ended May 2, 2009 (including any related notes and schedules) and the other financial statements included in the Company SEC Reports fairly present, in all material respects, the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and their consolidated cash flows for the periods set forth therein, and in each case were prepared in accordance with GAAP consistently applied during the periods involved (except as otherwise disclosed in the notes thereto and subject, in the case of financial statements for quarterly periods, to normal year-end adjustments not material in amount). The books of account and other financial records of the Company and each of its Subsidiaries are true and complete in all material respects, reflect only actual transactions and are maintained in accordance with GAAP.

(g) Since February 2, 2008, no attorney representing the Company or any of its Subsidiaries, whether or not employed by the Company or any Subsidiary of the Company, has reported to the Company’s chief legal counsel or Chief Executive Officer evidence of a material violation of securities Laws, breach of fiduciary duty or similar violation by the Company or any of its officers, directors, employees or agents pursuant to Section 307 of the Sarbanes-Oxley Act.

(h) Since February 2, 2008, to the knowledge of the Company, no employee of the Company or any of its Subsidiaries has provided or is providing information to any law enforcement agency or Governmental Entity regarding the commission or possible commission of any crime or the violation or possible violation of any applicable legal requirements of the type described in Section 806 of the Sarbanes-Oxley Act by the Company or any of its Subsidiaries.

(i) There is no liability or obligation of the Company or any of its Subsidiaries (whether accrued, contingent, absolute, determined or determinable) other than: (i) liabilities or obligations disclosed or provided for in the unaudited consolidated balance sheet of the Company as of May 2, 2009 or disclosed in the notes thereto (the “ Company Current Balance Sheet ”); (ii) liabilities or obligations incurred after May 2, 2009 in the ordinary course of the Company’s business; (iii) liabilities incurred in connection with the transactions contemplated by this Agreement and the Company Transaction Documents or disclosed on Section 3.6 of the Company Disclosure Letter; (iv) liabilities under any agreement, lease, note, mortgage, indenture or other obligation of the Company or any of its Subsidiaries, which is not in violation of the terms of this Agreement and which is disclosed on the Company Disclosure Letter if required hereby; and (v) other liabilities that are not, either individually or in the aggregate, material to the Company and its Subsidiaries, taken as a whole.

(j) The consolidated financial statements of the Company for all periods commencing after February 4, 2007 are in material compliance with the requirements of the Financial Accounting Standards Board’s Interpretation 48 (Accounting for Uncertainty in Income Taxes) (“ FIN 48 ”) and the Company and its Subsidiaries have provided or made available to Parent any and all of their respective accounting work papers with respect to compliance with the FIN 48 that Parent or its Representatives have reasonably requested.

3.7 Absence of Certain Changes or Events . Since January 31, 2009, the business of the Company and its Subsidiaries has been conducted in all material respects in the ordinary course consistent with past practice. From January 31, 2009 thru the date of this Agreement, (a) there has not been any event, occurrence or development that has had, either individually or in the aggregate, a Company Material Adverse Effect and (b) none of the Company or any of its Subsidiaries has taken any action that, if taken after the date of this Agreement, would constitute a breach of any of the covenants set forth in Section 5.1.

3.8 Properties . The Company or one of its Subsidiaries, as the case may be, (i) holds good and valid fee simple title to all of the properties and assets reflected in the Company Current Balance Sheet as being owned by the Company or one of its Subsidiaries or acquired after the date thereof (collectively, with respect to real property, the “ Company Owned Real Property ”) (except for assets (other than Company Owned Real Property) sold or otherwise disposed of since the date thereof in the ordinary course of business), free and clear of all Liens, except for Permitted Liens, (ii) holds the Company Owned Real Property, and each portion thereof or interest therein, free of any outstanding options or rights of first refusal or any offers to sell, purchase or lease or any Occupancy Agreements, except as set forth on Section 3.8 of the Company Disclosure Letter, (iii) except as set forth on Section 3.8 of the Company Disclosure Letter, is the lessee of all leasehold estates reflected in the Company Current Balance Sheet or acquired after the date thereof (except for leases that have expired by their terms since the date thereof), each of which, by address and store number, is set forth on Section 3.8 of the Company Disclosure Letter (collectively, with respect to real property, the “ Company Leased Real Property ”) (including those stores that have been approved for closing as noted therein) and (w) with respect to each Company Ground Leased Property, holds good and valid leasehold interest therein, free and clear of all Liens (except for Permitted Liens) and Occupancy Agreements, (x) is in possession of the properties purported to be leased thereunder and none of such properties is affected by any Occupancy Agreements, and each such lease is valid and in full force and effect, constitutes a valid and binding obligation of the Company or the applicable Subsidiary of the Company, and to the Company’s knowledge, each other party thereto, enforceable against the Company or the applicable Subsidiary of the Company

