Exhibit 10.1  






	
 

	
 

	
 


	
Execution Copy


	
 

	
 

	
 


	
 

	
 

	
 


	
 

	
 

	
 


	
ASSET PURCHASE AGREEMENT


	
 

	
 

	
 


	
 

	
 

	
 


	
 

	
 

	
 


	
among


	
 

	
 

	
 


	
LENOX GROUP INC.,


	
 


	
LENOX, INCORPORATED,


	
 


	
LENOX WORLDWIDE, LLC,


	
 


	
LENOX RETAIL, INC.,


	
 


	
LENOX SALES, INC.,


	
 


	
FL 56 INTERMEDIATE, CORP.,


	
 


	
D 56, INC.


	
 


	
and


	
 


	
LDG-DELAWARE OPCO, INC.


	
 


	
Dated as of February 28, 2009













	
 

	
 

	
 

	
 

	
 


	
TABLE OF CONTENTS


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
Page


	
 

	
 

	
 

	
 

	
 


	
ARTICLE I
 DEFINITIONS

	
 

	
1


	
 

	
 

	
 


	
Section 1.01

	
 

	
Definitions

	
 

	
1


	
Section 1.02

	
 

	
Interpretation
 and Rules of Construction

	
 

	
15


	
 

	
 

	
 

	
 

	
 


	
ARTICLE II
 PURCHASE AND SALE

	
 

	
15


	
 

	
 

	
 


	
Section 2.01

	
 

	
Purchase and
 Sale of Assets

	
 

	
15


	
Section 2.02

	
 

	
Assumption
 and Exclusion of Liabilities

	
 

	
19


	
Section 2.03

	
 

	
Purchase of
 Purchased Assets

	
 

	
21


	
Section 2.04

	
 

	
Purchase
 Price

	
 

	
22


	
Section 2.05

	
 

	
Payment of
 Purchase Price

	
 

	
22


	
Section 2.06

	
 

	
Allocation
 of the Purchase Price

	
 

	
22


	
Section 2.07

	
 

	
Determined
 Cure Costs

	
 

	
23


	
Section 2.08

	
 

	
Closing

	
 

	
23


	
Section 2.09

	
 

	
Closing
 Deliveries by the Sellers

	
 

	
23


	
Section 2.10

	
 

	
Closing
 Deliveries by the Purchaser

	
 

	
24


	
Section 2.11

	
 

	
Relinquishment
 of Control

	
 

	
25


	
Section 2.12

	
 

	
Assignment
 of Contracts and Rights

	
 

	
25


	
 

	
 

	
 

	
 

	
 


	
ARTICLE III
 REPRESENTATIONS AND WARRANTIES OF THE SELLERS

	
 

	
26


	
 

	
 

	
 


	
Section 3.01

	
 

	
Organization,
 Authority and Qualification of the Seller

	
 

	
26


	
Section 3.02

	
 

	
No Conflict

	
 

	
27


	
Section 3.03

	
 

	
Governmental
 Consents and Approvals

	
 

	
27


	
Section 3.04

	
 

	
SEC Filings;
 Financial Statements; Undisclosed Liabilities

	
 

	
28


	
Section 3.05

	
 

	
Litigation

	
 

	
28


	
Section 3.06

	
 

	
Compliance
 with Laws

	
 

	
29


	
Section 3.07

	
 

	
Environmental
 Matters

	
 

	
29


	
Section 3.08

	
 

	
Intellectual
 Property

	
 

	
30


	
Section 3.09

	
 

	
Real
 Property

	
 

	
31


	
Section 3.10

	
 

	
Employee
 Benefit Matters

	
 

	
32


	
Section 3.11

	
 

	
Taxes

	
 

	
32


	
Section 3.12

	
 

	
Material
 Contracts

	
 

	
33


	
Section 3.13

	
 

	
Brokers

	
 

	
34


	
Section 3.14

	
 

	
Insurance

	
 

	
34


	
Section 3.15

	
 

	
Permits

	
 

	
35


	
Section 3.16

	
 

	
Absence of
 Certain Changes

	
 

	
35


	
Section 3.17

	
 

	
Labor
 Matters

	
 

	
36


	
Section 3.18

	
 

	
Assets

	
 

	
36


	
 

	
 

	
 

	
 

	
 


	
ARTICLE IV
 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

	
 

	
36


	
 

	
 

	
 


	
Section 4.01

	
 

	
Organization
 and Authority of the Purchaser

	
 

	
36


	
Section 4.02

	
 

	
No Conflict

	
 

	
37





i







TABLE OF CONTENTS

(continued)


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
Page


	
 

	
 

	
 

	
 

	
 


	
Section 4.03

	
 

	
Governmental
 Consents and Approvals

	
 

	
37


	
Section 4.04

	
 

	
Litigation

	
 

	
37


	
Section 4.05

	
 

	
Brokers and
 Finders

	
 

	
37


	
Section 4.06

	
 

	
Financial
 Capability

	
 

	
37


	
Section 4.07

	
 

	
Condition of
 the Business

	
 

	
38


	
 

	
 

	
 

	
 

	
 


	
ARTICLE V
 ADDITIONAL AGREEMENTS

	
 

	
38


	
 

	
 

	
 


	
Section 5.01

	
 

	
Assumption
 of Assigned Contracts

	
 

	
38


	
Section 5.02

	
 

	
Conduct of
 Business Prior to the Closing

	
 

	
39


	
Section 5.03

	
 

	
Access to
 Information

	
 

	
42


	
Section 5.04

	
 

	
Regulatory
 and Other Authorizations; Notices and Consents

	
 

	
42


	
Section 5.05

	
 

	
Permits and
 Licenses

	
 

	
43


	
Section 5.06

	
 

	
Environmental
 Related Actions

	
 

	
43


	
Section 5.07

	
 

	
Intellectual
 Property

	
 

	
43


	
Section 5.08

	
 

	
Further
 Action

	
 

	
44


	
Section 5.09

	
 

	
Cooperation
 and Exchange of Information

	
 

	
44


	
Section 5.10

	
 

	
Conveyance Taxes

	
 

	
45


	
Section 5.11

	
 

	
Nondisclosure

	
 

	
45


	
Section 5.12

	
 

	
Documents at
 Closing

	
 

	
46


	
Section 5.13

	
 

	
Non-Competition;
 Non-Solicitation

	
 

	
46


	
Section 5.14

	
 

	
Parties’
 Access to Records After Closing

	
 

	
46


	
Section 5.15

	
 

	
Notification
 of Certain Matters

	
 

	
47


	
Section 5.16

	
 

	
Customers
 and Suppliers

	
 

	
47


	
Section 5.17

	
 

	
COBRA
 Matters

	
 

	
47


	
 

	
 

	
 

	
 

	
 


	
ARTICLE VI
 EMPLOYEE MATTERS

	
 

	
47


	
 

	
 

	
 


	
Section 6.01

	
 

	
Employment

	
 

	
47


	
Section 6.02

	
 

	
Employee
 Benefits

	
 

	
48


	
 

	
 

	
 

	
 

	
 


	
ARTICLE VII
 BANKRUPTCY COURT MATTERS

	
 

	
50


	
 

	
 

	
 


	
Section 7.01

	
 

	
Bankruptcy Court
 Filings

	
 

	
50


	
 

	
 

	
 

	
 

	
 


	
ARTICLE VIII
 CONDITIONS TO CLOSING

	
 

	
50


	
 

	
 

	
 


	
Section 8.01

	
 

	
Conditions
 to Obligations of the Sellers

	
 

	
50


	
Section 8.02

	
 

	
Conditions
 to Obligations of the Purchaser

	
 

	
51


	
 

	
 

	
 

	
 

	
 


	
ARTICLE IX
 TERMINATION, AMENDMENT AND WAIVER

	
 

	
53


	
 

	
 

	
 


	
Section 9.01

	
 

	
Termination

	
 

	
53


	
Section 9.02

	
 

	
Effect of
 Termination

	
 

	
54


	
 

	
 

	
 

	
 

	
 


	
ARTICLE X
 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES

	
 

	
54


	
 

	
 

	
 


	
Section 10.01

	
 

	
Non-Survival
 of Representations and Warranties

	
 

	
54





ii








TABLE OF CONTENTS

(continued)


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
Page 


	
 

	
 

	
 


	
ARTICLE XI
 GENERAL PROVISIONS

	
 

	
54


	
 

	
 

	
 


	
Section 11.01

	
 

	
Expenses

	
 

	
54


	
Section 11.02

	
 

	
Notices

	
 

	
54


	
Section 11.03

	
 

	
Public
 Announcements

	
 

	
55


	
Section 11.04

	
 

	
Severability

	
 

	
56


	
Section 11.05

	
 

	
Entire
 Agreement

	
 

	
56


	
Section 11.06

	
 

	
Successors
 and Assigns

	
 

	
56


	
Section 11.07

	
 

	
Non-Recourse

	
 

	
56


	
Section 11.08

	
 

	
Amendment

	
 

	
57


	
Section 11.09

	
 

	
Waiver

	
 

	
57


	
Section 11.10

	
 

	
No Third
 Party Beneficiaries

	
 

	
57


	
Section 11.11

	
 

	
Governing
 Law

	
 

	
57


	
Section 11.12

	
 

	
Waiver of
 Jury Trial

	
 

	
57


	
Section 11.13

	
 

	
Currency

	
 

	
58


	
Section 11.14

	
 

	
Construction

	
 

	
58


	
Section 11.15

	
 

	
Counterparts

	
 

	
58








	
 

	
 

	
 

	
 


	
EXHIBITS

	
 

	
 

	
 


	
 

	
 

	
 

	
 


	
Exhibit A

	
—

	
 

	
[Intentionally
 Left Blank]


	
 

	
 

	
 

	
 


	
Exhibit B

	
—

	
 

	
Form of
 Assignment of Intellectual Property


	
 

	
 

	
 

	
 


	
Exhibit C

	
—

	
 

	
Form of Bill
 of Sale and Assignment and Assumption Agreement


	
 

	
 

	
 

	
 


	
Exhibit D

	
—

	
 

	
Form of Deed


	
 

	
 

	
 

	
 


	
Exhibit E

	
—

	
 

	
Purchaser’s
 Disclosure Schedule


	
 

	
 

	
 

	
 


	
Exhibit F

	
—

	
 

	
Sellers’
 Disclosure Schedule


	
 

	
 

	
 

	
 


	
Exhibit G

	
—

	
 

	
Backstop
 Rights Purchase Agreement


	
 

	
 

	
 

	
 


	
Exhibit H

	
—

	
 

	
Credit
 Agreement





iii







 


                    ASSET
PURCHASE AGREEMENT (this “Agreement”), dated as of February 28, 2009,
among Lenox Group Inc., a Delaware corporation (“LGI”), Lenox,
Incorporated, a New Jersey corporation (“LI”), Lenox Worldwide, LLC, a
Delaware limited liability company (“LW”), Lenox Retail, Inc., a
Minnesota corporation (“LRI”), Lenox Sales, Inc., a Minnesota
corporation (“LSI”), FL 56 Intermediate, Corp., a Delaware corporation
(“FL”), D 56, Inc., a Minnesota corporation (“D56” and
collectively with LGI, LI, LW, LRI, LSI and FL, the “Sellers”), and
LDG-Delaware Opco, Inc., a Delaware corporation (the “Purchaser”).


RECITALS


                    WHEREAS,
the Sellers are engaged in the business of manufacturing, designing,
distributing, sourcing, marketing and selling (including through wholesale,
retail and direct channels) dinnerware, stemware, fine crystal and
beverageware, flatware, giftware, other tableware, holiday, seasonal and home
decorative, figurine and collectible products and accessories and other similar
products, including under the Seller Brands (as defined below) and other brands
(the “Business”);


                    WHEREAS,
on November 23, 2008, the Sellers commenced voluntary cases under chapter 11
(the “Chapter 11 Cases”) of title 11 of the United States Code (the “Bankruptcy
Code”) in the United States Bankruptcy Court for the Southern District of
New York (the “Bankruptcy Court”);


                    WHEREAS,
on December 16, 2008, the Bankruptcy Court entered an order (the “Bidding
Procedures Order”) approving procedures for the sale of all or substantially
all of the Sellers’ assets;


                    WHEREAS,
the Purchaser was the Successful Bidder (as defined in the Bidding Procedures
Order) for the Sellers’ assets under the procedures approved in the Bidding
Procedures Order; and


                    WHEREAS,
the Sellers wish to sell, assign and transfer to the Purchaser, and the
Purchaser wishes to purchase and acquire from the Sellers, the Purchased Assets
(as defined below), and the Purchaser is willing to assume all of the Assumed
Liabilities (as defined below), all upon the terms and subject to the
conditions set forth herein.


                    NOW,
THEREFORE, in consideration of the promises and the representations,
warranties, agreements and covenants hereinafter set forth, and intending to be
legally bound, the Sellers and the Purchaser hereby agree as follows:


ARTICLE I DEFINITIONS


                    Section
1.01 Definitions. For purposes of this Agreement:


                    “Accounts
Payable” means any and all accounts payable of the Sellers to third parties
(other than to any Seller or any Affiliate of any Seller) arising from the
conduct of the Business, incurred by the Sellers before the Petition Date.







                    “Accrued
Professional Fees” means any accrued but unpaid professional fees incurred
by the Sellers or the Creditors’ Committee through the Closing Date that have
been or subsequently will be approved by the Bankruptcy Court which shall be
deemed to include without limitation the accrued and unpaid fees of Berenson approved
by order of the court dated February 12, 2009, other than transaction,
restructuring, success or financing fees unless consented to in writing by the
Purchaser and the Sponsors.


                    “Action”
means any claim, as defined in the Bankruptcy Code, action, complaint, suit,
litigation, arbitration, appeal, petition, demand, inquiry, hearing,
proceeding, investigation or other dispute, whether civil, criminal,
administrative or otherwise, at law or in equity, by or before any Governmental
Authority or any third person.


                    “Affiliate”
means, with respect to any specified Person, any other Person that directly, or
indirectly through one or more intermediaries, controls, is controlled by, or
is under common control with, such specified Person.


                    “Agreement”
has the meaning given to it in the preamble hereto.


                    “Allocation”
has the meaning given to it in Section 2.06.


                    “Ancillary
Agreements” means the Bill of Sale and Assignment and Assumption Agreement,
the Deeds, the Assignments of Leased Properties, the Assignments of
Intellectual Property and any other instrument or agreement contemplated by
this Agreement or the foregoing.


                    “Assigned
Contract” means any Contract concerning Transferred Intellectual Property
or that relates to, or is used or useful in or held for use in, the Business,
including any Material Contract, that is not an Excluded Asset.


                    “Assignments
of Leased Properties” means the Assignments of Leased Properties to be
executed and delivered by the Sellers and the Purchaser at the Closing with
respect to the leases of the Leased Real Property that are Assigned Contracts,
in the form to be reasonably agreed by Purchaser and Sellers prior to the
Closing.


                    “Assignments
of Intellectual Property” means the Assignments of Owned Intellectual
Property to be executed and delivered by the Sellers and Purchaser at the
Closing, substantially in the form attached hereto as Exhibit B.


                    “Assumed
Liabilities” has the meaning given to it in Section 2.02(a).


                    “Assumption
Notice” has the meaning given to it in Section 2.12(b).


                    “Bankruptcy
Code” has the meaning given to it in the recitals hereto.


                    “Bankruptcy
Court” has the meaning given to it in the recitals hereto.


2







                    “Bill
of Sale and Assignment and Assumption Agreement” means the Bill of Sale and
Assignment and Assumption Agreement to be executed and delivered by the Sellers
and the Purchaser at the Closing, substantially in the form attached hereto as Exhibit
C.


                    “Business”
has the meaning given to it in the recitals hereto.


                    “Business
Day” means any day that is not a Saturday, a Sunday or other day on which
banks are required or authorized by Law to be closed in the City of New York.


                    “Business
Employees” means all current employees, officers and directors of Sellers
and their Affiliates who perform, as of the date hereof, services primarily
related to the Business.


                    “Cash”
means all cash and cash equivalents as determined in accordance with GAAP, net
of all outstanding checks and transfers; provided, that “Cash” shall not be
less than $0.00.


                    “Chapter
11 Cases” has the meaning given to it in the recitals hereto.


                    “Closing”
has the meaning given to it in Section 2.08. 


                    “Closing
Date” has the meaning given to it in Section 2.08.


                    “COBRA
Notice Election” has the meaning given to it in Section 5.17.


                    “Consent”
means any consent, waiver, approval, order or authorization of, or
registration, declaration or filing with or notice to, any Governmental
Authority or other Person.


                    “Consent
Pending Contract” has the meaning given to it in Section 2.12(a).


                    “Contracts”
means any contract, arrangement, note, bond, commitment, purchase order, sales
order, franchise, guarantee, indemnity, indenture, instrument, lease, license
or other agreement, understanding, instrument or obligation, whether written or
oral, all amendments, supplements and modifications of or for any of the
foregoing and all rights and interests arising thereunder or in connection
therewith, other than any Employee Plan (except for any Contract set forth on Section
2.01(b)(vi) of the Sellers’ Disclosure Schedule).


                    “Contract
Retention Period” has the meaning given to it in Section 2.12(b).


                    “control”
(including the terms “controlled by” and “under common control with”),
with respect to the relationship between or among two or more Persons, means
the possession, directly or indirectly or as trustee, personal representative
or executor, of the power to direct or cause the direction of the affairs,
policies or management of a Person, whether through the ownership of voting
securities, as trustee, personal representative or executor, by Contract, credit
arrangement or otherwise.


                    “Conveyance
Taxes” means all sales, use, value added, transfer, stamp, stock transfer,
real property transfer and similar Taxes.


3







                    “Corporate
Name” has the meaning given to it in Section 5.07(a).


                    “Credit
Bid” means a credit bid of a portion of the Pre-Petition Term Loan
Obligations in an amount equal to $44,500,000.


                    “Creditors’
Committee” means the Official Committee of Unsecured
Creditors appointed by the Office of United States Trustee in the Chapter 11
Cases.


                    “D56”
has the meaning set forth in the preamble hereto.


                    “D56
Business” means the business of manufacturing, designing, distributing,
sourcing, marketing and selling (including through wholesale, retail and direct
channels) of holiday, seasonal and home decorative, figurine and collectible
products and accessories and other similar products under the Department 56
brands as conducted by or on behalf of D56.


                    “D56
Scale Down” means in connection with the D56 Business, the discontinuance
of certain product lines, showrooms and retail stores, the restructuring of the
D56 sales force, and the termination of employees publicly disclosed by LGI
prior to the date hereof, including employees at the D56 headquarters in Eden
Prairie, Minnesota, employees at the D56 offices in Petaluma, California, and
field sales and showroom employees.


                    “Deed”
means, with respect to each parcel of Owned Real Property, the instrument of
conveyance customary to the applicable jurisdiction in registrable or
recordable form where applicable, to be executed and delivered by the
applicable Seller at the Closing in order to convey to the Purchaser such
Seller’s interest, if any, in such parcel of Owned Real Property, free and
clear of all Liens, other than Permitted Encumbrances, substantially in the
form attached hereto as Exhibit D.


                    “Determined
Cure Costs” means, in the aggregate, all amounts payable to counterparties
of Assigned Contracts (other than Excluded Contracts) on account of the
assumption of the Assigned Contracts (other than Excluded Contracts) by the
Sellers as determined pursuant to a Final Order, which Order may be the Sale
Order.


                    “DIP
Credit Agreement” means that certain Senior Secured, Super-Priority
Debtor-In-Possession Revolving Credit Agreement, dated as of November 25, 2008,
among D56, LRI, LI, LGI, the DIP Lenders and other guarantors party thereto,
UBS Securities LLC, JPMorgan Chase Bank, NA, UBS Loan Finance LLC, and UBS AG,
Stamford Branch.


                    “DIP
Lenders” means the several banks and other financial institutions or
entities from time to time that made loans under the DIP Credit Agreement.


                    “DIP
Order” means the Final Order of the Bankruptcy Court approving the Sellers’
Motion (A) for Authorization to (i) Obtain Post-Petition Financing Pursuant to
11 U.S.C. § 364; (ii) Utilize Cash Collateral Pursuant to 11 U.S.C. § 363;
(iii) Grant Priming Liens and Superpriority Claims to Post-Petition Lenders
Pursuant to 11 U.S.C. § 364(c) and (d); (iv) Provide Adequate Protection to
Pre-Petition Lenders Pursuant to 11 U.S.C. §§ 361, 362, 363, and 364 and (B) to
Schedule a Final Hearing Pursuant to Bankruptcy Rule 4001 dated November 23,
2008.


4







                    “Employee
Plans” has the meaning given to it in Section 3.10(a).


                    “Environmental
Claim” means any and all written complaints, summons, citations,
directives, orders, claims, litigation, investigations, notices of violation,
judgments, administrative, regulatory or judicial actions, suits, demands or
proceedings, or written notices of noncompliance or violation by any
Governmental Authority or Person involving or alleging potential liability
arising out of or resulting from any violation of Environmental Law or the
presence or Release of Hazardous Material from or relating to: (i) any of the
Owned Real Property, Leased Real Property or any other assets, properties or
businesses of Sellers or any of their respective predecessors in interest; (ii)
any facilities receiving or handling Hazardous Materials generated by any of
the Sellers.


