Enesco Group, Inc. (Form: 8-K)

This ASSET PURCHASE AGREEMENT is dated as of January 21, 2007, between Enesco Group, Inc., an Illinois corporation (“Parent”), its Subsidiaries set forth on the signature pages hereto (each a “Company,” collectively, the “Companies” and the Companies, together with Parent, each a “Seller” or collectively “Sellers”) and EGI Acquisition, LLC, a Delaware limited liability company (“Purchaser”). (Each of Sellers and Purchaser is a “Party” and collectively they are the “Parties” to this Agreement).

WHEREAS, Sellers are debtors-in-possession under title 11 of the Bankruptcy Code, 11 U.S.C. §§ 101—1330 (the “Bankruptcy Code”), and filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code on January 12, 2007 (the “Petition Date”), in the United States Bankruptcy Court for the Northern District of Illinois (the “Bankruptcy Court”) (Case No. 07-00565 (ABJ)) (the “Bankruptcy Case”);

WHEREAS, the Companies and the Foreign Subsidiaries presently conduct the Business; and

WHEREAS, Sellers desire to sell, transfer and assign to Purchaser, and Purchaser desires to purchase, acquire and assume from Sellers, pursuant to Sections 363 and 365 of the Bankruptcy Code, all of the Purchased Assets and Assumed Liabilities, upon the terms and subject to the conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements hereinafter contained, the parties hereby agree as follows:

1.1 Certain Definitions. For purposes of this Agreement, the following terms shall have the meanings specified in this Section 1.1:

“Accounts Receivable” means all accounts receivable or other receivables or rights to receive payment as of the Closing, including trade accounts and notes receivable and other miscellaneous receivables of the Business as of the Closing arising out of the sale or other disposition of goods or services of the Business including those arising out of any Assumed Contract.

“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person, and the term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise.

“Agreement” means this Agreement, as the same may be amended or supplemented from time to time in accordance with the terms hereof.

“Ancillary Agreements” means, collectively, the Bill of Sale, Assignment and Assumption Agreement.

“Assumed Contracts” means collectively, (i) the Contracts listed on Schedule 1.1(a), as amended from time to time in accordance with Section 2.6, (ii) all other Contracts Related to the Business entered into by Sellers on or after the Petition Date, provided, that the Contracts referred to in subsection (ii) are limited to (1) those Contracts listed in a Schedule to the Sellers Disclosure Schedule or entered into by a Seller or any of its Subsidiaries after the date hereof in accordance with Section 8.2. Without limiting the foregoing, the Assumed Contracts shall not include any Specified Excluded Contract or any Contract relating to Indebtedness of the Business.

“Bankruptcy-Related Fees” means any fees and expenses (including out of pocket expenses) incurred by or otherwise due from (whether or not billed) a Seller or any Subsidiary of a Seller related to the Bankruptcy Case, including the following fees and expenses: (i) counsel for Parent or any of its Affiliates; (ii) financial advisors to Parent or any of its Affiliates; (iii) counsel for the Committee of Unsecured Creditors (the “Committee”); (iv) consultants, financial advisors, and/or accountants for the Committee; (v) any claims, noticing, and/or balloting agent or agents; (vi) any professional retained in the Bankruptcy Case; and (vii) the members of the Committee.

“Business” means the business as conducted by Sellers and their respective Affiliates (including the Foreign Subsidiaries), including the manufacture and distribution of giftware.

“Business Day” means any day of the year, other than a Saturday or Sunday, on which national banking institutions in New York City are open to the public for conducting business and are not required or authorized to close.

“Business Intellectual Property” means the Owned Intellectual Property and the Licensed Intellectual Property.

“Cash” means cash and cash equivalents (including marketable securities and short-term investments) other than restricted cash balances, calculated net of any outstanding checks and on a basis in accordance with GAAP.

“Contract” means any indenture, note, bond, mortgage, deed of trust, deed of constitution of mortgage, mortgage note pledge agreement, loan agreement, franchise agreement, lease, sublease, license, purchase order and other contract, agreement, arrangement, commitment or instrument, whether written or oral, to which any Seller or Company is a party or by which it may be bound, or to which its properties are or may be subject.

“Cure Costs” shall mean any and all amounts due or otherwise required to be paid (as determined by an order of the Bankruptcy Court, established by Sellers without objection by the non-debtor contracting party, or agreed to between the Purchaser and the non-debtor contracting party) to cure all defaults under the Assumed Contracts (without giving effect to any acceleration clauses relating to bankruptcy or insolvency) pursuant to Section 365 of the Bankruptcy Code.

“Data” means all information and data, whether in printed or electronic form and whether contained in a database or otherwise, that is used in or held for use in the operation of the respective businesses of Sellers or their respective Subsidiaries, or that is otherwise material to or necessary for the operation of the respective businesses of Sellers or their respective Subsidiaries.

“DIP Financing Agreement” shall mean the Debtor-In-Possession Credit Agreement, dated as of January , 2007, by and among Parent, Enesco International Ltd., and Gregg Manufacturing, Inc., each a debtor and debtor-in-possession, as borrowers, the financial institutions from time to time party thereto as lenders, and Wells Fargo Foothill, Inc., as arranger and administrative agent for the lenders, as the same may be or has been amended, restated, supplemented, or otherwise modified from time to time and each other agreement, document or instrument executed in connection therewith.

“DIP Lender” means, collectively the financial institutions from time to time party to the DIP Financing Agreement as lenders thereto.

“DIP Note” means the note issued to the DIP Lender pursuant to the DIP Financing Agreement.

“Documents” means all files, documents, instruments, papers, books, reports, records, tapes, microfilms, photographs, letters, budgets, forecasts, ledgers, journals, title policies, customer lists, regulatory filings, operating data and plans, technical documentation (design specifications, functional requirements, operating instructions, logic manuals, flow charts, etc.), user documentation (installation guides, user manuals, training materials, release notes, working papers, etc.), marketing documentation (sales brochures, flyers, pamphlets, web pages, etc.) and other similar materials, in each case whether or not in electronic form.

“Employees” means all individuals, as of the Closing Date hereof, who are employed by any of the Companies (including employees who are on short-term disability or other leave of absence with a definite date of return, but excluding those employees on long-term disability or on a leave of absence without a definite date of return).

“Environmental Claims” means any complaint, summons, citation, notice, directive, order, claim, litigation, investigation, notice of violation, judicial or administrative proceeding, judgment, letter or other communication from any governmental agency, department, bureau, office or other authority, or any third party involving violations of Environmental Laws or Releases of Hazardous Materials from (i) any assets, properties or businesses of the Business or any predecessor in interest; (ii) from adjoining properties or businesses; or (iii) from or onto any facilities which received Hazardous Materials generated by the Business or any predecessor in interest.

“Environmental Laws” includes (A) the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. 9601 et seq., as amended; the Resource Conservation and Recovery Act, 42 U.S.C. 6901 et seq., as amended; the Clean Air Act, 42 U.S.C. 7401 et seq., as amended; the Clean Water Act, 33 U.S.C. 1251 et seq., as amended; the Occupational Safety and Health Act, 29 U.S.C. 655 et seq., and any other foreign, federal, state, local or municipal laws, statutes, regulations, rules or ordinances imposing liability or establishing standards of conduct for protection of the environment; and (B) all applicable, foreign, federal, provincial, state, municipal, or local laws, statutes or by-laws or ordinances relating to the environment, occupational safety, health, product liability, and transportation.

“Environmental Liabilities” means any obligations, losses, liabilities (including strict liability), damages, punitive damages, consequential damages, treble damages, costs and expenses (including all reasonable out-of-pocket fees, disbursements and expenses of counsel, out-of-pocket expert and consulting fees and out-of-pocket costs for environmental site assessments, remedial investigation and feasibility studies), fines, penalties, sanctions and interest incurred as a result of any Environmental Claim filed by any Governmental Authority or any third party which relate to any violations of Environmental Laws, Remedial Actions, Releases or threatened Releases of Hazardous Materials from or onto (i) any property presently or formerly owned or operated by any of Sellers or any of their respective Subsidiaries or a predecessor in interest, or (ii) any facility which received Hazardous Materials generated by the Business or any of the Companies or a predecessor in interest.

“Equipment” means all machinery, equipment, furniture, fixtures, furnishings, vehicles, leasehold improvements and other tangible personal property (other than Inventory), including, without limitation, all such artwork, desks, chairs, tables, Hardware, copiers, telephone lines and numbers, facsimile machines and other telecommunication equipment, cubicles and miscellaneous office furnishings and supplies, wherever located.

“Equity Securities” means, with respect to any Person, (i) capital stock of, or partnership interests, membership interests, joint venture interests or other equity interests in, such Person, (ii) securities convertible into or exchangeable for shares of capital stock, voting securities or other equity interests in such Person or (iii) options, warrants or other rights to acquire the securities described in clauses (i) and (ii), whether fixed or contingent, matured or unmatured, contractual, legal, equitable or otherwise.

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

“ERISA Affiliate” means any trade or business (whether or not incorporated) that is part of the same controlled group, or under common control with, or part of an affiliated service group that includes any of the Companies, within the meaning of Code Section 414(b), (c), (m), or (o) or ERISA Section 4001(a)(14).

“Exchange Act” means the Securities Exchange Act of 1934, as amended (together with the rules and regulations promulgated thereunder).

“Facilities” means, collectively, those facilities set forth on Schedule 1.1(c), together with any other premises in the United States, the United Kingdom, Hong Kong, France, Canada or elsewhere at which any Seller or Subsidiary of a Seller conducts the Business.

“Final Order” means an Order or judgment of a court of competent jurisdiction as to which the time to appeal, petition for certiorari, or move for reargument or rehearing has expired and as to which no appeal, petition for certiorari, or other proceedings for reargument or rehearing shall then be pending or in the event that an appeal, writ of certiorari, reargument, or rehearing thereof has been sought, such Order shall have been determined by the highest court to which such Order was appealed, or certiorari, reargument or rehearing shall have been denied and the time to take any further appeal, petition for certiorari, or move for reargument or rehearing shall have expired; provided, however, that the possibility that a motion under Rule 59 or Rule 60 of the Federal Rules of Civil Procedure, or any analogous rule under the Bankruptcy Code or the Federal Rules of Bankruptcy Procedure, may be filed with respect to such Order shall not prevent such Order from being deemed a Final Order.

“Foreign Benefit Plan” means each Benefit Plan sponsored or maintained by the Foreign Subsidiaries for the benefit of Employees of the Foreign Subsidiaries.

“Foreign Shares” means all of issued and outstanding shares of capital stock (or other equity interests) of each of the Foreign Subsidiaries.

“Foreign Subsidiaries” means collectively, N.C. Cameron & Sons Limited, Enesco Holdings Limited, Enesco France, S.A. and their respective Subsidiaries.

“Governmental Body” means any government or governmental or regulatory body thereof, or political subdivision thereof, whether foreign, federal, state or local, or any agency, instrumentality or authority thereof, any court or arbitrator (public or private), or any quasi-governmental or private body exercising any regulatory, taxing, importing or other governmental or quasi-governmental authority.

“Hardware” means any and all computer and computer-related equipment, including, without limitation, computers, servers, facsimile servers, scanners, color printers, laser printers, handheld computerized devices and networks and all network, communications and telecommunications equipment.

“Hazardous Materials” 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 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.

“Hedging Agreement” means any interest rate, foreign currency, commodity or equity swap, collar, cap, floor or forward rate agreement, or other agreement or arrangement designed to protect against fluctuations in interest rates or currency, commodity or equity values (including, without limitation, any option with respect to any of the foregoing and any combination of the foregoing agreements or arrangements), and any confirmation executed in connection with any such agreement or arrangement, all as amended or otherwise modified from time to time.

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

“Indebtedness” means (i) all Liabilities for borrowed money, whether current or funded, secured or unsecured, all obligations evidenced by bonds, debentures, notes or similar instruments, and all liabilities in respect of mandatorily redeemable or purchasable capital stock or securities convertible into capital stock; (ii) all Liabilities for the deferred purchase price of property; (iii) all Liabilities in respect of any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which liabilities are required to be classified and accounted for under GAAP as capital leases, (iv) all Liabilities for the reimbursement of any obligor on any letter of credit, banker’s acceptance or similar credit transaction securing obligations of a type described in clauses (i), (ii) or (iii) above to the extent of the obligation secured, and all Liabilities as obligor, guarantor, or otherwise, to the extent of the obligation secured.

“Intellectual Property” means all foreign and domestic (i) trademarks, service marks, brand names, certification marks, collective marks, d/b/a’s, 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, “Trademarks”); (ii) inventions, discoveries and ideas, whether patentable or not, and all patents and patent applications (including without limitation reissues, reexaminations, divisionals, renewals, extensions, provisionals, continuations, continuations-in-part, patent disclosures, mask works and integrated circuit topographies) and equivalents thereof (collectively, “Patents”); (iii) confidential and proprietary information, trade secrets and know-how, including without limitation processes, schematics, databases, formulae, drawings, prototypes, models, designs and customer lists (collectively, “Trade Secrets”); (iv) published and unpublished works of authorship, whether copyrightable or not (including without limitation, all artwork, designs and Software), copyrights therein and thereto, and registrations and applications therefor, and all renewals, extensions, restorations and reversions thereof (collectively, “Copyrights”); (v) electronic data processing, information, recordkeeping, communications, telecommunications, account management, inventory management and other computer systems (including all computer programs, Software, databases, firmware, Hardware 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 (collectively, “Other Proprietary Rights”).

“Intellectual Property Contracts” means all agreements concerning the Business Intellectual Property, including without limitation Software and other agreements granting Sellers and/or their respective Subsidiaries rights to use the Licensed Intellectual Property, agreements granting rights to use Owned Intellectual Property, confidentiality agreements, Trademark coexistence agreements, Trademark consent agreements and nonassertion agreements.

“Intercompany Payables” means obligations owed by a Seller or any of its Subsidiaries in connection with the operation of the Business to Parent or any of its Subsidiaries.

“Intercompany Receivables” means obligations owed to a Seller or any of its Subsidiaries in connection with the operation of the Business by Parent or any of its Subsidiaries.

“Inventory” means all inventory, including finished goods, work in process, raw materials, goods in transit, goods at customer sites and other inventory or goods held for sale of a person in all forms, wherever located, now or hereafter existing.

“Knowledge of Sellers” means the knowledge after due inquiry of those officers and directors of Parent and the other Sellers having primary responsibility for such matters.

“Labor Agreements” means all Contracts between any Seller or a Foreign Subsidiary and any certified or lawfully recognized labor organization representing Employees employed at, or in connection with, the Facilities.

“Law” means any statute, law, ordinance, regulation, rule, code or other requirement enacted, issued, promulgated, enforced or entered by a Governmental Body having jurisdiction over any of Sellers or Foreign Subsidiaries or any Order.

“Legal Proceeding” means any judicial, administrative or arbitral actions, suits, proceedings (public or private) or claims or any proceedings by or before a Governmental Body.

“Liability” means any debt, liability, commitment or obligation of any kind (whether direct or indirect, known or unknown, fixed, absolute or contingent, matured or unmatured, asserted or not asserted, accrued or unaccrued, liquidated or unliquidated, determined, determinable or otherwise or due or to become due and whether or not the same would be required by GAAP to be reflected in financial statements or disclosed in the notes thereto) and including all costs and expenses relating thereto.

“Licensed Intellectual Property” means Intellectual Property that Sellers and/or their respective Subsidiaries are licensed or otherwise permitted by other Persons to use.

“Lien” means any lien (including, without limitation, any liens imposed by Law, such as mechanics’ liens), encumbrance, pledge, mortgage, deed of trust, security interest, conditional sales agreement, adverse claim, lease, charge, option to purchase or lease or otherwise acquire any interest, right of first refusal or first offer or other third party right of any kind, easement of record, title defect, servitude, proxy, voting trust or agreement or transfer restriction under any shareholder or similar agreement or encumbrance.

“Material Adverse Effect” (x) with respect to the Business, Parent and its Subsidiaries, means any change, effect, event, occurrence or state of facts (or any development that has had or is reasonably likely to have any change or effect) that individually or in the aggregate is or could reasonably be expected to be, materially adverse to the (i) assets, properties, business, condition (financial or otherwise) prospects or results of operations of the Parent and its Subsidiaries, taken as a whole or (ii) ability of Sellers to perform its obligations hereunder and (y) with respect to Purchaser, means any change, effect, event, occurrence or state of facts (or any development that has had or is reasonably likely to have any change or effect) that individually or in the aggregate is or could reasonably be expected to be, materially adverse to Purchaser’s ability to perform their respective obligations hereunder. For purposes of clarity, Material Adverse Effect shall not include (i) changes or conditions generally affecting the economy or the financial, credit or securities markets; (ii) changes in, or events or conditions affecting, any of the businesses and industries in which Parent and its Subsidiaries operate, to the extent such changes do not affect Parent and its Subsidiaries, taken as a whole, in a disproportionate manner relative to other participants in such businesses and industries; and (iii) actions taken with the prior written consent of Purchaser.

“Most Recent Balance Sheet” means the unaudited consolidated balance sheet of the Business as at the Balance Sheet Date, a copy of which balance sheet is attached hereto on Schedule 5.5(a).

“Multiemployer Plan” means a “multiemployer plan” as defined in Section 3(37) of ERISA.

“Order” means any order, injunction, judgment, decree, award, ruling, writ, assessment or arbitration award entered, issued or enforced by or with any Governmental Body.

“Ordinary Course” or “Ordinary Course of Business” means the conduct of the Business in a manner that is consistent in nature, scope and magnitude with the past practices of the Business and is taken in the ordinary course of the normal, day-to-day operations of the Business.

“Owned Intellectual Property” means Intellectual Property owned by Sellers and/or their respective Subsidiaries, including without limitation, all right, title and interest to Intellectual Property owned by Enesco International Ltd., a Delaware corporation.

“Payoff Letters” means the letters provided by the DIP Lender to Parent and certain Affiliates of Purchaser in connection with the repayment of the DIP Note as contemplated hereby and wire instructions in customary form providing Parent with a confirmation that all Liens, including without limitation, collateral amounts held for the benefit of certain Affiliates of Purchaser, and all payment obligations with respect to such DIP Amount has been or will have been released effective as of the payment in full of the Purchase Price.

“Permits” means any approvals, authorizations, consents, filings, licenses, franchises, permits, certificates notices, development entitlements, permits and rights of or with all Governmental Bodies, including without limitation, all authorizations under Environmental Laws, certificates of occupancy, zoning permits, privileges, immunities, orders, registrations, easements, rights and other approvals and authorizations issued by Governmental Bodies.

“Permitted Exceptions” means: (i) with respect to real property (a) all easements, rights of way and encumbrances of record disclosed in policies of title insurance that have been disclosed to Purchaser prior to the date hereof and (b) zoning, entitlement and other land use and environmental regulations by any Governmental Body, provided that such regulations have not been violated by existing usage of improvements; provided, however, that in the case of this clause (i) none of the foregoing, individually or in the aggregate, detract from the value or current use of the applicable Real Property (hereinafter defined), require the removal, alteration or loss of any improvement located thereon (including, without limitation, paved parking areas) or materially interfere with the use of the affected asset or Real Property as the Business is currently conducted, provided that, if any of the foregoing encumbrances include mortgages or like encumbrances on the landlord’s interest in any Leased Real Property, the tenant receives a non-disturbance agreement reasonably satisfactory to it, providing inter alia, that the mortgagee shall not disturb the tenant’s occupancy or other rights in the event of foreclosure (unless the tenant is in default past applicable notice and cure periods under the related Lease); (ii) mechanics’, carriers’, workers’, repairers’ and similar Liens arising or incurred in the Ordinary Course of Business for sums not yet due and payable; (iv) title of a lessor under a capital or operating lease; and (v) any other Liens that will be discharged in full prior to Closing in connection with the Sale Order or any other actions of the Bankruptcy Court.

“Person” means any individual, corporation, limited liability company, partnership, firm, joint venture, association, joint-stock company, trust, unincorporated organization, Governmental Body or other entity.