and, to the Company’s knowledge, each other party thereto, except as enforceability may be limited by bankruptcy Laws, other similar Laws affecting creditors’ rights and general principles of equity affecting the availability of specific performance and other equitable remedies, (y) except as set forth on Section 3.8 of the Company Disclosure Letter, the Company has not received any written notice of termination or cancellation of or of a breach or default under any such lease, and (z) except as set forth on Section 3.8 of the Company Disclosure Letter, neither the Company nor the applicable Subsidiary of the Company, nor, to the Company’s knowledge, any other party thereto, is or is alleged to be in material violation thereof or in material default in respect thereof, nor has there occurred any event or condition which (with or without notice or lapse of time or both) would constitute a material violation thereof or a material default thereunder. The Company has provided Parent with (or made available to Parent on the Company’s Virtual Premises data site prior to the date hereof) true, complete and correct copies of each of the leases for the Company Leased Real Property, including all amendments and supplements thereto and all material notices delivered or received by the Company or its Subsidiaries in connection therewith. For purposes of the preceding sentence, each notice delivered or received by the Company or a Subsidiary thereof in connection with a lease of the Company Leased Real Property shall be deemed a material notice unless such notice (i) does not affect the substantive rights and/or obligations of the parties to the related lease, (ii) has been superseded by a subsequent amendment, supplement or notice made available to Parent on the Company’s Virtual Premises data site prior to the date hereof, (iii) is no longer in effect by being either withdrawn or abandoned, or through the passage of time, or relates to a default under the related lease that has been cured, (iv) discloses a matter of public record otherwise disclosed in the Company Disclosure Letter, or (v) is related to a matter otherwise disclosed in the Company Disclosure Letter. Except as set forth on Section 3.8 of the Company Disclosure Letter, none of the leases of the Company Leased Real Property is guaranteed by any third party, none of the rights of the Company or any of its Subsidiaries under any leases for Company Leased Real Property will be subject to termination or modification as the result of the consummation of the transactions contemplated by this Agreement and the Company Transaction Documents, and upon consummation of the Merger, the Surviving Corporation will have succeeded to all of the rights, title and interest of the Company or its Subsidiaries either directly or indirectly by ownership of the Company’s Subsidiaries under each of such leases. Section 3.8 of the Company Disclosure Letter sets forth a true, correct and complete list of the Company Owned Real Property and a true, correct and complete list of the most recent title insurance policies or reports relating to the Company Owned Real Property and the Company Ground Leased Property. The Company Leased Real Property and Company Owned Real Property comprise all of the real property owned or leased by the Company and/or its Subsidiaries and used in the business of the Company and its Subsidiaries as currently operated. All material personal property shown to be owned by the Company and its Subsidiaries on the Company Current Balance Sheet have been maintained in accordance with the Company’s and its Subsidiaries’ normal practices and are in usable condition for the operation of the Company’s and its Subsidiaries’ businesses, ordinary wear and tear excepted. To the Company’s knowledge, there are no tax abatements or exemptions specifically affecting any Company Owned Real Property or any Company Ground Leased Property and neither the Company nor any of its Subsidiaries has received any written notice of any proposed increase in the assessed valuation of any Company Owned Real Property or Company Ground Leased Property or of any proposed public improvement assessments. The Company has provided Parent with (or made available to Parent on the Company’s Virtual Premises data site prior to the date hereof) true, complete and correct copies of the most recent tax bills for each Company Owned Real Property and each Company Ground Leased Property. No Company Owned Real Property or Company Ground Leased Property is comprised of a tax lot that also encompasses property that is not such Company Owned Real Property or Company Ground Leased Property. There is no pending, or, to the Company’s knowledge, threatened or contemplated condemnation, eminent domain or similar Proceeding affecting any Company Owned Real Property or any portion thereof or any Company Ground Leased Property or any portion thereof. To the Company’s knowledge, there exists no fact or condition that is reasonably likely to result in the termination of the existing access to any Company Owned Real Property, Company Leased Real Property or Company Ground Leased Property.