                    “Environmental
Law” means all Federal, state, local and foreign Laws, statutes,
ordinances, rules, regulations, permits, licenses, registrations, Orders,
judgments, decrees, injunctions, or legally enforceable requirements of any
Governmental Entity which are in effect on or prior to the Closing Date, and
all final court orders and decrees and arbitration awards imposing Liability or
establishing standards of conduct for protection of the environment and human
health and safety including the Comprehensive Environmental Response,
Compensation and Liability Act (“CERCLA”), 42 U.S.C. 9601 et seq., as
amended; the Resource Conservation and Recovery Act (“RCRA”), 42 U.S.C.
6901 et seq., as amended; the Clean Air Act (“CAA”), 42 U.S.C. 7401 et
seq., as amended; the Clean Water Act (“CWA”), 33 U.S.C. 1251 et seq.,
as amended; the Occupational Safety and Health Act (“OSHA”), 29 U.S.C.
655 et seq.


                    “Environmental
Liability” means all Liabilities, monetary obligations, Remedial Actions,
losses, damages, punitive damages, consequential damages, treble damages,
natural resource damages, costs and expenses (including all reasonable fees,
disbursements and expenses of counsel, experts and consultants and costs of
investigations and feasibility studies), fines, penalties, sanctions and interest
of the Sellers arising under Environmental Laws, or otherwise incurred as a
result of any claim or demand by any Governmental Authority or any third party,
and which relate to any environmental condition, violation or alleged violation
of Environmental Laws or Releases of Hazardous Materials at or from (i) any of
the Owned Real Property, Leased Real Property or any other assets, properties
or businesses of any Seller or any of their respective predecessors in
interest; (ii) adjoining properties or businesses; or (iii) any facilities
which received Hazardous Materials generated by any Seller or any predecessor
in interest of any Seller.


                    “Environmental
Permits” means any permit, registration, certificate, qualification,
approval, identification number, license and other authorization required under
or issued pursuant to any applicable Environmental Law or otherwise required by
any applicable Governmental Authority.


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


                    “ERISA
Affiliate” means a Person required at any particular time to be aggregated
with any of the Sellers under Sections 414(b), (c), (m) or (o) of the Tax Code
or Section 4001 of ERISA.


5







                    “Exchange
Act” means the Securities Exchange Act of 1934, as amended, including the
rules and regulations promulgated thereunder.


                    “Excluded
Assets” has the meaning given to it in Section 2.01(b).


                    “Excluded
Contract” has the meaning given to it in Section 5.01(a).


                    “Excluded
Incentive Assets” means the Tax credits, incentives and grants set forth in
the first three items of Section 2.01(b)(vii) of the Sellers’ Disclosure
Schedule.


                    “Excluded
Liabilities” has the meaning given to it in Section 2.02(b).


                    “Excluded
Taxes” means (i) all Taxes (other than Pre-Closing Lien Taxes and
Conveyance Taxes) relating to the Purchased Assets or the Business for any
Pre-Closing Period and (ii) any income Taxes imposed on the Sellers. For
purposes of this Agreement, in the case of any Straddle Period, (a) Property
Taxes relating to the Purchased Assets allocable to the Pre-Closing Period
shall be equal to the amount of such Property Taxes for the entire Straddle
Period multiplied by a fraction, the numerator of which is the number of days
during the Straddle Period that fall within the portion of the Straddle Period
ending on (and including) the day before the Closing Date and the denominator
of which is the number of days in the entire Straddle Period, and (b) Taxes
(other than Property Taxes) relating to the Purchased Assets for the
Pre-Closing Period shall be computed as if such taxable period ended as of
12:01 a.m. New York time on the Closing Date.


                    “Final
Order” means an order, judgment or other decree of the Bankruptcy Court or
any other court or judicial body with proper jurisdiction, as the case may be,
which is in full force and effect, as to which no appeal is pending and which
has not been, and is not subject to being, reversed, stayed, modified or
amended.


                    “FL”
has the meaning set forth in the preamble hereto.


                    “GAAP”
means United States generally accepted accounting principles in effect from
time to time throughout the periods involved.


                    “Governmental
Authority” means any federal, national, supranational, foreign, state,
provincial, local, county, municipal or other government, any governmental, regulatory
or administrative authority, agency, department, bureau, board, commission or
official or any quasi-governmental or private body exercising any regulatory,
taxing, importing or other governmental or quasi-governmental authority, or any
court (including the Bankruptcy Court), tribunal, judicial or arbitral body, or
any Self-Regulatory Organization.


                    “Hazardous
Material” shall include, without regard to amount and/or concentration (a)
any element, compound, or chemical that is defined, listed or otherwise
classified as a contaminant, pollutant, toxic pollutant, toxic or hazardous
substances, extremely hazardous substance or chemical, hazardous waste, medical
waste, biohazardous or infectious waste, special waste, or solid waste under
Environmental Laws; (b) petroleum, petroleum-based or petroleum-derived
products; (c) polychlorinated biphenyls; (d) any substance exhibiting a
hazardous waste characteristic including but not limited to corrosivity,
ignitibility, toxicity or


6







reactivity as
well as any radioactive or explosive materials; and (e) any raw materials,
building components, including but not limited to asbestos-containing materials
and manufactured products containing Hazardous Materials.


                    “HSR
Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.


                    “HSR
Approval” has the meaning given to it in Section 3.03.


                    “IBNR
Claims Period” has the meaning given to it in Section 6.02(g).


                    “IBNR
Liabilities” has the meaning given to it in Section 6.02(g).


                    “Indebtedness”
means any liabilities or obligations, whether contingent or otherwise
(including penalties, interest and premiums), including any of the following:
(i) in respect of borrowed money or with respect to advances of any kind
(including under the DIP Credit Agreement or any applicable credit line); (ii)
evidenced by bonds, notes, debentures or similar instruments, (iii) for the
payment of money relating to any capitalized lease obligation; (iv) for the
deferred purchase price of goods or services or for trade or barter
arrangements; (v) evidenced by a letter of credit or reimbursement obligation
with respect to any letter of credit; (vi) under interest rate, currency or
commodity hedging, swap or similar derivative transactions; (vii) all
guarantees, assumptions, endorsements or other agreements and arrangements
having the economic effect of a guarantee of any Person by the Sellers; and
(viii) all liabilities and other obligations of others of the kind described in
clauses (i) – (vii) that are secured by a Lien on any properties or assets of
the Sellers.


                    “Intellectual
Property” means all (i) foreign and domestic trademarks, service marks,
brand names, Internet domain names, logos, symbols, trade dress, assumed names,
fictitious names and trade names that are utilized on or in connection with
products and/or services, all applications and registrations for all of the
foregoing, and all goodwill associated therewith and symbolized thereby,
including without limitation all extensions, modifications and renewals of same
(collectively, “Trademarks”); (ii) foreign and domestic patentable
inventions, and all patents, registrations, and applications therefor,
including without limitation divisions, continuations, continuations-in-part
and renewal applications, and including without limitation renewals, extensions
and reissues; and (iii) foreign and domestic published and unpublished
copyrightable works of authorship and registrations and applications therefor,
and all renewals, extensions, restorations and reversions thereof.


                    “Intercompany
Loans” means, with respect to each Seller, any intercompany Indebtedness
related to the Business between any such Seller and another Seller or
Affiliates of another Seller, whether or not evidenced by promissory notes
and/or recorded in the books and records of such Sellers.


                    “Inventory”
means all inventory and all finished goods, merchandise, work in progress,
residual by-products, samples, supplies, spare parts, shipping materials,
packaging materials, raw materials and other consumables relating to the
Business and owned by Sellers and maintained, held or stored by or for any of
the Sellers as of the Closing Date, wherever located, and any prepaid deposits
for any of the same.


7







                    “IRS”
means the Internal Revenue Service of the United States.


                    “Law”
means any federal, national, supranational, foreign, state, provincial, local,
county, municipal or similar statute, law, common law, writ, injunction,
decree, guideline, policy, ordinance, regulation, rule, code, Order,
constitution, treaty, requirement, judgment or judicial or administrative
doctrines enacted, promulgated, issued, enforced or entered by any Governmental
Authority.


                    “Leased
Real Property” means the leasehold interests of the Sellers and the
security deposits appurtenant thereto described in Section 3.09(b) of
the Sellers’ Disclosure Schedule, together with (a) any prepaid rent, security
deposits and options to renew or purchase relating to the foregoing and (b) all
buildings and other structures, facilities or improvements currently or
hereafter located thereon, all fixtures, systems and items of personal property
of such Seller used or useful in the Business attached or appurtenant thereto
and all easements, rights of way, options, renewal rights, licenses, rights and
appurtenances relating to the foregoing.


                    “LGI”
has the meaning set forth in the preamble hereto.


                    “LGI
SEC Documents” means all forms, reports, schedules, statements and other
documents (including, in each case, exhibits, schedules, amendments or
supplements thereto, and any other information incorporated by reference
therein) required to be filed with the SEC by LGI since January 1, 2005 under
the Exchange Act or the Securities Act (as such documents have been amended or
supplemented between the time of their respective filing and the date of this
Agreement).


                    “LI”
has the meaning set forth in the preamble hereto.


                    “Liabilities”
means any and all debts, liabilities, obligations to perform services and other
obligations, whether accrued or fixed, absolute or contingent, matured or
unmatured, known or unknown or determined or determinable, including those
arising under any Law, Action or Order and those arising under any Contract.


                    “Licensed
Intellectual Property” means all Intellectual Property used in connection
with the Business that any Seller is licensed or otherwise permitted by other
Persons to use.


                    “Liens”
means any mortgage, deed of trust, pledge, assignment, security interest,
encumbrance, lien, Mechanics Lien, charge, hypothecation, deemed trust, Action,
easement, charge or otherwise, or claim of any kind or nature whatsoever in
respect of any property, other than any license of Intellectual Property,
including any of the foregoing created by, arising under, or evidenced by any
conditional sale or other title retention agreement, the interest of a lessor
under a capital lease, any financing lease having substantially the same economic
effect as any of the foregoing, or the filing of a financing statement naming
the owner of the property as to which such lien relates as the debtor under the
Uniform Commercial Code or any comparable Law in any other jurisdiction.


                    “LRI”
has the meaning set forth in the preamble hereto.


8







                    “LSI”
has the meaning set forth in the preamble hereto.


                    “LW”
has the meaning set forth in the preamble hereto.


                    “Material
Adverse Effect” means any event, circumstance, development, change or
effect that, individually or in the aggregate with all other events,
circumstances, developments, changes or effects, (a) has had or would
reasonably be expected to have or result in a material adverse effect or change
in the results of operations, properties, assets, liabilities or condition
(financial or otherwise) of the Business, the Purchased Assets or the Assumed
Liabilities or (b) has or would reasonably be expected to prevent, materially
delay or materially impair the ability of the Sellers to consummate the
Transactions, except, in each case, for any such effects resulting from or
attributable to (i) general economic or political conditions; (ii) any
condition arising solely by reason of the commencement of the Chapter 11 Cases;
(iii) changes caused by acts of war, armed hostilities or terrorism occurring
after the date hereof; (iv) changes arising from the consummation of the
Transactions or the announcement of the execution of this Agreement; and (v)
any change that generally affects any industry in which any of the Sellers
operates.


                    “Material
Contracts” has the meaning given to it in Section 3.12.


                    “Mechanics
Liens” means mechanics’, carriers’, workers’, repairers’ and other similar
liens arising or incurred in the ordinary course of business relating to
obligations as to which there is no default on the part of any of the Sellers,
or pledges, deposits or other liens securing the performance of bids, trade contracts,
leases or statutory obligations (including workers’ compensation, unemployment
insurance or other social security legislation).


                    “Order”
means any order, writ, judgment, injunction, decree, rule, ruling, directive,
stipulation, determination or award made, issued or entered by or with any
Governmental Authority, whether preliminary, interlocutory or final, including,
without limitation, any Order entered by the Bankruptcy Court in the Chapter 11
Cases (including, without limitation, the Sale Order).


                    “Owned
Intellectual Property” means all Intellectual Property used or useful in
connection with the Business that is owned by any Seller, directly or
indirectly, jointly or individually.


                    “Owned
Real Property” means the real property and interests therein described on Section
3.09(a) of the Sellers’ Disclosure Schedule, including all buildings and
other structures, facilities or improvements currently or hereafter located
thereon, all fixtures, systems, and items of personal property attached or
appurtenant thereto and all interests, easements, rights of way, licenses,
rights, privileges, covenants, restrictive covenants, possibilities of
reverter, options to purchase, hereditaments and other appurtenances relating
to the foregoing.


                    “Permits
and Licenses” has the meaning given to it in Section 2.01(a)(x).


                    “Permitted
Encumbrances” means (a) statutory Liens for current Taxes not yet due or
delinquent (or which may be paid without interest or penalties); (b) Liens (if
any) securing the Assumed Liabilities; (c) zoning, landmarking, entitlement,
conservation restriction and other


9







land use and
environmental regulations by Governmental Authorities which do not materially
interfere with the occupancy or current use of the Purchased Assets; (d) all
covenants, conditions, restrictions, easements, rights of way, licenses and
other similar interests in land (excluding, for greater certainty, as of the
Closing, any mortgages, assignments of rents or any other financial charges
except those in the preceding clause (a)) which were recorded as of the
Petition Date, including any rights of way, easements, or other instruments
granting similar rights that may be registered or recorded after such times
without the consent of the Sellers and which do not materially interfere with
the occupancy, value or current use of any such real property or any interests
therein; (e) Mechanics Liens; and (f) matters which would be disclosed by an
accurate survey or inspection of the real property which do not or could not
materially impair the occupancy, value or current use of such real property
which they encumber.


                    “Person”
means any individual, partnership, firm, corporation, limited liability
company, association, joint venture, trust, Governmental Authority, first
nation, aboriginal or native group or band, unincorporated organization or
other entity, as well as any syndicate or group that would be deemed to be a
person under Section 13(d)(3) of the Exchange Act.


                    “Petition
Date” means the date on which the Chapter 11 Cases were commenced by the
filing of voluntary petitions under the Bankruptcy Code, being November 23,
2008.


                    “Pre-Closing
Lien Taxes” means any Property Taxes or other Taxes imposed on the Sellers
that are not yet due or delinquent relating to the Purchased Assets or the
Business for any Pre-Closing Period which if unpaid would result in the
imposition of a Lien on any of the Purchased Assets.


                    “Pre-Closing
Period” means any taxable period (or portion thereof) ending on or prior to
the Closing Date.


                    “Pre-Petition
Term Loan Obligations” means all indebtedness, obligations and liabilities
of Sellers incurred prior to the Petition Date arising from or related to the
Term Loan Agreement, together with all fees, expenses, indemnities and
reimbursement obligations due thereunder and interest thereon accruing both
before and after the Petition Date to the extent allowable under Section 506(b)
of the US Bankruptcy Code, whether such indebtedness, obligations or
liabilities are direct or indirect, joint or several, absolute or contingent,
due or to become due, whether for payment or performance, now existing or
hereafter arising.


                    “Property
Taxes” means real and personal ad valorem property Taxes and any other
Taxes imposed on a periodic basis and measured by the value of any item of
property.


                    “Purchased
Assets” has the meaning given to it in Section 2.01(a).


                    “Purchased
Intellectual Property” means all (i) foreign and domestic trademarks,
service marks, brand names, Internet domain names, logos, symbols, trade dress,
assumed names, fictitious names, trade names and other indicia of origin, all
applications and registrations for all of the foregoing, and all goodwill
associated therewith and symbolized thereby, including without limitation all
extensions, modifications and renewals of same (collectively, “Purchased
Trademarks”); (ii) foreign and domestic patentable inventions, and all
patents, registrations, and applications therefor, including without limitation
divisions, continuations, continuations-in-part


10







and renewal
applications, and including without limitation renewals, extensions and
reissues; (iii) confidential and proprietary information, trade secrets and
know-how, including without limitation processes, schematics, databases,
formulae, drawings, prototypes, models, designs and customer lists; (iv)
foreign and domestic published and unpublished works of authorship, whether
copyrightable or not (including, but not limited to, computer software),
copyrights therein and thereto, and registrations and applications therefor, and
all renewals, extensions, restorations and reversions thereof; (v) electronic
data processing, information, recordkeeping, communications,
telecommunications, networking, account management, inventory management and
other such applications, software, and hardware, equipment and services
(including, but not limited to, all applications and software installed on all
hardware and equipment, and all databases, firmware, and related
documentation), and Internet websites and related content (collectively, “IT
Systems”); and (vi) all other intellectual property or proprietary rights
and claims or causes of action arising out of or related to any infringement,
misappropriation or other violation of any of the foregoing, including without
limitation rights to recover for past, present and future violations thereof.


                    “Purchased
Licensed Intellectual Property” means all Purchased Intellectual Property
used or useful in connection with the Business that any Seller is licensed or
otherwise permitted by other Persons to use.


                    “Purchased
Owned Intellectual Property” means all Purchased Intellectual Property used
or useful in connection with the Business that is owned by any Seller, directly
or indirectly, jointly or individually.


                    “Purchase
Price” has the meaning given to it in Section 2.04.


                    “Purchaser”
has the meaning given to it in the preamble hereto.


                    “Purchaser’s
Disclosure Schedule” means the Disclosure Schedule attached hereto as Exhibit
E, dated as of the date hereof, delivered by the Purchaser to LGI in
connection with this Agreement.


                    “Purchaser’s
Financial Advisor” means Miller Buckfire & Co., LLC.


                    “Purchaser’s
Knowledge” means the actual knowledge of the persons set forth on Section
1.01(a) of the Purchaser’s Disclosure Schedule.


                    “Receivables”
means any and all accounts receivable, notes and other amounts receivable from
third parties, including customers, arising from the conduct of the Business
before the Closing, whether or not in the ordinary course of business, together
with any unpaid financing charges accrued thereon.


                    “Registered”
means, solely with respect to Intellectual Property, issued by, registered or
filed with, renewed by or the subject of a pending application or registration
before any Governmental Authority or Internet domain name registrar.


11







                    “Regulations”
means the Treasury Regulations (including Temporary Regulations) promulgated by
the United States Department of Treasury with respect to the Tax Code or other
federal tax statutes.


                    “Release”
means any spilling, leaking, pumping, emitting, emptying, discharging,
injecting, escaping, leaching, migrating, dumping, or disposing of Hazardous
Materials (including the abandonment or discarding of barrels, containers or
other closed receptacles containing Hazardous Materials) into the environment
in violation of Environmental Laws.


                    “Remedial
Action” means all actions taken to (i) clean up, remove, remediate,
contain, treat, monitor, assess, evaluate or in any other way address Hazardous
Materials in the indoor or outdoor environment; (ii) prevent or minimize a
Release or threatened Release of Hazardous Materials so they do not migrate or
endanger or threaten to endanger public health or welfare or the indoor or
outdoor environment; (iii) perform pre-remedial studies and investigations and
post-remedial operation and maintenance activities or (iv) any other actions
authorized or required by any Environmental Law or Governmental Authority.


                    “Representatives”
means, with respect to a particular Person, any director, officer, employee or
other representative of such Person, including such Person’s attorneys,
financial advisors and restructuring advisors. Without limiting the generality
of the foregoing, the Sellers’ Financial Advisor and Sellers’ Restructuring
Advisor shall be deemed Representatives of the Sellers.


                    “Required
Consent” has the meaning given to it in Section 8.02(j).


                    “Revolving
Credit Agreement” means the Amended and Restated Revolving Credit
Agreement, dated as of April 20, 2007, by and among LI, D56 and LRI, as
borrowers, LGI and other guarantors party thereto as guarantors, UBS AG,
Stamford Branch, as issuing bank and administrative agent, the Revolving Loan
Lenders party thereto and the other parties thereto.


                    “Revolving
Loan Lenders” means the several banks and other financial institutions or
entities from time to time that made loans under the Revolving Credit
Agreement.


                    “Sale
Hearing” means the hearing at which the approval of the Sale Order is to be
considered before the Bankruptcy Court. 


                    “Sale
Order” means the Order of the Bankruptcy Court approving
the sale of the Purchased Assets to the Purchaser in form and substance
reasonably acceptable to the Purchaser and the Sellers and authorizing Sellers
to consummate the Transactions. Sellers shall use their commercially
reasonable efforts to have included in such Order authorization for the Sellers
and the Purchaser to execute, deliver and/or file the Uniform Commercial Code,
lien releases, discharges, financing change statements and such other
documents, notes or instruments as the Purchaser may deem reasonably necessary
to release Liens (save and except for Permitted Encumbrances) on the Purchased
Assets.


                    “SEC”
means the United States Securities and Exchange Commission.


12







                    “Securities
Act” shall mean the Securities Act of 1933, as amended, including the rules
and regulations promulgated thereunder.


                    “Self-Regulatory
Organization” means the New York Stock Exchange or any other securities
exchange, futures exchange, contract market, any other exchange or corporation
or similar self-regulatory body or organization applicable to a party to this
Agreement.


                    “Seller
Brands” means the brands owned by the Sellers as set forth in Section
1.01(a) of the Sellers’ Disclosure Schedule.


                    “Sellers”
has the meaning given to it in the preamble hereto.


                    “Sellers’
Disclosure Schedule” means the Disclosure Schedule attached hereto as Exhibit
F, dated as of the date hereof, delivered by the Sellers to the Purchaser
in connection with this Agreement.


                    “Seller
Expenses” means any costs and expenses (including all legal, accounting,
financial advisory, valuation, investment banking and other third party
advisory or consulting fees and expenses including those of Weil, Gotshal &
Manges LLP, Sellers’ Financial Advisor and Sellers’ Restructuring Advisor)
incurred by or on behalf of the Sellers in connection with the Chapter 11 Cases
or the transactions contemplated by this Agreement.


                    “Sellers’
Financial Advisor” means Berenson & Company, LLC.


                    “Sellers’
Knowledge” means the actual knowledge of the persons set forth on Section
1.01(b) of the Sellers’ Disclosure Schedule.


                    “Sellers’
Restructuring Advisor” means Carl Marks Advisory Group LLC.