“Pre-Petition Liability” means any “claim”, as such term is defined in Section 101(5) of the Bankruptcy Code, against or obligation of any Seller arising or occurring on or before the Petition Date, which claim or obligation has not been waived, or otherwise satisfied in accordance with the applicable provisions of the Bankruptcy Code and/or the Federal Rules of Bankruptcy Procedure or Order of the Bankruptcy Court.

“Product Liability Claim” means any Legal Proceeding arising out of, or otherwise relating to in any way in respect of claims for personal injury, wrongful death or property damage resulting from exposure to, or any other warranty claims, refunds, rebates, property damage, product recalls, defective material claims, merchandise returns and/or any similar claims with respect to, Products or items purchased, sold, consigned, marketed, stored, delivered, distributed or transported by the Business, any Seller or any of its Subsidiaries, whether such claims are known or unknown or asserted or unasserted.

“Products” means any and all products developed, designed, manufactured, marketed or sold in connection with the Business, including all parts and components of the foregoing manufactured or licensed by any Seller or any of the Foreign Subsidiaries.

“Purchaser Disclosure Schedule” means the disclosure schedule delivered by Purchaser to Sellers prior to the execution hereof.

“Registered” means, with respect to Intellectual Property, issued, registered, renewed or the subject of a pending application;

“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.

“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 by 42 U.S.C. 9601 or the equivalent laws of any foreign jurisdiction.

“Representatives” means with respect to any Person, any officer, director or employee of, or any investment banker, attorney, accountant, consultant or other advisor, agent or representative of such Person.

“Schedule” means Sellers Disclosure Schedules and the Purchaser Disclosure Schedules, collectively.

“Sellers Disclosure Schedule” means the disclosure schedule delivered by Sellers to Purchaser prior to the execution hereof.

“Software” means any and all (i) computer programs, including, without limitation, program interfaces and any and all software implementations of algorithms, models and methodologies (including, without limitation, all of the foregoing that is installed on Hardware), whether in source code or object code, (ii) databases and compilations, including, without limitation, any and all data and collections of data, whether machine readable or otherwise, (iii) descriptions, flow-charts and other work product used to design, plan, organize and develop any of the foregoing and (iv) all documentation, including, without limitation, user manuals and other training documentation related to any of the foregoing.

“Subsequent Filings” shall mean any reports, schedules, forms, statements or other documents (including in each case, exhibits, amendments or supplements thereto and any other information incorporated by reference therein) filed with the SEC after the date of this Agreement.

“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, association, or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof or (ii) if a limited liability company, partnership, association, or other business entity (other than a corporation), a majority of the partnership or other similar ownership interests thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof and for this purpose, a Person or Persons own a majority ownership interest in such a business entity (other than a corporation) if such Person or Persons shall be allocated a majority of such business entity’s gains or losses or shall be or control any managing director or general partner of such business entity (other than a corporation). The term “Subsidiary” shall include all Subsidiaries of such Subsidiary, and specifically includes the Foreign Subsidiaries.

“Tax Authority” means any federal, state, local or foreign government, or agency, instrumentality or employee thereof, charged with the administration of any law or regulation relating to Taxes.

“Taxes” means any federal, state, local or foreign net income, gross income, net receipts, gross receipts, profit, severance, property, production, sales, use, license, excise, franchise, employment, payroll, withholding, alternative or add-on minimum, ad valorem, value-added, transfer, stamp, recording, employment or other tax, custom duty, fee or other governmental charge of any kind, together with any interest, fine, penalty, addition to tax or additional amount imposed with respect thereto.

“Trade Receivables” means Accounts Receivables due from customers arising from the sale of goods or provision of services by the Business prior to the Closing.

“WARN Act” means the Worker Adjustment and Retraining Notification Act of 1988, as amended, and any similar state Law or the equivalent Law(s) as to the Foreign Subsidiaries, and the rules and regulations thereunder.

1.2 Other Definitional and Interpretive Matters. (a) Unless otherwise expressly provided, for purposes of this Agreement, the following rules of interpretation shall apply:

Calculation of Time Period. When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded. If the last day of such period is a non-Business Day, the period in question shall end on the next succeeding Business Day.

Exhibits/Schedules. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any matter disclosed in a Schedule by a Party shall be deemed to constitute disclosure against all other representations and warranties of such Party to the extent, and solely to the extent, it is reasonably apparent on the face of such disclosure that the matter disclosed is relevant to such other representations and warranties of the Party. Any capitalized terms used in any Schedule or Exhibit but not otherwise defined therein shall be defined as set forth in this Agreement.

Gender and Number. Any reference in this Agreement to gender shall include all genders, and words imparting the singular number only shall include the plural and vice versa.

Headings. The provision of a Table of Contents, the division of this Agreement into Articles, Sections and other subdivisions and the insertion of headings are for convenience of reference only and shall not affect or be utilized in construing or interpreting this Agreement. All references in this Agreement to any “Section” are to the corresponding Section of this Agreement unless otherwise specified.

Herein. The words such as “herein,” “hereinafter,” “hereof” and “hereunder” refer to this Agreement as a whole and not merely to a subdivision in which such words appear unless the context otherwise requires.

Including. The word “including” shall mean “including, without limitation.”

(b) The parties hereto have participated jointly in the negotiation and drafting of this Agreement and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the Parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provision of this Agreement.

2.1 Purchase and Sale of Assets. On the terms and subject to the conditions set forth in this Agreement, at the Closing, Purchaser shall purchase, acquire and accept from Sellers and their respective Subsidiaries, and Sellers shall, and shall cause their respective Subsidiaries to, sell, transfer, assign, convey and deliver to Purchaser all right, title and interest of any Seller in, to and under the Purchased Assets, free and clear of all Liens, other than Permitted Exceptions. “Purchased Assets” shall mean, other than the Excluded Assets, all assets, properties, titles, interests and rights of Sellers and their respective Subsidiaries, as of the Closing, including without limitation, the following assets listed in clauses (a) through (q) below:

(d) all owned real property set forth on Schedule 2.1(d)(i) (the “Owned Real Property”) and all real property leased or subleased as set forth on Schedule 2.1(d)(ii) (the “Leased Real Property”);

(e) all Owned Intellectual Property, including without limitation, all Intellectual Property set forth on Schedule 5.8(a) to the Sellers Disclosure Schedule and all rights of Sellers and their respective Subsidiaries in the Licensed Intellectual Property and the Intellectual Property Contracts, including without limitation, all Intellectual Property Contracts set forth on Schedule 5.8(a) to the Sellers Disclosure Schedule (the “Purchased Intellectual Property”);

(h) other than the Wind-down Fund, all Cash, including without limitation, all restricted cash balances, deposits (including customer deposits and security deposits), claims, credits, prepayments, prepaid assets (including advances to vendors for inventory purchases), prepaid rent, prepaid charges and expenses, deferred charges, refunds or claims of refunds, defenses, counterclaims, rights of recovery, rights of setoff and rights of recoupment;

(j) all insurance proceeds and awards with respect to or arising in connection with (A) any Assumed Liability or (B) any Purchased Asset;

(k) all Documents of whatever nature and wherever located, including those in the possession or control of Parent or any of its Subsidiaries;

(l) all Permits (and applications therefor) owned, held or maintained by Sellers or any of their respective Subsidiaries to the extent assignable;

(m) all rights, privileges, claims, causes of action, and options relating or pertaining to the Purchased Assets including all rights and avoidance claims of Sellers arising under Chapter 5 of the Bankruptcy Code (i) against any Foreign Subsidiary, (ii) against Purchaser and/or its Affiliates, or (iii) against any customers, suppliers or vendors of the Business or otherwise relating to a Purchased Asset;

(o) all assets in respect of the Foreign Benefit Plans (the “Purchased Foreign Plan Assets”);

(q) any and all residual amounts of or reversionary interests in each of the L/C Collateral (as such term is defined in the Order approving the DIP Financing Agreement) and the Prepetition Indemnity Amount (as such term is defined in the Order approving the DIP Financing Agreement); and

(r) all guarantees and warranties of third parties that relate to the ownership or operation of the Business or the Purchased Assets, to the extent assignable or transferable.

2.2 Excluded Assets. Nothing herein contained shall be deemed to sell, transfer, assign or convey the Excluded Assets to Purchaser, and Sellers shall retain all right, title and interest to, in and under the Excluded Assets. “Excluded Assets” shall mean the following assets of Sellers and their respective Subsidiaries (but excluding the Purchased Assets):

(b) all avoidance claims or causes of action arising under the Bankruptcy Code or applicable state law, including, without limitation, all rights and avoidance claims of Sellers arising under Chapter 5 of the Bankruptcy Code that are not specified in Section 2.1(m);

(d) other than the Foreign Shares, all shares of capital stock or similar equity interests in any Subsidiaries of Parent;

(e) in each case to the extent solely in connection with or solely relating to any Excluded Asset, any and all instruments, prepaid assets and deposits, receivables for services performed prior to the Closing Date, letters of credit proceeds, unbilled costs and fees, and tax refunds;;

(f) (i) all rights under Sellers’ insurance policies relating to the Business (including, without limitation, health insurance, worker’s compensation insurance and life insurance), and any right to refunds due with respect to such insurance policies and (ii) all rights of Sellers under or pursuant to all warranties (express or implied), representations and guarantees made by third parties relating to (A) any Excluded Assets or (B) liabilities of Sellers to the extent such liabilities are not Assumed Liabilities;

(g) other than the Purchased Foreign Plan Assets, all assets in respect of the Benefit Plans; and

2.3 Assumption of Liabilities. On the terms and subject to the conditions set forth in this Agreement, at the Closing, Purchaser shall assume, effective as of the Closing, and shall timely perform and discharge in accordance with their respective terms, solely the Assumed Liabilities. “Assumed Liabilities” shall mean only the following liabilities (other than the Excluded Liabilities):

(b) solely to the extent provided in Section 9.1, the Liabilities arising out of the Foreign Benefit Plans; and

(i) all accrued payroll obligations of Transferred Employees (including vacation accruals, but excluding any severance or other obligations arising from the termination of employment of any employees of the Business, the Sellers or the Foreign Subsidiaries);

(ii) other than Intercompany Payables or the Pre-Petition Liabilities, all accounts payable incurred in the Ordinary Course of Business after the Petition Date (including, for the avoidance of doubt, (i) invoiced accounts payable and (ii) accrued but uninvoiced accounts payable); and

(iii) all obligations arising from advances received from customers of the Business; and

In addition, Purchaser acknowledges that it shall also have certain Liabilities to Transferred Employees specified in ARTICLE IX.

2.4 Excluded Liabilities. Notwithstanding anything in this Agreement to the contrary, other than the Assumed Liabilities, Purchaser shall not assume, and shall be deemed not to have assumed, and shall not have any responsibility of any nature with respect to, any Liabilities of any of Parent or any of its Affiliates or otherwise arising out of, or relating to, the Business (the “Excluded Liabilities”). The Excluded Liabilities shall include, but shall not be limited to, the following:

(a) all Liabilities arising out of, or associated with, any Excluded Assets, including Contracts that are not Assumed Contracts (e.g., the Specified Excluded Contracts);

(b) all Liabilities arising out of or related to (i) any Indebtedness of any Seller or any of its Subsidiaries or (ii) any Lien on any Purchased Asset, other than Permitted Exceptions;

(c) all Liabilities for expenses of Parent or any of its Affiliates (i) for the negotiation and preparation of this Agreement, (ii) relating to the transactions contemplated hereby (including Bankruptcy-Related Fees) or (iii) incurred in connection with the commencement and continuance of the Bankruptcy Case;

(d) except as otherwise provided in Section 2.3 and Article XI, other than Taxes relating to the Purchased Assets for taxable periods (or portions thereof) ending after the Closing Date, all Liabilities for Taxes of any Seller or any of its Subsidiaries or otherwise relating to the Purchased Assets or the Business;

(g) any Liabilities of any Seller or any of its Subsidiaries to current or former officers, employees, consultants or independent contractors of any Seller or any of the Selling Subsidiaries related to or arising out of any period ending on or prior to, or following (other than with respect to Transferred Employees), the Closing or related to or arising out of any act or omission during such period, including, without limitation, arising out of any severance plan or policy, employment Contract, unlawful discrimination, wrongful termination, violations of Law, breach of terms of any Benefit Plan or failure to pay or discharge such employees wages or benefits when due;

(h) except as specifically set forth in Article IX, Liabilities under or relating to any Benefit Plan, other than the Foreign Benefit Plans (including, without limitation, Liabilities resulting from the termination of any Benefit Plan), whether such Liabilities arise prior to, on or after the Closing, and any other Liability relating to the employment or termination of employment of (x) any employee of any of the Companies or their Subsidiaries, arising from or related to the operation of the Business prior to the Closing or (y) any employee of any of the Companies or their Subsidiaries who is not a Transferred Employee arising on or after the Closing;

(i) any severance, “parachute” or similar payment to any officer, director, employee or consultant of any of the Business, the Companies or their Subsidiaries, who provide(d) services for the Business, arising prior to, by virtue of, or in connection with the transactions contemplated by this Agreement (including, without limitation, as a result of the termination of employment pursuant to Section 9.1(a));

(j) any Liability of a Seller or any of its Subsidiaries that constitutes, or is alleged to constitute, a violation of Law;

(k) any Liability of a Seller or any of its Subsidiaries arising under or out of, in connection with, or related to any and all Legal Proceedings of any Sellers, its Subsidiaries or the Business;

(m) all Liabilities relating to amounts required to be paid by Sellers hereunder.

2.5 Transfer of the Foreign Shares. At the Closing, Parent shall deliver or cause to be delivered to Purchaser (or to one or more of its designated Affiliates) stock or share certificates (or other instruments evidencing equity ownership interest or, in the event of uncertificated interests, shall cause appropriate notations to be made in the relevant shareholder registers and share transfer ledgers) representing all of the Foreign Shares. Such stock or share certificates (or other instruments evidencing equity ownership interest) shall be duly endorsed in blank for transfer or delivered with stock powers duly executed blank in order to transfer to Purchaser (or its designated Affiliates) the Foreign Shares, free and clear of any and all Liens.

2.6 Purchaser’s Election Right. Notwithstanding anything to the contrary in this Agreement, Purchaser shall have the right, without any further adjustment to the Purchase Price, to: (i) add any Contract that is an executory contract or unexpired lease to Schedule 2.6, thereby making such Contract an Assumed Contract, by written notice delivered to Sellers at any time during the period from and after the date hereof until the later (A) of the Closing Date and (B) the fifth Business Day after receiving notice from any Seller that such Seller intends to reject such Contract; and (ii) remove any Contract that is an executory contract or unexpired lease from the from the list of Assumed Contracts set forth in the definition of Assumed Contracts herein, by written notice delivered to Sellers at any time during the period from and after the date hereof and until the Closing Date, thereby eliminating such Contract’s designation as an Assumed Contract and making it an Excluded Asset (any such Contract, a “Specified Excluded Contract”).

2.7 Further Conveyances and Assumptions. (a) From time to time following the Closing, Sellers shall, or shall cause their Affiliates to, make available to Purchaser such non-confidential data in personnel records of Transferred Employees as is reasonably necessary for Purchaser to transition such employees into Purchaser’s records.

(b) From time to time following the Closing, Sellers and Purchaser shall, and shall cause their respective Affiliates to, execute, acknowledge and deliver all such further conveyances, notices, assumptions, releases and acquaintances and such other instruments, and shall take such further actions, as may be reasonably necessary or appropriate to assure fully to Purchaser and its respective successors or assigns, all of the properties, rights, titles, interests, estates, remedies, powers and privileges intended to be conveyed to Purchaser under this Agreement and the Ancillary Agreements and to assure fully to Sellers and their Affiliates and their successors and assigns, the assumption of the Assumed Liabilities and obligations intended to be assumed by Purchaser under the Ancillary Agreements, and to otherwise make effective the transactions contemplated hereby and thereby. Without limiting the generality of the foregoing, to the extent Purchaser discovers following the Closing that any asset related to the Business or a Foreign Subsidiary prior to the Closing was not transferred to Purchaser as part of the transactions contemplated herein, upon Purchaser’s written request, Parent shall or shall cause its applicable Subsidiary to promptly assign and transfer to Purchaser all right, title and interest in such asset.

2.8 Bulk Sales Laws. Purchaser hereby waives compliance by Sellers with the requirements and provisions of any “bulk-transfer” Laws of any jurisdiction that may otherwise be applicable with respect to the sale and transfer of any or all of the Purchased Assets to Purchaser.

2.9 Non-Assignability of Purchased Assets. Notwithstanding anything in this Agreement to the contrary, to the extent that the sale, assignment, sublease, transfer, conveyance or delivery or attempted sale, sublease, assignment, transfer, conveyance or delivery to Purchaser of any asset that would be a Purchased Asset or any claim or right or any benefit arising thereunder or resulting therefrom is prohibited by any applicable Law or would require any governmental or third party authorizations, approvals, consents or waivers and such authorizations, approvals, consents or waivers shall not have been obtained prior to the Closing, the Closing shall proceed without the sale, assignment, sublease, transfer, conveyance or delivery of such asset unless such failure causes a failure of any of the conditions to Closing set forth in Article IV, in which event the Closing shall proceed only if the failed condition is waived by the party entitled to the benefit thereof. In the event that the failed condition is waived and the Closing proceeds without the transfer, sublease or assignment of any such asset, then following the Closing, Purchaser and each Seller shall use commercially reasonable efforts, and cooperate with each other, to obtain promptly such authorizations, approvals, consents and waivers. Pending such authorization, approval, consent or waiver, the parties shall cooperate with each other in any mutually agreeable arrangement designed to provide Purchaser with all of the benefits of use of such asset and to the applicable Seller(s) the benefits, including any indemnities, that they would have obtained had the asset been conveyed to Purchaser at the Closing. Once authorization, approval, consent or waiver for the sale, assignment, sublease, transfer, conveyance or delivery of any such asset not sold, assigned, subleased, transferred, conveyed or delivered at Closing is obtained, Sellers shall or shall cause the relevant Affiliates to assign, transfer, convey and deliver such asset to Purchaser at no additional cost. To the extent that any such asset cannot be transferred or the full benefits or use of any such asset cannot be provided to Purchaser following the Closing pursuant to this Section 2.9, then Purchaser and the applicable Seller(s) shall enter into such arrangements (including subleasing, sublicensing or subcontracting) to provide to the parties hereto the economic (taking into account Tax costs and benefits) and operational equivalent, to the extent permitted, of obtaining such authorization, approval, consent or waiver and the performance by Purchaser of the obligations thereunder. Sellers shall hold in trust for and pay to Purchaser promptly upon receipt thereof, all income, proceeds and other monies received by any Seller or any of its Affiliates derived from its use of any asset in connection with the arrangements under this Section 2.9.

2.10 Purchaser Affiliate Acquisitions. Notwithstanding anything to the contrary contained in this Agreement, Purchaser may elect to have any or all of the Purchased Assets conveyed or transferred to, or any of the Assumed Liabilities assumed by, one or more of its Affiliates.

2.11 Insurance. Between the date hereof and Closing, the Sellers shall take any and all necessary and required action to include the Purchaser and its Affiliates as additional named insureds under all of the Sellers’ insurance policies.

3.1 Consideration. The aggregate consideration for the Purchased Assets (the "Aggregate Consideration”) shall be (a) an amount in cash equal to the principal amount plus interest, fees and any other expenses of the DIP Note outstanding as of the Closing Date (the “Purchase Price”), (b) the assumption of the Assumed Liabilities, (c) forgiveness of any and all Pre-Petition Liabilities of the Sellers owed to Affiliates of the Purchaser, including without limitation a certain deposit in the amount of $100,000 funded by an Affiliate of the Purchaser for the benefit of Parent prior to the date hereof and (d) $600,000.00 in respect of administration expenses incurred by Sellers in the Bankruptcy Case (the “Wind-down Fund”). To the extent the Purchase Price shall exceed the aggregate of (i) the amount set forth in the Payoff Letters and (ii) the Wind-down Fund, such excess shall be returned to Purchaser. On the Closing Date, Parent shall deliver to Purchaser a certificate from an authorized executive officer of each of Parent and the DIP Lender which states the principal amount plus interest, fees and any other expenses of the DIP Note outstanding as of the Closing Date. Purchaser shall have the right to rely unconditionally and conclusively on such certificate in determining the Purchase Price and shall be obligated to fund only such amount. To the extent that it is determined that the Purchase Price paid is greater than amounts owed or owing under the DIP Amount, the excess, if any, shall immediately be returned to the Purchaser.