3.9 Tax Matters . Each of the Company and its Subsidiaries has timely filed all Tax Returns that it was required to file. All such Tax Returns are true, correct and complete in all material respects. Except as set forth on Section 3.9 of the Company Disclosure Letter, all Taxes due and payable by the Company or any of its Subsidiaries (whether or not shown on such Tax Returns) have been fully paid or properly accrued in accordance with GAAP. The provision for Taxes on the Company Current Balance Sheet is sufficient for all accrued and unpaid Taxes as of the date thereof and all Taxes that the Company or any Subsidiary of the Company is obligated to withhold from amounts owing to any employee, creditor or third party have been fully and timely paid or properly accrued. Since the date of the Company Current Balance Sheet, no Taxes have accrued with respect to the Company or any of its Subsidiaries other than Taxes arising in the ordinary course of business. There are no Liens with respect to any Taxes upon any of the Company’s or its Subsidiaries’ assets, other than Permitted Liens. The Company and its Subsidiaries have complied in all material respects with all Laws, rules and regulations relating to the payment and withholding of Taxes, and are not liable for any such Taxes or for failure to comply with such Laws, rules and regulations. There are no audits, claims, deficiencies, assessments, levies, administrative or judicial Proceedings pending, or to the Company’s knowledge threatened, against the Company or any of its Subsidiaries by any taxing authority. Neither the Company nor any of its Subsidiaries has received written notice of any claim made by any Governmental Entity in a jurisdiction where the Company or such Subsidiary does not file Tax Returns that the Company or such Subsidiary is or may be subject to taxation by that jurisdiction. There is no outstanding agreement, waiver or consent providing for an extension of the statutory period of limitations with respect to any Taxes or Tax Returns of the Company or any of its Subsidiaries. Other than the Tax Separation Agreement, neither the Company nor any of its Subsidiaries is a party to or is otherwise bound by any agreement or understanding providing for the allocation or sharing of Taxes, or has any obligation or liability under any such agreement or understanding to which it was once a party or otherwise bound, that could affect their liability for Taxes for any period after the Closing Date. Neither the Company nor any of its Subsidiaries has any obligation or liability under the Tax Separation Agreement that would affect their liability for Taxes for any period after the Closing Date. Neither the Company nor any of its Subsidiaries has been or is required to make any adjustment pursuant to Section 481(a) of the Code or any similar provision of state, local or foreign Tax law by reason of any change in any accounting method, there is no application pending with any taxing authority requesting permission for any change in any accounting method for Tax purposes and no taxing authority has proposed any such adjustment or change in accounting method, in any case, that could affect their liability for Taxes for any period after the Closing Date. Neither the Company nor any of its Subsidiaries (i) has been a member of an affiliated or similar group filing a consolidated, combined, unitary or similar income Tax Return, other than the affiliated groups of which the Company is the common parent corporation and the affiliated group of which The Limited, Inc. is the parent corporation, or (ii) has any liability for Taxes of any person (other than the Company and its Subsidiaries) under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local or foreign law), as a transferee or successor, by agreement or otherwise. There are no Tax rulings, requests for rulings or closing agreements relating to the Company or any of its Subsidiaries that could affect their liability for Taxes for any period after the Closing Date. The Company and each of its Subsidiaries has fully complied with all statutes and regulations relating to the accounting for and paying over of unclaimed or abandoned funds and other property. The Company has furnished Parent with, or otherwise made available to Parent, true and complete copies of all filed federal, state and local income or franchise Tax Returns and state and local sales and use Tax Returns for or including the Company and each of its Subsidiaries for all periods after December 31, 2005. Neither the Company nor any of its Subsidiaries has constituted either a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying for tax-free treatment under Section 355 of the Code (i) in the two years prior to the date of this Agreement or (ii) in a distribution which could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) in conjunction with the transactions contemplated by this Agreement. As of the date hereof, neither the Company nor any of its Subsidiaries has taken or agreed to take any action, nor does the Company have knowledge of any fact or circumstance, that would prevent the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code.

3.10 Material Contracts .

(a) Section 3.10 of the Company Disclosure Letter contains a true, complete and correct list of the Company Contracts as of the date hereof, copies of which have been made available to Parent. All of the Company Contracts that are required to be described in the Company SEC Reports or required to be filed as exhibits thereto have been described or filed as required.

(b) Each of the Company Contracts is a valid and binding obligation of the Company (or the Subsidiaries of the Company party thereto), and to the Company’s knowledge, the other parties thereto, enforceable against the Company and its Subsidiaries and, to the Company’s knowledge, the other parties thereto in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, moratorium, reorganization, arrangement or similar Laws affecting creditors’ rights generally and by general principles of equity.

(c) Neither the Company nor any of its Subsidiaries is, nor to the Company’s knowledge is any other party, in breach, default or violation (and no event has occurred or not occurred through the Company’s or any of its Subsidiaries’ action or inaction or, to the Company’s knowledge, through the action or inaction of any third party, that with notice or the lapse of time or both would constitute a breach, default or violation) of any term, condition or provision of any Company Contract to which the Company or any of its Subsidiaries is now a party, or by which any of them or any of their respective properties or assets may be bound, except for breaches, defaults or violations that would not have, either individually or in the aggregate, a Company Material Adverse Effect.

3.11 Intellectual Property .

(a) Section 3.11(a) of the Company Disclosure Letter sets forth a true, correct, and complete list of all registered Company-Owned Intellectual Property Rights, and all applications for such registration. The Company or one of its Subsidiaries is the sole and exclusive beneficial and record owner of all such Company-Owned Intellectual Property Rights. All such Company-Owned Intellectual Property Rights have been properly maintained by all requisite filings, renewals and payments, except for any such failures to maintain that would not reasonably be expected to have a Company Material Adverse Effect. All such issued or registered Company-Owned Intellectual Property Rights are subsisting and are valid and, to the Company’s knowledge, enforceable.

(b) To the Company’s knowledge, the Company and each of its Subsidiaries owns, or is licensed or has been granted covenants or otherwise possesses sufficient legally enforceable rights to use all Company Intellectual Property Rights, free and clear of all Liens, except for any such failures to own, be licensed, or otherwise possess rights that would not have a Company Material Adverse Effect.