                    “Sponsors”
means the Term Loan Lenders party to the Plan Support Agreement, dated November
23, 2008, among the Sellers and certain of the Term Loan Lenders.


                    “Straddle
Period” means any taxable period beginning on or prior to and ending after
the Closing Date.


                    “Subsequent
Filings” means, collectively, all subsequent filings made after the date of
this Agreement amending or superseding any LGI SEC Documents (including any
statements or schedules therein) and any forms, reports, schedules, statements,
registration statements, proxy statements, or other documents (including in
each case, exhibits, schedules, amendments or supplements thereto, and any
other information incorporated by reference therein) filed with the SEC after
the date of this Agreement.


                    “Subsidiary”
means, when used with reference to any Person, any corporation, partnership,
limited liability company, joint venture, stock company or other entity of
which such Person (either acting alone or together with its other
Subsidiaries), directly or indirectly, owns or has the power to vote or to
exercise a controlling influence with respect to 50% of more of the capital
stock or other voting interests, the holders of which are entitled to vote for
the election of


13







a majority of
the board of directors or any similar governing body of such corporation,
partnership, limited liability company, joint venture, stock company or other
entity.


                    “Tax”
or “Taxes” means any and all taxes, assessments, duties, levies or other
governmental charges, including, without limitation, all federal, state,
provincial, local, foreign and other income, franchise, profits, gross
receipts, capital gains, capital stock, transfer, property, sales, use,
value-added, occupation, property, excise, severance, windfall profits, stamp,
license, payroll, social security, withholding and other taxes, assessments,
duties, levies or other governmental charges of any kind whatsoever (whether
payable directly or by withholding and whether or not requiring the filing of a
Tax Return), all estimated taxes, deficiency assessments, additions to tax,
penalties and interest and shall include any liability for such amounts as a
result either of being a member of a combined, consolidated, unitary or
affiliated group or of a contractual obligation to indemnify any person or
other entity.


                    “Tax
Code” means the U.S. Internal Revenue Code of 1986, as amended through the
date hereof.


                    “Tax
Documents” has the meaning given to it in Section 5.09(a).


                    “Tax
Returns” means any and all returns, reports, documents, declarations,
claims for refund or other information or filings required to be supplied to
any Governmental Authority or jurisdiction (foreign or domestic) with respect
to Taxes together with all schedules or attachments thereto, including, without
limitation, information returns where required, any documents with respect to
or accompanying payments of estimated Taxes, or any documents with respect to
or accompanying requests for the extension of time in which to file any such
report, return, document, declaration or other information, and including any
amendments of any of the foregoing.


                    “Termination
Date” means March 31, 2009.


                    “Term
Loan Agreement” means the Amended and Restated Term Loan Credit Agreement,
dated as of April 20, 2007, by and among LI, D56 and LRI, as borrowers, LGI and
other guarantors party thereto as guarantors, The Bank of New York Mellon, as
administrative agent (as successor to UBS AG, Stamford Branch), the lenders
party thereto, and the other party thereto.


                    “Term
Loan Lenders” means the several banks and other financial institutions or
entities from time to time that made loans under the Term Loan Agreement.


                    “Trade
Payables” means any and all accounts payable of the Sellers to third
parties (other than to any Seller or any Affiliate of any Seller) arising from
the conduct of the Business, incurred by the Sellers after the Petition Date
and prior to the Closing incurred in the ordinary course of business or with
the approval of the Purchaser.


                    “Transactions”
means the transactions contemplated by this Agreement and the Ancillary
Agreements.


                    “Transferred
Employees” has the meaning given to it Section 6.01(a).


14







                    “Transferred
Intellectual Property” means all Purchased Owned Intellectual Property and
all Purchased Licensed Intellectual Property.


                    “Wachovia
Deposit” has the meaning given to it in Section 2.01(a)(iv).


                    Section
1.02 Interpretation and Rules of Construction. In this Agreement, except
to the extent otherwise provided or that the context otherwise requires:


                    (a)
when a reference is made in this Agreement to an Article, Section or Schedule,
such reference is to an Article or Section of or Schedule to, this Agreement
unless otherwise indicated;


                    (b)
the table of contents and headings for this Agreement are for reference purposes
only and do not affect in any way the meaning or interpretation of this
Agreement;


                    (c)
whenever the words “include,” “includes” or “including” are used in this
Agreement, they are deemed to be followed by the words “without limitation”;


                    (d)
the words “hereof,” “herein” and “hereunder” and words of similar import, when
used in this Agreement, refer to this Agreement as a whole and not to any
particular provision of this Agreement;


                    (e)
all terms defined in this Agreement have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto, unless
otherwise defined therein;


                    (f)
the definitions contained in this Agreement are applicable to the singular as
well as the plural forms of such terms;


                    (g)
references to a Person are also to the Person’s heirs, executors,
administrators, personal representatives, successors and permitted assigns, as
applicable;


                    (h)
references to agreements are also to the same agreements as amended, restated
or otherwise modified from time to time; and


                    (i)
references to the Sellers are also to each Seller individually.


ARTICLE II PURCHASE AND SALE


                    Section
2.01 Purchase and Sale of Assets.


                    (a)
Upon the terms and subject to the conditions of this Agreement, and subject to Section
5.01(b) and 5.07(b), at the Closing, each Seller shall sell, assign,
transfer, convey and deliver, or cause to be sold, assigned, transferred,
conveyed and delivered, to the Purchaser, and the Purchaser shall purchase and
acquire from such Seller, all of such Seller’s right, title and interest, as of
the Closing Date, in and to any and all assets, properties, rights and claims
of any kind or nature, whether tangible or intangible, real, personal or mixed,
wherever located and whether or not carried or reflected on the books and
records of any of the Sellers,


15








whether now
existing or hereinafter acquired, which relate to the Business or which are
used or useful in or held for use in, or were acquired in connection with, the
operation of the Business, excluding only the Excluded Assets (such assets,
properties, rights and claims to be acquired hereunder, collectively, the “Purchased
Assets”), in “AS IS” and “WHERE IS” condition without any representations
or warranties, except as otherwise expressly set forth in this Agreement. The
Purchased Assets shall include, but not be limited to, the following: 


	
 

	
 


	
 

	
          (i)
 the Owned Real Property and the Leased Real Property save and except any
 Leased Real Property that is leased under a lease that is an Excluded
 Contract; 


	
 

	
 


	
 

	
          (ii)
 all tangible personal property related to, or used or useful in or held for
 use in the conduct of, the Business, including equipment, machinery, tools,
 supplies, spare parts, molds, trucks, cars, other vehicles and rolling stock,
 furniture, fixtures, trade fixtures, leasehold improvements, office materials
 and supplies, and other tangible personal property located on, or off, the
 premises of the Owned Real Property and Leased Real Property; 


	
 

	
 


	
 

	
          (iii)
 the Inventory;


	
 

	
 


	
 

	
          (iv)
 all Cash, securities (other than any equity interests in the Sellers) and
 negotiable instruments of the Sellers on hand, in lock boxes, in financial
 institutions or elsewhere, but excluding the $1,200,000 that the Sellers
 deposited with Wachovia for payroll and sales tax (such funds deposited with
 Wachovia, the “Wachovia Deposit”);


	
 

	
 


	
 

	
          (v)
 the Receivables; 


	
 

	
 


	
 

	
          (vi)
 all files, operating data, books of account, general, financial and Tax
 (other than income Tax) records, personnel records of the Transferred
 Employees, invoices, shipping records, supplier lists, price lists, vendor
 lists, mailing lists, catalogs, sales promotion literature, advertising
 materials, brochures, standard forms of documents, manuals of operations or
 business procedures, research materials, contracts, instruments, filings,
 administrative and pricing manuals, correspondence, memoranda, plats,
 architectural plans, surveys, title insurance policies, drawings, plans and
 specifications, environmental reports, maintenance or service records, soil
 tests, engineering reports, expired purchase orders, operating records,
 operating safety manuals, and other material and documents, books (including
 applicable portions of minute books), records and files (whether or not in
 the possession of any of the Sellers or their respective Representatives,
 stored in hardcopy form or on magnetic, optical or other media) and any
 rights thereto owned, associated with or employed by any of the Sellers in
 the conduct of the Business or otherwise related to the Purchased Assets or
 the Assumed Liabilities;


	
 

	
 


	
 

	
          (vii)
 all goodwill associated with the Business or the Purchased Assets, including
 rights under any confidentiality agreements executed by any third party for
 the benefit of any of the Sellers and assigned to the Purchaser to the extent
 relating to the Business;


	
 

	
 


	
 

	
          (viii)
 the Transferred Intellectual Property;





16







	
 

	
 


	
 

	
          (ix)
 to the extent transferable after giving effect to the Sale Order, all of the
 rights and benefits accruing under any Assigned Contracts, including any
 outstanding deposits thereunder;


	
 

	
 


	
 

	
          (x)
 all of the rights and benefits accruing under any franchises, permits,
 consents, certificates, clearances, approvals, exceptions, variances,
 permissions, filings, publications, declarations, notices, licenses,
 agreements, waivers and authorizations, including Environmental Permits, of
 or with any Governmental Authority held, used or made by any of the Sellers
 in connection with the Business (collectively, the “Permits and Licenses”)
 and all deposits and prepaid expenses held by third parties and/or
 governmental agencies, save and except any such Permit and License that is an
 Excluded Contract; 


	
 

	
 


	
 

	
          (xi)
 [Intentionally Omitted]


	
 

	
 


	
 

	
          (xii)
 subject to the terms of the Sellers’ privacy policy the sales and promotional
 literature, customer lists and other sales related materials related to the
 Business;


	
 

	
 


	
 

	
          (xiii)
 except for any such amounts required to be paid to the Term Loan Lenders or
 the DIP Lenders under the DIP Order, the amount of, and all rights to any,
 insurance proceeds received by any of the Sellers after the date hereof in
 respect of the loss, destruction or condemnation of any Purchased Assets
 occurring prior to, on or after the Closing or relating to any Assumed
 Liabilities;


	
 

	
 


	
 

	
          (xiv)
 all unexpired, transferable warranties, indemnities, or guaranties from any
 third party with respect to any Purchased Asset, including any item of real
 property, personal property or equipment;


	
 

	
 


	
 

	
          (xv)
 to the extent transferable and to the extent related to the Purchased Assets,
 the full benefit of all representations, warranties, guarantees, indemnities,
 undertakings, certificates, covenants, agreements and all security therefor
 received by any of the Sellers on the purchase or other acquisition of the
 Purchased Assets;


	
 

	
 


	
 

	
          (xvi)
 any rights, demands, claims, credits, allowances, rebates, or rights of
 setoff (other than against the Sellers or any of their Affiliates) arising
 out of or relating to any of the Purchased Assets;


	
 

	
 


	
 

	
          (xvii)
 all deposits received by any of the Sellers from any subtenants with respect
 to any subleases of Leased Real Property assumed by the Purchaser;


	
 

	
 


	
 

	
          (xviii)
 all prepaid and deferred items that relate to the Business or the Purchased
 Assets, including all prepaid rentals and unbilled charges, fees and
 deposits;


	
 

	
 


	
 

	
          (xix)
 all confidentiality, non-compete and similar agreements entered into by any
 of the Sellers, or any of their respective Representatives, and assumed by
 the Purchaser in connection with a sale of the Purchased Assets or the
 Business;





17







	
 

	
 


	
 

	
          (xx)
 all current and prior insurance policies of any of the Sellers that relate to
 the Business or any of the Assumed Liabilities and all rights and benefits of
 any nature (except for any rights to insurance recoveries thereunder required
 to be paid to the Term Loan Lenders or the DIP Lenders under the DIP Order)
 with respect thereto, including all insurance recoveries thereunder and
 rights to assert claims with respect to any such insurance recoveries, but
 excluding any tail insurance policies that provide coverage to the Sellers or
 their Affiliates or Representatives after the Closing Date;


	
 

	
 


	
 

	
          (xxi)
 subject to the approval of the Department of Community and Economic
 Development for the Commonwealth of Pennsylvania, the assets set forth on Section
 2.01(a)(xxi) of the Sellers’ Disclosure Schedule; and


	
 

	
 


	
                    (xxii)
 all other assets, properties, rights and claims of any of the Sellers of any
 kind or nature which relate to the Business, which are used or useful in or
 held for use in the Business, or which relate to the Purchased Assets (in
 each case, other than the Excluded Assets) not otherwise described above.


	
 


	
                    (b)
 Notwithstanding anything in Section 2.01(a) to the contrary, the
 Sellers shall not sell, convey, assign, transfer or deliver, nor cause to be
 sold, conveyed, assigned, transferred or delivered, to the Purchaser, and the
 Purchaser shall not purchase or acquire, and the Purchased Assets shall not
 include, the Sellers’ right, title and interest in and to the following
 assets of the Sellers (collectively, the “Excluded Assets”):








	
 

	
 


	
 

	
          (i)
 all documents and other items related solely to the organization, existence
 or capitalization of the Sellers, including without limitation the company
 seal, charter documents, stock or equity record books and such other similar
 books and records (including applicable portions of minute books); 


	
 

	
 


	
 

	
          (ii)
 all rights of the Sellers under this Agreement and the Ancillary Agreements; 


	
 

	
 


	
 

	
          (iii)
 any rights to Tax refunds;


	
 

	
 


	
 

	
          (iv)
 Tax Returns of the Sellers (other than the copies of such Tax Returns
 obtained pursuant to Section 5.09 or otherwise);


	
 

	
 


	
 

	
          (v)
 any Excluded Contract and rights thereunder; 


	
 

	
 


	
 

	
          (vi)
 except as set forth in Section 2.01(b)(vi) of the Sellers’ Disclosure
 Schedule, any assets relating to the Employee Plans;


	
 

	
 


	
 

	
          (vii)
 any right, property or asset that is listed or described in Section
 2.01(b)(vii) of the Sellers’ Disclosure Schedule. The Purchaser at its
 sole discretion shall be allowed to amend or supplement Section
 2.01(b)(vii) of the Sellers’ Disclosure Schedule at any time prior to the
 Closing Date. Notwithstanding the foregoing, if in accordance with Section
 2.12 and 5.08 the requisite Consent to permit any Excluded Incentive Asset to
 be transferred to the Purchaser has been obtained, such Excluded Incentive
 Asset shall no longer be an Excluded Asset; and





18







	
 

	
 


	
 

	
          (viii)
 funds constituting the Wachovia Deposit.


	
 

	
 


	
 

	
          Section
 2.02 Assumption and Exclusion of Liabilities.


	
 

	
 


	
                    (a)
 The Purchaser shall assume no liability or obligation of the Sellers except
 the liabilities and obligations expressly set forth in this Section
 2.02(a) (collectively, the “Assumed Liabilities”), which the
 Purchaser or its permitted assignee (as contemplated by Section 11.06), as
 the case may be, shall assume and pay, perform and discharge in accordance
 with their respective terms, subject to any defenses or claimed offsets
 asserted in good faith against the obligee to whom such liabilities or
 obligations are owed: 


	
 


	
 

	
          (i)
 all Liabilities of the Sellers (other than Environmental Liabilities) under
 the Assigned Contracts for the lease of real property (other than any such
 lease that is an Excluded Contract) and the other Assigned Contracts (other
 than any that is an Excluded Contract), in each case (A) for which all
 necessary consents and/or Bankruptcy Court approval to transfer have been
 obtained and (B) all Determined Cure Costs, it being understood and agreed
 that all such Determined Cure Costs shall be paid as a portion of the
 Purchase Price in accordance with Section 2.04(b); 


	
 

	
 


	
 

	
          (ii)
 all Liabilities in respect of Permits and Licenses (other than any that is an
 Excluded Contract), in each case arising and relating solely to the period
 from and after the Closing and not to the extent arising out of any breach or
 default thereof or other activities prior to the Closing; 


	
 

	
 


	
 

	
          (iii)
 (A) all Property Taxes and assessments on the Purchased Assets that relate to
 the period from and after the Closing, and (B) all Pre-Closing Lien Taxes;


	
 

	
 


	
 

	
          (iv)
 all Trade Payables;


	
 

	
 


	
 

	
          (v)
 all obligations relating to any gift certificates issued by Sellers in
 connection with the Business prior to the Closing Date; 


	
 

	
 


	
 

	
          (vi)
 all obligations to replace or repair any product, or to return the purchase
 price of any product, arising in the ordinary course of business from claims
 of retail or online customers under product warranties, product return
 policies or other retail or online customer programs set forth in Section
 2.02(a)(vi) of the Sellers’ Disclosure Schedule, in each case (A)
 relating to the Purchased Assets and (B) excluding any Liabilities for
 personal injury claims or product recalls relating to the operation of the
 Business prior to the Closing;


	
 

	
 


	
 

	
          (vii)
 all Liabilities set forth in Section 2.02(a)(vii) of the Sellers’
 Disclosure Schedule; and


	
 

	
 


	
 

	
          (viii)
 to the extent submitted pursuant to Section 6.02(g) prior to the
 termination of the IBNR Claims Period, any IBNR Liabilities.


	
 

	
 


	
                    (b)
 Notwithstanding anything to the contrary in this Agreement, the parties
 expressly acknowledge and agree that the Purchaser shall not assume or in any
 manner 





19







whatsoever be
liable or responsible for any Liabilities of any of the Sellers, or of any
predecessor or Affiliate of any of the Sellers, existing on the Closing Date or
arising thereafter as a result of any act, omission or circumstance taking
place prior to the Closing, other than the Assumed Liabilities. The Liabilities
not specifically assumed by Purchaser pursuant to Section 2.02(a) shall be
referred to herein collectively as the “Excluded Liabilities.” Without
limiting the foregoing, the Purchaser shall not be obligated to assume, and
does not assume, and hereby disclaims all of the Excluded Liabilities,
including, without limitation, all of the following Liabilities, of any of the
Sellers, or of any predecessor or Affiliate of any of the Sellers: 


	
 

	
 


	
 

	
          (i)
 all Excluded Taxes;


	
 

	
 


	
 

	
          (ii)
 any Liabilities relating to or arising out of the Excluded Assets;


	
 

	
 


	
 

	
          (iii)
 all Accounts Payable;


	
 

	
 


	
 

	
          (iv)
 any pre-Petition Date accrued expenses of the Sellers;


	
 

	
 


	
 

	
          (v)
 any Environmental Liabilities in respect of the Owned Real Property, the
 Leased Real Property and any area used pursuant to the Permits and Licenses
 relating to the Business, or Hazardous Material or environmental conditions
 that exist on or prior to the Closing Date; 


	
 

	
 


	
 

	
          (vi)
 the Sellers’ obligations under this Agreement and the Ancillary Agreements
 and any fees or expenses incurred by any of the Sellers in connection with
 the negotiation, preparation, approval or execution of this Agreement and the
 Ancillary Agreements and/or the sale of the Purchased Assets pursuant hereto,
 including, without limitation, the fees and expenses of counsel, independent
 auditors, brokers, bankers, investment bankers and other advisors or
 consultants and any success (or similar fees) arising in connection
 therewith;


	
 

	
 


	
 

	
          (vii)
 any Liabilities arising as a result of any Action initiated at any time, to
 the extent related to the Business or the Purchased Assets on or prior to the
 Closing Date, including any shareholder Actions, or Actions in tort or for
 breach of contract and any Liabilities arising in connection with the Actions
 set forth on Section 2.02(b)(vii) of the Sellers’ Disclosure Schedule;


	
 

	
 


	
 

	
          (viii)
 except as set forth in Section 2.02(b)(viii) of the Sellers’ Disclosure Schedule
 or to the extent specifically provided in Article VI, all Liabilities
 arising out of, relating to or with respect to (i) the employment or
 performance of services, or termination of employment or services by Sellers
 or any of their Affiliates of any individual on or before the Closing Date,
 (ii) each of the Employee Plans subject to Title IV of ERISA, all other
 Employee Plans and any other “employee benefit plan” (within the meaning of
 Section 3(3) of ERISA) or other benefit or compensation plan, program,
 agreement or arrangement at any time maintained, sponsored, contributed or
 required to be contributed to by any Seller or any Affiliate of any Seller,
 or with respect to which any Seller or any Affiliate of any Seller has any
 Liability or otherwise, or (iii) workers’ compensation claims against Sellers
 or any of their Subsidiaries that relate to the period





20







	
 

	
 


	
 

	
ending on
 the Closing Date, irrespective of whether such claims are made prior to or
 after the Closing;


	
 

	
 


	
 

	
          (ix)
 any Liability relating to the employment or termination of employment of any
 Person arising from or related to the operation of the Business prior to
 Closing (including but not limited to, any severance or stay or incentive
 bonuses) not expressly assumed by Purchaser under Article VI;


	
 

	
 


	
 

	
          (x)
 any Liabilities arising under Intercompany Loans and all promissory notes
 related thereto; 


	
 

	
 


	
 

	
          (xi)
 all Liabilities arising under the Term Loan Agreement; 


	
 

	
 


	
 

	
          (xii)
 all Liabilities arising under the DIP Credit Agreement;


	
 

	
 


	
 

	
          (xiii)
 all Liabilities arising under the Revolving Credit Agreement;


	
 

	
 


	
 

	
          (xiv)
 all Liabilities with respect to Seller Expenses;


	
 

	
 


	
 

	
          (xv)
 subject to Section 2.02(a)(iii)(B), Section 2.02(a)(iv), Section
 2.02(a)(v), Section 2.02(a)(vi) and Section 2.02(a)(vii)
 any Liabilities arising from the ownership and operation of the Business
 prior to the Closing, including, without limitation, all Liabilities in
 respect of Indebtedness that relates to the period prior to the Closing;


	
 

	
 


	
 

	
          (xvi)
 any Liabilities arising from the operation of any successor liability Laws,
 including, without limitation, “bulk sales” statutes, to the extent that
 non-compliance therewith or the failure to obtain necessary clearances would
 subject the Purchaser or the Purchased Assets to the claims of any creditors
 of any of the Sellers, or would subject any of the Purchased Assets to any
 Liens or other restrictions (except for Permitted Encumbrances);


	
 

	
 


	
 

	
          (xvii)
 any violation of an applicable Law or Order prior to the Closing by any of
 the Sellers, including, without limitation, any Environmental Law;


	
 

	
 


	
 

	
          (xviii)
 any IBNR Liability submitted pursuant to Section 6.02(g) following the
 termination of the IBNR Claims Period; and


	
 

	
 


	
 

	
          (xix)
 any Liability with respect to outstanding checks or other instruments issued
 by the Sellers.