3.2 Payment of Purchase Price. On the terms and subject to the conditions set forth herein, at the Closing, in consideration for the sale of the Purchased Assets, Purchaser shall (i) pay, on behalf of Sellers and in full satisfaction of their obligations under the DIP Note, the Purchase Price to the DIP Lender and (ii) assume the Assumed Liabilities. The Purchase Price payable at Closing shall be paid by Purchaser to the DIP Lender by wire transfer of immediately available funds into an account designated by the DIP Lender at least two Business Days prior to the Closing Date.

3.3 Cure Costs. At Closing or as soon as thereafter practicable, the Purchaser shall pay all Cure Costs other than Cure Costs that are subject to a dispute and/or an objection by the non-debtor contracting party (“Disputed Cure Costs”). Within five (5) Business Days of entry of an Order by the Bankruptcy Court resolving any dispute relating to the Cure Cost for an Assumed Contract (the “Resolved Cure Cost”), (i) Purchaser shall pay the Resolved Cure Cost to the non-debtor contracting party to such Assumed Contract, and (ii) such Assumed Contract shall be deemed to have been assumed by the relevant Seller and assigned to Purchaser immediately upon such payment to the non-debtor contracting party effective, as of the Closing Date.

4.1 Closing Date. The closing of the purchase and sale of the Purchased Assets and the assumption of the Assumed Liabilities provided for in Article II hereof (collectively, the “Closing”) shall take place at the offices of Schulte Roth & Zabel LLP located at 919 Third Avenue, New York, New York (or at such other place as the Parties may designate in writing) at 10:00 a.m. (New York City time) on (i) the third Business day in which the last of the conditions set forth in Sections 10.1, 10.2 and 10.3 to be fulfilled or waived are fulfilled or waived (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions) or (ii) such other date as agreed to in writing by the Parties. The date on which the Closing shall be held is referred to in this Agreement as the “Closing Date.” The Closing shall be deemed to have occurred at 11:59:59 p.m. (New York City time) on the Closing Date.

(a) a duly executed bill of sale (the “Bill of Sale”) in the form of Exhibit A hereto;

(b) a duly executed assignment and assumption agreement (the “Assignment and Assumption Agreement”) in the form of Exhibit B-1 hereto, duly executed assignments of the Owned Intellectual Property consisting of Trademarks and Patents, in a form suitable for recording in the United States Patent and Trademark Office and corresponding foreign offices, duly executed assignments of Owned Intellectual Property consisting of Copyrights, in a form suitable for recording in the United States Copyright Office and corresponding foreign offices, and duly executed assignments of all Internet domain names; and duly executed assignments of all Leased Real Property constituting Purchased Assets in the form of Exhibit B-2;

(c) The Payoff Letters with respect to all outstanding amounts owed under the DIP Note as of the Closing Date and any necessary releases or authorizations as may be reasonably required to evidence the satisfaction of the DIP Note and any obligations of certain Affiliates of Purchaser related thereto;

(d) the stock certificates and other instruments of transfer contemplated by Section 2.5;

(e) the organizational documents, common seal (if any), share register and share certificate book (with any unissued share certificates) and all minute books and other statutory books (which shall be written up to, but not including the Closing Date) of each of the Foreign Subsidiaries;

(f) all notifications, consents, waivers and approvals obtained by Sellers and their respective Subsidiaries that are required by the terms of this Agreement;

(g) certified copies of the Sale Order and the docket of the Bankruptcy Court (and such other court to which the Sale Order may have been appealed or a petition for certiorari or reargument may have been filed) evidencing that the Sale Order has become a Final Order;

(h) the certificate of incorporation (or equivalent organizational document) for Sellers and each of the Foreign Subsidiaries, certified as of a recent date by the Secretary of State of the applicable jurisdiction of organization;

(i) (i) a certificate of the Secretary of State or comparable Governmental Body of each jurisdiction in which any Seller is organized as to the good standing as of a recent date in such jurisdiction and (ii) a certificate of the Secretary of State or comparable Governmental Body as to any Foreign Subsidiary is organized as to the good standing as of a recent date in such jurisdiction;

(j) a certificate of an officer of Sellers and each Foreign Subsidiary, given by such officer on behalf of Sellers and each Foreign Subsidiary and not in such officer’s individual capacity, certifying as to the bylaws (or equivalent governing document) of Sellers and each Foreign Subsidiary and as to resolutions of the board of directors (or equivalent governing body) of Sellers authorizing this Agreement and any related documents and the transactions contemplated hereby and thereby (including, with respect to the Foreign Subsidiaries, the transfer of the Foreign Shares);

(k) affidavits dated as of the Closing Date, in the form required by the Treasury regulations issued under Section 1445 of the Code, to the effect that Sellers are not foreign persons for purposes of Section 1445 of the Code;

(l) a certificate dated as of the Closing Date, in the form required by Subsection 116(3) of the Income Tax Act (the Act), in respect of the Foreign Shares of N.C. Cameron & Sons Limited;

(m) a Clearance Certificate from the Canadian Workplace Safety & Insurance Board in respect of Ontario, Canada;

(n) release of all Liens against the assets of the Foreign Subsidiaries, other than Permitted Exceptions, from any lenders or other secured parties having an interest therein;

(o) the officer’s certificate required to be delivered pursuant to Section 10.1(a), (b) and (f);

(p) all other instruments of conveyance and transfer, in form and substance reasonably acceptable to Purchaser, as may be necessary to convey the Purchased Assets to Purchaser; and

(q) such other duly executed documents, instruments and certificates as may be necessary or appropriate to be delivered by any Seller or any Subsidiary of a Seller pursuant to this Agreement, including to the extent requested by Purchaser, resignations of the officers and directors of the Foreign Subsidiaries.

(i) to the DIP Lender, the Purchase Price by wire transfer of immediately available funds into an account designated by the DIP Lender at least two Business Days prior to the Closing Date;

(iii) to Sellers, the officer’s certificate required to be delivered pursuant to Sections 10.2(a) and 10.2(b);

(iv) Certificate of Secretary of Purchaser, together with true and correct copies of the Certificate of Formation of Purchaser (certified as of a recent date by the Secretary of State of the applicable jurisdiction), true and correct copies of the Resolutions of the Managing Member of Purchaser authorizing or ratifying the execution, delivery and performance of this Agreement and the other related documents provided for in this Agreement to be executed by Purchaser, and the names of the officers of Purchaser authorized to sign this Agreement and the other related documents provided for in this Agreement to be executed by Purchaser, together with a sample of the true signature of each such officer; and

(v) to Sellers, such other duly executed documents, instruments and certificates as may be necessary or appropriate to be delivered Purchaser pursuant to this Agreement.

4.4 Termination of Agreement. This Agreement may be terminated prior to the Closing as follows:

(a) by Purchaser or Sellers, if the Closing shall not have occurred by the close of business on March 5, 2007 (the “Termination Date”); provided, further, that if the Closing shall not have occurred on or before the Termination Date due to a breach of any representations, warranties, covenants or agreements contained in this Agreement by Purchaser or Sellers, then the breaching party may not terminate this Agreement pursuant to this Section 4.4(a);

(c) by Purchaser, if any of the conditions to the obligations of Purchaser set forth in Section 10.1 or 10.3 shall have become incapable of fulfillment other than as a result of a breach by Purchaser of any covenant or agreement contained in this Agreement, and such condition is not waived by Purchaser;

(d) by Sellers, if any condition to the obligations of Sellers set forth in Section 10.2 or 10.3 shall have become incapable of fulfillment other than as a result of a breach by any Seller of any covenant or agreement contained in this Agreement, and such condition is not waived by Sellers;

(e) by Purchaser, if there shall be a breach by any Seller of any representation or warranty, or any covenant or agreement contained in this Agreement, which would result in a failure of a condition set forth in Section 10.1 or 10.3, and which breach cannot be cured or has not been cured by the earlier of (i) twenty Business Days after the giving of written notice by Purchaser to Sellers of such breach and (ii) the Termination Date;

(f) by Sellers, if there shall be a breach by Purchaser of any representation or warranty, or any covenant or agreement contained in this Agreement, which would result in a failure of a condition set forth in Section 10.2 or 10.3, and which breach cannot be cured or has not been cured by the earlier of (i) twenty Business Days after the giving of written notice by Sellers to Purchaser of such breach and (ii) the Termination Date;

(g) by Sellers or Purchaser if there shall be in effect a final nonappealable Order of a Governmental Body of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby; it being agreed that the Parties hereto shall promptly appeal any adverse determination that is not nonappealable (and pursue such appeal with reasonable diligence);

(h) by Purchaser or Sellers, if the Bankruptcy Court shall enter an Order approving a Competing Bid;

(i) any event or condition of any character shall have occurred which would result in, a Material Adverse Effect on Parent, the other Sellers or the Business;

(ii) so long as Purchaser is not then in breach of its obligations under this Agreement, the Bidding Procedures Order has not been entered by the Bankruptcy Court by January 22, 2007, if the Sale Order has not been entered by the Bankruptcy Court by February 13, 2007 or if the Sale Order has not become a Final Order by February 24, 2007; or

(iii) (a) the Bankruptcy Court (1) enters an Order authorizing an Alternative Transaction or (2) confirms a plan of reorganization or liquidation that involves the Purchased Assets, (b) any Seller becomes a proponent or co-proponent of any plan of reorganization under the Bankruptcy Code filed with the Bankruptcy Court that does not contemplate the acquisition of the Purchased Assets by Purchaser on the terms set forth herein, (c) the Bankruptcy Case is converted from a case under Chapter 11 of the Bankruptcy Code to a case under Chapter 7 of the Bankruptcy Code or is dismissed, (d) a trustee, an examiner with expanded powers, or any other responsible officer or Person is appointed in any Bankruptcy Case, or (e) the periods of exclusivity under Section 1121(b) and 1121(c) of the Bankruptcy Code are terminated or reduced by the Bankruptcy Court pursuant to Section 1121(d) in any Bankruptcy Case.

4.5 Procedure Upon Termination. In the event of termination and abandonment by Purchaser or Sellers, or both, pursuant to Section 4.4 hereof, written notice thereof shall forthwith be given to the other Party or Parties, and this Agreement shall terminate, and the purchase of the Purchased Assets hereunder shall be abandoned, without further action by Purchaser or Sellers.

4.6 Effect of Termination. (a) In the event that this Agreement is validly terminated as provided herein and the transactions contemplated hereby are not consummated, this Agreement shall become null and void and of no further force and effect and, except as otherwise provided in this Section 4.6, there shall be no Liability on the part of any party hereto (or any shareholder, director, officer, partner, employee, agent, consultant or representative of such party); provided that nothing contained herein shall release any party hereto for any willful breach of this Agreement.

(b) In the event this Agreement is terminated pursuant to Section 4.4(a), 4.4(c) 4.4(e), 4.4(h), 4.4(i)(ii) or 4.4(i)(iii), Sellers shall pay Purchaser (to the extent not previously reimbursed) an amount equal to the reasonable, out-of-pocket documented costs and expenses (including, without limitation, the fees and expenses of outside counsels, financial advisors and other consultants, including employees, agents and representatives of Tinicum Incorporated, and the HSR Act filing fee or other fees paid in connection with any notices or filings made pursuant to other Antitrust Laws) incurred by Purchaser and/or its Affiliates in connection with its due diligence investigation of the Business and the negotiation and execution of this Agreement and furtherance of the transactions contemplated hereby, up to a maximum amount of costs and expenses equal to 0.5% of the Aggregate Consideration (the “Expense Reimbursement”). The Expense Reimbursement shall constitute superpriority administrative expenses of Sellers under Section 364 of the Bankruptcy Code, senior to all other administrative claims against Sellers, including those of the kind specified in Sections 503(b) and 507(b) of the Bankruptcy Code (other than those granted to Sellers’ pre-petition or post-petition lenders by Orders of the Bankruptcy Court). Payment of the Expense Reimbursement shall be made by Sellers no later than the close of business on the next Business Day following the date of such termination.

(i) (A) this Agreement is terminated pursuant to Section 4.4(h), or 4.4(i)(iii)(a) and (B) within 12 months following the date of such termination, one or more Sellers or their respective Subsidiaries sells, transfers, leases or otherwise disposes, directly or indirectly, including through an asset sale, stock sale, merger, reorganization or other similar transaction (by any Seller or any of their Subsidiaries or otherwise), all or a any portion of the Equity Securities of any Seller or any of their Subsidiaries engaged in the Business or all or a any portion of the Purchased Assets or the assets of the Foreign Subsidiaries (or agrees to do any of the foregoing) in a transaction or series of transactions to or with any party or parties other than Purchaser or any of its Affiliates (an “Alternative Transaction”),

then, Sellers shall pay to Purchaser an amount equal to 3.0% of the Aggregate Consideration (the “Breakup Fee” and, together with the Expense Reimbursement, the “Termination Fee”).

(d) Payment of the Breakup Fee shall be made by Sellers prior to or contemporaneously with the consummation of an Alternative Transaction. The Termination Fee shall constitute a superpriority administrative expense obligation of Sellers under Section 364 of the Bankruptcy Code, senior to all other administrative claims against Sellers, including those of the kind specified in Sections 503(b) and 507(b) of the Bankruptcy Code (other than those granted to Sellers’ pre-petition or post-petition lenders by Orders of the Bankruptcy Court). Any Termination Fee paid or payable as aforesaid is in the nature of liquidated damages and is lieu of any other payments or damages hereunder, other than the Expense Reimbursement.

(e) This Section 4.6 shall survive any termination of this Agreement and nothing in this Section 4.6 shall relieve Purchaser or Sellers of such obligations.

Subject to the exceptions set forth in the applicable sections of Sellers Disclosure Schedule, Sellers hereby jointly represent and warrant to Purchaser that:

5.1 Organization and Good Standing. Parent is a corporation duly organized, validly existing and in good standing under the laws of the State of Illinois and each of the other Sellers is duly organized, validly existing and in good standing under the laws of its respective state of formation as identified on Schedule 5.1 of Sellers Disclosure Schedule, and has all requisite power and authority to own, lease and operate its properties and to carry on its business as now conducted. Schedule 5.1 of Sellers Disclosure Schedule identifies the only jurisdictions in which the ownership, use or leasing of such Seller’s assets and properties, or the conduct or nature of its business, makes such qualification, licensing or admission necessary, other than those jurisdictions the failure to be so qualified, licensed or admitted has not resulted in, and would not result in a Material Adverse Effect on such Seller.

5.2 Foreign Subsidiaries. Schedule 5.2 of Sellers Disclosure Schedule sets forth for each Foreign Subsidiary (i) its name and jurisdiction of incorporation, (ii) the number of authorized shares or other equity interests for each class of its capital stock or other equity interests, (iii) the number of issued and outstanding shares or other equity interests of each class of its capital stock or other equity interests, the names of the holders thereof and the number of shares or other equity interests held by each such holder and (iv) the number of shares of its capital stock or other equity interests held in treasury and similar information. Each Foreign Subsidiary is duly incorporated or formed, validly existing corporation or other business entity in good standing under the laws of the jurisdiction of its incorporation or formation with the requisite power and authority, and all necessary qualifications, licenses and registrations to own or lease its properties and to conduct its business in the manner and in the places where such properties are owned or leased or such business is currently conducted, and Schedule 5.2 sets forth the only jurisdictions in which such qualifications, licenses or registrations are required. Except for qualifying director’s shares set forth in Schedule 5.2 of Sellers Disclosure Schedule, all of the outstanding shares of capital stock, shares or other equity ownership interests of a Foreign Subsidiary are beneficially and legally owned by a Seller, free and clear of any Liens, and said shares have been duly and validly issued and are outstanding, fully paid and nonassessable. Upon consummation of the transactions contemplated by this Agreement, Purchaser or its designated Affiliates will own all of the issued and outstanding shares of capital stock or other equity interests of the Foreign Subsidiaries, free and clear of all Liens. There are no voting trusts, stockholder agreements, proxies or other agreements or understandings with respect to the voting or transfer of any of the Foreign Shares. There are (i) no outstanding warrants, options, preemptive rights or other rights to purchase or acquire any of the shares of capital stock, shares or other ownership interests of any Foreign Subsidiary, or any outstanding securities convertible into such shares or ownership interests, outstanding warrants, options or other rights to acquire any such convertible securities, (ii) no outstanding bonds, debentures, notes or other obligations the holders of which have the right to vote (or convertible into or exercisable for securities having the right to vote) with the stockholders of the Foreign Subsidiaries on any matter, (iii) obligations of the Foreign Subsidiaries to repurchase, redeem or otherwise acquire any such outstanding securities of Foreign Subsidiaries or to issue, deliver or sell, or cause to be issued, delivered or sold, any such securities and (iv) no restrictions on the transfer of any Foreign Subsidiary’s capital stock, shares or other ownership interests, other than the requirement for consent or approval of its directors or shareholders under its articles of incorporation or under applicable federal, state or foreign securities laws. There are no Contracts that require any of the Foreign Subsidiaries to provide funds to, or make any investments (in the form of a loan, capital contribution or otherwise) in any Person. Except as set forth on Schedule 5.2 of Sellers Disclosure Schedule, none of the Foreign Subsidiaries, directly or indirectly, owns or holds the right to acquire any outstanding capital stock of, or other equity or voting interests in, any Person. Except as required by applicable Law, there are no restrictions of any kind which prevent the payment of dividends by any Foreign Subsidiary. Parent has made available to Purchaser prior to the execution of this Agreement complete and correct copies of the organizational documents of the Foreign Subsidiaries, in each case as amended to the date hereof.

5.3 Authorization of Agreement. Except for such authorization as is required by the Bankruptcy Court (as hereinafter provided for), each Seller has all requisite power and authority to execute and deliver this Agreement and each Seller has all requisite power and authority to execute and deliver each of the Ancillary Agreements and such other agreements, documents, instruments or certificates contemplated by this Agreement or to be executed by such Seller in connection with the consummation of the transactions contemplated by this Agreement (the “Seller Documents”), to perform their respective obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the Seller Documents and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of each Seller. This Agreement has been, and each of the Seller Documents will be at or prior to the Closing, duly executed and delivered by each Seller which is a party thereto and (assuming the due authorization, execution and delivery by Purchaser, the entry of the Sale Order, and, with respect to Sellers’ obligations under Section 7.1 the entry of the Bidding Procedures Order) this Agreement constitutes, and each of the Seller Documents when so executed and delivered will constitute, legal, valid and binding obligations of such Seller, enforceable against such Seller in accordance with their respective terms.

5.4 Conflicts; Consents of Third Parties. (a) Except as set forth on Schedule 5.4(a) of the Sellers Disclosure Schedule, none of the execution and delivery by Sellers of this Agreement or the Seller Documents, the consummation of the transactions contemplated hereby or thereby, or compliance by Sellers with any of the provisions hereof or thereof will conflict with, or result in any breach, violation of or default (with or without notice or lapse of time, or both) under, create any Lien or Liability under, or give rise to a right of termination, modification, prepayment, suspension, limitation, revocation, acceleration or cancellation under any provision of (i) the certificate of incorporation and by-laws or comparable organizational documents of any Seller or any of its Subsidiaries; (ii) subject to entry of the Sale Order and subject to standard provisions that prohibit the assignment by a Seller of its rights under a Contract without the consent of the other party thereto, but only to the extent such provision would be given effect under the Bankruptcy Code, any Contract or Permit to which any Seller or any Subsidiary of a Seller is a party or by which any of the properties or assets of any Seller or any Subsidiary of a Seller are bound; or (iii) subject to entry of the Sale Order, any applicable Law or Order.