(c) To the Company’s knowledge, neither the use of any Company Intellectual Property Rights by the Company or its Subsidiaries nor the conduct of the businesses of the Company or its Subsidiaries conflicts with, infringes upon, violates or interferes with, or constitutes a misappropriation of any right, title, interest or goodwill associated with any patent, copyright, trademark, trade name, service mark, trade secret or other intellectual property right of any other Person, except for any such conflict, infringement, violation or interference that would not have a Company Material Adverse Effect. Except as set forth on Section 3.11(c) of the Company Disclosure Letter, there are no pending or, to the knowledge of the Company, threatened proceedings or litigation or other adverse claims or communications by any Person to or against Company or any of its Subsidiaries alleging any such conflict, infringement, violation, interference or misappropriation.

(d) There are no Proceedings (including, without limitation, interference, reexamination, opposition, nullity or cancellation proceedings) pending or, to the Company’s knowledge, threatened (or any basis therefor known to the Company) against the Company or any of its Subsidiaries challenging the ownership rights of the Company or any of its Subsidiaries in, or the right of the Company or any of its Subsidiaries to use, or the validity or enforceability of, any of the Company-Owned Intellectual Property Rights.

(e) To the Company’s knowledge, except as set forth on Schedule 3.11(e), no Person materially conflicts with, infringes upon, violates or interferes with, or otherwise misappropriates any Company-Owned Intellectual Property Rights, and there is no Proceeding relating to any such conflict, infringement, violation or interference threatened or pending by the Company or any of its Subsidiaries.

(f) The consummation of the transactions contemplated by this Agreement and the Company Transaction Documents will not result in the loss or impairment of any Company-Owned Intellectual Property Right or payment of any additional amounts with respect to any Company Intellectual Property Right, nor will the consummation of such transactions require the consent of any other Person in respect of any Company-Owned Intellectual Property Right.

(g) Neither the Company nor any of its Subsidiaries is subject to any settlement agreement, covenant not to sue, outstanding order, decree, judgment or stipulation limiting or restricting in any manner the right of the Company or any of its Subsidiaries to use, license, transfer or enforce any of the Company-Owned Intellectual Property Rights.

(h) The Company has taken commercially reasonable action to maintain and protect the secrecy and confidentiality of all trade secrets and other confidential information used in the Company’s and its Subsidiaries’ businesses, including requiring all employees, consultants, contractors and other Persons with access to trade secrets or other confidential information of the Company or its Subsidiaries to execute binding confidentiality agreements and, to the knowledge of the Company, no such employee, consultant, contractor or other Person is in breach of any such confidentiality agreement. The Company and its Subsidiaries have secured from all employees, consultants, contractors and other Persons who have contributed to the creation or development of any material Company-Owned Intellectual Property Rights valid and binding written assignments of all rights to such contributions.

(i) Neither the Company nor any of its Subsidiaries has granted to any Person an exclusive license or equivalent exclusive right with respect to any of the Company-Owned Intellectual Property Rights, or assigned or conveyed to any Person any ownership interest (including joint ownership rights) therein, and no third party owns or holds any such right, license or interest.

3.12 Litigation . Except as set forth and summarized in Section 3.12 of the Company Disclosure Letter, there is no action, suit, hearing, claim, investigation, arbitration, inquiry or proceeding (“ Proceeding ”) pending or, to the Company’s knowledge, threatened (or any basis therefor known to the Company) against the Company or any of its Subsidiaries or any of their respective assets or properties, or their respective officers and directors, in their capacity as such, before or by any court, arbitrator or Governmental Entity that, if settled or adversely determined, might reasonably be expected to result in a settlement or judgment in an amount in excess (including reasonable attorneys’ fees) of $250,000 or which challenges this Agreement or the Company Transaction Documents or the transactions contemplated hereby or thereby. There is no unsatisfied judgment or award, decision, decree, injunction, rule or order of any Governmental Entity, court or arbitrator outstanding against the Company or any of its Subsidiaries that might materially and adversely affect the Company’s ability to consummate the transactions contemplated by this Agreement and the Company Transaction Documents. There is no Proceeding by the Company or any of its Subsidiaries currently pending or which the Company or any of its Subsidiaries intends to initiate.

3.13 Company Employee Benefit Plans .

(a) Section 3.13(a) of the Company Disclosure Letter sets forth a true and complete list of all “employee benefit plans” within the meaning of Section 3(3) of ERISA and all other material medical, dental, life insurance, equity, bonus or other incentive compensation, disability, salary continuation, severance, retention, retirement, pension, deferred compensation, vacation, sick pay or paid time off plans or policies, and any other material plans, agreements (including employment, consulting and collective bargaining agreements), policies, trust funds or arrangements (whether written or unwritten, insured or self-insured) (i) established, maintained, sponsored or contributed to (or with respect to which any obligation to contribute has been undertaken) by the Company, any of its Subsidiaries or any of their respective current ERISA Affiliates on behalf of any employee, officer, director, stockholder or other service provider of the Company or its Subsidiaries (whether current, former or retired) or their beneficiaries, or (ii) with respect to which the Company, its Subsidiaries or any of their respective current ERISA Affiliates has any material liability (whether contingent or actual) as to any such employee, officer, director, stockholder or other service provider or beneficiary (each a “ Company Plan ,” and collectively, the “ Company Plans ”).