	
 

	
 


	
                    (c)
 Nothing contained in this Agreement shall require the Purchaser to pay or
 discharge any Assumed Liabilities (i) prior to such Assumed Liabilities
 becoming due and payable in accordance with the underlying terms of any
 Contracts giving rise to or governing such Assumed Liabilities or (ii) so
 long as the Purchaser shall in good faith contest the amount or the validity
 thereof. 


	
 


	
                    Section
 2.03 Purchase of Purchased Assets. On the terms and subject to the
 conditions of this Agreement, on the Closing Date (a) the Purchaser shall
 purchase the Purchased 





21







Assets and
assume the Assumed Liabilities from the Sellers, and (b) the Purchase Price
shall be paid as set forth in Section 2.04. 


                    Section
2.04 Purchase Price. The purchase price (the “Purchase Price”)
payable in consideration for the sale, transfer, assignment, conveyance and
delivery by the Sellers to the Purchaser of the Purchased Assets shall consist
of the following: 


                    (a)
$44,500,000 of debt forgiveness evidenced by the Credit Bid, which shall become
effective on the Closing Date; plus 


                    (b)
the assumption at the Closing by the Purchaser of the Assumed Liabilities from
the Sellers, including the assumption of the obligation to pay to the
applicable counterparties of the applicable Assigned Contracts in accordance
with Section 5.01(c) an amount equal to the Determined Cure Costs
payable by the Purchaser under Section 5.01(c); plus 


                    (c)
cash in an amount equal to the Obligations (as defined in the DIP Credit
Agreement) outstanding under the DIP Credit Agreement (including all letters of
credit to the extent not replaced or subject to a back to back letter of
credit) as of the Closing; plus 


                    (d)
cash in an aggregate amount equal to the sum of (A) up to $2,150,000 to pay
allowed administrative, priority and secured tax claims (exclusive of Accrued
Professional Fees), (B) an amount equal to the Accrued Professional Fees to pay
the Accrued Professional Fees, (C) an amount equal to $250,000 to provide for
distributions to the holders of allowed general unsecured claims against the
Sellers, and (D) $100,000 to fund the costs and expenses of a plan
administrator to wind down the Sellers’ estates from and after the Closing. 


                    Section
2.05 Payment of Purchase Price. On the Closing Date, Purchaser shall pay
the Purchase Price to Sellers (to the extent payable on the Closing Date),
which shall be paid to the extent payable in cash by wire transfer of
immediately available funds into an account designated by Sellers and to the extent
not payable in cash, by a means reasonably acceptable to Sellers and Purchaser.



                    Section
2.06 Allocation of the Purchase Price. The Purchase Price (to the extent
required by the Tax Code) shall be allocated among the Purchased Assets and by
entity as of the Closing Date in accordance with the relative fair market value
of the Purchased Assets at that time, to the extent relevant, and in a manner
consistent with Section 1060 of the Tax Code and the Regulations which
allocation will be set out in a schedule to be prepared by Purchaser and to be
agreed upon by LGI within thirty (30) days after the Closing Date (the “Allocation”).
If LGI and the Purchaser are unable to agree upon the Allocation within thirty
(30) days after the Closing Date, the disputed items shall be resolved by KPMG
LLP (or if unable or unwilling to accept its mandate, an independent accountant
to be mutually agreed upon by Sellers and Purchaser). Subject to the foregoing
provisions of this Section 2.06, for all Tax purposes, the Purchaser and
the Sellers agree that the Transactions shall be reported in a manner
consistent with the terms of this Agreement, including the Allocation, and that
none of them will take any position inconsistent therewith in any Tax Return, in
any refund claim, in any litigation, or otherwise. The Sellers and the
Purchaser agree to cooperate with each other in preparing IRS Form 8594
(including any subsequent adjustments required thereto), and to furnish the
other with 


22







a copy of such
form prepared in draft form within a reasonable period before its filing due
date. If such allocation is disputed by any taxation or other Governmental
Authority, the Purchaser or any Seller receiving notice of such dispute will
promptly notify the other party and the parties will use their reasonable best
efforts to sustain the final allocation. The parties will share information and
cooperate in good faith to permit the Transactions to be properly, timely and
consistently reported. 


                    Section
2.07 Determined Cure Costs. The Purchaser agrees to promptly satisfy all
Determined Cure Costs, as and when such Determined Cure Costs become due, in
respect of Assigned Contracts (other than Excluded Contracts) for which all
necessary consents and/or Bankruptcy Court approval to transfer have been
obtained; provided, however, that, notwithstanding anything to the contrary
herein (including any limitation on the time period for identifying Contracts
that will constitute Excluded Contracts pursuant to Section 5.01(a)), if the
Determined Cure Costs for any Assigned Contract exceeds the amount reflected as
due and owing as of the Petition Date on Sellers’ books and records, the
Purchaser, in its sole discretion, may elect to make such Assigned Contract an Excluded
Contract. 



                    Section
2.08 Closing. Subject to the terms and conditions of this Agreement, the
consummation of the transactions contemplated by this Agreement shall take
place at a closing (the “Closing”) to be held at the offices of Weil,
Gotshal, & Manges LLP, 767 Fifth Avenue, New York, New York at 10:00 a.m.
New York time on the third Business Day following the satisfaction or waiver of
the conditions to the obligations of the parties hereto set forth in Section
8.01 and Section 8.02 (other than those conditions that by their
nature are to be satisfied at the Closing, but subject to the fulfillment or
waiver of those conditions), or at such other place or at such other time or on
such other date as LGI and the Purchaser may mutually agree upon in writing.
The date of the Closing is herein referred to as the “Closing Date.”  


                    Section
2.09 Closing Deliveries by the Sellers. At the Closing, the Sellers
shall deliver or cause to be delivered to the Purchaser: 


                    (a)
a certified copy of the Sale Order, as entered by the Bankruptcy Court; 


                    (b)
the Bill of Sale and Assignment and Assumption Agreement, the Deeds applicable
in the relevant jurisdictions for the Owned Real Property (with the Deeds for
the Owned Real Property to be recorded with copies of all required Conveyance
Tax stamps affixed, except for any Conveyance Taxes that are exempt pursuant to
Section 1146(a) of the Bankruptcy Code), the Assignments of Leased Properties
in recordation form, the Assignments of Intellectual Property and such other
instruments, in form and substance and in registrable or recordation form where
applicable, reasonably satisfactory to the Purchaser, as may be reasonably
requested by the Purchaser to effect the transfer of the Purchased Assets to
the Purchaser, or to register or record or evidence such transfer on the public
records, in each case duly executed by each applicable Seller and the other
parties thereto (other than the Purchaser); 


                    (c)
the Ancillary Agreements, duly executed by each applicable Seller and the other
parties thereto (other than the Purchaser) other than the Ancillary Agreements
delivered pursuant to Section 2.09(b); 


23







                    (d)
a certificate of non-foreign status pursuant to section 1.1445-2(b)(2) of the
Regulations from each Seller; 


                    (e)
copies of resolutions of the board of directors (or equivalent governing body)
of each Seller authorizing and approving the execution and delivery of this
Agreement and the Ancillary Agreements and the performance by such Seller of
its obligations hereunder and thereunder, certified by the Secretary of such
Seller; 


                    (f)
an incumbency certificate dated the Closing Date for each Seller executed by
the Secretary of such Seller which shall identify the names and titles and bear
the signatures of the officers of such Seller individually authorized to
execute and deliver this Agreement and the Ancillary Agreements to which such
Seller is a party; 


                    (g)
copies of the certificate of incorporation and bylaws (or equivalent governance
documents) of each Seller, in each case certified by the Secretary of such
Seller; 


                    (h)
termination statements, lien releases, discharges, financing change statements
or other documents, notices or other instruments as the Purchaser may
reasonably deem necessary to release Liens (other than Permitted Encumbrances)
on the Purchased Assets, each in form and substance reasonably satisfactory to
the Purchaser duly executed by any holders of such Liens; 


                    (i)
subject to Section 5.01(b), written consents in form and substance
reasonably satisfactory to the Purchaser duly executed by the applicable Sellers
and counterparties evidencing any consents necessary to effect the assignment
to the Purchaser of Purchased Intellectual Property pursuant to Section
5.07(b) and 5.07(c); 


                    (j)
a certificate of a duly authorized officer of each of the Sellers certifying
that all conditions set forth in Section 8.02 have been satisfied (or to
the extent any such condition has been waived in accordance with the terms
hereof, attaching thereto the applicable written waiver); 


                    (k)
an updated Section 2.09(k) of the Sellers’ Disclosure Schedule setting
forth the Trade Payables outstanding as of 11:59:59 p.m. Eastern Standard Time
on a date no earlier than three (3) Business Days prior to the Closing Date;
and 


                    (l)
such other customary documents and instruments of transfer, assumptions and
filings as may be reasonably required to be delivered by any Seller to
consummate the Transactions or otherwise give effect to this Agreement. 


                    Section
2.10 Closing Deliveries by the Purchaser. At the Closing, the Purchaser
shall deliver, or cause to be delivered, 


                    (a)
to LGI: 


	
 

	
 


	
 

	
          (i)
 the Bill of Sale and Assignment and Assumption Agreement, the Assignments of
 Leased Properties and the Assignments of Intellectual Property, in each 





24







	
 

	
 


	
 

	
case in form
 and substance reasonably satisfactory to LGI, to effect the assumption by the
 Purchaser of the Assumed Liabilities, duly executed by the Purchaser (where
 required);


	
 

	
 


	
 

	
          (ii)
 the Ancillary Agreements to which the Purchaser is a party, duly executed by
 the Purchaser other than the Ancillary Agreements delivered pursuant to Section
 2.10(a)(i); 


	
 

	
 


	
 

	
          (iii)
 a certificate of a duly authorized officer of the Purchaser certifying that
 the conditions set forth in Section 8.01(a) have been satisfied (or to
 the extent any such condition has been waived in accordance with the terms
 hereof, attaching thereto the applicable written waiver);


	
 

	
 


	
 

	
          (iv)
 a copy of resolutions of the board of directors of the Purchaser authorizing
 and approving the execution and delivery of this Agreement and the Ancillary
 Agreements to which it is a party and the performance by the Purchaser of its
 obligations hereunder and thereunder, certified by the Secretary of the
 Purchaser;


	
 

	
 


	
 

	
          (v)
 an incumbency certificate dated the Closing Date for the Purchaser executed
 by the Secretary of the Purchaser which shall identify the names and titles
 and bear the signatures of the officers of the Purchaser individually
 authorized to execute and deliver this Agreement and the Ancillary Agreements
 to which the Purchaser is a party; 


	
 

	
 


	
 

	
          (vi)
 such other customary documents and instruments of transfer, assumptions and
 filings as may be reasonably required to be delivered by the Purchaser to
 consummate the Transactions or otherwise give effect to this Agreement; and





                    (b)
the Purchase Price (to the extent due and payable at the Closing) in accordance
with Section 2.04. 


                    Section
2.11 Relinquishment of Control. At the Closing, the Sellers shall turn
over actual possession and control of all of the Purchased Assets to the
Purchaser by taking such action that may be required or reasonably requested by
the Purchaser to effect such transfer of possession and control. 


                    Section
2.12 Assignment of Contracts and Rights. (a) To the extent that any
Contract to be sold, transferred, conveyed or assigned (any sale, transfer,
conveyance or assignment, a “Transfer”) to the Purchaser pursuant to the
terms of Section 2.01 is not , or any Excluded Incentive Assets are not,
capable of being Transferred to the Purchaser (after giving effect to the Sale
Order) without the Consent of a third Person (each such Contract and each
Excluded Incentive Asset, a “Consent Pending Contract”), or if such
Transfer or attempted Transfer would, or if the subsequent Transfer or
attempted Transfer of the equity interests of the Purchaser would, constitute a
breach thereof or a violation of any Law, nothing in this Agreement or in any
document, agreement or instrument delivered pursuant to this Agreement will
constitute a Transfer or an attempted Transfer thereof prior to the time at
which all Consents necessary for such Transfer will have been obtained unless
an Order of the Bankruptcy Court effects such Transfer without Consent. 


25







                    (b)
Sellers shall hold and not reject pursuant to section 365 of the Bankruptcy
Code any Consent Pending Contracts for a period of sixty (60) days following
the Closing Date (the “Contract Retention Period”) and, as soon as
practicable with regard to the Excluded Incentive Assets and otherwise after
receiving further written notice(s) (each, an “Assumption Notice”) from
Purchaser during the Contract Retention Period requesting assumption and
assignment of any Consent Pending Contract, the Sellers shall, subject to
Purchaser’s demonstrating adequate assurance of future performance thereunder
(if applicable), take all actions reasonably necessary to seek to assume and
assign to Purchaser pursuant to section 365 of the Bankruptcy Code any
Contract(s) set forth in an Assumption Notice, and any applicable Determined
Cure Cost shall be satisfied in accordance with Section 2.07 hereof. The
Sellers agree and acknowledge that the covenant set forth in this Section
2.12(b) shall survive the Closing; provided, that, with respect to
any Consent Pending Contract, Purchaser shall compensate the Sellers for
Liabilities for the continuation of such Consent Pending Contracts during the
Contract Retention Period up to and including the date which is ten (10) days
following Sellers’ receipt of written notice from Purchaser authorizing
rejection of the same or, in the case of any Consent Pending Contracts that
relate to any Owned Real Property or any Leased Real Property, the date which
is forty-five (45) days following Sellers’ receipt of written notice from
Purchaser authorizing rejection of the same, it being understood and agreed
that Sellers’ obligation to assume and assign any Consent Pending Contract
shall be conditioned upon Purchaser’s payment of such amounts and that
Purchaser’s covenant to pay such amounts shall survive the Closing until the
termination of the Contract Retention Period unless otherwise authorized by
Purchaser by written notice to Sellers to be rejected. Notwithstanding anything
in this Agreement to the contrary, on the date any Contract or Excluded
Incentive Asset is assumed and assigned to Purchaser pursuant to this Section
2.12(b), such Contract shall be deemed an Assigned Contract and deemed
scheduled on Section 3.12(a) under the appropriate heading for all
purposes under this Agreement. Sellers shall have the right at any time
following the expiration of the Contract Retention Period to reject any Consent
Pending Contracts pursuant to section 365 of the Bankruptcy Code. 


ARTICLE III REPRESENTATIONS AND WARRANTIES OF
THE SELLERS


                    Except
as set forth in the corresponding sections or subsections of the Sellers’
Disclosure Schedule, the Sellers jointly and severally hereby represent and
warrant to the Purchaser as of the date hereof and as of the Closing Date
(except for representations and warranties that are made as of a specific date,
which are made only as of such date) as follows: 


                    Section
3.01 Organization, Authority and Qualification of the Seller. Each of
the Sellers is a corporation or limited liability company, as the case may be,
duly organized, validly existing and, except as a result of the commencement of
the Chapter 11 Cases, in good standing under the laws of the jurisdiction of
its incorporation, formation or organization, and, subject to obtaining the
approval of the Bankruptcy Court, has all necessary power and authority to enter
into this Agreement and the Ancillary Agreements, to carry out its obligations
hereunder and thereunder, and to consummate the Transactions. Each of the
Sellers has all necessary power and authority to own, lease, operate and
conduct its respective businesses, properties and assets as now being
conducted. Each of the Sellers is duly licensed or qualified to do business and
is in good standing in each jurisdiction in which the properties owned or
leased by it or the operation of its respective business makes such licensing
or qualification necessary, except to the 


26







extent that
the failure to be so licensed, qualified or in good standing (a) has resulted
from the commencement or continuance of the Chapter 11 Cases; or (b) would not:
(i) adversely affect the ability of such Seller to carry out its obligations
under this Agreement and the Ancillary Agreements, and to consummate the
Transactions; or (ii) otherwise reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect. Subject to obtaining the Sale
Order from the Bankruptcy Court, and except as otherwise disclosed in Section
3.01 of the Sellers’ Disclosure Schedule, the execution and delivery of
this Agreement and the Ancillary Agreements by each Seller, the performance by
each Seller of its obligations hereunder and thereunder, and the consummation
by each Seller of the Transactions have been duly authorized by all requisite
action on the part of such Seller, and no other corporate or limited liability
company action or proceeding on the part of any of the Sellers is necessary to
authorize the execution and delivery of this Agreement and the Ancillary
Agreements by each of the Sellers, or the consummation of the Transactions.
This Agreement has been, and upon their execution, the Ancillary Agreements
shall have been, duly executed and delivered by each Seller, and (assuming due
authorization, execution and delivery by the Purchaser), subject to the
approval of the Bankruptcy Court, this Agreement constitutes, and, upon their
execution, the Ancillary Agreements shall constitute, legal, valid and binding
obligations of such Seller, enforceable against such Seller in accordance with
their respective terms, subject to bankruptcy, insolvency, reorganization,
moratorium or similar Laws now or hereafter in effect relating to creditors’
rights generally and subject to general principles of equity. None of the
Sellers have any Subsidiaries, except for other Sellers. 


                    Section
3.02 No Conflict. Subject to obtaining the HSR Approval (if required)
and the approval of the Bankruptcy Court and the State of New Jersey under the
Industrial Site Recovery Act (if required), and assuming that all consents,
approvals, authorizations and other actions described in Section 3.03
have been obtained, all filings and notifications listed in Section 3.03
of the Sellers’ Disclosure Schedule have been made, and any applicable waiting
period has expired or been terminated, and except as may result from any facts
or circumstances relating solely to the Purchaser, the execution, delivery and
performance of this Agreement and the Ancillary Agreements by the Sellers and
the consummation of the Transactions hereby and thereby do not and will not,
except as set forth in Section 3.02 of the Sellers’ Disclosure Schedule:
(a) violate, conflict with or result in the breach of the certificate of
incorporation, articles of incorporation, bylaws, certificate of formation,
operating agreement, limited liability company agreement or similar formation or
organizational documents of any of the Sellers; (b) conflict with or violate
any Law or Order applicable to any of the Sellers or any of the Purchased
Assets or Assumed Liabilities; (c) violate, conflict with, result in any breach
of, constitute a default (or event which with the giving of notice or lapse of
time, or both, would become a default) under, or require any consent under any
note, bond, mortgage or indenture, Contract, agreement, lease, sublease,
license, permit, franchise or other instrument or arrangement to which any of
the Sellers is a party, or result in the creation of any Lien (other than
Permitted Liens) on any of the Purchased Assets, except to the extent that any
such rights and such Liens are not enforceable (before or after consummation of
the Transactions) due to operation of the Bankruptcy Code and except, in the
case of clauses (b) and (c), for any such conflict, violation, breach or
default that would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. 


27







                    Section
3.03 Governmental Consents and Approvals. The execution, delivery and
performance of this Agreement and each Ancillary Agreement by the Sellers do
not or, upon the entry by the Bankruptcy Court of the Sale Order as required by
Section 8.01(d) and Section 8.02(d), will not require any
consent, approval, authorization or other Order of, action by, filing with or
notification to, any Governmental Authority under any of the terms, conditions
or provisions of any Law or Order applicable to any Seller or by which any of
the Purchased Assets may be bound, any Contract to which any Seller is a party
or by which any Seller may be bound, except (i) the filing of notification and
report forms with the United States Federal Trade Commission and the United
States Department of Justice under the HSR Act and the expiration or
termination of any applicable waiting period thereunder, if required (“HSR
Approval”), and (ii) as described in Section 3.03 of the Sellers’
Disclosure Schedule. 


                    Section
3.04 SEC Filings; Financial Statements; Undisclosed Liabilities. (a) To
the Sellers’ Knowledge, except as set forth in Section 3.04(a) of the
Sellers’ Disclosure Schedule, since January 1, 2007, LGI has timely filed with
the SEC all LGI SEC Documents, all of which are publicly available on EDGAR.
Except to the extent amended or superseded by a subsequent filing with the SEC
made prior to the date hereof, as of their respective dates (and if so amended
or superseded, then on the date of such filing prior to the date hereof), the
LGI SEC Documents (including any financial statements or schedules included
therein) and any forms, reports, schedules, statements, registration
statements, proxy statements and other documents (including in each case,
exhibits, schedules, amendments or supplements thereto, and any other
information incorporated by reference therein) (i) did not, and in the case of
Subsequent Filings will not, contain any untrue statement of a material fact or
omit, or in the case of Subsequent Filings will not omit, to state a material
fact required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading, and (ii) complied, and in the case of Subsequent Filings will
comply, in all material respects with the applicable requirements of the
Exchange Act and the Securities Act, as the case may be. None of LGI’s
Subsidiaries is required to file any forms, reports or other documents with the
SEC. 


                    (b)
To the Sellers’ Knowledge, each of the financial statements contained or to be
contained in the LGI SEC Documents (including, in each case, any related notes
and schedules) has (i) at the time at which they were prepared, been prepared
from, and is in accordance with, the books and records of LGI and its
consolidated Subsidiaries, and complies in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, (ii) been prepared in accordance with GAAP
applied on a consistent basis throughout the periods indicated (except as may
be indicated in the notes thereto and in the case of unaudited quarterly
financial statements, as permitted by Form 10-Q under the Exchange Act) and
fairly presents in all material respects the consolidated financial position
and the consolidated results of operations and cash flows of LGI and its
consolidated Subsidiaries as at the dates and for the periods covered thereby
except for subsequent adjustments that may be required to reflect the impact
that the commencement of the Chapter 11 Cases has had on the Sellers and except
that the unaudited interim financial statements were or are subject to normal
year-end adjustments. 