(b) Except as set forth on Schedule 5.4(b) of Sellers Disclosure Schedule, no consent, waiver, approval, Order, Permit or authorization of, or declaration or filing with, or notification to, any Governmental Body is required on the part of any Seller or any of its Subsidiaries in connection with the execution and delivery of this Agreement or the Seller Documents, the compliance by any Seller with any of the provisions hereof or thereof, the consummation of the transactions contemplated hereby or the taking by any Seller of any other action contemplated hereby, except for (i) compliance with the applicable requirements of the HSR Act and any other Antitrust Law, (ii) the entry of the Sale Order and (iii) the entry of the Bidding Procedures Order with respect to Sellers’ obligations under Section 7.1.

(a) A true and complete schedule, as of the date hereof, of the Indebtedness of the Foreign Subsidiaries is set forth on Schedule 5.5(a) of Sellers Disclosure Schedule. None of Foreign Subsidiaries has any Liabilities, except (i) as disclosed on Schedule 5.5(a) of Sellers Disclosure Schedule, (ii) as reflected and reserved against on the Most Recent Balance Sheet, (iii) as incurred subsequent to the Balance Sheet Date and prior to the date hereof in the Course of Business (x) in an amount not to exceed $100,000 or (y) pursuant to Sellers and their Subsidiaries existing senior secured revolving line of credit and (iv) as incurred on or after the date hereof in accordance with Section 8.2.

(b) Schedule 5.5(b) of Sellers Disclosure Schedule sets forth a true and complete list, as of the date hereof, of all franchise, construction, fidelity, performance, surety and other bonds, third-party guarantees, letters of credit and other credit-support instruments or arrangements used in the operation of the Business (the “Credit Support Instruments”).

5.6 Title to Purchased Assets; Assets of Foreign Subsidiaries. (a) Sellers have outright, good, valid and marketable title to, or a valid license to or leasehold interest in, each of the Purchased Assets and (ii) each of the Foreign Subsidiaries has outright, good, valid and marketable title to, or a valid license to or leasehold interest in, all of their respective assets.

(b) Subject to the entry of the Sale Order, on the Closing Date, Purchaser will acquire all of Sellers’ right, title and interest in the Purchased Assets, and each of the Foreign Subsidiaries will own all of its respective assets, free and clear of all Liens, other than Permitted Exceptions and Liens created by Purchaser, to the fullest extent permissible under Section 363(f) of the Bankruptcy Code and other applicable Law.

(c) The machinery, equipment, personal property and other tangible assets of the Business (including building structures) have been maintained in accordance with normal industry practice, and are in reasonable operating condition and repair for the purposes for which they are used (in each case subject to normal wear and tear).

(d) The Purchased Assets, and the assets and property of the Foreign Subsidiaries, constitute all assets, properties and rights necessary to conduct the Business as currently conducted and, immediately after the Closing, necessary for Purchaser to continue to operate and conduct the Business as currently conducted.

(e) Except as set forth in Schedule 5.6(e) of Sellers Disclosure Schedule, all assets of the Business and their uses conform in all material respects with all applicable electrical, building, zoning, occupational safety and health, and other requirements of any Governmental Body. Neither Sellers nor any of their Subsidiaries has received notice from any Governmental Body of any existing violation of any such matters relating to such assets or their use that has not been resolved to the satisfaction of such Governmental Body or is being contested in good faith by appropriate proceedings described in Schedule 5.6(e) of Sellers Disclosure Schedule.

5.7 Real Property. (a) Except as otherwise described on Schedule 5.7(a) of Sellers Disclosure Schedule, with respect to the Owned Real Property and real property owned by any of the Foreign Subsidiaries (collectively, the “Relevant Owned Real Property”):

(i) the Seller or the Foreign Subsidiary specified as the owner of such Relevant Owned Real Property, as set forth in Schedule 5.7(a) of Sellers Disclosure Schedule, owns good, marketable and insurable title to such Relevant Owned Real Property, free and clear of any Lien, except for Permitted Exceptions;

(ii) there are no pending or, to the Knowledge of Sellers, threatened condemnation, taking, or eminent domain proceedings, lawsuits or administrative actions relating to the Relevant Owned Real Property or other matters adversely affecting the current use, occupancy or value of the Relevant Owned Real Property;

(iii) no Person (other than the Companies or the Foreign Subsidiaries) is in possession of any of the Relevant Owned Real Property and no Seller or any Subsidiary of a Seller has leased or licensed to any other Person, or otherwise granted to any Person the right to use or occupy, any Relevant Owned Real Property or any portion thereof or interest therein and there is no material default under any such leases, licenses, shared use agreements or other occupancy agreements and there are no outstanding options, rights of first offer or rights of first refusal to purchase or other preferential rights to purchase, lease or otherwise use or occupy any Real Property or any portion thereof or interest therein;

(iv) other than the rights of Purchaser pursuant to this Agreement, there are no unrecorded or outstanding options, rights of first offer or rights to purchase, lease or use, or right of first refusal or first offer to purchase, such lease or otherwise occupy or use any Relevant Owned Real Property or any portion thereof or interest therein, or contract relating to the right to receive any portion of the income or profits from the sale, operation or development thereof; and

(v) there is no Contract, Permit or other document or instrument affecting any Relevant Owned Real Property which requires the consent or approval of any person or entity for the transactions contemplated hereby.

(b) Sellers and the Foreign Subsidiaries do not own, lease or sublease any real property used in the operation of the Business as currently conducted, except as set forth on Schedule 2.1(d);

(c) Schedule 5.7(c) of Sellers Disclosure Schedule sets forth a true and complete list of all real property lease and sublease Contracts related to the use or occupancy of real property entered into by any Seller or any of its Subsidiaries (indicating which such Person is party thereto and identifies the name of the lessor, lessee and any subtenants and the date and term of the lease or sublease, and each amendment, extension, renewal, assignment and guaranty relating to each lease) and the locations of such real properties are described thereon, together with all modifications thereof (collectively, the “Real Property Leases”). Sellers have delivered to Purchaser a correct, true and complete copy of each Real Property Lease, as modified, amended or assigned to date. Except to the extent that such modifications, amendments or assignments are listed on Sellers Disclosure Schedule, none of the Real Property Leases have been modified, amended or assigned in any material respect. With respect to each of the Real Property Leases: (A) each such Contract is in full force and effect and valid and enforceable in accordance with its terms, and the Seller indicated opposite such Lease on Sellers Disclosure Schedule holds a valid, marketable and existing leasehold interest under such Lease, subject only to Permitted Exceptions for the term set forth on the thereon and (B) other than defaults solely arising from the filing of the Bankruptcy Case, the Seller party thereto is not in breach or default (including unmatured defaults) under such Contract, and, to the Knowledge of Sellers, no event has occurred or circumstance exists which, with the delivery of notice, the passage of time or both, would constitute a breach or default thereunder. None of the Real Property Leases has been assigned, no portion of such real property has been subleased, and Parent or one of its Subsidiaries is currently in occupancy of all such real property. Subject to the entry of the Sale Order, all Real Property Leases constituting Purchased Assets may be assumed by the applicable Seller and assigned to Purchaser. The Relevant Owned Real Property and the Leased Real Property are sometimes hereinafter referred to collectively as the “Real Property.”

(d) There is no pending or, to the Knowledge of Sellers, threatened, any (i) zoning application or proceeding, or (ii) other claim, action or proceeding including, without limitation, condemnation or eminent domain proceedings of any kind whatsoever or other matter relating to any Real Property or portion of either thereof or interest therein that would adversely affect the ownership, use or occupancy or value thereof or result in the taking of the whole or any part of the Real Property for public or quasi-public use pending.

(e) Each Real Property and the improvements located thereon (i) has adequate rights of access to dedicated public ways and adequate utility service, (ii) is in good order and repair, (iii) has received all Permits required in connection with the ownership or operation of such Real Property, is currently operating in conformity with all applicable Permits and Law and all such Permits remain valid and in full force and effect, and (iv) is otherwise adequate for the conduct of the Business as currently carried out thereon.

(f) Set forth on Schedule 5.7(f) of Sellers Disclosure Schedule hereto is an accurate and complete list of each certificate of occupancy for the improvements located on each Real Property. True, complete and correct copies of each such certificate of occupancy and all amendments thereto have been delivered to Purchaser. All notes or notices of violation of any laws against or affecting any such Real Property have been or are being complied with. There are no outstanding correcting work orders from any Governmental Body or any insurance company, with respect to any Real Property.

(g) Schedule 5.7(g) of Sellers Disclosure Schedule lists any non-disturbance or similar arrangement between any Seller or any Foreign Subsidiary and the holder of any mortgage or similar indenture on any real property that is leased to any Seller or any Foreign Subsidiary pursuant to a Real Property Lease.

(h) Sellers are not now and have never been a “United States Real Property Holding Corporation” as defined in Section 897(c)(2) of the Code and Section 1.897-2(b) of the regulations thereunder.

(i) None of Sellers nor any of their Subsidiaries holds any option or are subject to any contractual obligations to purchase or acquire an interest in real property.

5.8 Intellectual Property. (a) Schedule 5.8(a) of Sellers Disclosure Schedule sets forth, as of the date hereof, a true and complete list of all (a) Owned Intellectual Property that is Registered or material (including the identity of the current owner of record thereof) and (b) Intellectual Property Contracts.

(b) All Owned Intellectual Property (and to the Knowledge of Sellers, all Licensed Intellectual Property) is valid, subsisting and enforceable. No Owned Intellectual Property (and to the Knowledge of Sellers, no Licensed Intellectual Property) has been abandoned, cancelled or adjudicated invalid (excepting any expirations in the ordinary course), or is subject to any outstanding order, judgment or decree restricting its use or adversely affecting or reflecting Sellers’ or any of their respective Subsidiaries’ rights thereto. The Business Intellectual Property has been used by Sellers and their respective Subsidiaries (and to the Knowledge of Sellers, by the licensees of Sellers and their respective Subsidiaries) with all patent, trademark, copyright, confidential, proprietary, and other Intellectual Property notices and legends prescribed by law or otherwise permitted.

(c) Except as set forth in Schedule 5.8(c) of Sellers Disclosure Schedule, (A) no suit, action, reissue, reexamination, public protest, interference, arbitration, mediation, opposition, cancellation, Internet domain name dispute resolution or other proceeding (collectively, “Suit”) has been decided or is pending concerning any claim or position that Sellers or their respective Subsidiaries have violated any Intellectual Property rights, (B) no claim has been threatened or asserted in writing against Sellers or their respective Subsidiaries or any of their indemnitees for violation of any Intellectual Property rights and (C) to the Knowledge of Sellers, the operation of the Business as presently conducted and as presently contemplated to be conducted does not violate and has not violated any Intellectual Property rights.

(d) Except as set forth in Schedule 5.8(d) of Sellers Disclosure Schedule, (i) no Suit has been decided or is pending concerning any Intellectual Property Contract, including any Suit concerning a claim or position that Sellers or the Subsidiaries or another Person has breached any Intellectual Property Contract or that any Intellectual Property Contract is invalid or unenforceable, (ii) no such claim has been threatened or asserted in writing. The Sellers and their respective Subsidiaries are in compliance with, and have conducted the Business so as to comply with, all terms of all Intellectual Property Contracts other than with respect to the filing of the Bankruptcy Case, (iv) except for defaults arising from the filing of the Bankruptcy Case, there exists no event, condition or occurrence which, with the giving of notice or lapse of time, or both, would constitute a breach or default by Sellers or their respective Subsidiaries or another Person under any Intellectual Property Contract, (v) each Person who is a party to any Intellectual Property Contract had and has all rights, power and authority necessary to enter into, be bound by and fully perform such Intellectual Property Contract and (vi) no party to any Intellectual Property Contract has given Sellers or Subsidiaries notice of its intention to cancel, terminate or fail to renew any Intellectual Property Contract and to the Knowledge of Sellers, no party to any Intellectual Property Contract has any current intention to cancel, terminate or fail to renew any Intellectual Property Contract.

(e) Except as set forth in Schedule 5.8(e) of Sellers Disclosure Schedule, (A) no Suit has been decided or is pending concerning the Owned Intellectual Property, including any Suit concerning a claim or position that the Owned Intellectual Property has been violated or is invalid, unenforceable, unpatentable, unregisterable, cancelable, not owned or not owned exclusively by Sellers or their respective Subsidiaries, (B) no such claim has been threatened or asserted in writing and (C) to Knowledge of Sellers, no valid basis for any such Suits or claims exists.

(f) No Suit involving Sellers or their respective Subsidiaries has been decided or is pending concerning the Licensed Intellectual Property, including any such Suit concerning a claim or position that the Licensed Intellectual Property has been violated or is invalid, unenforceable, unpatentable, unregisterable, cancelable, not owned or not owned exclusively by the licensor of such Intellectual Property. No Suit has been decided or is pending concerning the right of Sellers or the Subsidiaries to use the Licensed Intellectual Property, including any Suit concerning a claim or position that such right has been violated or is invalid or unenforceable. To Knowledge of Sellers, no such claims have been threatened or asserted and no valid basis for any such Suits or claims exists.

(g) To Knowledge of Sellers, no Person is violating any Business Intellectual Property.

(h) The Sellers and their respective Subsidiaries own or otherwise hold valid rights to use all Intellectual Property used or contemplated to be used in the operation of the Businesses as currently conducted and as currently contemplated to be conducted. Except as set forth on Schedule 5.8(h) of the Sellers Disclosure Schedule and subject to standard provisions that prohibit the assignment by a Seller of its rights under a Contract without the consent of the other party thereto, but only to the extent such provision would be given effect under the Bankruptcy Code which are set forth on Schedule 5.8(h) of the Sellers Disclosure Schedule (a) all such rights are free of all Liens and are fully assignable by Sellers and their respective Subsidiaries to any Person, without payment, consent of any Person or other condition or restriction; and (b) the completion of the transactions contemplated by this Agreement will not alter or impair the ownership or right of Sellers or their respective Subsidiaries to use (including but not limited to altering the effective rate of any royalties or other payments or triggering any transfer payments under or constituting a breach of any Intellectual Property Contract), or require any consent with respect to, any of the Business Intellectual Property or any component thereof. The Business Intellectual Property constitutes all Intellectual Property necessary to operate the Business as currently conducted and as currently contemplated to be conducted.

(i) The Sellers and their respective Subsidiaries have timely made all filings and payments with the appropriate foreign and domestic agencies required to maintain in subsistence all Registered Owned Intellectual Property. Except as indicated on Schedule 5.8(i) of Sellers Disclosure Schedule, no due dates for filings or payments concerning the Owned Intellectual Property (including without limitation office action responses, affidavits of use, affidavits of continuing use, renewals, requests for extension of time, maintenance fees, application fees and foreign convention priority filings) fall due within ninety (90) days of the date hereof, whether or not such due dates are extendable. All documentation necessary to confirm and effect Sellers’ and their respective Subsidiaries’ ownership of the Owned Intellectual Property, if acquired from other Persons, has been recorded in the United States Patent and Trademark Office, the United States Copyright Office and other official offices. Parent or Gregg Manufacturing, Inc. (as the case may be) is the current owner of record of all Registered Owned Intellectual Property that is material to the Business.

(j) The Sellers and their respective Subsidiaries have taken reasonable measures to protect the secrecy, confidentiality and value of all Trade Secrets used in the Business (collectively, “Business Trade Secrets”) (including without limitation entering into appropriate confidentiality agreements with all officers, directors, employees, and other Persons with access to the Business Trade Secrets). None of the Business Trade Secrets has been authorized to be disclosed to any Person other than to employees or agents of Sellers or their respective Subsidiaries for use in connection with the Business or pursuant to a confidentiality or non-disclosure agreement that reasonably protects the interest of Sellers and their respective Subsidiaries in and to such matters. To the Knowledge of Sellers, no unauthorized disclosure of any Business Trade Secrets has been made.

(k) To the Knowledge of Sellers, no current or former employee of Sellers or any of their respective Subsidiaries is or was a party to any confidentiality agreement and/or agreement not to compete that restricts or forbids, or restricted or forbade at any time during such employee’s employment by Sellers or a Subsidiary of Sellers such employee’s performance of Sellers’ or any of their respective Subsidiaries’ business, or any other activity that such employee was hired to perform or otherwise performed on behalf of or in connection with such employee’s employment by Sellers or a Subsidiary of Sellers.

(l) The Sellers and their respective Subsidiaries have a policy of requiring all employees, agents, consultants or contractors who have contributed to or participated in the creation, development, improvement or modification of Intellectual Property for Sellers or their respective Subsidiaries to assign all of their rights therein to Sellers or a Subsidiary of Sellers. The Sellers and their respective Subsidiaries comply with such policy. To the Knowledge of Sellers, no Person (other than Sellers or a Subsidiary of Sellers) has any reasonable basis for claiming any right, title or interest in and to any such Intellectual Property.

(m) Except as set forth on Schedule 5.8(m) of Sellers Disclosure Schedule, the IT Systems of Sellers and their respective subsidiaries are adequate in all material respects for their intended use and for the operation of the Business as currently operated and as currently contemplated to be operated by Sellers and their respective Subsidiaries, and are in good working condition (normal wear and tear excepted). Except as set forth on Schedule 5.8(m) of Sellers Disclosure Schedule, there has not been any malfunction with respect to any of the IT Systems of Sellers and their respective subsidiaries since January 1, 2003 that has not been remedied or replaced in all material respects.

(n) The use of the Data by Sellers or their respective Subsidiaries does not materially infringe or violate the rights of any Person or otherwise materially violate any Law or regulation, (ii) Sellers and their respective Subsidiaries have taken reasonable and customary measures consistent with generally accepted industry practices to protect the privacy of the Data of their respective customers, and (iii) to Knowledge of Seller, since January 1, 2003 there have been no material security breaches with respect to the privacy of such Data.