(b) The Company has made available to Parent: (i) copies of all material documents setting forth the terms of each Company Plan, including all amendments thereto and all related trust documents; (ii) the three most recent annual reports (Form Series 5500), if any, required under ERISA or the Code in connection with each Company Plan; (iii) the most recent actuarial report (if any) for all Company Plans; (iv) the most recent summary plan description, if any, required under ERISA with respect to each Company Plan; (v) all material written administrative service agreements and group insurance contracts (if any) with respect to each Company Plan; (vi) the most recent IRS determination or opinion letter (if any) issued with respect to each Company Plan intended to be qualified under Section 401(a) of the Code; and (vii) any and all filings pending or made within the past three years under the IRS’ Employee Plans Compliance Resolution System Program or any of its predecessors or the Department of Labor Delinquent Filer Program with respect to any Company Plan.

(c) None of the Company, its Subsidiaries, any of their respective ERISA Affiliates or any of their respective predecessors currently, or at any time in the past six years, contributed to, contributes to, has been required to contribute to, participated in or participates in or in any way, directly or indirectly, has or had any liability with respect to any plan subject to the minimum funding standards of Section 412 of the Code or Section 302 of ERISA, or subject to Title IV of ERISA, including any “multiemployer plan” (within the meaning of Section 3(37) or 4001(a)(3) of ERISA or Section 414(f) of the Code) or any “single-employer plan” (within the meaning of Section 4001(a)(15) of ERISA) that is subject to Section 4063, 4064 or 4069 of ERISA.

(d) With respect to each of the Company Plans: (i) each Company Plan intended to qualify under Section 401(a) of the Code has received a determination letter from the IRS regarding its qualified status under the Code for all statutory and regulatory changes with respect to plan qualification requirements for which the IRS will issue such a letter and nothing has occurred, whether by action or by failure to act, that caused or could reasonably cause the loss of such qualification; (ii) in all material respects, all payments required by each Company Plan, any collective bargaining agreement or other agreement, or by Law (including all contributions, insurance premiums or intercompany charges) with respect to all prior periods have been made or provided for by the Company or its Subsidiaries in accordance with the provisions of each of the Company Plans, applicable Law and GAAP; (iii) no Proceeding has been asserted, instituted or, to the Company’s knowledge, has been threatened or anticipated against any of the Company Plans or any of the assets of any trust of any of the Company Plans (other than routine claims for benefits and appeals of such claims), or, with respect to their capacities in relation to the Company Plans only and other than routine claims for benefits and appeals of such claims, against any trustee or fiduciaries of the Company Plans thereof, any of the Company’s or its Subsidiaries’ ERISA Affiliates, or any employee, officer, director, stockholder or other service provider of the Company or its Subsidiaries (whether current, former or retired); (iv) each Company Plan complies in form and has been maintained and operated in all material respects in accordance with its terms and applicable Law, including ERISA and the Code; (v) no non-exempt “prohibited transaction,” within the meaning of Section 4975 of the Code and Section 406 of ERISA, has occurred with respect to the Company Plans which could reasonably be expected to give rise to a material liability; (vi) no Company Plan is under, and neither the Company nor any of its Subsidiaries has received any notice of, an audit or investigation by the IRS, Department of Labor or any other Governmental Entity, and no such completed audit, if any, has resulted in the imposition of any material Tax or penalty; (vii) with respect to each Company Plan that is funded mostly or partially through an insurance policy, none of the Company, its Subsidiaries or any of their respective ERISA Affiliates currently has any material liability in the nature of retroactive rate adjustment, loss sharing arrangement or other actual or contingent material liability arising wholly or partially out of events occurring on or before the date of this Agreement or is reasonably expected to have such liability with respect to periods through the Effective Time; (viii) no Company Plan provides post-retirement health and welfare benefits to any current or former employee of the Company or its Subsidiaries, except as disclosed on Section 3.13(d) of the Company Disclosure Letter or as required under Section 4980B of the Code, Part 6 of Title I of ERISA or any other applicable Law; and (ix) there are no loans by the Company or any of its Subsidiaries to any of their respective executive officers or directors.