                    Section
3.05 Litigation. Except (a) for the Chapter 11 Cases or (b) as set forth
in Section 3.05 of the Sellers’ Disclosure Schedule, there is no pending
Action by or against any 


28







of the Sellers
or relating to the Business or any of the Purchased Assets or Assumed
Liabilities, or, to the Sellers’ Knowledge, threatened against or affecting any
of the Sellers or relating to the Business or any of the Purchased Assets or
Assumed Liabilities, which, if adversely determined, would reasonably be
expected to have a Material Adverse Effect. 


                    Section
3.06 Compliance with Laws. Except as would not have a Material Adverse
Effect, since January 1, 2007, the Sellers (a) have conducted and continue to
conduct the Business in all material respects in accordance with all applicable
Laws and Orders applicable to the Business, (b) have complied with and continue
to comply with in all material respects all Laws and Orders applicable to the
Purchased Assets and the Assumed Liabilities, (c) are not in violation in any
material respect of any such Law or Order, and (d) have not received any notice
that any violation of any such Law or Order is being or may be alleged. 


                    Section
3.07 Environmental Matters. Except as set forth in Section 3.07
of the Sellers’ Disclosure Schedule or in each case as would not have a
Material Adverse Effect, to the Sellers’ Knowledge: 


                    (a)
The Business, the Leased Real Property, the Owned Real Property or any
properties or facilities owned, leased or operated by the Business are in
compliance with Environmental Laws; 


                    (b)
The Business possesses and is in compliance with all Environmental Permits
necessary for the conduct of its business as presently conducted; 


                    (c)
There has been no Release at the Leased Real Property, the Owned Real Property
or any properties or facilities currently owned, leased or operated by the
Business or a predecessor in interest; 


                    (d)
None of the Leased Real Property, the Owned Real Property or any facilities
currently owned, leased, operated or otherwise used by the Business contains or
is contaminated with any Hazardous Materials, other than in compliance with the
requirements of Environmental Law and in quantities or under circumstances such
that no investigation or remediation would reasonably be expected to be
required under any Environmental Law; 


                    (e)
Since January 1, 2007, no Environmental Claims have been asserted against the
Business or, to the Sellers’ Knowledge, any predecessor in interest, nor do the
Sellers have knowledge or notice of any threatened or pending Environmental
Claim against the Business or any predecessor in interest; 


                    (f)
Neither the Business, the Leased Real Property, the Owned Real Property nor any
properties or facilities currently owned, leased, operated or otherwise used by
the Business is subject to any agreement that may require it to pay to,
reimburse, guarantee, pledge, defend, indemnify or hold harmless any Person for
or against any Environmental Liabilities; 


                    (g)
None of the Leased Real Property, the Owned Real Property or any other
properties or facilities currently owned, leased, operated or otherwise used by
the Business contain an active or inactive incinerator, lagoon, landfill,
septic system, wastewater treatment 


29







system,
underground storage tank, friable asbestos or friable asbestos-containing
material, or polychlorinated biphenyls; and 


                    (h)
No Environmental Law regulates the transfer or requires the submission of any
notice of transfer the Leased Real Property, the Owned Real Property, the
Business or its assets. 


                    Section
3.08 Intellectual Property. 


                    (a)
Schedule 3.08(a) sets forth a true and complete list of all material (i)
Owned Intellectual Property; and (ii) Licensed Intellectual Property. 


                    (b)
Except as set forth in Section 3.08(b) of the Sellers’ Disclosure
Schedule and to Sellers’ Knowledge: 


	
 

	
 


	
 

	
          (i)
 All Owned Intellectual Property is valid, subsisting and enforceable, is not
 subject to any outstanding order, judgment or decree restricting its use or
 adversely affecting any Seller’s rights thereto. 


	
 

	
 


	
 

	
          (ii)
None of the Sellers are violating and have not since January 1, 2007,
violated any Intellectual Property rights. To Sellers’ Knowledge, there are
no Actions, reissues, reexaminations, public protests, interferences,
arbitrations, mediations, oppositions, cancellations, Internet domain name
dispute resolutions or other proceedings (collectively, “Suits”) pending or
threatened concerning any claim or position that any Seller or any of their
indemnitees have violated any Intellectual Property rights.  


	
 

	
 


	
 

	
          (iii)
 There are no Suits pending or threatened concerning the Owned Intellectual
 Property, and, to the Sellers’ Knowledge, no valid basis for any such Suits
 exists. To the Sellers’ Knowledge, there are no Suits pending or threatened
 concerning the Licensed Intellectual Property or the right of any Seller to
 use the Licensed Intellectual Property, and no valid basis for any such Suits
 or claims exists.


	
 

	
 


	
 

	
          (iv)
 One or more Sellers own or otherwise hold valid rights to use all Owned
 Intellectual Property and all Licensed Intellectual Property. To the Sellers’
 Knowledge, no Person is violating any Owned Intellectual Property or Licensed
 Intellectual Property.


	
 

	
 


	
 

	
          (v)
 No Person other than a Seller has any ownership interest in, or a right to
 receive a royalty or similar payment with respect to, any of the Owned
 Intellectual Property. To Sellers’ Knowledge, no Person is entitled to a
 royalty or similar payment with respect to Intellectual Property not owned by
 a Seller. Since January 1, 2007, none of the Sellers have granted any
 options, licenses, assignments or agreements of any kind relating to (i)
 ownership of rights in Owned Intellectual Property; or (ii) the marketing or
 distribution of Owned Intellectual Property. 


	
 

	
 


	
 

	
          (vi)
 Since January 1, 2007, none of the Sellers have entered into any agreement to
 indemnify any other Person against any charge of infringement of any third
 party Intellectual Property, except for customary infringement indemnities
 agreed to in the ordinary course of business and included as part of any
 contracts for the license or





30







	
 

	
 


	
 

	
sale of
 products or services. Since January 1, 2007, none of the Sellers have entered
 into any agreement granting any third party the right to bring infringement
 actions or otherwise to enforce rights with respect to the Owned Intellectual
 Property or pursuant to which any Seller has agreed not to sue or otherwise
 enforce any legal rights with respect to Owned Intellectual Property. 





                    Section
3.09 Real Property. 


                    (a)
Section 3.09(a) of the Sellers’ Disclosure Schedule lists the street
address, legal description where appropriate and the current owner of each
parcel of real property in which any of the Sellers has fee title (or
equivalent) interest and which is used in or held for use in the conduct of the
Business. Except as described in Section 3.09(a) of the Sellers’
Disclosure Schedule: (i) each Seller listed in Section 3.09(a) of the
Sellers’ Disclosure Schedule as the owner of a parcel of Owned Real Property
has good and valid title in fee simple to such parcel; (ii) to the extent as
are in any of the Sellers’ possession, the Sellers have made available to the
Purchaser copies of each deed for each parcel of Owned Real Property; and (iii)
all buildings situated on the Owned Real Property form a part of the Owned Real
Property and are owned by the Sellers. No Seller has received notice of any
pending condemnation proceeding or any threatened condemnation that would
preclude or impair the use of any Owned Real Property by the Business for the
purposes for which it is currently used. No Seller has received notice of the
applicable Governmental Authority altering its zoning Laws so as to affect or
potentially affect the Leased Real Property. 


                    (b)
Section 3.09(b) of the Sellers’ Disclosure Schedule lists the street
address and legal description where appropriate of each parcel of real property
leased or subleased by any Seller as tenant or subtenant, as the case may be,
which is used in or held for use in the conduct of the Business, and the
identity of the lessee of each such parcel of Leased Real Property. To the
extent as are in any of the Sellers’ possession, the Sellers have delivered to
the Purchaser true and complete copies of the leases and subleases in effect at
the date hereof (including all amendments thereto and assignments in respect
thereof) relating to the Leased Real Property, and there has not been any
sublease or assignment entered into by any of the Sellers in respect of the
leases and subleases relating to the Leased Real Property. To Sellers’
Knowledge, each lease and sublease in respect of the Leased Real Property is a
valid lease or sublease and Sellers have received no written notice of default
except as disclosed in Section 3.09(b) of the Sellers’ Disclosure
Schedule. To Sellers’ Knowledge, the security deposit required pursuant to each
lease and sublease in respect of the Leased Real Property has not been drawn
upon by the relevant landlord or sublandlord, as applicable, and no additional
monies are required to bring the security deposits into compliance with respect
to each such lease or sublease, as applicable. No Seller has received notice of
any pending condemnation proceeding or any threatened condemnation that would
preclude or impair the use of any Leased Real Property by the Business for the
purposes for which it is currently used. No Seller has received notice of the
applicable Governmental Authority altering its zoning Laws so as to affect or
potentially affect the Leased Real Property. 


                    (c)
The Owned Real Property and the Leased Real Property constitute all of the real
property used in the conduct of the Business. 


31







                    (d)
Except as set forth in Section 3.09(d) of the Sellers’ Disclosure
Schedule, Sellers have (i) in the case of Owned Real Property, good and valid
title to, and (ii) in the case of the Leased Real Property, valid and binding
leasehold interests in all of their respective material assets, free and clear
of any Liens, except, in each case, for Permitted Encumbrances. 


                    (e)
Except as set forth in Section 3.09(e) of the Sellers’ Disclosure
Schedule, no options or rights of first offer or rights of first refusal or
similar rights or options have been granted by any Seller to any Person (other
than the Purchaser) that are enforceable despite the continuation of the
Bankruptcy Cases to (i) purchase, lease or otherwise acquire any interest in
any of the Owned Real Property or leases or subleases relating to the Leased
Real Property. 


                    Section
3.10 Employee Benefit Matters. 


                    (a)
Section 3.10(a) of the Sellers’ Disclosure Schedule lists: (i) all material
“employee benefit plans”, as defined in Section 3(3) of ERISA, and (ii) other
material pension, welfare benefit, bonus, incentive compensation, deferred
compensation, severance, vacation, paid time off, salary continuation, life
insurance, or educational assistance plans, programs or agreements, in each
case, with respect to which any Seller and their Subsidiaries have any
obligation or liability, contingent or otherwise, with respect to current or
former employees of the Sellers and their Subsidiaries (the “Employee Plans”).
All Employee Plans which are single employer plans or multiemployer plans and
are subject to Title IV of ERISA or Section 412 of the Tax Code are separately
identified on Section 3.10(a) of the Sellers’ Disclosure Schedule (collectively,
“Title IV Plans”). 


                    (b)
A summary description of each Employee Plan has been made available to
Purchaser. Correct and complete copies of each Assumed Employee Plan and the
following documents, if applicable, have been made available to Purchaser: (A)
the most recent trust agreement and all amendments thereto, (B) the most recent
Forms 5500, (C) the most recent actuarial valuation, and (D) the most recent
IRS determination letter. 


                    (c)
Each Assumed Employee Plan intended to qualify under Section 401 of the Tax
Code has been determined by the IRS to be so qualified. Except as set forth in Section
3.10(c) of the Sellers’ Disclosure Schedule, to the Sellers’ Knowledge,
nothing has occurred with respect to the operation of any such plan which could
reasonably be expected to result in the revocation of such favorable
determination. 


                    (d)
Except by reason of the automatic stay under the Bankruptcy Code or as set
forth in Section 3.10(d) of the Sellers’ Disclosure Schedule, each
Assumed Employee Plan has been maintained, in all material respects, in
accordance with its terms and applicable Law. 


                    (e)
Except as set forth in Section 3.10(e) of the Sellers’ Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment becoming due to any employee of Sellers or any of their Subsidiaries;
(ii) increase any benefits otherwise payable under any Employee Plan; or (iii)
result in the acceleration of the time of payment or vesting of any such
benefits. 


                    Section
3.11 Taxes. Except as set forth in Section 3.11 of the Sellers’
Disclosure Schedule: 


32








                    (a)
Sellers have timely filed or caused to be timely filed with the appropriate
taxing authorities (taking into account extensions to file Tax Returns) all
material Tax Returns that are required to be filed with respect to the income
or operations of the Business or the ownership of the Purchased Assets; 


                    (b)
All Taxes shown to be payable on such filed Tax Returns have been paid or
reserved against in accordance with GAAP; and 


                    (c)
Sellers are not foreign persons within the meaning of Section 1445 of the Tax
Code and the Regulations thereunder. 


                    Section
3.12 Material Contracts. 


                    (a)
Section 3.12(a) of the Sellers’ Disclosure Schedule sets forth all
Contracts concerning the Owned Intellectual Property or Licensed Intellectual
Property or that are related to, or used in or held for use in, the Business
(except for Contracts that are Excluded Assets, purchase orders for inventory
and other goods and services purchased in the ordinary course of business, or
in the case of clauses (i), (iv), (vi)-(x), (xiii) and (xiv) below, Contracts
(other than Contracts concerning the Owned Intellectual Property or Licensed
Intellectual Property) that individually have a future liability not in excess
of $150,000 annually or $1,000,000 during the term thereof, and other than
Contracts that are cancelable by a Seller upon notice of not more than 90
calendar days without penalty or cost), including, without limitation: 


	
 

	
 


	
 

	
          
 (i) Contracts for the purchase or sale of assets, products or services;


	
 

	
 


	
 

	
          
 (ii) Exclusive supply Contracts for the purchase of Inventory or other goods
 or services that are otherwise not generally available and that are used in
 connection with the Business; 


	
 

	
 


	
 

	
          
 (iii) Contracts pursuant to which a Seller grants to any Person the right to
 manufacture, design, market, distribute or resell any Business product, or to
 represent a Seller with respect to any such product, or act as agent for any
 Seller in connection with the marketing, distribution or sale of any Business
 product;


	
 

	
 


	
 

	
          
 (iv) Contracts for the lease of tangible personal property;


	
 

	
 


	
 

	
          
 (v) Contracts containing a covenant that restricts a Seller or any Affiliate
 of a Seller from engaging in any line of business or competing with any
 Person;


	
 

	
 


	
 

	
          
 (vi) Contracts providing for indemnification by a Seller, other than in
 connection with respect to standard terms and conditions of a Contract for
 the purchase or sale of assets, products or services in the ordinary course
 of business;


	
 

	
 


	
 

	
          
 (vii) Employment, consulting or independent contractor Contracts, other than
 unwritten at-will employment Contracts; 


	
 

	
 


	
 

	
          
 (viii) Contracts relating to a joint venture of the Business; 





33







	
 

	
 


	
 

	
          (ix)
 Currency exchange, interest rate, commodity exchange or similar Contracts; 


	
 

	
 


	
 

	
          (x)
 Contracts for capital expenditures; 


	
 

	
 


	
 

	
          (xi)
 Contracts with any director, officer or employee of Seller or any of its
 Subsidiaries (in each case, other than (A) employment agreements covered in
 clause (vii) above), (B) payments of compensation for employment to employees
 in connection with unwritten at-will employment Contracts and (C) participation
 in Employee Plans by employees; 


	
 

	
 


	
 

	
           (xii)
 Contracts or licenses of any patents, trademarks, trade names, service marks,
 copyrights or other Intellectual Property received from or granted to third
 parties; 


	
 

	
 


	
 

	
          
 (xiii) Contracts for radio, television newspaper or other media advertising;
 and


	
 

	
 


	
 

	
          (xiv)
 Contracts not made in the ordinary course of business. 


	
 

	
 


	
(such
 Contracts collectively, “Material Contracts”, and each a “Material
 Contract”).





                    
(b) Except as set forth in Section 3.12(b) of the Sellers’ Disclosure
Schedule, to Sellers’ Knowledge, each Material Contract (i) is valid and
binding on the applicable Seller and the counterparties thereto, and is in full
force and effect; and (ii) upon consummation of the Transactions, except to the
extent that any consents set forth in Section 3.02 or Section 3.03
of the Sellers’ Disclosure Schedule and Bankruptcy Court approvals to transfer
are not obtained or would otherwise not have a Material Adverse Effect, shall
continue in full force and effect without penalty or other adverse consequence.
Except as disclosed in Section 3.12(b) of the Sellers’ Disclosure
Schedule, the applicable Seller and, to the Sellers’ Knowledge, the
counterparties thereto, are not in breach of, or default under, any Material
Contract to which any of them is a party except for breaches or defaults that
that would not have a Material Adverse Effect or, upon entry or issuance of the
Sale Order by the Bankruptcy Court, would not preclude the Sellers from
assigning such Material Contract to the Purchaser and that would be cured or
rendered unenforceable in accordance with the Sale Order. 


                    Section
3.13 Brokers. Except as set forth in Section 3.13 of the Sellers’
Disclosure Schedule, no broker, finder or investment banker is entitled to any
brokerage, finder’s or other fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of any Seller. The
Sellers are solely responsible for the fees and expenses of the Sellers’
Financial Advisor except for all unpaid professional fees approved by the
Bankruptcy Court which shall be paid in accordance with the terms of the Sale
Order. 


                    Section
3.14 Insurance. Set forth in Section 3.14 of the Sellers’
Disclosure Schedule is an accurate and complete list of each insurance policy
and insurance arrangement that covers the Purchased Assets, the Assumed
Liabilities or employees (including self insurance, but excluding insurance
policies providing benefits under welfare plans and directors’ and officers’
insurance) of the Business (the “Insurance Policies”). To the Sellers’
Knowledge, the Insurance Policies are in full force and effect, all premiums
thereon have been paid, and the Sellers are otherwise in compliance in all
material respects with the terms and provisions of such 


34







policies. To
the Sellers’ Knowledge, no Seller is in default under any of the Insurance
Policies (or any policy required to be set forth in Section 3.14 of the
Sellers’ Disclosure Schedule) and there exists no event, occurrence, condition
or act (including the purchase of the Purchased Assets hereunder) that, with
the giving of notice, the lapse of time or the happening of any other event or
condition, would become a default thereunder. No Seller is aware of any pending
notice of cancellation or non-renewal of any such Insurance Policies nor, to
the Sellers’ Knowledge, has the termination of any such Insurance Policies been
threatened, and, to the Sellers’ Knowledge, there exists no event, occurrence,
condition or act (including the purchase of the Purchased Assets hereunder)
that, with the giving of notice, the lapse of time or the happening of any
other event or condition, would entitle any insurer to terminate or cancel any
such Insurance Policies. 


                    Section
3.15 Permits. The Sellers have made available to the Purchaser prior to
the date hereof a true and complete copy of each of the Permits and Licenses,
each of which is listed in Section 3.15 of the Sellers’ Disclosure
Schedule. To the Sellers’ Knowledge, and except as would not have a Material
Adverse Effect, the Sellers have obtained and possess all Permits and Licenses
and have made all registrations or filings with or notices to any Governmental
Authority necessary for the lawful conduct of the Business as presently
conducted and operated, or necessary for the lawful ownership of their
properties and assets or the operation of the Business as presently conducted
and operated. To Sellers’ Knowledge, each such Permit and License is valid and
in full force and effect and the Sellers are in material compliance with all
such Permits and Licenses. Each such Permit and License is included in the
Purchased Assets. To Sellers’ Knowledge, the consummation of the Transactions
will not result in the revocation, cancellation or termination of, or any
adverse amendment or modification to, any such Permit and License. Any
applications for the renewal of any such Permit and License that are due prior
to the Closing Date will be timely made or filed by the applicable Seller prior
to the Closing Date. To Sellers’ Knowledge, no proceeding to modify, suspend,
revoke, withdraw, terminate or otherwise limit any such Permit and License is
pending or threatened and, to the Sellers’ Knowledge, there is no valid basis
for any such proceeding. To Sellers’ Knowledge, no administrative or
governmental action or proceeding has been taken in connection with the
expiration, continuance or renewal of any such Permit and License and there is
no valid basis for any such proceeding. 


                    Section
3.16 Absence of Certain Changes. Other than as a result of the
commencement of the Chapter 11 Cases or the D56 Scale Down, since September 27,
2008, the Business has not experienced any (a) damage, destruction or loss,
whether covered by insurance or not, individually having a cost of $500,000 or
more; (b) except as would not have a Material Adverse Effect, change in
accounting methods or principles or any write-down, write up or revaluation of
any of the Purchased Assets or Assumed Liabilities, in each case except
depreciation accounted for in the ordinary course of business and write-downs
of inventory which reflect the lower of cost or market and, in each case, which
are in the ordinary course of business and in accordance with GAAP; or (c)
sale, assignment, transfer, lease or license (other than a Permitted
Encumbrance) of or on any of the Business’ tangible assets, except in the
ordinary course of business consistent with past practice, or agreement,
whether orally or in writing, to do any of the foregoing in this subsection
(c). Since September 27, 2008, other than as a result of the commencement of
the Chapter 11 Cases or the D56 Scale Down, there has not been, occurred or
arisen any agreement, condition, action, omission or event which would be 


35







prohibited (or
require consent) under Section 5.02 had it existed, occurred or arisen
after the date of this Agreement. 


                    Section
3.17 Labor Matters


                    (a)
None of the Sellers nor any of their Subsidiaries are a party to any collective
bargaining agreement. 


                    (b)
Except as set forth in Section 3.17(b) of the Sellers’ Disclosure
Schedule, as of the date hereof, there are no (i) strikes, work stoppages, work
slowdowns or lockouts pending or, to the Sellers’ Knowledge, threatened against
or involving Sellers or any of their Subsidiaries, or (ii) unfair labor
practice charges, grievances or complaints pending or, to the Sellers’
Knowledge, threatened by or on behalf of any employee or group of employees of
Sellers or any of their Subsidiaries, except in each case as would not have a
Material Adverse Effect. 