(a) Schedule 5.9(a) of Sellers Disclosure Schedule sets forth a true and correct list (by reference to applicable subsection) of the following Contracts in effect as of the date of this Agreement in which either Parent or any of its Subsidiaries is a party to or bound by (each, a “Material Contract”):

(i) any Contract relating to Indebtedness with third parties where the amount as to which Parent or any of its Subsidiaries is, or may become, obligated is in excess of $100,000;

(ii) any joint venture, partnership, limited liability company, strategic alliance or other similar Contract involving a sharing of profits or losses, costs or liabilities by Parent or any of its Subsidiaries with any other Person;

(iii) any Contract relating to the acquisition or disposition of any business or real property (whether by merger, sale of stock, sale of assets or otherwise);

(iv) any Contract entered into with (1) any person directly or indirectly owning, controlling or holding with power to vote, 1% or more of the outstanding voting securities of Parent or any of its Subsidiaries, (2) any person 1% or more of the outstanding voting securities of which are directly or indirectly owned, controlled or held with power to vote by Parent or any of its Subsidiaries or (3) any current or former director or officer of Parent or any of its Subsidiaries or any “associates” or members of the “immediate family” (as such terms are respectively defined in Rule 12b-2 and Rule 16a-1 of the Exchange Act) of any such director or officer;

(v) any Contract that limits or restricts either the type of business in which Parent or its Subsidiaries may engage or the manner or locations in which any of them may so engage in any business (including any covenant not to compete or, except for confidentiality agreements entered into by Parent or any of its Subsidiaries, not to solicit employees) or which contains any standstill or similar provision or could require the disposition of any assets or line of business of Parent or its Subsidiaries;

(vi) any Contract containing a right of first refusal, first offer or first negotiation in respect of assets, businesses or shares of capital stock of Parent or any of its Subsidiaries;

(viii) any Contract (other than Benefit Plans) with any current or former employee, director, officer or consultant of Parent or any of its Subsidiaries under which Parent or its Subsidiaries may have ongoing or future payment obligations for services rendered or to be rendered;

(ix) any Contract, arrangement or other understanding the benefits of which will be increased, or the vesting of the benefits of which will be accelerated, by the occurrence of any transactions contemplated by this Agreement;

(x) any (1) Real Property Leases and (2) Contracts providing for the sale or exchange of, or option to sell or exchange, any Real Property, or for the purchase or exchange of, or option to purchase or exchange, any Real Property;

(xi) any Contracts under which Parent or any of its Subsidiaries is lessee of, or holds or operates any personal property owned by any other party, for which the annual rental exceeds $100,000;

(xiv) any Contract that cannot be cancelled upon fewer than 60 days’ notice without penalty, premium or other liability or that provides for continuing indemnification obligations of Parent or any of its Subsidiaries, in each case in excess of $100,000 in any fiscal year;

(xvi) any Contract pursuant to which Parent or any of its Subsidiaries has granted to a Person any marketing, sales representative relationship, franchising consignment or distribution right;

(xvii) any Contract (including keepwell agreements among any Subsidiaries of Parent) under which (1) any person has directly or indirectly guaranteed any liabilities or obligations of Parent or any of its Subsidiaries or (2) Parent or any of its Subsidiaries has directly or indirectly guaranteed liabilities or obligations of any other person;

(xix) any Contract for the (1) purchase or improvement of any fixed or capital assets for more than $100,000 or (2) sale of any fixed or capital assets for more than $100,000 as to any individual or series of related items;

(xxi) any Contract (1) the termination or breach of which or the failure to obtain consent in respect of which is reasonably likely to be material to Parent or any of its Subsidiaries, or (2) pursuant to which Parent or any of its Subsidiaries is required to pay or is scheduled to receive (assuming full performance pursuant to the terms thereof) $100,000 or more during any 12-month period following the date of this Agreement;

(xxii) any Contract for which any Seller or any Foreign Subsidiary is currently obligated or obligated in the future for the purchase of goods, services, equipment or machinery in excess of $100,000 or any “take-or-pay” agreement;

(xxiii) any Contract relating to capital expenditures of Parent and/or its Subsidiaries in excess of $50,000 in any fiscal year, or $100,000 in the aggregate;

(xxiv) any Contract containing “change of control” provisions triggered by the execution of this Agreement or the consummation of the transactions contemplated hereby;

(xxvi) any other Contract that Parent or any of its Subsidiaries has filed or would be required to describe in any Exchange Act Report, or to file as an exhibit thereto under Items 401 or 601(b)(10) of Regulation S-K under the Exchange Act.

(b) Purchaser has been supplied with a true and correct copy of all Material Contracts together with all amendments, waivers or other changes thereto. Except as disclosed in Schedule 5.9(b) of Sellers Disclosure Schedule and other than defaults solely arising from the filing of the Bankruptcy Case, each Material Contract is and each Contract entered into after the date hereof but prior to the Closing Date that would have, if it had been entered into prior to the date hereof, been a Material Contract (each such Contract, a “Subsequent Material Contract”) will be, when executed, in full force and effect and is or, in the case of a Subsequent Material Contract, will be, a legal, valid and binding obligation of Parent or a Subsidiary, as applicable, and, to the Knowledge of Sellers, the other party thereto, and, there is or, in the case of a Subsequent Material Contract, will be, no material default or breach (nor does there exist, nor, in the case of a Subsequent Material Contract, will there exist any condition which upon the passage of time or the giving of notice or both would cause a material default or breach) by Parent or any of its Subsidiaries, as applicable, or to the Knowledge of Sellers, any other party, in the timely performance of any obligation to be performed or paid thereunder or any other material provision thereof. Except as disclosed in Schedule 5.9(b) of Sellers Disclosure Schedule, no party with whom Parent or any of its Subsidiaries has entered into any Material Contract has given notice of its intention to terminate, or has sought to repudiate or disclaim or modify any material term of such Material Contract. There are no renegotiations of, attempts to renegotiate or outstanding rights to renegotiate any material amounts paid or payable to the Business under current or completed Material Contracts with any Person having the contractual or statutory right to demand or require such renegotiation and no such Person has made written demand for such renegotiation.

(c) Subject to the entry of the Sale Order and except as set forth on Schedule 5.9(c) of the Sellers Disclosure Schedule and subject to standard provisions that prohibit the assignment by a Seller of its rights under a Contract without the consent of the other party thereto, but only to the extent such provision would be given effect under the Bankruptcy Code which are set forth on Schedule 5.9(c) of the Sellers Disclosure Schedule, all Assumed Contracts to be transferred pursuant to this Agreement are assumable by a Seller or a Subsidiary of a Seller, as the case may be, and assignable to Purchaser and, as to the Foreign Subsidiaries, do not require consent upon a “change of control” or “change of ownership” or similar provision set forth in any such Assumed Contracts.

5.10 Absence of Changes. Except for transactions expressly contemplated or permitted by this Agreement or as set forth in Section 5.10 of Sellers Disclosure Schedule, since December 31, 2005 (i) Parent and its Subsidiaries have conducted the Business in the Ordinary Course of Business, (ii) there has not been a Material Adverse Effect on Parent, the other Sellers or the Business and (iii) there has not occurred any sale, transfer, distribution, lease, abandonment or other disposed of, or mortgaging, pledge or imposition of any Lien on, any Real Property, or of any other properties or other assets of Parent and its Subsidiaries. Except as set forth in Section 5.10 of Sellers Disclosure Schedule, neither Parent nor any Subsidiary has taken any action, or failed to take any action, which if such action or failure occurred during the period from the date of this Agreement to the Closing Date would have required the consent of Purchaser under Section 8.2 had such action or failure occurred after the date hereof and prior to the termination of this Agreement, and neither Parent nor any Subsidiary has authorized, or committed or agreed, to take any of such actions.

(a) Section 5.11(a) of Sellers Disclosure Schedule sets forth a true and correct list of the names of the ten largest suppliers of each division of Parent and its Subsidiaries measured by dollar value for the twelve months ended November 30, 2006 (each, a “Material Supplier”). Except as set forth on Section 5.11(a) of Sellers Disclosure Schedule, no Material Supplier has cancelled or otherwise terminated, or threatened to cancel or otherwise terminate, its relationship with Parent or its Subsidiaries during the twelve months immediately preceding the date hereof or has, during the last twelve months, materially decreased, or threatened to materially decrease or materially limit, its services, supplies or materials to Parent or its Subsidiaries.

(b) Section 5.11(b) of Sellers Disclosure Schedule sets forth the names of the twenty largest customers of each division of Parent and its Subsidiaries measured by dollar value for each of the calendar years 2004-2005 (each, a “Material Customer”). Except as set forth on Section 5.11(b) of Sellers Disclosure Schedule, no Material Customer has cancelled or otherwise terminated, or threatened to cancel or otherwise terminate, its relationship with Parent or the Subsidiaries during the twelve months immediately preceding the date hereof or has, during the last twelve months, materially decreased, or threatened to materially decrease or materially limit, its use of services or products of Parent or the Subsidiaries.

(a) Schedule 5.12(a) of Sellers Disclosure Schedule sets forth a true and complete list of each “employee benefit plan” (as defined in Section 3(3) of ERISA) and each stock purchase, stock option, severance, employment, change-in-control, fringe benefit, bonus, incentive, deferred compensation and all other employee benefit plans, agreements, programs, policies or other arrangements, whether or not subject to ERISA, that any Seller or any Subsidiary of a Seller maintains, is a party to, participates in or has any Liability with respect to any of its current or former employees, consultants or directors, who provide or have provided services for the Business (collectively, the “Benefit Plans”). Sellers have made available to Purchaser true and complete copies of each Benefit Plan or written summaries of any unwritten material Benefit Plan and, to the extent applicable, (i) the current summary plan description, (ii) the most recent determination letter or opinion letter received from the Internal Revenue Service, (iii) the most recent annual financial statements. (iv) the most recent annual reports on IRS Form 5500 (including all schedules thereto). (v) the most recent actuarial report, and (vi) any trust agreement or other funding instrument.

(b) Each Benefit Plan has been maintained in material compliance with its terms and with the requirements prescribed by any and all Laws applicable to such Benefit Plan, including the Code. Each Benefit Plan which is intended to be qualified within the meaning of Section 401(a) of the Code has received a favorable determination letter or opinion letter as to its qualification, and nothing has occurred, whether by action or failure to act, that could reasonably be expected to cause the loss of such qualification.

(c) Except as set forth on Schedule 5.12(c) of Sellers Disclosure Schedule, none of Sellers nor any of their Subsidiaries has incurred any current or projected liability in respect of post-employment or post-retirement health or welfare benefits for their current, former or retired employees, who provide or have provided services for the Business, except as required to avoid an excise tax under Section 4980B of the Code.

(d) The consummation of the transactions contemplated by this Agreement, either alone or in combination with another event, will not result in any payment becoming due to any employee of any Seller or any Subsidiary of a Seller, increase any benefits or result in the acceleration or creation of any rights of any person to benefits under any Benefit Plan (including but not limited to, the acceleration of the vesting or exercisability of any stock options or the acceleration of the accrual or vesting of any benefits). No payment or benefit to be provided to any Employee in connection with the consummation of the transactions contemplated by this Agreement, either alone or in combination with another event will result in an “excess parachute payment” within the meaning of Section 280G of the Code.

(e) No Benefit Plan is subject to Title IV of ERISA or is a defined benefit pension plan maintained for the non-US employees of the Company or any or its Subsidiaries, and neither the Company, its Subsidiaries nor any ERISA Affiliate has any liability or obligation in respect of any such plans.

(f) None of Sellers or any of their respective Subsidiaries nor any ERISA Affiliate has or had any liability or obligation in respect of a Multiemployer Plan.

(a) All Foreign Benefit Plans which are intended to qualify for Tax-favored status, have been approved for such status by the appropriate Governmental Entity.

(b) Except with respect to the pension or retirement plans set forth on Schedule 5.13(b) of Sellers Disclosure Schedule (the “Disclosed Schemes”) and the State pension scheme, the Foreign Subsidiaries are not under any obligation to provide any pension or lump sum benefit upon retirement or death (or in anticipation of retirement), or, in connection with past service, after retirement or on death to or in respect of any current or former employees of the Foreign Subsidiaries. The Foreign Subsidiaries have, in all material respects, complied with all of their obligations and applicable primary and secondary legislation (including European Community Law) in relation to the Disclosed Schemes. The Disclosed Schemes were, as of April 5, 2005, exempt approved schemes pursuant to the Income and Corporation Taxes Act 1988 and, on April 6, 2006, became “registered schemes” pursuant to Schedule 36 Part I of the Finance Act 2004. To the knowledge of the Sellers and their respective Subsidiaries, the Disclosed Schemes remain as “registered schemes” pursuant to Schedule 36 Part I of the Finance Act 2004 and no reason exists for the withdrawal of such registered status. Since April 27, 2004, no act or omission has taken place and no circumstances exist which would expose the Foreign Subsidiaries to any liabilities arising under Sections 38 to 42 (inclusive) of the Pensions Act 2004. No member of the Disclosed Schemes is in contracted-out employment as defined in the Pensions Schemes Act 1993 by reference to the Disclosed Schemes.

(a) Each Labor Agreement set forth on Schedule 5.9 to Sellers Disclosure Schedule has been administered by Sellers and their respective Subsidiaries in accordance with its terms and all applicable Laws. To the Knowledge of Sellers, no employee organizing efforts are pending with respect to non-unionized Employees. Within the last three years, there has been no strike, work slowdown or other material labor dispute with respect to Employees, nor, to the Knowledge of Sellers, is any strike, work slowdown or other material labor dispute pending.

(b) Except as disclosed on Schedule 5.14(b) to Sellers Disclosure Schedule, there are no grievances, arbitrations, or unfair labor practice, employment discrimination, immigration, equal pay, employee safety and health, or sexual harassment charges, complaints or claims (or other charges, complaints or claims related to employment practices) against the Companies or any of their Subsidiaries pending, or to their knowledge, threatened, in each case, with respect to any of their current or former employees, consultants or directors, who provide or have provided services for the Business. None of Sellers nor any Subsidiary of a Seller is delinquent in payments to any of its or their current or former employees for any wages, salaries, commissions, bonuses, other direct or indirect compensation or severance or termination payments for any services performed by them, or for amounts required to be reimbursed to their current or former employees.

(c) Section 5.14(c) of Sellers Disclosure Schedule sets forth a true and complete list of each Employee (including each full-time Employee of a Foreign Subsidiary whether or not they are on a leave of absence without a definite date of return or long-term disability) as of the date hereof, together with each employee’s name, title, part-time or full-time status, current employer, current annual rate of base salary or wages, current target bonus, total compensation in each of the last two calendar years, period of employment service with respect to any Seller or Subsidiary of a Seller and date of birth.

(d) No event that would reasonably be expected to give rise to the requirement under the Worker Adjustment and Retraining Notification Act, 29 U.S.C. §2101, et seq., has occurred during the 90-day period ending on the date hereof.

5.15 Litigation. Except for the Bankruptcy Case or as set forth on Schedule 5.15 of Sellers Disclosure Schedule, there is no Legal Proceeding seeking damages in excess of $50,000 or which is otherwise material, pending or, to the Knowledge of Sellers, threatened against or affecting Parent or any of its Subsidiaries or any of their respective assets, nor is there any Order of any Governmental Body outstanding against, or, to the Knowledge of Sellers, any investigation by any Governmental Body involving, Parent, any of its Subsidiaries, the Business, any of the Purchased Assets or Assumed Liabilities or otherwise, including as to any Foreign Subsidiary.

5.16 Compliance with Laws. (a) Except as otherwise provided in Schedule 5.16(a) of Sellers Disclosure Schedule, each of Parent and its Subsidiaries is in material compliance with all statutes, laws, ordinances, rules, regulations, judgments, orders, decrees, Permits, notes and notices of any Governmental Body (other than Environmental Laws) (collectively, “Legal Provisions”) applicable to the Business or Real Property. Except as disclosed in Schedule 5.16(a) of Sellers Disclosure Schedule, since January 1, 2001, neither Parent nor any of its Subsidiaries has received any written notice from any Governmental Body regarding any actual or possible material violation of, or material failure to comply with, any Legal Provisions. Except as disclosed in Schedule 5.16(a) of Sellers Disclosure Schedule, each of Parent and its Subsidiaries has in effect all Permits necessary for it to own, lease or operate its properties and assets and to carry on the Business as now conducted including the current use, occupancy and operation by Parent and its Subsidiaries of the Real Property. Except as disclosed in Schedule 5.16(a) of Sellers Disclosure Schedule all Permits are in full force and effect, no proceeding is pending or threatened to revoke any Permit, no Permit shall be affected in any respect by the transactions contemplated hereby and there has occurred no default under, or violation of, any such Permit. Consummation of the transactions contemplated hereunder, in and of itself, would not cause the revocation or cancellation of any such Permit.

(b) Except as disclosed in Schedule 5.16(b) of Sellers Disclosure Schedule, since December 31, 2003, Parent, its Subsidiaries and the principal executive officer and the principal financial officer of Parent have complied in all material respects with (i) the applicable provisions of the Sarbanes-Oxley Act of 2002 and the related rules and regulations promulgated under such Act (the “Sarbanes-Oxley Act”), (ii) the applicable provisions of the Exchange Act, and (iii) through June 9, 2006, the applicable listing and corporate governance rules and regulations of The New York Stock Exchange. The principal executive officer and the principal financial officer of Parent have made all certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act with respect to each SEC Filing filed Parent. For purposes of the preceding sentence, “principal executive officer” and “principal financial officer” shall have the meanings given to such terms in the Sarbanes-Oxley Act. Except as permitted by the Exchange Act, including Sections 13(k)(2) and (3), since the enactment of the Sarbanes-Oxley Act, neither Parent nor any of its Affiliates has directly or indirectly extended or maintained credit, arranged for the extension of credit, renewed an extension of credit or materially modified an extension of credit in the form of personal loans to any executive officer or director (or equivalent thereof) of Parent or any of its Subsidiaries. Parent has delivered or made available to Purchaser copies of all certifications, sub-certifications, and minutes of meetings of the Board of Directors and committees thereof of Parent relating to the certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act, and to the Knowledge of Sellers, no complaints or allegations have been made, which, if true, would conflict with or otherwise prevent such certifications from being made.

(c) Except as disclosed in Schedule 5.16(b) of Sellers Disclosure Schedule, Parent has delivered or made available to Purchaser copies of any written notifications it has received since December 31, 2003 of a (i) “reportable condition” or (ii) “material weakness” in the Parent’s internal controls. For purposes of this Agreement, the terms “reportable condition” and “material weakness” shall have the meanings assigned to them in the Statements of Auditing Standards No. 60, as in effect on the date hereof. Parent has delivered or made available to Purchaser copies of all management letters and internal control letters delivered in connection with Section 404 of the Sarbanes-Oxley Act.

5.17 Financial Advisors. (a) Except as set forth on Schedule 5.17 of Sellers Disclosure Schedule, no Person has acted, directly or indirectly, as a broker, finder or financial advisor for any Seller or any Subsidiary of a Seller in connection with the transactions contemplated by this Agreement and (b) no Person acting on behalf of any Seller is entitled to any fee or commission or like payment from Purchaser or any Foreign Subsidiary in respect thereof.

5.18 Environmental Matters. Except as set forth in Schedule 5.18 of Sellers Disclosure Schedule:

(a) the operations of the Business are in compliance in all material respects with Environmental Laws;

(b) the Business has obtained and is in compliance in all material respects with all necessary Permits that are required under Environmental Laws to operate the facilities, assets and business of the Business;

(c) there have been no Releases at any of the properties owned or operated by the Business or a predecessor in interest, or to the Knowledge of Sellers, at any disposal or treatment facility which received Hazardous Materials generated by the Business or any predecessor in interest that have resulted in or are reasonably likely to result in material Environmental Liabilities;

(d) no Environmental Claims have been asserted or are pending against the Business or, to the Knowledge of Sellers, any predecessor in interest or, to the Knowledge of Sellers, threatened against the Business or any predecessor in interest that have resulted in, or are reasonably likely to result in, material Environmental Liabilities;

(e) to the Knowledge of Sellers, no Environmental Claims have been asserted or are pending or threatened against any facilities that may have received Hazardous Materials generated by the Business or any predecessor in interest that have resulted in, or are reasonably likely to result in, material Environmental Liabilities; and

(f) Sellers have delivered to Purchaser true and complete copies of all environmental reports, studies, investigations or correspondence regarding any Environmental Liabilities of the Business or any environmental conditions at any of the Relevant Owned Real Property listed on Schedule 5.7(a) of Sellers Disclosure Schedule or Leased Real Property listed on Schedule 5.7(c) of Sellers Disclosure Schedule that are in possession of any Seller, any Affiliate of a Seller or any agents thereof.

5.19 Inventory; Accounts Receivable. Except as set forth in Schedule 5.19 of the Seller Disclosure Schedule and to the extent of inventory reserves reflected in the Financial Statements, the inventories of Parent and its Subsidiaries are usable and salable in the Ordinary Course of Business. The aggregate value at which the inventory, including the inventory reserves, is carried in the Financial Statements, and will be carried on the books of the Business as of the Closing Date, reflects and will reflect the normal and consistent inventory valuation method of Parent of valuing inventory at the lower of cost or market, all in accordance with GAAP and includes appropriate allowances for obsolescence. Parent and each of its Subsidiaries have operated in the Ordinary Course of Business and have not changed its business practices in such a manner as would reasonably be expected to result in an accounts receivable portfolio that, in amount or character, is materially different than that maintained by Parent and each of its Subsidiaries in the Ordinary Course of Business. Except as set forth in Schedule 5.19 of the Seller Disclosure Schedule relating to certain claimed offsets or credits by Federated Department Stores, all accounts, notes and other receivables have arisen in the Ordinary Course of Business, arise out of bona fide sales, represent valid obligations to Parent or any of its Subsidiaries and either have been collected or will be collected within 90 days from the date of the receivable or, in the case of “December dating” only, in a timely manner consistent with past practice, and not subject to any valid defense, offset or credit, subject to reserves established in accordance with the policies, practices, principles and methods used to establish such corresponding reserves in accordance with the Financial Statements.