(e) The consummation of the Merger alone, or in combination with any other event, including, without limitation, a termination of any employee, officer, director, stockholder or other service provider of the Company or its Subsidiaries (whether current, former or retired) or their beneficiaries, will not give rise to any liability under any Company Plan, including liability for severance pay, unemployment compensation, termination pay or withdrawal liability, or accelerate the time of payment or vesting or increase the amount of compensation or benefits due to any employee, officer, director, stockholder or other service provider of the Company or its Subsidiaries (whether current, former or retired) or their beneficiaries. No amount that could be received (whether in cash or property or the vesting of property) as a result of the consummation of the Merger by any employee, officer, director, stockholder or other service provider of the Company or its Subsidiaries under any Company Plan or otherwise would not be deductible by reason of Section 162(m) or Section 280G of the Code or would be subject to an excise tax under Section 4999 of the Code. Neither the Company nor any of its Subsidiaries has any indemnity obligation on or after the Effective Time for any Taxes imposed under Section 4999 or 409A of the Code. The Company has provided materially correct estimates (based on the assumptions stated in such estimates) of the following to Parent: (i) the maximum amount that could be paid to each individual who could reasonably be a “disqualified individual” (as such term is defined in Treasury Regulations Section 1.280G-1) entitled to receive a “parachute payment” (as such term is defined in Treasury Regulations Section 1.280G-1) in connection with the Merger under all employment, severance and termination agreements currently in effect and under all other compensation arrangements and Company Plans currently in effect, assuming that the individual’s employment with the Company or its Subsidiaries is terminated immediately following the Effective Time, (ii) the “base amount” (as defined in Section 280G(b)(e) of the Code) for each such individual as of the date of this Agreement, and (iii) the vesting schedule (including any acceleration provisions with respect thereto) for each outstanding Company Option, Company Restricted Share or other equity award held by each such individual as of the date of this Agreement.

(f) Except as provided in the Company Plans, neither the Company nor any of its Subsidiaries has made any promises or commitments to create any additional Company Plan or to modify or change in any material way any existing Company Plan.

(g) Neither the Company nor any of its Subsidiaries has unfunded liabilities pursuant to any Company Plan that is not intended to be qualified under Section 401(a) of the Code and is either an “account balance plan” or “nonaccount balance plan” within the meaning of Section 409A of the Code and the plan aggregation rules thereunder. 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 from the period beginning January 1, 2005 through December 31, 2008, and, if any amendments were reasonably necessary, has been amended prior to January 1, 2009 to comply in all material respects with Section 409A of the Code.

(h) Except as would not be expected to give rise to a material liability, individually or in the aggregate, (i) any individual who performs services for the Company or any of its Subsidiaries and who is not treated as an employee for federal income Tax purposes by the Company or its Subsidiaries is not an employee under applicable Law or for any purpose including for Tax withholding purposes or Company Plan purposes; (ii) the Company and its Subsidiaries have no liability by reason of an individual who performs or performed services for the Company or its Subsidiaries in any capacity being improperly excluded from participating in a Company Plan; and (iii) each employee of the Company and its Subsidiaries has been properly classified as “exempt” or “non-exempt” under applicable Law.

(i) Each Company Option (i) has an exercise price at least equal to the fair market value of Company Common Stock on a date no earlier than the date of the corporate action authorizing the grant, (ii) no Company Option has had its exercise date or grant date delayed or “back-dated” and (iii) all Company Options have been issued in compliance with all applicable Laws and properly accounted for in all material respects in accordance with GAAP. Section 3.13(i) of the Company Disclosure Letter sets forth a complete and accurate list, as of the date of this Agreement, of: (x) all Company Equity Plans, indicating for each Company Equity Plan the number of shares of Company Common Stock issued to date under such Company Equity Plans, the number of shares of Company Common Stock subject to outstanding Company Options and other equity awards and the number of shares of Company Common Stock reserved for future issuance under such Company Equity Plan and (y) all holders of outstanding Company Options or other equity awards, indicating with respect to each Company Option or other award the Company Equity Plan under which it was granted, the number of shares of Company Common Stock subject to such Company Option or other award, the exercise price and the date of grant, as applicable. The Company has provided or made available to Parent complete and accurate copies of all Company Equity Plans and forms of all award agreements evidencing Company Options and other equity awards.

(j) With respect to each Company Plan that is mandated by a government other than the United States or subject to the Laws of a jurisdiction outside of the United States (a “ Foreign Company Plan ”), the fair market value of the assets of each funded Foreign Company Plan, the liability of each insurer for any Foreign Company Plan funded through insurance or the book reserve established for any Foreign Company Plan, together with any accrued contributions, is sufficient in all material respects to procure or provide for the accrued benefit obligations, as of the date of this Agreement, with respect to all current and former participants in such Foreign Company Plan according to the actuarial assumptions and valuations most recently used to determine employer contributions to such Foreign Company Plan, and no transaction contemplated by this Agreement shall cause such assets or insurance obligations to be less than such benefit obligations in any material respect. Each Foreign Company Plan has been maintained and operated in all material respects in accordance with the applicable plan document and all applicable Laws and other requirements, and if intended to qualify for special Tax treatment, satisfies all requirements for such treatment in all material respects.

3.14 Insurance . Section 3.14 of the Company Disclosure Letter contains a true, complete and correct list of all policies of insurance existing on the date hereof relating to the assets of the Company and its Subsidiaries and the business and employees of the Company and its Subsidiaries (except for any such policies maintained to provide benefits to employees under a benefit plan or arrangement described in Section 3.13 hereof). All of such insurance policies are in full force and effect, and neither the Company nor any of its Subsidiaries is in default with respect to its material obligations under any of such insurance policies. All premiums and other payments due from the Company and its Subsidiaries prior to the date of this Agreement under or on account of any such insurance policies have been paid as of the date hereof. Such insurance policies are of the kinds, in the amounts and against the risks maintained by the Company and its Subsidiaries consistent with past practice.