                    Section
3.18 Assets. To Sellers’ Knowledge, the Purchased Assets constitute all
of the assets necessary for the operation of the Business as presently
conducted. 


ARTICLE IV REPRESENTATIONS AND WARRANTIES OF
THE PURCHASER


                    Except
as set forth in the corresponding sections or subsections of the Purchaser’s
Disclosure Schedule, the Purchaser hereby represents and warrants to the
Sellers as of the date hereof and as of the Closing Date (except for
representations and warranties that are made as of a specific date, which are
made only as of such date) as follows: 


                    Section
4.01 Organization and Authority of the Purchaser. The Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of Delaware and has all necessary corporate power and authority to enter
into this Agreement and the Ancillary Agreements to which it is a party, to
carry out its obligations hereunder and thereunder and to consummate the
Transactions. The Purchaser is duly licensed or qualified to do business and is
in good standing in each jurisdiction in which the properties owned or leased
by it or the operation of its business makes such licensing or qualification
necessary, except to the extent that the failure to be so licensed, qualified
or in good standing would not adversely affect the ability of the Purchaser to
carry out its obligations under this Agreement and the Ancillary Agreements to
which it is a party, and to consummate the Transactions. The execution and
delivery by the Purchaser of this Agreement and the Ancillary Agreements to
which it is a party, the performance by the Purchaser of its obligations
hereunder and thereunder and the consummation by the Purchaser of the
Transactions have been duly authorized by all requisite corporate action on the
part of the Purchaser. This Agreement has been, and upon their execution the
Ancillary Agreements to which the Purchaser is a party shall have been, duly
executed and delivered by the Purchaser, and (assuming due authorization,
execution and delivery by each of the Sellers and other parties thereto),
subject to the approval of the Bankruptcy Court, this Agreement constitutes,
and upon their execution the Ancillary Agreements to which the Purchaser is a
party shall constitute, legal, valid and binding obligations of the Purchaser,
enforceable against the Purchaser in accordance with their respective terms,
subject to bankruptcy, insolvency, reorganization, moratorium or similar Laws 


36







 now or hereafter in effect relating to creditors’ rights
generally and subject to general principles of equity. 


                    Section
4.02 No Conflict. Except as described in Section 4.02 of the
Purchaser’s Disclosure Schedule, subject to obtaining the HSR Approval (if
required) and the approval of the Bankruptcy Court, and assuming that all
consents, approvals, authorizations and other actions described in Section
4.03 have been obtained, all filings and notifications listed in Section
4.03 of the Purchaser’s Disclosure Schedule have been made, and any applicable
waiting period has expired or been terminated, and except as may result from
any facts or circumstances relating solely to the Sellers, the execution,
delivery and performance by the Purchaser of this Agreement and the Ancillary
Agreements to which the Purchaser is a party do not and will not: (a) violate,
conflict with or result in the breach of any provision of the certificate of
incorporation or bylaws of the Purchaser; (b) conflict with or violate any Law
or Order applicable to the Purchaser or its assets, properties or businesses;
or (c) conflict with, result in any breach of, constitute a default (or event
which with the giving of notice or lapse of time, or both, would become a
default) under, require any consent under, or give to others any rights of
termination, amendment, acceleration, suspension, revocation or cancellation
of, any note, bond, mortgage or indenture, contract, agreement, lease,
sublease, license, permit, franchise or other instrument or arrangement to
which the Purchaser is a party, except, in the case of clauses (b) and (c), as
would not materially and adversely affect the ability of the Purchaser to carry
out its obligations under this Agreement and the Ancillary Agreements to which
it is a party, and to consummate the Transactions. 


                    Section
4.03 Governmental Consents and Approvals. The execution, delivery and
performance by the Purchaser of this Agreement and each Ancillary Agreement to
which the Purchaser is a party do not or, upon the entry by the Bankruptcy
Court of the Sale Order as required by Section 8.01(d) and Section
8.02(d), will not require any consent, approval, authorization or other
Order of, action by, filing with, or notification to, any Governmental
Authority, except (i) the HSR Approval (if required), (ii) as described in Section
4.03 of the Purchaser’s Disclosure Schedule and (iii) where failure to
obtain such consent, approval, authorization or action, or to make such filing
or notification, would not prevent or materially delay the consummation by the
Purchaser of the Transactions. 


                    Section
4.04 Litigation. As of the date hereof, no Action by or against the
Purchaser is pending or, to the Purchaser’s Knowledge, threatened, which would
reasonably be expected to affect the legality, validity or enforceability of
this Agreement, any Ancillary Agreement or the consummation of the
Transactions. 


                    Section
4.05 Brokers and Finders. Except for Purchaser’s Financial Advisor, no
broker, finder or investment banker is entitled to any brokerage, finder’s or
other fee or commission in connection with the Transactions based upon
arrangements made by or on behalf of the Purchaser. 


                    Section
4.06 Financial Capability. Purchaser has provided to LGI a complete and
correct copy of the executed Backstop Rights Purchase Agreement attached hereto
as Exhibit G (the “Backstop Rights Purchase Agreement”) and a
complete and correct copy of the executed Debt Commitment Letter (“Debt
Commitment Letter”) together with the Credit 


37







Agreement in
substantially final form (the “Credit Agreement”) attached hereto as Exhibit
H. The Backstop Rights Purchase Agreement and the Debt Commitment Letter
are binding on the parties thereto and are in full force and effect as of the
date hereof. Upon the closing of the transactions contemplated by the Backstop
Rights Purchase Agreement, the Debt Commitment Letter and the Credit Agreement,
Purchaser (i) will have sufficient funds available to pay the Purchase Price,
any expenses incurred by Purchaser in connection with the Transactions and any
other amounts necessary under this Agreement and (ii) has not incurred any
obligation, commitment, restriction or Liability of any kind, which would
impair or adversely affect such resources and capabilities. 


                    Section
4.07 Condition of the Business. Notwithstanding anything contained in
this Agreement to the contrary, Purchaser acknowledges and agrees that Sellers
are not making any representations or warranties whatsoever, express or
implied, beyond those expressly given by Sellers in Article III hereof
(as modified by the Sellers’ Disclosure Schedule), and Purchaser acknowledges
and agrees that, except for the representations and warranties contained
therein, the Purchased Assets and the Business are being transferred on a
“where is” and, as to condition, “as is” basis. Any claims Purchaser may have
for breach of representation or warranty shall be based solely on the
representations and warranties of Sellers set forth in Article III
hereof (as modified by the Sellers’ Disclosure Schedule hereto as supplemented
or amended). Purchaser further represents that neither Sellers nor any of their
Affiliates nor any other Person has made any representation or warranty,
express or implied, as to the accuracy or completeness of any information
regarding Sellers or any of their Affiliates, the Business or the transactions
contemplated by this Agreement not expressly set forth in this Agreement, and
none of Sellers, any of their Affiliates or any other Person will have or be
subject to any liability to Purchaser or any other Person resulting from the
distribution to Purchaser or its representatives or Purchaser’s use of, any
such information, including any confidential memoranda distributed on behalf of
Sellers relating to the Business or other publications or data room information
provided to Purchaser or its representatives, or any other document or
information in any form provided to Purchaser or its representatives in
connection with the sale of the Business and the transactions contemplated
hereby. Purchaser acknowledges that it has conducted to its satisfaction, its
own independent investigation of the Business and, in making the determination
to proceed with the transactions contemplated by this Agreement Purchaser has
relied on the results of its own independent investigation. 


ARTICLE V ADDITIONAL AGREEMENTS


                    Section
5.01 Assumption of Assigned Contracts. 


                    (a)
No later than five (5) Business Days following the execution of this Agreement,
the Purchaser shall deliver to Sellers a list of the Contracts that the
Purchaser proposes to be the Assigned Contracts pursuant to this Agreement (the
“Assigned Contracts List”). Subject to the second sentence of Section
5.01(d), at any time and from time to time before the Closing Date (or in
the case of any lease pursuant to which the Leased Real Property is leased by a
Seller, at any time and from time to time on or before 90 days after the
Closing Date (the period of time from the Closing Date until the earlier of (i)
the date that is 90 days after the Closing Date and (ii) the date that
Purchaser, by written notice to LGI, elects to exclude such lease from the
Transactions, the “Lease Retention Period”)), the Purchaser may, by
written 


38







 notice to LGI, elect to exclude from the Transactions and
the Assigned Contracts List (i) any one or more of the Contracts that would
otherwise be Purchased Assets (including any lease pursuant to which the Leased
Real Property is leased by a Seller) and (ii) any or more of the Permits and
Licenses. Any Contract or Permit and License designated in such a notice
pursuant to the preceding sentence or designated as an Excluded Contract
pursuant to the second sentence of Section 5.01(d) (each such designated
Contract or Permit and License, an “Excluded Contract”, and all such
designated Contracts and Permits and Licenses collectively, the “Excluded
Contracts”) shall no longer be an Assigned Contract or a Permit and License
to be assigned to the Purchaser hereunder. There shall be no adjustment to the
Purchase Price as a result of the Purchaser’s election to exclude any one or
more of the Contracts or Permits and Licenses from the Transactions pursuant to
this Section 5.01(a) except that the Purchaser shall not be required to
make any payments for Determined Cure Costs or any other amounts for any such
Excluded Contracts, provided that, with respect to any lease pursuant to
which the Leased Real Property is leased by a Seller that would otherwise be a
Purchased Asset and that Purchaser has not elected to exclude prior to the
Closing, such lease shall be treated as a Consent Pending Contract under
Section 2.12(b) and Purchaser shall compensate the Sellers with respect thereto
in accordance with such Section except that the Contract Retention Period shall
be deemed to be the Lease Retention Period for these purposes. 


                    (b)
At the time of Closing, and subject to the approval of the Bankruptcy Court
pursuant to the Sale Order or such other Order of the Bankruptcy Court and/or
the consent of the applicable counterparties to the extent necessary to effect
the assignment in any case, the Sellers shall assume (to the extent required)
and then assign to the Purchaser and the Purchaser shall assume from the
Sellers all the Assigned Contracts. 


                    (c)
Subject to the terms of Section 2.04 and Section 5.01(a), the
Purchaser shall make provision for the payment of the Determined Cure Costs in
accordance with the Sale Order. The Sellers shall use their reasonable efforts,
including the filing and prosecution of any and all appropriate proceedings in
the Bankruptcy Court, to establish the Determined Cure Costs, if any, for each
Assigned Contract, in accordance with the Sellers’ books and records as of the
Petition Date and to obtain the Required Consents. 


                    (d)
The Sellers shall have delivered to the Purchaser true and complete copies of
the material Assigned Contracts and Permits and Licenses (including all
amendments thereto and assignments thereof) or otherwise provide Purchaser with
access to such true and complete copies of such material Assigned Contracts and
Permits and Licenses on or before the fifth Business Day following the
execution of this Agreement. Notwithstanding any provision in this Agreement to
the contrary, the Purchaser shall not be required to purchase, acquire or
assume any material Assigned Contract or Permit and License (or any Liabilities
thereunder) a true and complete copy of which has not been made available by
the Sellers to Purchaser in accordance with the preceding sentence, and the
Purchaser, subject to the parenthetical in the second sentence of Section
5.01(a), may by written notice to LGI no later than one day prior to the
Closing, elect to make such Assigned Contract or License and Permit an Excluded
Contract. Notwithstanding any provision in this Agreement to the contrary, from
and after the date hereof through the Closing Date, the Sellers will not reject
or take any action (or fail to take any action that would result in rejection
by operation of law) to reject, repudiate or disclaim any Contract without the
prior written consent of the Purchaser. 


39







                    Section
5.02 Conduct of Business Prior to the Closing. 


                    (a)
The Sellers covenant and agree that, except (1) as described in Section
5.02(a) of the Sellers’ Disclosure Schedule, (2) as required by Law or as a
result of the Chapter 11 Cases, (3) as otherwise expressly contemplated by this
Agreement, or (4) with the prior consent of Purchaser (which consent shall not
be unreasonably withheld or delayed), between the date hereof and the Closing,
each Seller shall: 


	
 

	
 


	
 

	
          (i)
 use its commercially reasonable efforts and take all necessary actions to
 preserve intact in all material respects the Purchased Assets, to maintain,
 preserve and keep the Purchased Assets in good condition and repair (normal
 wear and tear excepted), and to maintain in effect all material licenses,
 permits, and approvals of Governmental Authorities which are necessary for
 the conduct of the Business; 


	
 

	
 


	
 

	
          (ii)
 conduct the Business only in the ordinary course of business consistent with
 past practice;


	
 

	
 


	
 

	
          (iii)
 use commercially reasonable efforts to maintain in full force and effect the
 Purchased Owned Intellectual Property; 


	
 

	
 


	
 

	
          (iv)
 use commercially reasonable efforts to maintain in all material respects the
 goodwill and organization of the Business and Sellers’ relationship with the
 Business Employees, suppliers, customers, lenders, lessors and others having
 business dealings with them in connection with the Business; 


	
 

	
 


	
 

	
          (v)
 subject to Section 5.01(c), use commercially reasonable efforts to
 obtain all necessary consents to the transfer of the Contracts that are to be
 transferred to the Purchaser pursuant to this Agreement, provided
 that, subject to Section 5.01(c), the obligation to use commercially
 reasonable efforts shall not require any payment of money or other
 consideration by the Sellers unless the Purchaser requests that the Sellers
 make such a payment or provide such other consideration and Purchaser agrees
 to pay the Sellers or provide such other consideration in advance for such
 payment and any associated costs; 


	
 

	
 


	
 

	
          (vi)
 use commercially reasonable efforts to obtain authorization pursuant to the
 Sale Order to execute, deliver and/or file Uniform Commercial Code, lien
 releases, discharges, financing change statements and such other documents, notices
 or instruments as the Purchaser may reasonably deem necessary to release all
 Liens, except for Permitted Encumbrances, against the Purchased Assets; 


	
 

	
 


	
 

	
          (vii)
 pay and discharge their post petition administrative Liabilities relating to the
 Business as they come due in the ordinary course of business except those (A)
 contested in good faith by the Sellers or (B) otherwise subject to the
 automatic stay under the Bankruptcy Code, and subject to compliance with the
 approved DIP Credit Agreement cash flow budget; and 


	
 

	
 


	
 

	
          (viii)
 subject to any confidentiality restrictions which apply to the Sellers, use
 commercially reasonable efforts to consult in good faith from time to time
 with the 





40







	
 

	
 


	
 

	
Representatives
 of the Purchaser to report material operational developments and the general
 status of ongoing operations of the Business, including any Material Adverse
 Effect. 





                    (b)
The Sellers covenant and agree that, except (1) as described in Section
5.02(b) of the Sellers’ Disclosure Schedule, (2) as required by Law or as a
result of the Chapter 11 Cases, (3) as otherwise expressly contemplated by this
Agreement, or (4) with the prior consent of Purchaser (which consent shall not
be unreasonably withheld or delayed and which consent shall be deemed to be
given where Sellers’ notify Purchaser in writing that they intend to take any
of the below actions and Purchaser does not object to Sellers taking such
action within five (5) Business Days) between the date hereof and the Closing,
each Seller shall not: 


	
 

	
 


	
 

	
          (i)
 sell, lease, dispose or otherwise transfer or distribute any of the Purchased
 Assets, or any interest therein, other than the sale of Inventory made in the
 ordinary course of business; 


	
 

	
 


	
 

	
          (ii) make
 any material changes to any method of accounting or accounting practice or
 policy used by the Sellers (as it relates to the Business), other than such
 changes required by GAAP; 


	
 

	
 


	
 

	
          (iii)
 fail to exercise any rights of renewal with respect to any Leased Real
 Property that by its terms would otherwise expire; 


	
 

	
 


	
 

	
          (iv)
 enter or agree to enter into any Material Contract which may be included in
 the Purchased Assets, or make or agree to make a material change or
 modification to any existing Material Contract included in the Purchased
 Assets, except for agreements relating to sale and purchase of Inventory from
 suppliers in the ordinary course of business; 


	
 

	
 


	
 

	
          (v)
 enter into any Contract regarding the license, sublicense, agreement or
 permission to use Purchased Intellectual Property, other than in the ordinary
 course of business; 


	
 

	
 


	
 

	
          (vi)
 enter into any Contract for the sale of any of the Owned Real Property or the
 sublease of any of the Leased Real Property; 


	
 

	
 


	
 

	
          (vii)
 amend its certificate or articles of incorporation, bylaws, certificate of
 formation, limited liability company agreement or other organizational
 documents or take any other action if any such amendment or action would have
 an adverse effect on the ability of any Seller to consummate the Transactions
 or otherwise adversely affect the Business or the value, utility or
 transferability of the Purchased Assets; 


	
 

	
 


	
 

	
          (viii)
 purchase, redeem or agree to purchase or redeem any of its equity interests,
 options, warrants or rights to purchase equity interests or securities of any
 kind convertible or exchangeable for equity interests; 


	
 

	
 


	
 

	
          (ix)
 acquire any entity or all or substantially all of the assets of any entity or
 make any other investment outside the ordinary course of business; 





41







	
 

	
 


	
 

	
          (x)
 other than trade payables, salary and other compensation to employees, and
 occupancy expenses related to owned and leased real property incurred in the
 ordinary course of business create or incur any Indebtedness in excess of
 $500,000 in the aggregate; 


	
 

	
 


	
 

	
          (xi)
 other than the extension of credit to customers or advances to employees in
 the ordinary course of business, make any loan, guaranty or other extension
 of credit to any Person or enter into any commitment to make any loan,
 advance, guaranty or other extension or credit; 


	
 

	
 


	
 

	
          (xii)
 make or modify any material Tax election; 


	
 

	
 


	
 

	
          (xiii)
 declare, issue, make or pay any dividend or other distribution of assets,
 whether consisting of money, other personal property, real property or other
 thing of value, to holders of its equity interests; 


	
 

	
 


	
 

	
          (xiv)
 enter into, amend or modify any transaction or Contract with any Affiliate,
 director, officer, manager or employee of any Seller except in the case of
 employees pursuant to written Contracts existing as of the date hereof and
 made available to Purchaser; provided that in no event shall the Sellers take
 any action that will increase the liability of the Purchaser under Section
 6.02(e) or Section 6.02(f);


	
 

	
 


	
 

	
          (xv)
 take any other action that would require Bankruptcy Court approval unless
 such approval is obtained; or 


	
 

	
 


	
 

	
          (xvi)
 agree to take any of the actions specified in this Section 5.02,
 except as expressly contemplated by this Agreement and the Ancillary
 Agreements. 


	
 

	
 





                    Section
5.03 Access to Information. From the date hereof until the Closing, and
subject to any confidentiality obligations to which the Sellers may be bound,
upon reasonable notice, the Sellers shall, and shall cause their respective
Representatives, accountants and counsel to: (a) afford the Purchaser, its
Affiliates, potential financing sources and their respective authorized
Representatives reasonable access to the offices, properties and books and
records of the Sellers (to the extent relating to the Business, the Purchased
Assets or the Assumed Liabilities), including access to conduct environmental
site assessments; and (b) furnish to the respective authorized Representatives
of the Purchaser and its Affiliates and potential financing sources such
additional financial and operating data and other information regarding the
Business, the Purchased Assets and the Assumed Liabilities (or copies thereof)
as the Purchaser may from time to time reasonably request; provided, however,
that any such access or furnishing of information shall be (i) conditioned upon
the party receiving such access or information entering into a confidentiality
agreement with the Sellers containing terms reasonably acceptable to the
Sellers and (ii) conducted during normal business hours, under the supervision
of the applicable Seller’s personnel and in such a manner as not to interfere
with the normal operations of the Business. 


                    Section
5.04 Regulatory and Other Authorizations; Notices and Consents. The
Purchaser and the Sellers shall each use their commercially reasonable efforts
to promptly obtain all waivers, authorizations, notices to proceed, consents,
orders and approvals of all 


42







Governmental
Authorities, officials and other Persons, make all required filings,
applications and petitions with, and give all required notices to, the
applicable Governmental Authorities and other Persons that may be or become
necessary for its execution and delivery of, and the performance of its
obligations pursuant to, this Agreement and the Ancillary Agreements and will
cooperate fully with the other parties in promptly seeking to obtain all such
waivers, authorizations, consents, orders, notices to proceed and approvals.
Without limiting the generality of the foregoing, the parties hereto shall
make, or cause to be made, all filings required (if any) of each of them or any
of their respective Subsidiaries or Affiliates under the HSR Act with respect
to the transactions contemplated hereby as promptly as practicable and, in any
event, within 10 days after the date hereof, and the parties hereto shall use
their commercially reasonable efforts to respond to any requests for additional
information made by any Governmental Authority to which any such filing was
made, to cause any applicable waiting periods to terminate or expire at the
earliest possible date and to resist vigorously, at their respective cost and
expense, any assertion that the transactions contemplated herein constitute a
violation of the HSR Act, all to the end of expediting consummation of the
Transactions. 


                    Section
5.05 Permits and Licenses. Commencing on the date of this Agreement, the
parties, cooperating in good faith, shall use commercially reasonable efforts
to take such steps, including the filing of any required applications with
Governmental Authorities, as may be necessary (i) to effect the transfer of the
Permits and Licenses to the Purchaser on or as soon as practicable after the
Closing Date, to the extent such transfer is permissible under applicable Law,
and (ii) to enable the Purchaser to obtain, on or as soon as practicable after
the Closing Date, any additional licenses, permits, approvals, consents,
certificates, registrations, and authorizations (whether governmental,
regulatory, or otherwise) as may be necessary for the lawful operation of the
Business from and after the Closing Date. 