5.20 Transactions with Related Parties. Between the date of Parent’s proxy statement for its 2006 annual meeting of shareholders filed with the SEC and the date of this Agreement, no event has occurred that would be required to be reported by Parent pursuant to Item 404 of Regulation S-K under the Exchange Act.

5.21 Insurance. Schedule 5.21 of Sellers Disclosure Schedule contains a true, complete and correct list of all currently in effect and most recently expired liability, property and casualty, employee liability, directors and officers liability, surety bonds, key man life insurance and other similar insurance contracts of Parent and its Subsidiaries that insure the business, properties, operations or affairs of Parent or its Subsidiaries or affect or relate to the ownership, use or operations of the Parent’s or its Subsidiaries’ assets or properties and the amount of coverage, insurance carrier, policy number and deductible or self-insured retention under each such insurance Contract. All premiums due on all such insurance Contracts of Parent and its Subsidiaries have been paid, Parent and its Subsidiaries have complied in all material respects with the terms and conditions of each such insurance Contract, no notice of termination or cancellation of any such insurance Contract has been received and all such insurance Contracts are in full force and effect. Purchaser has been provided with a complete and accurate copy of the signed application for new or renewal insurance currently pending or most recently bound, and no false or misleading affirmations were made in any such application. Purchaser has also been provided with complete and accurate copies of all reservation of rights letters, carrier coverage position letters, or denial of coverage letters relating to any currently pending claim. To the Knowledge of Sellers, no event has occurred that, with notice or the lapse of time or both, would constitute a breach or default under, or permit termination of, any insurance policy of Parent, and there has been no threatened termination or non-renewal of, or material premium increase with respect to, any insurance policy of Parent. All Litigation for which coverage is provided under any of the Parent’s insurance policies has been properly reported to the applicable insurer.

5.22 Taxes. Parent, each Subsidiary of the Company and each affiliated group (within the meaning of Section 1504 of the Code) or consolidated, combined or unitary group (under state or local Tax law) of which Parent or any Subsidiary is or has been a member (each, an “Affiliated Group”) have timely filed all federal, state, local and foreign returns, reports, statements and forms required to be filed under the Code or applicable state, local or foreign Tax Laws (“Tax Returns”) and such Tax Returns are true, correct and complete. Except as disclosed in Schedule 5.22 of Sellers Disclosure Schedule, all Taxes required to be paid with respect to the periods covered by the Tax Returns have been paid in full. No Tax Liens have been filed and, except as set forth on Schedule 5.22 of Sellers Disclosure Schedule, no claims are being asserted with respect to any Taxes of Parent, any Subsidiary or any Affiliated Group. Except as set forth in Schedule 5.22 of Sellers Disclosure Schedule, no examination, audit or inquiry is currently being conducted by any Taxing authority with respect to Parent, any Subsidiary or any Affiliated Group, including any examination, audit or inquiry which could result in a Tax liability for which Parent or any Subsidiary could be severally liable under Treasury Regulations § 1.1502-6 or any comparable state, local or foreign Tax provisions. Except as disclosed in Schedule 5.22 of Sellers Disclosure Schedule, Parent and each Subsidiary has complied with all applicable Laws relating to the payment and withholding of Taxes. There are no outstanding waivers or comparable consents regarding the application of the statute of limitations with respect to any Taxes or Tax Returns of Parent, any Subsidiary or any Affiliated Group. Neither Parent nor any Subsidiary is a party to any Contract or understanding providing for the allocation or sharing of Taxes other than with respect to each other. Neither Parent nor any Subsidiary is required to include in income any adjustment pursuant to Section 481(a) of the Code by reason of a voluntary change in accounting method initiated by Parent or any Subsidiary and neither Parent nor any Subsidiary has knowledge that the Internal Revenue Service has proposed any such adjustment or change in accounting method, except as set forth in Schedule 5.22 of Sellers Disclosure Schedule. Neither Parent, any Affiliated Group nor any Subsidiary has (A) filed with respect to any item a disclosure statement pursuant to Section 6662 of the Code or (B) engaged in a “listed” transaction within the meaning of Treasury Regulation Section 1.6011-4. During the last five years, neither Parent nor any Subsidiary was a distributing or controlled corporation in a transaction intended to be governed by Section 355 of the Code.

5.23 Certain Business Practices Neither Parent nor any of its Subsidiaries nor (to the Knowledge of Sellers) any director, officer, agent or employee of Parent or any of its Subsidiaries has, in connection with the conduct of the Business, (i) used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to foreign or domestic political parties or campaigns or violated any provision of the Foreign Corrupt Practices Act of 1977, as amended, or (iii) made any other unlawful payment.

5.24 Products. Parent has made available to Purchaser a true, correct and complete copy of Parent’s standard written warranty or warranties for sales of any and all products distributed or sold by Parent or its Subsidiaries (the “Products”) and, except as stated therein or as imposed by applicable Law, there are no warranties, contractual commitments or contractual obligations (excluding allowances and returns in the ordinary course of business with past practice (a description of such past practices being included in Schedule 5.24 of Sellers Disclosure Schedule)) with respect to the return, repair or replacement of Products. Schedule 5.24 of Sellers Disclosure Schedule sets forth the estimated aggregate annual cost to the Company and its Subsidiaries of performing warranty obligations for customers for each of the three preceding fiscal years and the current fiscal year to the date. Schedule 5.24 of Sellers Disclosure Schedule there are no known defects in design, construction or manufacture of Products that would reasonably be expected to create an unusual risk of injury to persons or property, and, to the Knowledge of Sellers, no facts or conditions exist that would reasonably be expected to result in a new Product recall requirement. Except as set forth in Schedule 5.24 of Sellers Disclosure Schedule: (i) there is no action by or before any Governmental Body pending or, to Sellers Knowledge, threatened against or involving Parent or its Subsidiaries concerning any Product that is alleged to have been manufactured, shipped, sold, marketed, distributed, processed or merchandised by Parent or its Subsidiaries to have a material defect of any kind, in manufacture, processing, design or otherwise, including without limitation any failure to warn of the defect; and (ii) there has not been any Product recall or post-sale warning by Parent or its Subsidiaries concerning any Product that was manufactured, shipped, sold, marketed, distributed, processed or merchandised by Parent or its Subsidiaries.

5.25 Survival of Representations and Warranties. None of the representations or warranties of Sellers set forth in this Agreement shall survive the Closing.

Subject to the exceptions set forth in the applicable sections of the Purchaser Disclosure Schedule, Purchaser hereby represents and warrants to Sellers that:

6.1 Organization and Good Standing. Purchaser is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Delaware and has all requisite power and authority to own, lease and operate its properties, to carry on its business as now conducted and to perform its obligations under this Agreement and the Purchaser Documents.

6.2 Authorization of Agreement. Purchaser has full corporate power and authority to execute and deliver this Agreement and each of the Ancillary Agreements and such other agreement, document, instrument and certificates contemplated by this Agreement or to be executed by Purchaser in connection with the consummation of the transactions contemplated by this Agreement (the “Purchaser Documents”), to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Purchaser of this Agreement and the Purchaser Documents and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on behalf of Purchaser. This Agreement has been, and each Purchaser Document will be at or prior to the Closing, duly executed and delivered by Purchaser and (assuming the due authorization, execution and delivery by the other parties hereto and thereto) this Agreement constitutes, and each Purchaser Document when so executed and delivered will constitute, the legal, valid and binding obligations of Purchaser, enforceable against Purchaser in accordance with their respective terms.

6.3 Conflicts; Consents of Third Parties. (a) Except as set forth on Schedule 6.3(a) of the Purchaser Disclosure Schedule, none of the execution and delivery by Purchaser of this Agreement or the Purchaser Documents, the consummation of the transactions contemplated hereby or thereby, or compliance by Purchaser with any of the provisions hereof or thereof will conflict with, or result in any breach, violation of or default (with or without notice or lapse of time, or both) under, create any Lien or Liability under, or give rise to a right of termination, modification, prepayment, suspension, limitation, revocation, acceleration or cancellation under any provision of (i) the certificate of incorporation and by-laws of Purchaser, (ii) any Contract or Permit to which Purchaser is a party or by which Purchaser or its properties or assets are bound or (iii) any applicable Law other than, in the case of clauses (ii) and (iii), such conflicts, violations, terminations or cancellations that would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the ability of Purchaser to perform its obligations under this Agreement or to consummate the transactions contemplated hereby.

(b) Except as set forth on Schedule 6.3(b) of the Purchaser Disclosure Schedule, no consent, waiver, approval, Order, Permit or authorization of, or declaration or filing with, or notification to, any Person or Governmental Body is required on the part of Purchaser in connection with the execution and delivery of this Agreement or the Purchaser Documents, the compliance by Purchaser with any of the provisions hereof or thereof, the consummation of the transactions contemplated hereby or the taking by Purchaser of any other action contemplated hereby, or for Purchaser to conduct the Business, except for compliance with the applicable requirements of the HSR Act and any other Antirust Laws.

6.4 Financial Advisors. No Person has acted, directly or indirectly, as a broker, finder or financial advisor for Purchaser in connection with the transactions contemplated by this Agreement as a result of which any such Person is entitled to any fee or commission or like payment from any Seller in respect thereof.

6.5 Adequate Assurance Regarding Executory Contracts. Purchaser is and will be capable of satisfying the conditions contained in Sections 365(b)(1)(C) and 365(f) of the Bankruptcy Code with respect to the Assumed Contracts.

6.6 Survival of Representations and Warranties. None of the representations or warranties of Purchaser set forth in this Agreement shall survive the Closing.

7.1 Bankruptcy Actions. (a) No later than one Business Day after the execution of this Agreement, Sellers shall file with the Bankruptcy Court a motion in substantially the form of Exhibit C hereto (the “Sale Motion”) seeking, among other things, entry of (i) an order, which proposed order shall be substantially in the form of Exhibit D hereto (the “Bidding Procedures Order”), approving (A) the bidder protections described and/or set forth in Article IV of this Agreement or otherwise set forth in the Sale Motion, (B) certain bidding procedures for alternative offers for the acquisition of the Purchased Assets and the assumption of the Assumed Liabilities (C) certain procedures for the assumption and assignment of the Assumed Contracts, substantially in the form of Exhibit E hereto, and (D) notice, substantially in the form of Exhibit F hereto, of the sale as contemplated by this Agreement, free and clear of all liens, claims, interests and encumbrances, and (ii) an order approving this Agreement and the transactions contemplated thereby (including the sale of the Purchased Assets, to Purchaser free and clear of all Liens except the Permitted Exceptions) should the purchase offer made by this Agreement constitute the highest and best offer for the acquisition of the Purchased Assets and the assumption of the Assumed Liabilities pursuant to the Bidding Procedures Order, which order shall be substantially in the form of Exhibit G hereto (the “Sale Order”).

(b) Sellers acknowledge that this Agreement is the culmination of an extensive process undertaken by Sellers to identify and negotiate a transaction with a bidder who was prepared to pay the highest and best purchase price for the Purchased Assets while assuming or otherwise satisfying the Assumed Liabilities in order to maximize the value of those assets. This Agreement is subject to competitive bidding as provided in the Bidding Procedures Order and approval by the Bankruptcy Court at a hearing under Sections 105, 363 and 365 of the Bankruptcy Code. The overbid provisions and related bidder protections set forth in the Bidding Procedures Order are designed to reimburse Purchaser for its efforts and agreements to date and to facilitate a full and fair process designed to maximize the value of the Purchased Assets for the benefit of the creditors and stakeholders of Sellers.

(c) Sellers agree to take all actions necessary to exclude Purchaser’s rights under this Agreement and the Ancillary Agreement from any release or similar provision for the benefit of Sellers contained in any plan of reorganization or liquidation proposed by Sellers or confirmed by the Bankruptcy Court, and no obligation of Sellers under this Agreement or the Ancillary Agreement, or claim of Purchaser arising under or relating to this Agreement or the Ancillary Agreement, shall be discharged as a result of the confirmation of any plan of reorganization for Sellers pursuant to section 1141 of the Bankruptcy Code or otherwise.

7.2 Actions of Sellers. Sellers shall use their reasonable best efforts to have the Bankruptcy Court (i) schedule a hearing on the Sale Motion not later than January 23, 2007, (ii) enter the Bidding Procedures Order as soon as practicable following the date hereof, but in any case no later than January 23, 2007 and (iii) enter the Sale Order as and when contemplated by the Bidding Procedures Order, but in any case no later than February 13, 2007. Sellers shall use their reasonable best efforts to cause the Bidding Procedures Order and the Sale Order to become Final Orders as soon as possible after their entry. Furthermore, Sellers shall use their reasonable best efforts to obtain any other approvals or consents from the Bankruptcy Court that may be reasonably necessary to consummate the transactions contemplated in this Agreement.

7.3 Purchaser Actions. Purchaser agrees that it will promptly take such actions as are reasonably requested by Sellers to assist in obtaining the Sale Order and the Bidding Procedures Order, including, without limitation, 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.

7.4 Adequate Assurance. With respect to each Assumed Contract, Purchaser shall provide adequate assurance of the future performance of such Assumed Contract by Purchaser.

7.5 Support of Sale Order. 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, other than the Sale Motion. In the event the entry of the Sale Order or the Bidding Procedures Order shall be appealed, Sellers and Purchaser shall use their respective reasonable efforts to defend such appeal.

7.6 Assignment of Contracts. At Closing, pursuant to Sections 363 and 365 of the Bankruptcy Code, the applicable Seller shall assume, assign and sell to Purchaser and Purchaser shall assume and purchase from the applicable Seller, the Assumed Contracts.

7.7 Cure Costs. At the Closing or as soon as practicable thereafter, Purchaser, pursuant to Section 3.3, shall pay all Cure Costs required to be paid under the Bankruptcy Code, so that the Assumed Contracts may be assumed by Sellers and assigned to Purchaser in accordance with the provisions of Section 365 of the Bankruptcy Code.

7.8 Competing Transaction. This Agreement is subject to approval by the Bankruptcy Court and the consideration by Sellers of higher or better competing bids (each, a “Competing Bid”) in accordance with the terms of the Bidding Procedures Order entered by the Bankruptcy Court. From and after the date of this Agreement until the entry of the Bidding Procedures Order, Parent shall not, and shall cause each of its Subsidiaries and each of their respective directors, officers, employees, financial advisors, representatives and agents not to, directly or indirectly, (i) solicit, initiate, engage or participate in or encourage discussion or negotiations with any Person or entity (other than Purchaser) concerning any Alternative Transaction; or (ii) provide any non-public information concerning the business, properties or assets of Parent or any of its Subsidiaries to any Person or entity (other than to Purchaser or its representatives). Parent shall, and shall cause each of its Subsidiaries to, immediately cease any and all existing activities, discussions and negotiations with any Person other than Purchaser with respect to any Alternative Transaction. Parent shall immediately notify Purchaser of, and shall disclose to Purchaser the terms of any Alternative Transaction proposal received by Sellers. The provisions of this Section 7.8 are referred to in this Agreement as the “Exclusivity Provisions.” Following entry of the Bidding Procedures Order, Parent and its Subsidiaries shall be free to respond to and solicit prospective bidders in order to provide information to such prospective bidders and to negotiate an Alternative Transaction with such prospective bidders who have executed a confidentiality agreement with Parent. Parent will promptly notify Purchaser in reasonable detail as Purchaser may request of the existence of any negotiation, or proposal received by Sellers, and prior to furnishing information to prospective bidders, with respect to any Alternative Transaction (and will promptly provide to Purchaser copies of any written materials received by Sellers or their respective representatives in connection with such proposal or negotiation) and the identity of the party making such proposal. Parent will promptly provide to Purchaser any non-public information provided to any other party which was not previously provided to Purchaser. Parent shall, and shall cause its Subsidiaries to, comply in all respects with its obligations under the Bidding Procedures Order.

8.1 Access to Information and Investigation. Prior to the Closing Date, Parent shall, and shall cause each of its Subsidiaries to, permit any authorized representatives of Purchaser to visit and inspect any of the properties of the Parent or of any of its Subsidiaries, to inspect, copy and take extracts from its and their financial, accounting and tax records, and to discuss its and their affairs, finances and accounts with its and their officers and independent public accountants (provided that Parent may, if it so chooses, be present at or participate in any such discussion), all upon reasonable notice and at such reasonable times during normal business hours and as often as may reasonably be requested. Without limiting the foregoing, from and after the date the Bidding Procedures Order is entered, Purchaser shall have the right to designate two authorized representatives (to be located on a full time basis at Parent’s headquarters and, herein “Purchaser’s Representative(s)”) to whom Parent shall immediately grant access, inspection, participation, consultation, discussion and other similar rights related to, or otherwise affecting, any of Parent’s or any of its Subsidiaries properties and their respective businesses, affairs, finances and accounts. Without limiting the foregoing, Purchaser and its representatives shall be allowed to conduct an environmental investigation of the facilities owned or operated by Parent or any of its Subsidiaries, including, at the reasonable discretion of Purchaser, the undertaking of environmental testing at such facilities, subject to consultation with Parent and subject to customary indemnification arrangements.

8.2 Conduct of the Business Pending the Closing. (a) Prior to the Closing, subject to any obligations as debtors-in-possession under the Bankruptcy Code (in the case of the Purchased Assets) and except (1) as set forth on Schedule 8.2(a) of Sellers Disclosure Schedule, (2) as required by applicable Law, (3) as otherwise expressly contemplated by this Agreement or (4) with the prior written consent of Purchaser, Sellers shall, and shall cause each of their respective Subsidiaries to:

(i) conduct the Business in the Ordinary Course and preserve and maintain the Purchased Assets in the condition in which they were existing as of the date hereof, normal wear and tear excepted; and

(ii) use their commercially reasonable efforts to (A) preserve the present business operations, organization and goodwill of the Business and (B) preserve the present relationships with customers, suppliers, partners, employees, lessors, licensors, licensees, distributors and other non-Affiliated Person with which Sellers or their respective Subsidiaries has significant business relationships.