3.15 Compliance with Laws; Permits .

(a) Each of the Company and its Subsidiaries is in compliance in all material respects with all Laws applicable to the Company and its Subsidiaries or applicable to any Company Owned Real Property or any Company Ground Leased Property. To the Company’s knowledge, neither the Company nor any of its Subsidiaries is under investigation with respect to, nor has the Company nor any of its Subsidiaries been threatened to be charged with or been given notice of any violation of, any applicable Law.

(b) (i) Except as would not reasonably be expected to have, either individually or in the aggregate, a Company Material Adverse Effect, each of the Company and its Subsidiaries has and maintains in full force and effect, and is in compliance with, all Permits necessary for each of the Company and its Subsidiaries to carry on their respective businesses as currently conducted and (ii) neither the Company nor any of its Subsidiaries has received notice that the Person issuing or authorizing any such Permit intends to terminate, or will refuse to renew or reissue, any such Permit upon its expiration.

(c) Since January 31, 2009, each of the Company and its Subsidiaries has been and are in compliance in all material respects with the applicable provisions of the Sarbanes-Oxley Act and the rules and regulations promulgated thereunder.

3.16 Environmental Matters .

(a) All references in this Section 3.16 to the Company shall include each entity comprising the Company, any Subsidiaries thereof and all predecessors thereto, and any Person or entity to the liabilities of which, pursuant to the Environmental Laws, contractually, by common law or by operation of law, the Company or any of its Subsidiaries have succeeded.

(b) All of the operations of the Company, its Subsidiaries and their respective assets, including any operations at or from any Company Owned Real Property and any Company Leased Real Property (collectively, the “ Company Real Property ”) or any real property formerly owned, used, leased, occupied, managed or operated by the Company or any of its Subsidiaries (the “ Former Company Real Property ”), comply and have at all times been in material compliance with all applicable Environmental Laws. Neither the Company nor any of its Subsidiaries nor, to the knowledge of the Company, any other Person has engaged in, authorized, allowed or suffered any operations or activities upon any of the Company Real Property or Former Company Real Property for the purpose of or in any way involving the handling, manufacture, treatment, processing, storage, use, generation, release, discharge, emission, dumping or disposal of any Hazardous Substances at, on or under the Company Real Property or the Former Company Real Property, except in material compliance with all applicable Environmental Laws.

(c) Neither the Company Real Property nor, to the knowledge of the Company, the Former Company Real Property contains any Hazardous Substances in, on, over, under or at it in concentrations that would currently violate Environmental Laws or impose liability or obligations on the Company or any Subsidiary under the Environmental Laws for any investigation, corrective action, remediation or monitoring of Hazardous Substances in, on, over, under or at such Company Real Property or Former Company Real Property. None of such Company Real Property nor, to the knowledge of the Company, any Former Company Real Property is listed or proposed for listing on the National Priorities List pursuant to the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq ., or any similar inventory of sites requiring investigation or remediation maintained by any state. Neither the Company nor any of the Company’s Subsidiaries has received any notice, whether oral or written, from any Governmental Entity or other Person of any actual or threatened material Environmental Liabilities with respect to the Company, its Subsidiaries, the Company Real Property or the conduct of the businesses of the Company or any of its Subsidiaries.

(d) There are no conditions existing at any Company Real Property that constitute, or which with the giving of notice or the passage of time or both may constitute material Environmental Liabilities requiring remedial or corrective action, removal or closure pursuant to the Environmental Laws. To the knowledge of the Company, there are no conditions existing at any Former Company Real Property that constitute, or which with the giving of notice or the passage of time or both may constitute material Environmental Liabilities requiring remedial or corrective action, removal or closure pursuant to the Environmental Laws for which the Company, any Subsidiary of the Company or the Surviving Corporation could be liable.

(e) Each of the Company and its Subsidiaries has all the material Permits necessary for the conduct of its businesses and operations that are required under applicable Environmental Laws and is in material compliance with the terms and conditions of all such Permits.

(f) The Company has provided to Parent all material environmental reports, assessments, audits, studies, investigations, data and other written environmental information in its custody, possession or control concerning the Company, its Subsidiaries and their respective assets and the Company Real Property and Former Company Real Property.

(g) Neither the Company nor any of its Subsidiaries has contractually, by operation of law, by the Environmental Laws, by common law or otherwise assumed or succeeded to any material Environmental Liabilities of any predecessors or any other Person.

(h) None of the transactions contemplated by this Agreement or the Company Transaction Documents will trigger any filing requirement or other action under any applicable Environmental Law, including, without limitation, any environmental transfer law, including, without limitation, the New Jersey Industrial Site Recovery Act (N.J.S.A. §§13:1L-6 et seq. ) and the Connecticut Real Property Transfer Act (C.G.S.A. 22a-134 et seq. ).

(i) The Company, its Subsidiaries, their businesses and their products are and have been in compliance with all applicable requirements under California’s Safe Drinking Water and Toxic Enforcement Act of 1986 (Proposition 65).