                    Section
5.06 Environmental Related Actions. Sellers shall, at their own cost and
expense, be responsible for complying with the notice and transfer requirements
of any Environmental Laws regarding the sale or transfer of the Owned Real Property
and the Leased Real Property in compliance with, and within the time required
under, Environmental Laws. All of the Environmental Permits will be modified or
transferred, as the case may be, by the Sellers in compliance with, and within
the time required under, Environmental Laws. 


                    Section
5.07 Intellectual Property. 


                    (a)
No later than twenty (20) Business Days following the Closing, each Seller
shall, and shall cause each of its Affiliates to, file amendments with the
appropriate Governmental Authorities changing its corporate name, “doing
business as” name, trade name, and any other similar corporate identifier
(each, a “Corporate Name”) to a Corporate Name that does not contain any
of the Purchased Trademarks comprising the Transferred Intellectual Property. 


                    (b)
The Sellers shall use commercially reasonable efforts to assign to the
Purchaser those Contracts concerning Purchased Licensed Intellectual Property
that require third party consents and shall assign to the Purchaser all other
Contracts concerning Purchased Licensed Intellectual Property, or otherwise
shall obtain for the Purchaser and its Affiliates the right to use Purchased
Licensed Intellectual Property, such that, beginning on the Closing Date, 


43







 the Purchaser and its Affiliates will have valid and
enforceable rights to use all Purchased Licensed Intellectual Property as it
was used by or for the benefit of the Business (including all configurations
and customizations thereof) prior to the Closing. Prior to the Closing Date,
the Sellers shall use their commercially reasonable efforts to obtain all third
party consents necessary to assign such agreements or to obtain such rights and
the Purchaser shall cooperate with the Sellers in good faith to assist the
Sellers in obtaining such consents. 


                    (c)
On or before the Closing Date, the Sellers shall deliver to the Purchaser all
records and information in the Sellers’ possession or under the Sellers’
control concerning the Purchased Owned Intellectual Property, and all copies
thereof, including, but not limited to, any license and settlement agreements,
the documentation, source code and object code for all computer software,
documentation concerning registrations and applications, prosecution histories,
correspondence with Governmental Authorities, litigation files relating to
infringements, disputes or demands, including opposition and cancellation
proceedings, cease and desist and protest letters, and all documents concerning
security interests, mortgages, liens and other encumbrances. 


                    Section
5.08 Further Action. Each party hereto shall use its commercially
reasonable efforts to take, or cause to be taken, all appropriate action, to do
or cause to be done all things necessary, proper or advisable under applicable
Law, and to execute and deliver such documents and other papers, as may be
required to carry out the provisions of this Agreement and consummate and make
effective the Transactions, including using its commercially reasonable efforts
to defend any lawsuits or other legal proceedings, whether judicial or
administrative, whether brought derivatively or on behalf of third parties
(including any Governmental Authority), challenging this Agreement. Without
limiting the generality of the foregoing, (i) each of the Sellers shall use its
commercially reasonable efforts to (x) to cause the Excluded Incentive Assets
to be transferred and assigned to Purchaser at the Closing and any requisite
Consent for such transfer and assignment to be obtained, and (y) to cause its
accountants, attorneys, advisors, employees and other Representatives to
cooperate with the Purchaser in order to consummate and make effective the
Transactions, and (ii) Purchaser shall use its commercially reasonable efforts
to satisfy any conditions to consummation of the financing transaction
contemplated by the Credit Agreement. In case at any time after the Closing
Date any further action is reasonably necessary to carry out the purposes of
this Agreement, the Sellers and the Purchaser shall take all such necessary
action, including, without limitation, each Seller using its commercially
reasonable efforts to cause the Excluded Incentive Assets to be transferred and
assigned to Purchaser after the Closing if any requisite Consent for such
transfer and assignment is not obtained prior to the Closing.. 


                    Section
5.09 Cooperation and Exchange of Information. 


                    (a)
The parties hereto will provide the other parties (at no charge) with such
cooperation and information as may be reasonably requested in preparing or
finalizing any financial statements or accounting records or filing any Tax
Return, amended Tax Return or claim for refund, determining any liability for
Taxes or a right to a refund of Taxes or participating in or conducting any
audit or other proceeding in respect of Taxes relating to the Purchased Assets
or the Business. Such cooperation and information shall include providing
reasonable access to accounting systems and records and providing copies of
relevant Tax 


44







Returns or
portions thereof, together with accompanying schedules and related work papers
and documents relating to rulings or other determinations by taxing
authorities. Each of the parties will make themselves (and their respective
employees and Representatives) reasonably available, on a mutually convenient
basis, to provide explanations of any documents or information provided under
this Section 5.09(a) and to provide reasonable assistance with the
preparation or finalization of any financial statements or accounting records
and shall enter into a reasonable transition agreement which allows Sellers to
utilize certain agreed-upon employees of Purchaser for this purpose in consideration
of a reasonable fee to be paid through Sellers’ bankrupt estate. Each of the
parties will retain all Tax Returns, schedules and work papers and all material
records or other documents in its possession (or in the possession of its
Affiliates) relating to Tax matters relevant to the Purchased Assets or the
Business for the taxable period first ending after the Closing and for all
prior taxable periods (the “Tax Documents”) until the expiration of the
statute of limitations of the taxable periods to which such Tax Returns and
other documents relate, without regard to extensions. After such time or at any
other time when the parties want to dispose the Tax Documents, before any of
the parties shall dispose of any such documents in its possession (or in the
possession of its Affiliates), the other party shall be given the opportunity,
after 90 days’ prior written notice, to remove and retain all or any part of
such documents as such other party may select (at such other party’s expense).
In the event that a Seller is liquidated or otherwise ceases to be a going
concern prior to the expiration of the period described in the second preceding
sentence and such Seller’s Tax Documents are not retained by any such Seller’s
Affiliate, such Seller shall offer the Purchaser the opportunity described in
the preceding sentence (with 90 days’ prior written notice or such shorter
period of notice as may be practicable) to remove and retain Tax Documents (at
Purchaser’s expense) and such Seller may then dispose of any such documents not
removed by the Purchaser. If it is not practical to give the other party the
right to retain Tax Documents, the other party may instead be given a
reasonable opportunity to make copies, at its own expense of such Tax
Documents. Any information obtained under this Section 5.09(a) shall be
kept confidential, except as may be otherwise required in connection with the
filing of Tax Returns or claims for refund or in conducting an audit or other
proceeding. 


                    (b)
The Sellers shall not take any actions (including, but not limited to, filing
any Tax Return or amended Tax Return, responding to any audit or inquiry by a
taxing authority, or settling or compromising any controversy with a taxing
authority) that could materially affect the Tax Liability of the Purchaser
without the prior written consent of the Purchaser, which consent shall not be
unreasonably withheld or delayed, provided that this Section 5.09(b)
shall not apply to income Taxes or Tax Returns in respect thereof. 


                    Section
5.10 Conveyance Taxes. In the event that any Conveyance Taxes (as may be
reduced or eliminated pursuant to Section 1146(b) of the Bankruptcy Code and/or
the Sale Order entered by the Bankruptcy Court) are assessed on the transfer of
the Purchased Assets to the Purchaser, the Purchaser shall pay such Conveyance
Taxes. The Sellers shall complete and file all returns associated therewith. 


                    Section
5.11 Nondisclosure. For the period from the date hereof (a) in the case
of the Purchaser, until Closing and (b) in the case of each Seller,
indefinitely, no such Person shall disclose to the public or to any third party
any material non-public information concerning or relating to the other parties
hereto, other than with the express prior written consent of such 


45







other parties,
except as may be required by applicable Law or the Bankruptcy Court, in which
event the contents of any proposed disclosure shall be discussed with such
other parties before release; provided, however, that
notwithstanding anything to the contrary contained in this Agreement, any party
hereto may disclose such information (a) to any of its stockholders, members,
Affiliates, agents, Representatives and existing and potential financing
sources who need to know such information for the sole purpose of evaluating,
negotiating or implementing the Transactions, (b) where such disclosure is
required under any applicable Law, or (c) in the case of Sellers, to (A) the
DIP Lenders, (B) the statutory committee of unsecured creditors appointed by
the Bankruptcy Court in respect of the Chapter 11 Cases (the “Creditors’
Committee”), or (C) the Term Loan Lenders or (D) the Representatives of
the DIP Lenders, the Creditors’ Committee or the Term Loan Lenders. For the
avoidance of doubt, as of the Closing, the Purchased Assets and the Assumed
Liabilities (and any material non-public information with respect thereto)
shall be deemed the confidential information of the Purchaser, and the Sellers
shall maintain the confidentiality thereof in accordance with the terms of this
Section 5.11. 


                    Section
5.12 Documents at Closing. Subject to the terms hereof, each party
hereto agrees to execute and deliver on the Closing Date those documents
identified in Section 2.09 and 2.10 to which it is a party. 


                    Section
5.13 Non-Competition; Non-Solicitation. 


                    (a)
As an inducement for the Purchaser to enter into this Agreement and in
consideration for the consideration to be paid under this Agreement to the
Sellers, each Seller agrees that from and after the Closing until the date that
is the five (5) year anniversary of the Closing Date, within the United States
of America or anywhere else in the world, none of the Sellers will, directly or
indirectly, engage or invest in, own, manage, operate, finance, control or
participate in the ownership, management, operation, financing, or control of,
be associated with, or in any manner connected with, lend, or otherwise advance
credit to, or render services or advice to any business that manufactures,
designs, distributes, sources, markets, sells or provides products or services
similar to the products or services manufactured, designed, distributed,
sourced, marketed, sold or provided by the Business currently or as of the
Closing Date or directly or indirectly solicit the business of any Person known
to any Seller to be a customer of the Purchaser or the Business or induce or
attempt to induce any customer, supplier, licensee or business relation of the
Purchaser or the Business to cease doing business with the Purchaser or the
Business. 


                    (b)
For a period of five (5) years from and after the Closing: (a) no Seller will,
directly or indirectly, (i) hire any employee of the Purchaser or any of its
Affiliates, provided that a Seller may hire any person who contacts such Seller
on his or her own initiative without any direct or indirect solicitation by or
encouragement from such Seller, or (ii) in any way interfere with the
relationship between the Purchaser or any of its Affiliates and any employees
thereof. 


                    Section
5.14 Parties’ Access to Records After Closing. Each Seller acknowledges
that all customer lists, records and other information pertaining to any
Seller, the Business or its customers that are included in the Purchased Assets
are proprietary, confidential information and that on and after the Closing,
all such lists, records and information shall be the property of the Purchaser.
Each of the parties hereto agrees to preserve until December 31, 


46







2010, or the
expiration of the applicable statute of limitations for documents necessary to
prepare Tax returns, all records in its possession relating to any of the
Purchased Assets, Assumed Liabilities or the Business for all time periods
hereof ended on or prior to the Closing Date or relating to the transactions
contemplated herein. In the event that any party hereto needs and requests
access to such records in the possession of any other party hereto relating to
any of the Purchased Assets, the Assumed Liabilities, the Business or the
Transactions for the purpose of (i) preparing income Tax returns, (ii) for
complying with any audit request, subpoena or other investigative demand by any
Governmental Authority, (iii) for any civil litigation, (iv) the
administration, resolution and wind-down of the Bankruptcy Cases, and (v) any
other legitimate purpose not injurious to such other party, such other party
will allow such requesting party and its authorized Representatives and agents
reasonable access to such records and to that party’s employees and
Representatives at no charge during normal business hours at such other party’s
place of business for the sole purpose of obtaining information for use as
aforesaid and will permit such requesting party to make extracts and copies
thereof as may be necessary or convenient and, if required for such purpose, to
have access to and copies of original documents (at such requesting party’s
expense). 


                    Section
5.15 Notification of Certain Matters. Except with respect to the actions
required by this Agreement, LGI shall give prompt notice to the Purchaser, and
the Purchaser shall give prompt notice to LGI, of (i) the occurrence or
non-occurrence of any event, the occurrence or non-occurrence of which would
cause any of its representations or warranties in this Agreement to be untrue
or inaccurate in any material respect at or prior to the Closing Date and (ii)
any material failure of any Seller, on the one hand, or the Purchaser, on the
other hand, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement; provided, however, the delivery of any notice pursuant
to this Section 5.15 shall not limit or otherwise affect the remedies
available to the party receiving such notice under this Agreement. 


                    Section
5.16 Customers and Suppliers. The Sellers shall, promptly following the
request thereof by the Purchaser, seek and use its reasonable best efforts to
arrange such meetings and telephone conferences with all material customers and
suppliers of the Sellers as may be necessary and appropriate for the Purchaser
to conduct a comprehensive review of the Sellers’ relations with its customers
and suppliers. 



                    Section
5.17 COBRA Matters. If within two (2) days prior to the Closing Date the
Purchaser provides written notice to LGI that Purchaser elects for Sellers to
provide the notification described below in this Section 5.17 (such written
notice by Purchaser to LGI, the “COBRA Notice Election”), Sellers shall
prior to the Closing Date provide notification of the right to receive
continued health benefit coverage under Sellers’ health benefit plans pursuant
to Section 4980B of the Tax Code to all qualified beneficiaries (as defined in
Section 4980B(g)(1)(D) of the Tax Code) who have lost coverage under Sellers’
health benefit plans as a result of the “qualifying event” defined in Tax Code
Section 4980B(f)(3)(F), which qualified beneficiaries are listed on Section
8.02(m) of the Sellers’ Disclosure Schedule, and shall provide evidence of
the foregoing to Purchaser in a form that is reasonably satisfactory to
Purchaser.  


47







ARTICLE VI EMPLOYEE MATTERS


                    Section
6.01 Employment.


                    (a)
Transferred Employees. Prior to the Closing, Purchaser shall deliver, in
writing, an offer of employment to each of the employees who remain employed
immediately prior to the Closing by any of the Sellers or their Subsidiaries to
commence immediately following the Closing; provided that any offer of
employment shall be contingent on the Closing actually occurring. Each such
offer of employment shall be at the same salary or hourly wage rate and
position in effect immediately prior to the Closing. Such individuals who
accept such offer by the Closing Date are hereinafter referred to as the “Transferred
Employees.” 


                    (b)
Standard Procedure. Pursuant to the “Standard Procedure” provided
in Section 4 of Revenue Procedure 2004-53, (i) Purchaser and Sellers shall
report on a predecessor/successor basis as set forth therein, (ii) Sellers will
not be relieved from filing a Form W-2 with respect to any Transferred Employees,
and (iii) Purchaser will undertake to file (or cause to be filed) a Form W-2
for each such Transferred Employee with respect to the portion of the year
during which such Transferred Employees are employed by Purchaser that includes
the Closing Date, excluding the portion of such year that such Transferred
Employees were employed by Sellers or their Subsidiaries. 


                    Section
6.02 Employee Benefits. 


                    (a)
Benefits. Purchaser shall provide or cause to be provided for a period
of one (1) year following the Closing Date or such longer period of time
required by applicable Law to each of the Transferred Employees, compensation
(including salary, wages and opportunities for commissions, overtime and
premium pay) and employee benefits that are, in the aggregate substantially
equivalent to those provided to the Transferred Employees immediately prior to
the Closing; provided that Purchaser shall not have any
obligation to provide equity-based benefits, defined benefit pension benefits
(qualified or non-qualified), retiree medical or life insurance benefits,
incentive or bonus plans or arrangements or issue, or adopt any plans or
arrangements providing for the issuance of, shares of capital stock, warrants,
options or other rights in respect of any shares of capital stock of any entity
or any securities convertible or exchangeable into such shares pursuant to any
such plans or arrangements; provided, further, that no plans or
arrangements of Sellers providing for such benefits or issuances shall be taken
into account in determining whether employee benefits are substantially
equivalent in the aggregate. 


                    (b)
Past Service Credit. For purposes of eligibility, vesting and for
calculating of severance and vacation benefits (but not for benefit accrual
purposes generally) under the employee benefit plans of Purchaser providing
benefits to Transferred Employees (other than any equity-based plans or
nonqualified deferred compensation plans or arrangements) (the “Purchaser
Plans”), Purchaser shall credit each Transferred Employee with his or her
years of service with Sellers, their Subsidiaries and any predecessor entities,
to the same extent as such Transferred Employee was entitled immediately prior
to the Closing to credit for such service under any similar Employee Plan.
Notwithstanding the foregoing, nothing herein shall be construed to require
crediting of service that would result in a duplication of benefits. 


48







                    (c)
Medical and LTD. Purchaser shall provide Transferred Employees with
uninterrupted benefits coverage as of the Closing Date with respect to group
medical benefits and long term disability insurance. The Purchaser Plans which
are health benefit plans shall not deny Transferred Employees coverage on the
basis of pre-existing conditions in the plan year in which the Closing occurs
to the extent the pre-existing condition exclusions were waived or satisfied
under an analogous Employee Plan as of the Closing Date and shall credit, to the
extent commercially practicable, such Transferred Employees for any deductibles
and out-of-pocket expenses paid in the calendar year of initial participation
in the Purchaser Plans in the plan year in which the Closing occurs. 


                    (d)
Accrued Wages and Vacation. Except as required by applicable Law,
Purchaser shall be responsible for all Liabilities with respect to Transferred
Employees attributable to their (i) accrued and unpaid salary or wages as of
the Closing Date, and (ii) accrued and unused vacation, sick days and personal
days through the Closing Date. The Purchaser shall continue the Sellers’
vacation policy in effect as of the date hereof from the Closing Date to the
end of the calendar year in which the Closing Date occurs. 


                    (e)
Severance. Each Transferred Employee whose employment terminates prior
to the first anniversary of the Closing Date shall be entitled to receive
severance benefits, if any, upon the same terms and in the same amount as would
be payable under the applicable Employee Plan set forth in Section 6.02(e)
of the Sellers’ Disclosure Schedule. 


                    (f)
Retention Bonus. Purchaser shall provide retention bonuses to each of
the key employees and in the aggregate amounts set forth in and disclosed to
the Purchaser in Section 6.02(f) of the Sellers’ Disclosure Schedule.
The retention bonus for any such employee shall be paid in two equal
installments: one-half payable six (6) months following the Closing Date and
the remaining half payable on the first anniversary of the Closing Date, in
each case only if the employee has not terminated his or her employment
relationship with the Purchaser prior to such payment date (other than by
reason of without cause or for good reason (as such terms are defined in the
Sellers’ severance plan). 


                    (g)
IBNR Liabilities. The Purchaser will assume an obligation to pay,to one or more segregated bank accounts to
be notified in writing by Sellers to Purchaser prior to the Closing Date, any
unpaid claims that were incurred under Sellers’ self-insured medical, dental,
and prescription drug benefit plans prior to the Closing Date and are payable
under the terms of such plans and reported to Sellers or Sellers’ benefits
administration representatives on or before the 60th day following the Closing
Date (such claims, the “IBNR Liabilities”, and such period, the “IBNR
Claims Period”), it being understood for the avoidance of doubt that the
Purchaser is not assuming the sponsorship of or any Liabilities under Sellers’
medical, dental and prescription drug benefit plans and that Sellers will
further retain responsibility for administering the payment of all claims under
such plans. Sellers shall promptly take all commercially reasonable actions to
(i) amend their medical, dental and prescription drug plans to require that all
claims incurred thereunder must be submitted to Sellers or their benefits
administration representatives for payment within sixty (60) days following the
Closing Date to be eligible for payment, and (ii) communicate such amendments
to all plan participants and beneficiaries and Sellers’ benefits administration
representatives. Sellers shall promptly provide Purchaser with (i) copies of
such plan amendments and the general form of communications to participants and
beneficiaries, 


49







together with
information regarding the date and manner of communication, and (ii) reasonably
detailed claims information as such information becomes available during the
IBNR Claims Period so that Purchaser has an opportunity to review such
information.


                    (h)
Nothing contained in this Section 6.02 or elsewhere in this Agreement
shall be construed to prevent the termination of employment of any individual
Transferred Employee or any change in the employee benefits available to any
individual Transferred Employee. Nothing contained in this Article VI
or any other provision of this Agreement, (i) shall be construed to establish,
amend, or modify any benefit or compensation plan, program, agreement or
arrangement, (ii) shall limit the ability of Purchaser or any of its Affiliates
to amend, modify or terminate any benefit or compensation plan, program,
agreement or arrangement at any time assumed, established, sponsored or
maintained by any of them, or (iii) create any third-party beneficiary rights
or obligations in any Person (including any Transferred Employee) other than
the parties to this Agreement or any right to employment or continued
employment or to a particular term or condition of employment with Purchaser or
any of its Affiliates.


ARTICLE VII BANKRUPTCY COURT MATTERS


                    Section
7.01 Bankruptcy Court Filings. Purchaser agrees that it will promptly
take such actions as are reasonably requested by Sellers to assist in obtaining
entry of the Sale Order and a finding of adequate assurance of future
performance by Purchaser, including furnishing affidavits or other documents or
information for filing with the Bankruptcy Court for the purposes, among
others, of providing necessary assurances of performance by Purchaser under
this Agreement and demonstrating that Purchaser is a “good faith” purchaser
under Section 363(m) of the Bankruptcy Code. Purchaser shall not, without the
prior written consent of Sellers, file, join in, or otherwise support in any
manner whatsoever any motion or other pleading relating to the sale of the
Purchased Assets hereunder. In the event the entry of the Sale Order shall be
appealed, Sellers and Purchaser shall use their respective reasonable efforts
to defend such appeal.