(iii) Subject to any obligations as debtors-in-possession under the Bankruptcy Code (in the case of the Purchased Assets) and except (1) as set forth on Schedule 8.2(iii) of the Seller Disclosure Schedule, (2) as required by applicable Law, (3) as otherwise contemplated by this Agreement or (4) with the prior written consent of Purchaser, Sellers shall not, and shall cause each of their respective Subsidiaries not to:

(A) (i) declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock or property), in respect of, any of its capital stock, other than dividends or distributions by a direct or indirect wholly-owned Subsidiary of Parent to its parent, (ii) split, combine or reclassify any of its capital stock or amend the terms of any outstanding securities or (iii) purchase, redeem or otherwise acquire any shares of its capital stock or any other securities;

(B) issue, deliver, sell, grant, pledge or otherwise encumber or subject to any Lien any shares of its capital stock, any other securities convertible into or exercisable or exchangeable for, or any rights, warrants or options to acquire, any such shares or securities or any “phantom” stock, “phantom” stock rights, stock appreciation rights or stock-based performance units;

(D) acquire or agree to acquire by merging or consolidating with, or by purchasing assets of, or by any other manner, any Person or division, business or equity interest of any Person except for purchases of assets in the ordinary course of business which do not constitute the purchase of a Person’s business;

(E) except in the ordinary course of business, sell, lease, license, mortgage or otherwise encumber or subject to any Lien or otherwise dispose of any of its properties or assets;

(F) (i) incur any Indebtedness for borrowed money (other than to Purchaser or any Affiliate thereof) or guarantee any such Indebtedness of another Person, issue or sell any debt securities or warrants or other rights to acquire any debt securities of Parent or any of its Subsidiaries, guarantee any debt securities of another Person, enter into any “keep well” or other agreement to maintain any financial statement condition of another Person, pay any fees under existing credit facilities or enter into any arrangement having the economic effect of any of the foregoing or (ii) make any loans, advances or capital contributions to, or investments in, any other Person, other than in the ordinary course of business or to or in any direct or indirect wholly-owned Subsidiary of Parent (or any Foreign Subsidiary with nominal non Company ownership);

(G) make or agree to make any new capital expenditure (including leases) or except as consented to by a Purchaser’s Representative, enter into any agreement or agreements providing for payments which are in excess of $75,000 individually or $150,000 in the aggregate;

(H) (i) except as consented to by a Purchaser’s Representative, pay, discharge, settle or satisfy any claims, liabilities, obligations or litigation (absolute, accrued, asserted or unasserted, contingent or otherwise) in excess of $75,000 individually and $150,000 in the aggregate, or (ii) cancel any Indebtedness in excess of $75,000 individually and $150,000 in the aggregate, other than in the ordinary course of business;

(I) except as consented to by a Purchaser’s Representative, modify, amend or terminate any Material Contract to which Parent or any of its Subsidiaries is a party;

(J) enter into any Contract that would be a Material Contract, other than pursuant to any such contracts, agreements, arrangements or understandings currently in place (that have been disclosed in writing to Purchaser prior to the date hereof) in accordance with their terms as of the date hereof;

(K) except as otherwise set forth in this Agreement, as required to comply with applicable Legal Provisions or contractual commitments existing as of the date hereof (i) adopt, enter into, terminate or amend (A) any collective bargaining agreement or Benefit Plan or (B) any other agreement, plan or policy involving Parent or its Subsidiaries, and one or more of its current or former directors, officers, or other employees, (ii) increase in any manner the compensation, bonus or fringe or other benefits of, or pay any bonus to, any current or former officer, director or employee, (iii) pay any benefit or amount not required under any Benefit Plan, (iv) increase in any manner the severance or termination pay of any current or former director, officer or other executive employee, (v) enter into or amend any employment, deferred compensation, consulting, severance, termination, retention, change in control or indemnification agreement, arrangement or understanding with any current or former officer, director, employee or consultant, (vi) grant any awards under any bonus, incentive, performance or other compensation plan or arrangement or Benefit Plan (including the grant of stock options, stock appreciation rights, performance units, restricted stock, “phantom” stock or other stock related awards), or remove any existing restrictions in any Benefit Plans or agreements or awards made thereunder, (vii) amend or modify any stock option plan, (viii) take any action to fund or in any other way secure the payment of compensation or benefits under any employee plan, agreement, Contract or arrangement or Benefit Plan, or (ix) take any action to accelerate the vesting of payment of any compensation or benefit under any Benefit Plan;

(L) except as required by GAAP, make any change in accounting methods, principles or practices;

(M) transfer or license to any Person or otherwise extend, amend or modify any rights to the Intellectual Property rights of Parent and its Subsidiaries, other than in the ordinary course of business or pursuant to any contracts, agreements, arrangements or understandings currently in place (that have been disclosed in writing to Purchaser prior to the date of this Agreement);

(N) enter into any Hedging Agreement, unless consented to by a Purchaser’s Representative;

(O) take any action that would reasonably be expected to prevent, impair or materially delay the ability of the Parties to consummate the transactions contemplated by this Agreement;

(P) (i) change any material tax election; (ii) change any annual tax accounting period or method of tax accounting in any material respect; (iii) file any amended Tax Return; (iv) enter into any closing agreement relating to any material Tax; (v) settle any material Tax claim or assessment or (vi) surrender any right to claim a material Tax refund or to any extension or waiver of the limitations period applicable to any material Tax claim or assessment;

(Q) make additions to or deletions from the current product line or (ii) set pricing policies for the 2007 product line, unless consented to by a Purchaser’s Representative;

® file a motion or otherwise seek, to convert to a case under Chapter 7 of the Bankruptcy Code, to dismiss the Bankruptcy Case or for the appointment of a trustee, examiner with expanded powers or other responsible officer or Person for any Seller or any of its Subsidiaries; or

(b) Sellers shall be deemed not to have breached Sections 8.2(a)(i) and (ii) if such action or inaction otherwise constituting a breach of Sections 8.2(a)(i) or (ii) is solely and exclusively the result of the DIP Lender’s breach of its obligations to fund when due all or any portion of the DIP Note in accordance with the DIP Financing Agreement.

8.3 Third-Party Consents. Without limiting the effect of Sections 10.2 and 10.3, Sellers shall use commercially reasonable efforts to promptly obtain all authorizations, consents, approvals and waivers of, and give all notices to, each third party that may be necessary for the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements and Sellers shall pay any and all fees, costs and expenses in connection with obtaining any such authorizations, consents, approvals and waivers.

8.4 Regulatory Approvals. (a) If necessary, Purchaser and Sellers shall (i) make or cause to be made all filings required of each of them or any of their respective Subsidiaries or Affiliates under the HSR Act or other Antitrust Laws with respect to the transactions contemplated hereby as promptly as practicable and, in any event, within ten (10) Business Days after the date of this Agreement in the case of all filings required under the HSR Act or by other Antitrust Laws, (ii) comply at the earliest practicable date with any request under the HSR Act or other Antitrust Laws for additional information, documents or other materials received by each of them or any of their respective Subsidiaries from the Federal Trade Commission (the “FTC”), the Antitrust Division of the United States Department of Justice (the “Antitrust Division”), or any other Governmental Body in respect of such filings or such transactions and (iii) cooperate with each other in connection with any such filing (including, without limitation, to the extent permitted by applicable law, providing copies of all such documents to the non-filing Parties prior to filing and considering all reasonable additions, deletions or changes suggested in connection therewith) and in connection with resolving any investigation or other inquiry of any of the FTC, the Antitrust Division or other Governmental Body under any Antitrust Laws with respect to any such filing or any such transaction. Each such Party shall use commercially reasonable efforts to furnish to each other all information required for any application or other filing to be made pursuant to any applicable law in connection with the transactions contemplated by this Agreement. Each such Party shall promptly inform the other Parties of any oral communication with, and provide copies of written communications with, any Governmental Body regarding any such filings or any such transaction. To the fullest extent reasonably practicable, no Party hereto shall independently participate in any meeting with any Governmental Body in respect of any such filings, investigation or other inquiry without giving the other Parties prior notice of the meeting and, to the extent permitted by such Governmental Body, the opportunity to attend and/or participate. Subject to applicable law, the Parties will consult and cooperate with one another in connection with any analyses, appearances, presentations, memoranda, briefs, arguments, opinions and proposals made or submitted by or on behalf of any Party relating to proceedings under the HSR Act or other Antitrust Laws. Sellers and Purchaser may, as each deems advisable and necessary, reasonably designate any competitively sensitive material provided to the other under this Section 8.4 “outside counsel only.” Such materials and the information contained therein shall be given only to the outside legal counsel of the recipient and will not be disclosed by such outside counsel to employees, officers or directors of the recipient, unless express written permission is obtained in advance from the source of the materials (Sellers or Purchaser, as the case may be).

(b) Each of Purchaser and Sellers shall use its commercially reasonable efforts to resolve such objections, if any, as may be asserted by any Governmental Body with respect to the transactions contemplated by this Agreement under the HSR Act, the Sherman Act, as amended, the Clayton Act, as amended, the Federal Trade Commission Act, as amended, and any other United States federal or state or foreign statutes, rules, regulations, orders, decrees, administrative or judicial doctrines or other laws that are designed to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade (collectively, the “Antitrust Laws”). In connection therewith, if any Legal Proceeding is instituted (or threatened in writing to be instituted) challenging that any transaction contemplated by this Agreement is in violation of any Antitrust Law, each of Purchaser and Sellers shall cooperate and use its commercially reasonable efforts to contest and resist any such Legal Proceeding, and to have vacated, lifted, reversed or overturned any decree, judgment, injunction or other order whether temporary, preliminary or permanent, that is in effect and that prohibits, prevents or restricts consummation of the transactions contemplated by this Agreement, including by pursuing all reasonably available avenues of administrative and judicial appeal and all reasonably available legislative action, unless, by mutual agreement, Purchaser and Sellers decide that litigation is not in their respective best interests. Each of Purchaser and Sellers shall use its commercially reasonable efforts to take such action as may be required to cause the expiration of the notice periods under the HSR Act or other Antitrust Laws with respect to such transactions as promptly as possible after the execution of this Agreement. Nothing stated in this Agreement shall require Purchaser or any of its Affiliates to, or permit Parent or any of its Subsidiaries to, sell, divest, dispose or hold separate any Purchased Assets or Assumed Liabilities or any portion of the Business or otherwise take or commit to take any action or assume any material obligation or liability to obtain termination of the waiting period under the HSR Act or other Antitrust Laws or any other consents or approvals required to be obtained to consummate the Closing.

8.5 Assumed Liabilities. Subsequent to the Closing, Purchaser agrees to pay, perform and discharge the Assumed Liabilities as they become due.

8.7 Confidentiality. (a) After the Closing, the Companies will, and cause their respective Affiliates and Representatives to, hold in confidence and not use in any manner detrimental to the Business all Confidential Information concerning the Business, the Purchased Assets or the Foreign Subsidiaries, except to the extent that such information can be shown to have been (i) in the public domain prior to the Closing, (ii) in the public domain at or after the Closing through no fault of Parent or any of its Affiliates or any of their respective Representatives or (iii) lawfully acquired after the Closing by Parent or any of its Affiliates or any of their respective Representatives from sources other than Purchaser or any of its Affiliates or any of their respective Representatives. If, after the Closing, Parent or any of its Affiliates or any of their respective Representatives are legally required to disclose any such confidential or proprietary information, Parent shall (A) promptly notify Purchaser to permit Purchaser, at its expense, to seek a protective order or take other appropriate action and (B) cooperate as reasonably requested by Purchaser in Purchaser’s efforts to obtain a protective order or other reasonable assurance that confidential treatment will be accorded such Confidential Information, but only at Purchaser’s sole cost and expense. If, after the Closing and in the absence of a protective order, Parent or any of its Affiliates or any of their respective Representatives are compelled as a matter of Law to disclose any such confidential information to a third party, such Person may disclose to the third party compelling disclosure only the part of such Confidential Information as is required by Law to be disclosed; provided, however, that, prior to any such disclosure, such Person consults in good faith with Purchaser and its legal counsel as to such disclosure and the nature and wording of such disclosure.

(b) For purposes of Section 8.7(b), “Confidential Information” shall mean any confidential information concerning the Business, Purchased Assets or Foreign Subsidiaries, including, without limitation, methods of operation, customers, customer lists, Products, prices, fees, costs, technology, inventions, trade secrets, know-how, Software, marketing methods, plans, personnel, suppliers, competitors, markets or other specialized information or proprietary matters.

8.8 Preservation of Records. For a period of three (3) years after the Closing Date (or such longer period as may be required by any Governmental Body or ongoing claim):

(a) Each Party (the “Requested Party”) shall allow the other Party and any of its Representatives reasonable access during normal business hours after reasonable advance notice to all employees and files of the Requested Party of the Business and any books and records pertaining to the Business and relating to periods prior to the Closing Date in connection with the preparation of tax returns, amended tax return or claim for refund (and any materials necessary for the preparation of any of the foregoing), and financial statements for periods ending on or prior to the Closing Date, the management and handling of any audit, investigation, litigation or other proceeding in, whether such audit, investigation, litigation or other proceeding is a matter with respect to which indemnification may be sought hereunder), to comply with the rules and regulations of the Internal Revenue Service, the SEC or any other Governmental Body. Each Party shall designate a specific individual with responsibility for insuring that such non-Requesting Party complies with the Requesting Party’s requests.

8.9 Publicity. Neither Sellers nor Purchaser shall issue any press release or public announcement concerning this Agreement or the transactions contemplated hereby without obtaining the prior written approval of the other Party hereto, which approval will not be unreasonably withheld or delayed, unless, in the sole judgment of Purchaser or Sellers, disclosure is otherwise required by applicable Law or by the Bankruptcy Court with respect to filings to be made with the Bankruptcy Court in connection with this Agreement or by the applicable rules of any stock exchange on which Purchaser or Sellers list securities, provided that the Party intending to make such release shall use commercially reasonable efforts consistent with such applicable Law or Bankruptcy Court requirement to consult with the other Party with respect to the text thereof.

8.11 Post-Closing Amounts Received and Paid. All amounts that are received by a Seller or any of its Subsidiaries in respect of any of the Purchased Assets shall be received by such Person as agent, in trust for and on behalf of Purchaser, and following the Closing, Sellers shall, on a monthly basis, pay, or cause to be paid, by wire transfer of immediately available funds to Purchaser all such amounts received by or paid to any such Seller or any of their respective Subsidiaries, and shall provide Purchaser with information as to the nature and source of all such payments, including any invoice related thereto. All amounts that are received by Purchaser or any of its Affiliates following the Closing in respect of any Excluded Assets shall be received by such Person as agent, in trust for and on behalf of Sellers, and Purchaser shall, on a monthly basis, pay or cause to be paid all such amounts over to Sellers by wire transfer of immediately available funds and shall provide Seller with information as to the nature and source of all such payments, including any invoice relating thereto.

8.12 Casualty and Condemnation. Sellers shall keep, or cause to be kept, all Policies in full force and effect through the Closing Date. In the event that, after the execution of this Agreement, but prior to the Closing, any Purchased Asset (or series of related Purchased Assets) with a book value in excess of $10,000 as of the month-end immediately preceding the insurable event is subject to loss, destruction or damage thereon (a “Casualty”) or the exercise of eminent domain by a Governmental Body (a “Condemnation”) prior to or at the Closing, Sellers shall pay to Purchaser all proceeds Sellers received from any insurance claims, condemnation awards, compensation or other reimbursements relating to such Casualty or Condemnation (except as to business interruption insurance), and any deductible or self-retention amount related to any such claim, and shall assign, to the extent assignable, to Purchaser the right to receive any future proceeds (including any proceeds in respect of business interruption insurance for any period after the Closing) relating to such Casualty or Condemnation following the Closing, in each case only to the extent Sellers have not paid to repair any such Casualty. Subject to the terms of such insurance policies, Sellers shall use commercially reasonably efforts so that Purchaser shall have the right, power and authority, in the name of Sellers, to make directly to the insurer any request for payment under the Business’ liability insurance policies of any Casualty or Condemnation. Purchaser may make a request for payment only to the extent that a Person of ordinary prudence in like circumstances would make a claim under the Person’s own insurance policy. Any party receiving a notice of Casualty or Condemnation shall promptly notify all other parties thereto.

8.13 Assistance in Transfer of Licenses, Permits and Registrations. Each Seller will use reasonable best efforts to assist Purchaser in obtaining the transfer of any Permits capable of being transferred to Purchaser in connection with the Closing, including promptly after the date hereof directing its employees to cooperate with such transfer and making all notifications required to be sent by Sellers or any of its Subsidiaries prior to the Closing. No Seller shall have any Liability for the failure to obtain the transfer of any such Permit, other than by virtue of Sellers’ representations and warranties in Article V.

8.14 Interim Financial Statements. Sellers will prepare and furnish to Purchaser as soon as they become available, and in any event not later than 15 days after the end of each month and quarterly accounting period between the date hereof and the Closing, an unaudited balance sheet for the Business at the end of each period and an unaudited income statement and statement of cash flows for the Business for each month and quarter then ended (the “Interim Financial Statements”). Sellers will prepare the Interim Financial Statements on a basis consistent with the Unaudited Financial Statements.

(a) Subject to the occurrence of the Closing and as of the Closing Date, Sellers, on behalf of themselves and each of their Affiliates, hereby release and forever discharge the Purchaser, its Affiliates, the Business and each of the Foreign Subsidiaries from any and all actions, causes of action, suits, debts, claims and demands (except for obligations arising under this Agreement, the Ancillary Agreements and any other document or instrument executed and delivered in connection with the transactions contemplated by this Agreement) that arise out of acts, events, conditions or omissions occurring or existing from the beginning of the world to and including the Closing Date.

(b) Notwithstanding anything to the contrary contained in this Agreement, prior to the Closing, Sellers shall cause the Intercompany Receivables and Intercompany Payables to be extinguished without any tax Liability to Purchaser or any Foreign Subsidiary.

8.16 Notices of Certain Events. From the date hereof until the Closing, each party shall promptly notify the other party of:

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

(b) any written notice or other written communication from any Governmental Body in connection with the transactions contemplated by this Agreement and the Ancillary Agreements; and

(c) any change or fact of which it is aware that, with notice or lapse of time or both, will or is reasonably likely to result in a material breach of this Agreement or otherwise result in any of the conditions set forth in Article X becoming incapable of being satisfied.

No disclosure by any Party pursuant to this Section 8.17 shall be deemed to amend or supplement Sellers Disclosure Schedule or Purchaser Disclosure Schedule, as applicable, with respect thereto or prevent or cure any misrepresentation or breach of warranty for purposes of this Agreement.

8.17 Subsequent Events. If, subsequent to the date of this Agreement and prior to the Closing Date, an event occurs that renders untrue any representation or warranty of Sellers (a “Subsequent Event”), Sellers shall promptly deliver to Purchaser an amended or supplemental Schedule (a “Subsequent Disclosure Schedule”) that will contain a reasonable description of the Subsequent Event. The existence of a Subsequent Event that is disclosed on a Subsequent Disclosure Schedule shall not cure a breach by Sellers of any representations or warranties hereunder or be taken into account in determining whether any condition precedents have been satisfied. This Section 8.18 is not intended to permit Sellers to alter or amend the representations and warranties as made herein as of the date of this Agreement and shall not cure the inaccuracy thereof as of the date of this Agreement for any purpose under this Agreement.

8.18 Reasonable Best Efforts. Upon the terms and subject to the conditions set forth in this Agreement, each of the parties agrees to use its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the Offer, the Merger and the other transactions contemplated by this Agreement, including using reasonable best efforts to accomplish the following:

(a) the taking of all acts necessary to cause the conditions to Closing to be satisfied;

(b) the obtaining of all necessary consents, approvals or waivers from third parties other than Governmental Bodies (provided that if obtaining any such consent, approval or waiver would require any action other than the payment of a nominal amount, such action shall be subject to the consent of Purchaser);

(c) From the date hereof until the Closing Date, subject to the limitations set forth below, and unless otherwise agreed by Purchaser, Parent will cause its Subsidiaries and their respective management to use reasonable best efforts to cooperate with Purchaser and provide information reasonably requested in connection with the debt financings for the transactions contemplated by this Agreement. Such cooperation will include, without limitation, (i) the assistance in the preparation of offering circulars or private placement memoranda, (ii) the delivery of such financial and statistical information relating to Parent and its Subsidiaries as may be reasonably requested in connection with such financings, (iii) using reasonable best efforts to arrange for the Parent’s independent accountants to provide such comfort letters, consents and other services that are reasonably required in connection with any financings contemplated by Purchaser and (iv) using reasonable best efforts to assist in the marketing and sale of any other syndication of any such financings by making appropriate officers of Parent available for due diligence meetings and for participation in the road show and meetings with prospective participants in such financings.

8.19 D&O Insurance. Following the Closing, the Purchaser shall maintain in effect for not less than six years from the Closing Date policies of directors’ and officers’ liability insurance and fiduciary liability insurance (the “D&O Insurance”) of at least the same coverage and amounts containing terms and conditions which are in the aggregate no less advantageous to the insured as those maintained by Parent; provided, however, that in satisfying its obligation under this Section 8.19 the Purchaser shall not be obligated to pay in the aggregate in excess of $1,000,000; provided, further, that notwithstanding the foregoing, the Purchaser may satisfy its obligations under this Section 8.19 by purchasing a “tail” policy under the D&O Insurance maintained by the Company that (i) has an effective term of six (6) years from the Closing Date, (ii) covers each of the insureds and (iii) provides at least the same coverage and amounts and contains terms and conditions that are no less advantageous in the aggregate to insured as the D&O Insurance maintained by Parent.