(j) None of the matters disclosed on the Company Disclosure Letter or in the Company SEC Reports with respect to this Section 3.16, individually or in the aggregate, is reasonably likely to have a Parent Material Adverse Effect or a Company Material Adverse Effect.

3.17 Affiliated Transactions . The Company has no knowledge that any current or former officer, director, stockholder or Affiliate of the Company or any of its Subsidiaries is a party to any material agreement, contract, commitment or transaction with the Company or any of its Subsidiaries or has any material interest in any material property used by the Company or any of its Subsidiaries or in a Person that is a party to any material Company Contract.

3.18 Labor and Employment Matters .

(a) Section 3.18(a) of the Company Disclosure Letter sets forth a true, complete and correct list of the name, job position and current annual base rate of salary of all employees of the Company and its Subsidiaries whose current annual base rate of salary is in excess of $100,000. To the knowledge of the Company, no such employee has indicated an intention to resign or retire. Except for obligations set forth on Section 3.18(a) of the Company Disclosure Letter, the Company has accrued by adequate reserves on the Company Current Balance Sheet, in accordance with GAAP, all wages, salaries, bonuses, vacation pay and other direct, indirect and deferred compensation earned by, or accrued for the benefit of, all employees of the Company and its Subsidiaries. Parent has been supplied with true, complete and correct copies of all currently in effect written employment codes, procedures, policies and employee manuals. Except as described on Section 3.18(a) of the Company Disclosure Letter, there are no material non-written employee policies or procedures that are binding on the Company or its Subsidiaries or that would be binding on Parent, Merger Sub or the Surviving Corporation.

(b) Neither the Company nor any of its Subsidiaries is a party to or bound by any collective bargaining agreement and there are no labor unions, works councils or other organizations representing, purporting to represent or, to the knowledge of the Company, attempting to represent any employee of the Company or any of its Subsidiaries. In the three years prior to the Closing Date, there has not been any actual or threatened strike, slowdown, picketing or work stoppage with respect to employees of the Company or any of its Subsidiaries and, to the knowledge of the Company, no such activity is anticipated. There are no labor disputes currently subject to any grievance procedure, arbitration or litigation and there is no representation petition with any Governmental Entity pending, threatened or, to the knowledge of the Company, anticipated with respect to any employee of the Company or any of its Subsidiaries. In the three years prior to the Closing Date, neither the Company nor any of its Subsidiaries has engaged in any unfair labor practices for which a claim has been made to the Company or any Governmental Entity and, to the knowledge of the Company, no facts exist that could reasonably be expected to give rise to an unfair labor practice charge within the meaning of the National Labor Relations Act. The Company and its Subsidiaries are in compliance in all material respects with the Worker Adjustment and Retraining Notification Act, 29 U.S.C. §2109 et seq. and the regulations promulgated thereunder (the “ WARN Act ”) and any comparable state statute or regulation and, to the knowledge of the Company. the Company and its Subsidiaries are in compliance in all material respects with all applicable Laws relating to employment and employment practices, workers’ compensation, terms and conditions of employment, worker safety, wages and hours, civil rights, discrimination, immigration, and collective bargaining. There have been no material claims of harassment, discrimination, retaliatory act or similar actions against any employee, officer or director of the Company or any of its Subsidiaries at any time during the past three years, no such claims are pending or threatened, and, to the knowledge of the Company, no such claim is anticipated. The Company and its Subsidiaries are not required to have, and do not have, any affirmative action plans or programs. To the Company’s knowledge, no employees of the Company or any of its Subsidiaries are in any material respect in violation of any term of any employment contract, non-disclosure agreement, non-competition agreement or any restrictive covenant to a former employer relating to the right of any such employee to be employed by the Company or any of its Subsidiaries because of the nature of the business conducted or presently proposed to be conducted by the Company or any of its Subsidiaries or to the use of trade secrets or proprietary information of others.

3.19 Bank Accounts . Section 3.19 of the Company Disclosure Letter sets forth a true, correct and complete list of the (a) name of each bank, savings and loan or other financial institution in which the Company and its Subsidiaries has an account, and the account numbers and names of all persons authorized to draw thereon or having access thereto, and (b) locations of all lock boxes and safe deposit boxes of the Company and its Subsidiaries and the names of all persons authorized to draw thereon or having access thereto.

3.20 Suppliers . Section 3.20 of the Company Disclosure Letter sets forth a true, correct and complete list that (a) sets forth the names of the 20 largest suppliers by cost dollar volume of merchandise inventory purchased by the Company and its Subsidiaries during the most recent full fiscal year and (b) indicates the cost dollar volume purchased by the Company and its Subsidiaries from each such supplier during such fiscal year. Except for letters of credit for outstanding purchase orders, neither the Company nor any of its Subsidiaries is required to provide any bonding or other financial security arrangements in connection with any transactions with any supplier in the ordinary course of its respective business. Since December 31, 2008, there has been no termination, cancellation or material curtailment of the business relationship of the Company or any of its Subsidiaries with any such supplier, nor has any such supplier provided the Company with written notice of an intent to so terminate, cancel or ma