ARTICLE VIII CONDITIONS TO CLOSING


                    Section
8.01 Conditions to Obligations of the Sellers. The obligations of the
Sellers to consummate the Transactions shall be subject to the satisfaction at
or prior to the Closing Date of each of the following conditions, any one or
more of which may be waived (but only in writing) by LGI (provided that no such
waiver shall be deemed to have cured any breach of any representation, warranty
or covenant made in this Agreement):


                    (a)
Representations, Warranties and Covenants. (i) All of the
representations and warranties made by the Purchaser in this Agreement and in
the Ancillary Agreements to which it is a party shall be true and correct in
all material respects (other than those representations and warranties that are
qualified by materiality, which shall be true and correct in all respects) as
of the date hereof and as of the Closing Date as though made at and as of the
Closing Date (except to the extent such representations and warranties
expressly speak as of an earlier date, which shall be true and correct as of
such date); provided, however, that in the event of a breach of a
representation or warranty, other than a representation or warranty qualified
by a 


50







Material
Adverse Effect, the condition set forth in this Section 8.01(a)(i) shall
be deemed satisfied unless the effect of all such breaches of representations
and warranties taken together result in a Material Adverse Effect; (ii) the
Purchaser shall have performed and complied in all material respects with all
agreements and covenants required by this Agreement to be performed by the
Purchaser on or prior to the Closing Date; and (iii) with respect to clauses
(i) and (ii), at the Closing there shall be delivered to LGI a certificate
signed by a duly authorized representative of the Purchaser to the foregoing
effect.


                    (b)
Governmental Approvals. All authorizations, consents, orders or
approvals of, or declarations or filings with, or expirations of waiting
periods imposed by, any Governmental Authority which are necessary to
consummate the transactions contemplated hereby shall have been filed, been
obtained or occurred and such authorizations, consents, orders or approvals
shall not have expired or been withdrawn.


                    (c)
No Order. No Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any Law or Order (whether temporary,
preliminary or permanent) that has the effect of making the Transactions
illegal or otherwise restraining, prohibiting or materially restricting the
consummation of such Transactions.


                    (d)
Sale Order. The Bankruptcy Court shall have entered the Sale Order in
form and substance reasonably acceptable to the Purchaser and the Sellers and
such Sale Order shall be a Final Order.


                    (e)
Closing Deliveries. (i) LGI shall have received all of the deliverables
of the Purchaser as set forth in Section 2.10.


                    Section
8.02 Conditions to Obligations of the Purchaser. The obligations of the
Purchaser to consummate the Transactions shall be subject to the satisfaction
at or prior to the Closing Date of each of the following conditions, any one or
more of which may be waived (but only in writing) by the Purchaser (provided
that no such waiver shall be deemed to have cured any breach of any
representation, warranty or covenant made in this Agreement):


                    (a)
Representations, Warranties and Covenants. (i) All of the
representations and warranties made by the Sellers in this Agreement and in the
Ancillary Agreements shall be true and correct in all material respects (other
than those representations and warranties that are qualified by materiality or
Material Adverse Effect, which shall be true and correct in all respects) as of
the date hereof and as of the Closing Date as though made at and as of the
Closing Date (except to the extent such representations and warranties
expressly speak as of an earlier date, which shall be true and correct as of
such date); provided, however, that in the event of a breach of a
representation or warranty, other than a representation or warranty qualified
by a Material Adverse Effect, the condition set forth in this Section
8.02(a)(i) shall be deemed satisfied unless the effect of all such breaches
of representations and warranties taken together result in a Material Adverse
Effect; (ii) each Seller shall have performed and complied in all material
respects with all agreements and covenants required by this Agreement to be
performed by such Seller on or prior to the Closing Date; and (iii) with
respect to clauses (i) and (ii), at the Closing there shall be delivered to the
Purchaser a certificate signed by a duly authorized representative of each
Seller to the foregoing effect.


51







                    (b)
Governmental Approvals. All authorizations, consents, orders or
approvals of, or declarations or filings with, or expirations of waiting
periods imposed by, any Governmental Authority which are necessary to
consummate the transactions contemplated hereby shall have been filed, been
obtained or occurred and such authorizations, consents, orders or approvals
shall not have expired or been withdrawn.


                    (c)
No Order. No Governmental Authority shall have enacted, issued, promulgated,
enforced or entered any Law or Order (whether temporary, preliminary or
permanent) that has the effect of making the Transactions illegal, otherwise
restraining, prohibiting or materially restricting the consummation of such
Transactions or limiting or restricting Purchaser’s conduct or operation of the
Business following consummation of the Transactions or requiring Purchaser or
its Affiliates to divest or hold separate any assets or businesses.


                    (d)
Sale Order. The Bankruptcy Court shall have entered the Sale Order in
form and substance reasonably acceptable to the Purchaser and the Sellers and
such Sale Order shall be a Final Order.


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


                    (f)
Closing Deliveries. The Purchaser shall have received all of the
deliverables of the Sellers as set forth in Section 2.09.


                    (g)
Title Policy. Except as would not have a Material Adverse Effect, the
Purchaser shall have received, at its sole cost, one or more policies and/or a
commitment to issue one or more policies of title insurance, designating the
Purchaser as the named insured, insuring marketable title to all Owned Real
Property and Leased Real Property included in the Purchased Assets free and
clear of any Liens other than Permitted Liens.


                    (h)
Release of Liens. To the extent that the Sale Order authorizes the
Sellers to file, execute, deliver and/or file Uniform Commercial Code
termination statements, lien releases, discharges, financing change statements
and such other documents, notices or instruments absent the consent of the
holder of a Lien, the Sellers shall have executed, delivered and/or filed or
authorized the Purchaser to file such termination statements, lien releases,
discharges, financing change statements or other documents, notices or other
instruments as the Purchaser may reasonably deem necessary to release Liens
(other than Permitted Encumbrances) on the Purchased Assets, to the extent they
are authorized to do so absent the consent of the holder of the Lien.


                    (i)
Absence of Investigations and Proceedings. There shall not be in effect any
Order by a Governmental Authority of competent jurisdiction restraining,
enjoining or otherwise prohibiting the consummation of the Transactions
contemplated hereby. There shall have not been commenced or threatened any
proceeding or investigation by a Governmental Authority of competent
jurisdiction for the purpose of restraining, prohibiting or materially
restricting the consummation of such Transactions or materially limiting or
materially restricting 


52







Purchaser’s conduct or operation of the
Business following consummation of the Transactions or requiring Purchaser or
its Affiliates to divest or hold separate any assets or businesses.


                    (j)
Required Consents. Each of the third party consents set forth on Section
8.02(j) of the Sellers’ Disclosure Schedule (each a “Required Consent”)
have been received by the Purchaser and are in full force and effect.


                    (k)
365(d)(4)(B) Order. The Bankruptcy Court shall have entered
an Order pursuant to section 365(d)(4)(B) of the Bankruptcy Code extending the
time for Sellers to assume or reject unexpired leases of nonresidential real
property under which the Sellers are the lessees for ninety (90) days after the
date that is one hundred and twenty (120) days after the Petition Date.


                    (l)
Purchaser Credit Facility. On or prior to the Closing, the Purchaser
shall have consummated the financing transaction contemplated under the Credit
Agreement to enable Purchaser to consummate the transactions contemplated
hereunder and to perform its obligations under this Agreement.


                    (m)
COBRA Obligations. To the extent that the Purchaser provides LGI the
COBRA Notice Election pursuant to Section 5.17, Sellers shall have provided
notification of the right to receive continued health benefit coverage under
Sellers’ health benefit plans pursuant to Section 4980B of the Tax Code to all
qualified beneficiaries (as defined in Section 4980B(g)(1)(D) of the Tax Code)
who have lost coverage under Sellers’ health benefit plans as a result of the
“qualifying event” defined in Tax Code Section 4980B(f)(3)(F), which qualified
beneficiaries are listed on Section 8.02(m) of the Sellers’ Disclosure
Schedule, and shall have provided evidence of the foregoing to Purchaser in a
form that is reasonably satisfactory to Purchaser.


ARTICLE IX TERMINATION, AMENDMENT AND WAIVER


                    Section
9.01 Termination. This Agreement may be terminated at any time prior to
the Closing:


                    (a)
by either LGI or the Purchaser if the Closing shall not have occurred by the
Termination Date; provided, however, that the right to terminate
this Agreement under this Section 9.01(a) shall not be available to any
party whose failure (or in the case of a Seller as the terminating party, any
Seller’s failure) to fulfill any obligation under this Agreement shall have
been the cause of, or shall have resulted in, the failure of the Closing to
occur on or prior to such date;


                    (b)
by either the Purchaser or LGI in the event that any Order restraining,
enjoining or otherwise prohibiting the Transactions shall have become a Final
Order;


                    (c)
by the Purchaser by written notice to LGI (i) if any event occurs or condition
exists which would render impossible the satisfaction of one or more conditions
to the obligations of the Purchaser to consummate the transactions contemplated
by this Agreement as set forth in Section 8.02, or (ii) in accordance
with Section 5.04;


53







                    (d)
by LGI by written notice to the Purchaser if any event occurs or condition
exists which would render impossible the satisfaction of one or more conditions
to the obligations of the Sellers to consummate the transactions contemplated
by this Agreement as set forth in Section 8.01;


                    (e)
by the Purchaser if there has occurred a material misrepresentation or other
material breach by any Seller of its representations, warranties or covenants
set forth herein or in any Ancillary Agreement; provided, however,
that if such breach is susceptible to cure, subject to Section 9.01(a),
the breaching party or parties shall have twenty (20) calendar days after
receipt of written notice (which notice includes a summary description of such
breach) from the Purchaser of its intention to terminate this Agreement if such
breach continues in which to cure such breach;


                    (f)
by LGI if there has occurred a material misrepresentation or other material
breach by the Purchaser of its representations, warranties or covenants set forth
herein or in any Ancillary Agreement to which the Purchaser is a party; provided,
however, that if such breach is susceptible to cure, subject to Section
9.01(a), the Purchaser shall have twenty (20) calendar days after receipt
of written notice (which notice includes a summary description of such breach)
from LGI of its intention to terminate this Agreement if such breach continues
in which to cure such breach;


                    (g)
by the Purchaser if all or substantially all of the Sellers’ assets relating to
the Business are sold, disposed of, or otherwise liquidated to a purchaser (the
“Alternate Purchaser”) other than in a sale to the Purchaser pursuant to
the transactions contemplated by this Agreement; or


                    (h)
by the written consent of each of LGI and the Purchaser.


                    Section
9.02 Effect of Termination. In the event that this Agreement shall be
terminated pursuant to Section 9.01, all further obligations of the
parties under this Agreement shall terminate; provided that the obligations of
the parties contained in Section 5.11, Section 11.01 through Section
11.15 and this Section 9.02 shall survive any such termination.


ARTICLE X NON-SURVIVAL OF REPRESENTATIONS AND
WARRANTIES


                    Section
10.01 Non-Survival of Representations and Warranties. The
representations, warranties, covenants and agreements (other than covenants and
agreements that, by their terms, survive the Closing or termination of this
Agreement) in this Agreement shall terminate at the Closing, or upon
termination of this Agreement pursuant to Section 9.01, and, following
the Closing or the termination of this Agreement, as the case may be, no party
shall make any claim whatsoever for any breach of any such representation,
warranty or covenant hereunder, subject to Section 9.02.


ARTICLE XI GENERAL PROVISIONS


                    Section
11.01 Expenses. Except as otherwise specified in this Agreement, all
costs and expenses, including fees and disbursements of counsel, financial
advisors, accountants and other advisors, incurred in connection with this
Agreement and the Transactions shall be 


54







paid by the
party incurring such costs and expenses, subject to Bankruptcy Court approval,
whether or not the Closing shall have occurred. As between the Purchaser and
the Sellers, the Sellers shall bear all of the costs of administration of the
Chapter 11 Cases.


                    Section
11.02 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by an internationally recognized overnight courier service, by
facsimile or registered or certified mail (postage prepaid, return receipt requested)
to the respective parties hereto at the following addresses (or at such other
address for any party as shall be specified by such party in a notice given in
accordance with this Section 11.02:


	
 

	
 

	
 

	
 


	
 

	
(i)

	
if to the
 Sellers:


	
 

	
 

	
 


	
 

	
 

	
Lenox Group
 Inc.


	
 

	
 

	
1414
 Radcliffe Street


	
 

	
 

	
Bristol, PA
 19007


	
 

	
 

	
Facsimile: 

	
267-525-5646


	
 

	
 

	
Attention: 

	
Louis A
 Fantin, SVP, General Counsel & Secretary


	
 

	
 

	
 


	
 

	
 

	
with a copy
 to:


	
 

	
 

	
 


	
 

	
 

	
Weil,
 Gotshal & Manges LLP


	
 

	
 

	
700
 Louisiana Street, Suite 1600


	
 

	
 

	
Houston,
 Texas 77002-2784


	
 

	
 

	
Facsimile: 

	
713-224-9511


	
 

	
 

	
Attention: 

	
Alfredo R.
 Perez, Esq.


	
 

	
 

	
 


	
 

	
 

	
767 Fifth
 Avenue


	
 

	
 

	
New York, NY
 10153


	
 

	
 

	
Facsimile: 

	
212-735-4710


	
 

	
 

	
Attention: 

	
Simeon Gold,
 Esq.


	
 

	
 

	
 


	
 

	
(ii)

	
if to the Purchaser:


	
 

	
 

	
 


	
 

	
 

	
LDG-Delaware
 Opco, Inc.


	
 

	
 

	
c/o Trumpet Investors
 L.P.


	
 

	
 

	
110 East
 59th Street


	
 

	
 

	
Suite 200


	
 

	
 

	
New York, NY
 10022


	
 

	
 

	
Facsimile: 

	
212-371-7597


	
 

	
 

	
Attention: 

	
Eric Kogan





55







	
 

	
 

	
 

	
 


	
 

	
 

	
with a copy
 to:


	
 

	
 

	
 


	
 

	
 

	
Schulte Roth
 & Zabel


	
 

	
 

	
919 Third
 Avenue


	
 

	
 

	
New York,
 New York 10022


	
 

	
 

	
Facsimile: 

	
(212) 593-5955


	
 

	
 

	
Attention: 

	
Adam C.
 Harris, Esq.


	
 

	
 

	
 

	
David E.
 Rosewater, Esq.





                    Section
11.03 Public Announcements. Prior to the Closing, neither the Purchaser,
on the one hand, nor any of the Sellers, on the other hand, shall make, or
cause to be made, any press release or public announcement in respect of this
Agreement or the Transactions, or otherwise communicate with any news media
without the prior written consent of LGI or the Purchaser, respectively, except
(i) as otherwise required by Law, (ii) applicable stock exchange regulation,
(iii) in filings in the Bankruptcy Court or office of the United States
trustee, or (iv) for any press release or other public announcement that is
issued with respect to the Transaction when this Agreement is executed and at
Closing, and the parties to this Agreement shall cooperate as to the timing and
contents of any such press release, public announcement or communication. After
the Closing, the parties may issue public announcements regarding the Transaction
so long as such announcements, in the case of announcements made by any Seller,
do not disclose the specific terms or conditions of this Agreement or any
Ancillary Agreement except where such terms and conditions have already been
disclosed as required by Law, applicable stock exchange regulation or in
filings that the Sellers were required to make in the Bankruptcy Court or
office of the United States trustee.


                    Section
11.04 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any Law or public policy,
all other terms and provisions of this Agreement shall nevertheless remain in
full force and effect for so long as the economic or legal substance of the
Transactions is not affected in any manner materially adverse to any party
hereto. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
Transactions are consummated as originally contemplated to the greatest extent
possible.


                    Section
11.05 Entire Agreement. This Agreement (including the Exhibits hereto)
and the Ancillary Agreements constitute the entire agreement of the parties
hereto with respect to the subject matter hereof and thereof and supersede all
prior agreements and undertakings, both written and oral, among the Sellers and
the Purchaser with respect to the subject matter hereof and thereof.


                    Section
11.06 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors
(including any trustee, receiver, receiver-manager, interim receiver or monitor
or similar officer appointed in respect of the Sellers in the Chapter 11 Cases)
and permitted assigns, but shall not be assignable or delegable by the Sellers
or Purchaser without the prior written consent of the other party and by Order
of the Bankruptcy Court. Notwithstanding the foregoing, (i) prior to the
Closing, 


56







Purchaser
shall have the right to assign its rights and/or delegate its obligations
hereunder to any Affiliate that is directly or indirectly wholly owned by
Purchaser and (ii) after the Closing, Purchaser (or its permitted assignee)
shall have the right to assign its rights and/or delegate its obligations
hereunder (A) to any Affiliates, (B) to any financing sources for collateral
purposes or (C) to any subsequent purchaser of all or substantially all of the
stock or assets of Purchaser or the Business; provided, however, that in each
case Purchaser shall remain liable for the obligations of any assignee to whom
Purchaser assign its rights and/or obligations pursuant to this Section 11.06
except in the case of Section 11.06(ii)(C) where the subsequent
purchaser shall assume any such rights and/or obligations.


                    Section
11.07 Non-Recourse. No past, present or future director, officer,
employee, incorporator, member, partner, stockholder, agent, attorney or
representative of the respective parties to this Agreement, in such capacity,
shall have any liability for any obligations or liabilities of Purchaser or
Sellers, as applicable, under this Agreement or for any claim based on, in
respect of, or by reason of, the transactions contemplated hereby.


                    Section
11.08 Amendment. This Agreement may not be amended or modified except
(a) (i) by an instrument in writing signed by, or on behalf of, LGI and the
Purchaser or (ii) by a waiver in accordance with Section 11.09; and, (b)
to the extent such amendment or modification is material, by an Order of the
Bankruptcy Court.


                    Section
11.09 Waiver. Any Seller, on the one hand, or the Purchaser, on the
other hand, may: (a) extend the time for the performance of any of the
obligations or other acts of the other; (b) waive any inaccuracies in the
representations and warranties of the other contained herein or in any document
delivered by the other pursuant hereto; or (c) waive compliance with any of the
agreements or obligations of the other contained herein. Any such extension or
waiver shall be valid only if set forth in an instrument in writing signed by
the party to be bound thereby. Any waiver of any term or condition shall not be
construed as a waiver of any subsequent breach or a subsequent waiver of the
same term or condition, or a waiver of any other term or condition of this
Agreement. The failure of any party hereto to assert any of its rights
hereunder shall not constitute a waiver of any of such rights.


                    Section
11.10 No Third Party Beneficiaries. This Agreement shall be binding upon
and inure solely to the benefit of the parties hereto and their respective
successors and permitted assigns and nothing herein, express or implied, is
intended to or shall confer upon any other Person any legal or equitable right,
benefit or remedy of any nature whatsoever, including any rights of employment
for any specified period, under or by reason of this Agreement.


                    Section
11.11 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the Laws of the State of New York and, to the extent
applicable, the Bankruptcy Code. The parties hereto agree that the Bankruptcy
Court shall be the exclusive forum for enforcement of this Agreement or the
Transactions and (only for the limited purpose of such enforcement) submit to
the jurisdiction thereof; provided that if the Bankruptcy Court determines that
it does not have subject matter jurisdiction over any action or proceeding
arising out of or relating to this Agreement, then each party: (a) agrees that
all such actions or proceedings shall be heard and determined in a New York
federal court sitting in The City of New York; (b) irrevocably submits to the
jurisdiction of such court in any such action or 


57







proceeding;
(c) consents that any such action or proceeding may be brought in such courts
and waives any objection that such party may now or hereafter have to the venue
or jurisdiction or that such action or proceeding was brought in an
inconvenient court; and (d) agrees that service of process in any such action
or proceeding may be effected by providing a copy thereof by any of the methods
of delivery permitted by Section 11.02 to such party at its address as
provided in Section 11.02 (provided that nothing herein shall affect the
right to effect service of process in any other manner permitted by Law).


                    Section
11.12 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY WAIVES TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS. EACH OF THE
PARTIES HERETO HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY
OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND THE TRANSACTIONS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.12.


                    Section
11.13 Currency. Unless otherwise specified in this Agreement, all
references to currency, monetary values and dollars set forth herein shall mean
United States (U.S.) dollars and all payments hereunder shall be made in United
States dollars.


                    Section
11.14 Construction. The parties hereto and their respective legal
counsel participated in the preparation of this Agreement, and therefore, this
Agreement shall be construed neither against nor in favor of any of the parties
hereto, but rather in accordance with the fair meaning thereof.


                    Section
11.15 Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original, but all of which taken together shall
constitute one and the same agreement.


[Remainder of page intentionally left blank]


58







                    IN
WITNESS WHEREOF, the Sellers and the Purchaser have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.


	
 

	
 

	
 


	
 

	
LENOX GROUP
 INC.


	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	 

	
 

	
 

	
Name:


	
 

	
 

	
Title:


	
 

	
 

	
 


	
 

	
LENOX,
 INCORPORATED


	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	 

	
 

	
 

	
Name:


	
 

	
 

	
Title:


	
 

	
 

	
 


	
 

	
LENOX
 WORLDWIDE, LLC


	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	 

	
 

	
 

	
Name:


	
 

	
 

	
Title:


	
 

	
 

	
 


	
 

	
LENOX
 RETAIL, INC.


	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	 

	
 

	
 

	
Name:


	
 

	
 

	
Title:


	
 

	
 

	
 


	
 

	
LENOX SALES,
 INC.


	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	 

	
 

	
 

	
Name:


	
 

	
 

	
Title:





[Asset Purchase Agreement]







	
 

	
 

	
 


	
 

	
FL 56
 INTERMEDIATE, CORP.


	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	 

	
 

	
 

	
Name:


	
 

	
 

	
Title:


	
 

	
 

	
 


	
 

	
D 56, INC.


	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	 

	
 

	
 

	
Name:


	
 

	
 

	
Title:


	
 

	
 

	
 


	
 

	
LDG-DELAWARE
 OPCO, INC.


	
 

	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	 

	
 

	
 

	
Name: 


	
 

	
 

	
Title: 





[Asset Purchase Agreement]