9.1 Employment. (a) Purchaser shall offer employment effective as of the Closing to all Employees at compensation levels and terms and conditions as Purchaser shall determine; provided that the employment of Employees on short-term disability or leave of absence with a definite date of return shall be effective upon the Employee’s date of return. Such employees who accept Purchaser’s offer of employment and commence employment with Purchaser and employees of the Foreign Subsidiaries shall be referred to as the “Transferred Employees.”

(b) Effective as of the Closing Date, Purchaser shall cause each Transferred Employee who was covered under the Benefit Plans immediately prior to the Closing Date to be covered under employee benefit plans, programs and arrangements maintained or established by Purchaser (the “Purchaser Plans”). The Purchaser Plans shall recognize each Transferred Employee’s prior service that is recognized under the Benefit Plans (including prior service with predecessor employers to the extent such prior service is recognized under the Benefit Plans) for eligibility and vesting purposes and, in the case of vacation or severance benefits, for purposes of determining the amount of benefits.

(c) As soon as practicable following the Closing Date, Purchaser shall take all action necessary or appropriate to cause a defined contribution plan adopted or maintained by Purchaser (the “Purchaser 401(k) Plan”) to recognize prior service with Parent or any of its Subsidiaries for purposes of vesting and participation. Parent shall permit and Purchaser shall cause the Purchaser 401(k) Plan to accept a “rollover” of any Transferred Employees’ account balances (including loans to Transferred Employees) under the 401(k) Plan of the Parent and its Affiliates, as amended from time to time (the “Parent 401(k) Plan”) to the Purchaser 401(k) Plan. In connection with any such rollover elected by any such Transferred Employee, Purchaser shall allow any such Transferred Employee’s outstanding loan and related promissory note under the Parent 401(k) Plan to be rolled over into the Purchaser 401(k) Plan.

10.1 Conditions Precedent to Obligations of Purchaser. The obligation of Purchaser to consummate the transactions contemplated by this Agreement is subject to the satisfaction, on or prior to the Closing Date, of each of the following conditions (any or all of which may be waived by Purchaser in whole or in part to the extent permitted by applicable Law):

(a) each of the representations and warranties of Sellers set forth in this Agreement shall be true and correct (disregarding all qualifications and exceptions contained therein relating to materiality, Material Adverse Effect or similar qualifications, other than such qualifications in clause (ii) of Section 5.10) as of the date hereof and as of the Closing Date (except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall be true and correct on and as of such earlier date), except where the failure to be so true and correct would not constitute, individually or in the aggregate, a Material Adverse Effect on Parent, the other Sellers or the Business, other than with respect to the representations and warranties set forth in Sections 5.1, 5.2, 5.3, 5.4 and 5.6 which shall be true and correct in all respects; and Purchaser shall have received a certificate signed by an authorized officer of Parent on behalf of Sellers, dated the Closing Date, to the foregoing effect;

(b) Sellers shall have performed and complied in all material respects with all obligations and agreements required in this Agreement to be performed or complied with by any of them prior to the Closing Date, and Purchaser shall have received a certificate signed by an authorized officer of Parent on behalf of Sellers, dated the Closing Date, to the foregoing effect;

(c) all consents, authorizations, approvals and filings required to be obtained from or filed with a Governmental Body or required to be obtained from any other Person shall have been obtained or made;

(d) Since the date of this Agreement there shall not have occurred any change, event, circumstance or development that has had or is reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on Parent, the other Sellers or the Business, and Purchaser shall have received a certificate signed by an authorized officer of Parent on behalf of Sellers, dated the Closing Date, to the foregoing effect;

(e) Purchaser shall have received from Sellers an affidavit that the requisite notices have been given and that the affidavits of service of notice have been filed with the Bankruptcy Court;

(f) All Liens related to or arising under the DIP Note, including without limitation any collateral amounts held by the DIP Lender for the benefit of certain Affiliates of Purchaser, shall have been terminated and released and Purchaser shall have received the Payoff Letters reasonably acceptable to it with respect to the payment of the DIP Note and the release of all of the Liens related thereto and the obligations of Sellers or certain Affiliates of Purchaser thereunder and shall have received the notes (if any) evidencing such DIP Note, marked “cancelled;” and

(g) Sellers shall have delivered, or caused to be delivered, to Purchaser all of the items set forth in Section 4.2.

10.2 Conditions Precedent to Obligations of Sellers. The obligations of Sellers to consummate the transactions contemplated by this Agreement are subject to the satisfaction, prior to or on the Closing Date, of each of the following conditions (any or all of which may be waived by Sellers in whole or in part to the extent permitted by applicable Law):

(a) each of the representations and warranties of Purchaser set forth in this Agreement shall be true and correct (disregarding all qualifications and exceptions contained therein relating to materiality or similar qualifications) as of the date hereof and as of the Closing Date (except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall be true and correct on and as of such earlier date), except where the failure to be so true and correct does not constitute, and would not constitute, a Material Adverse Effect on Purchaser, and Sellers shall have received a certificate signed by an authorized officer of Purchaser, dated the Closing Date, to the foregoing effect;

(b) Purchaser shall have performed and complied in all material respects with all obligations and agreements required by this Agreement to be performed or complied with by Purchaser on or prior to the Closing Date, and Sellers shall have received a certificate signed by an authorized officer of Purchaser, dated the Closing Date, to the foregoing effect; and

10.3 Conditions Precedent to Obligations of Purchaser and Sellers. The respective obligations of Purchaser and Sellers to consummate the transactions contemplated by this Agreement are subject to the satisfaction, on or prior to the Closing Date, of each of the following conditions (any or all of which may be waived by Purchaser and Sellers in whole or in part to the extent permitted by applicable Law):

(a) there shall not be in effect any Order by a Governmental Body of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby;

(b) the Bankruptcy Court shall have entered the Sale Order no later than February 13, 2007 in form and substance reasonably acceptable to Purchaser, and the Sale Order shall have become a Final Order; and

(c) the waiting period applicable to the transactions contemplated by this Agreement under the HSR Act shall have expired or early termination shall have been granted and the consents, notices, reports and other filings required to be made or obtained pursuant to those other Antitrust Laws set forth on Schedule 10.3 hereto in connection with the transactions contemplated hereby at or prior to Closing shall have been made or obtained.

11.1 Transfer Taxes. Purchaser shall be responsible for (and shall indemnify and hold harmless Sellers and their directors, officers, employees, Affiliates, agents, successors and permitted assigns against) any sales, use, stamp, documentary stamp, filing, recording, transfer or similar fees or taxes or governmental charges (including any interest and penalty thereon) payable in connection with the transactions contemplated by this Agreement (“Transfer Taxes”). Sellers shall seek to include in the Sales Order a provision that provides that the transfer of the Purchased Assets shall be free and clear of any stamp or similar taxes under Section 1146(a) of the Bankruptcy Code. To the extent that any Transfer Taxes are required to be paid by any Seller (or such Transfer Taxes are assessed against a Seller or any of its Affiliates), Purchaser shall promptly reimburse Purchaser, as applicable, for such Transfer Taxes. Sellers and Purchaser shall cooperate and consult with each other prior to filing any Tax Returns in respect of Transfer Taxes. Sellers and Purchaser shall cooperate and otherwise take commercially reasonable efforts to obtain any available refunds for Transfer Taxes.

11.2 Purchase Price Allocation. Sellers and Purchaser shall allocate the Purchase Price (including the Assumed Liabilities) among the Purchased Assets as mutually agreed upon as promptly as practicable after the date hereof and, in accordance with such allocation, Purchaser shall prepare and deliver to Sellers copies of Form 8594 and any required exhibits thereto (the “Asset Acquisition Statement”). Purchaser shall prepare and deliver to Sellers from time to time revised copies of the Asset Acquisition Statement (the “Revised Statements”) so as to report any matters on the Asset Acquisition Statement that need updating (including purchase price adjustments, if any) consistent with the agreed upon allocation. The Purchase Price for the Purchased Assets shall be allocated in accordance with the Asset Acquisition Statement or, if applicable, the last Revised Statements, provided by Purchaser to Sellers, and all income Tax Returns and reports filed by Purchaser and Sellers shall be prepared consistently with such allocation.

12.1 Expenses. Except as otherwise provided in this Agreement, Sellers and Purchaser shall bear their own expenses, including attorney’s fees, incurred in connection with the negotiation and execution of this Agreement and each other agreement, document and instrument contemplated by this Agreement and the consummation of the transactions contemplated hereby and thereby. Notwithstanding the foregoing, in the event of any action or proceeding to interpret or enforce this Agreement, the prevailing party in such action or proceeding (i.e., the party who, in light of the issues contested or determined in the action or proceeding, was more successful) shall be entitled to have and recover from the non-prevailing party such costs and expenses (including, without limitation, all court costs and reasonable attorneys’ fees) as the prevailing party may incur in the pursuit or defense thereof.

12.2 Submission to Jurisdiction; Consent to Service of Process. (a) Without limiting any Party’s right to appeal any order of the Bankruptcy Court, (i) the Bankruptcy Court shall retain exclusive jurisdiction to enforce the terms of this Agreement and to decide any claims or disputes which may arise or result from, or be connected with, this Agreement, any breach or default hereunder, or the transactions contemplated hereby, and (ii) any and all proceedings related to the foregoing shall be filed and maintained only in the Bankruptcy Court, and the Parties hereby consent to and submit to the jurisdiction and venue of the Bankruptcy Court and shall receive notices at such locations as indicated in Section 12.6 hereof; provided, however, that if the Bankruptcy Case has closed, the Parties agree to unconditionally and irrevocably submit to the exclusive jurisdiction of any state or federal court located in the U.S. District Court for the Southern District of New York and any appellate court from any thereof, for the resolution of any such claim or dispute. The Parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any such dispute brought in such court or any defense of inconvenient forum for the maintenance of such dispute. Each of the Parties hereto agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

(b) Each of the Parties hereby consents to process being served by any Party in any suit, action or proceeding by delivery of a copy thereof in accordance with the provisions of Section 12.6.

12.3 Waiver of Right to Trial by Jury. Each Party to this Agreement waives any right to trial by jury in any action, matter or proceeding regarding this Agreement or any provision hereof.

12.4 Entire Agreement; Amendments and Waivers. This Agreement (including the schedules and exhibits hereto), the Ancillary Agreements, any other documents, agreements or certificates entered into in connection therewith represent the entire understanding and agreement between the Parties with respect to the subject matter hereof. This Agreement can be amended, supplemented or changed, and any provision hereof may be waived, only by written instrument making specific reference to this Agreement signed by the Party against whom enforcement of any such amendment, supplement, modification or waiver is sought. No action taken pursuant to this Agreement, including, without limitation, any investigation by or on behalf of any Party, shall be deemed to constitute a waiver by the Party taking such action of compliance with any representation, warranty, covenant or agreement contained herein. The waiver by any Party of a breach of any provision of this Agreement shall not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or subsequent breach. No failure on the part of any Party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such Party preclude any other or further exercise thereof or the exercise of any other right, power or remedy.

12.5 Governing Law. This Agreement shall be governed by and construed in accordance with the Bankruptcy Code and to the extent not consistent with the Bankruptcy Code, the internal laws of the State of New York applicable to contracts made and performed in such State (without regard to principles of conflicts of laws).

12.6 Notices. All notices and other communications under this Agreement shall be in writing and shall be deemed given (i) when delivered personally by hand (with written confirmation of receipt), (ii) when sent by facsimile (with written confirmation of transmission) or (iii) one Business Day following the day sent by overnight courier (with written confirmation of receipt), in each case at the following addresses and facsimile numbers (or to such other address or facsimile number as a party may have specified by notice given to the other party pursuant to this provision):

Vedder Price Kaufman & Kammholz, P. C.
222 N. LaSalle Street, Suite 2600
Chicago, Illinois 60601

c/o Tinicum Incorporated
800 Third Avenue
New York, New York 10022
Telephone: (212) 446-9314
Telecopier: (212) 750-9264
Attention: Seth Hendon

12.7 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 or provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties agree that the court making the determination of invalidity or unenforceability shall have the power to reduce the scope, duration, or area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable, so that the outcome of any such modifications is an amended provision that comes closest under applicable Law to expressing the intention of the invalid or unenforceable term or provision as of the date hereof, and this Agreement shall be enforceable as so modified after the expiration of the time within which the judgment may be appealed.

12.8 Binding Effect; Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns, including any trustee, examiner with expanded powers or other responsible Person or officer appointed for any of the Sellers in a case under any chapter of the Bankruptcy Code. Except as otherwise expressly provided in this Agreement, nothing herein shall create or be deemed to create any third party beneficiary rights in any Person or entity not a Party to this Agreement. No assignment of this Agreement or of any rights or obligations hereunder may be made by Sellers or Purchaser (by operation of law or otherwise) without the prior written consent of the other Parties hereto and any attempted assignment without the required consents shall be void; provided, that Purchaser may assign any or all of its rights and obligations hereunder, without the consent of any Parties hereto, to any one or more of its Affiliates or to any lender or lenders providing debt financing to Purchaser in connection with transactions contemplated by this Agreement (or any replacement financing or refinancing thereof). No assignment of any obligations hereunder shall relieve the Parties hereto of any such obligations. Upon any such permitted assignment, the references in this Agreement to Purchaser shall also apply to any such assignee unless the context otherwise requires.

12.9 Non-Recourse. No past, present or future director, officer, employee, incorporator, member, partner, limited partner or equityholder (other than Parent) of any Seller or Purchaser shall have any liability for any obligations or liabilities of Sellers or Purchaser under this Agreement or the Seller Documents or Purchaser Documents of or for any claim based on, in respect of, or by reason of, the transactions contemplated hereby and thereby, except in the case of fraud or willful breach.

12.10 Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase Agreement to be executed by their respective officers thereunto duly authorized, as of the date first written above.

By: /s/ Marie Meisenbach Graul
Name: Marie Meisenbach Graul
Title: Executive Vice President & CFO

THIS DEBTOR-IN-POSSESSION CREDIT AGREEMENT (this “Agreement”), is entered into as of January 23, 2007 by and among the lenders identified on the signature pages hereof (such lenders, together with their respective successors and permitted assigns, are referred to hereinafter each individually as a “Lender” and collectively as the “Lenders”), WELLS FARGO FOOTHILL, INC., a California corporation, as the arranger and administrative agent for the Lenders (“Agent”), ENESCO GROUP, INC., an Illinois corporation, as debtor and debtor-in-possession (“Parent”), ENESCO INTERNATIONAL LTD., a Delaware corporation, as debtor and debtor-in-possession (“EI Borrower”), and GREGG MANUFACTURING, INC., a California corporation, as debtor and debtor-in-possession (“Gregg Borrower”, and together with Parent and EI Borrower, collectively, the “Borrowers” and each, individually, a "Borrower”).

WHEREAS, on January 12, 2007 (the “Filing Date”), Borrowers filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code (as hereinafter defined) in the United States Bankruptcy Court for the Northern District of Illinois (Eastern Division) (the “Bankruptcy Court”);

WHEREAS, Borrowers are continuing to operate their respective businesses and manage their respective properties as debtors-in-possession under Sections 1107 and 1108 of the Bankruptcy Code;

WHEREAS, Borrowers have requested that the Lenders provide a secured revolving credit facility to Borrowers in order to (i) fund the continued operation of each Borrower’s business as debtor and debtor-in-possession under the Bankruptcy Code and (ii) satisfy and extinguish in full the Existing Secured Obligations (as hereinafter defined); and

WHEREAS, the Lenders are willing to make available to Borrowers such post-petition loans and other extensions of credit upon the terms and subject to the conditions set forth herein.

1.1. Definitions. Capitalized terms used in this Agreement shall have the meanings specified therefor on Schedule 1.1.

1.2. Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with GAAP. When used herein, the term “financial statements” shall include the notes and schedules thereto.

1.3. Code. Any terms used in this Agreement that are defined in the Code shall be construed and defined as set forth in the Code unless otherwise defined herein; provided, however, that to the extent that the Code is used to define any term herein and such term is defined differently in different Articles of the Code, the definition of such term contained in Article 9 of the Code shall govern.

1.4. Construction. Unless the context of this Agreement or any other Loan Document clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the terms “includes” and “including” are not limiting, and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.” The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular provision of this Agreement or such other Loan Document, as the case may be. Section, subsection, clause, schedule, and exhibit references herein are to this Agreement unless otherwise specified. Any reference in this Agreement or in any other Loan Document to any agreement, instrument, or document shall include all alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and thereof, as applicable (subject to any restrictions on such alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set forth herein). Any reference herein or in any other Loan Document to the satisfaction or repayment in full of the Obligations shall mean the repayment in full in cash (or cash collateralization in accordance with the terms hereof) of all Obligations other than unasserted contingent indemnification Obligations and other than any Bank Product Obligations that, at such time, are allowed by the applicable Bank Product Provider to remain outstanding and that are not required by the provisions of this Agreement to be repaid or cash collateralized. Any reference herein to any Person shall be construed to include such Person’s successors and assigns. Any requirement of a writing contained herein or in any other Loan Document shall be satisfied by the transmission of a Record and any Record so transmitted shall constitute a representation and warranty as to the accuracy and completeness of the information contained therein.

1.5. Schedules and Exhibits. All of the schedules and exhibits attached to this Agreement shall be deemed incorporated herein by reference.

(a) Subject to the terms and conditions of this Agreement, and during the term of this Agreement, each Lender agrees (severally, not jointly or jointly and severally) to make advances (“Advances”) to Borrowers in an amount at any one time outstanding not to exceed such Lender’s Pro Rata Share of an amount equal to the Maximum Revolver Amount less the Letter of Credit Usage at such time less the Bank Product Reserve. Notwithstanding the foregoing, (i) the aggregate Advances made during any week, together with all Advances made in prior weeks, shall not exceed the aggregate disbursements of cash set forth for such week, together with aggregate disbursements of cash set forth for all prior weeks, in each case as set forth in the Budget and (ii) Advances shall be used by Borrowers solely as set forth in Section 6.14.

(b) Anything to the contrary in this Section 2.1 notwithstanding, Agent shall have the right to establish reserves against the Maximum Revolver Amount in such amounts, and with respect to such matters, as Agent in its Permitted Discretion shall deem necessary or appropriate, including reserves (i) with respect to sums that Borrowers or their Subsidiaries are required to pay under any Section of this Agreement or any other Loan Document (such as taxes, assessments, insurance premiums, or, in the case of leased assets, rents or other amounts payable under such leases) and have failed to pay, (ii) with respect to amounts owing by Borrowers or their Subsidiaries to any Person to the extent secured by a Lien on, or trust over, any of the Collateral (other than a Permitted Lien), which Lien or trust, in the Permitted Discretion of Agent could have a priority superior to the Agent’s Liens (such as Liens or trusts in favor of landlords, warehousemen, carriers, mechanics, materialmen, laborers, or suppliers, Liens pertaining to employee wages or Liens or trusts for ad valorem, excise, sales, or other taxes where given priority under applicable law) in and to such item of the Collateral, (iii) to address the results of any audit or appraisal performed by or on behalf of Agent from time to time after the Closing Date, including audits and appraisals of any Equipment, Inventory or Real Property, (iv) the Retained Professionals Carveout and UST Fees, and (v) other potential costs expenses pertaining to the Bankruptcy Case. Promptly after establishing any individual reserve for an amount in excess of $500,000, Agent will notify Borrowers thereof.

(c) Amounts borrowed pursuant to this Section 2.1 may be repaid and, subject to the terms and conditions of this Agreement, reborrowed at any time during the term of this Agreement. The outstanding principal amount of the Advances, together with interest accrued thereon, shall be due and payable on the Maturity Date or, if earlier, on the date on which they are declared due and payable pursuant to the terms of this Agreement.

(a) Procedure for Borrowing. Each Borrowing shall be made by an irrevocable written request by a Responsible Officer delivered to Agent. Such notice must be received by Agent no later than 9:00 a.m. (California time) on the requested Funding Date specifying (i) the amount of such Borrowing and (ii) the requested Funding Date, which shall be a Business Day. At Agent’s election, in lieu of delivering the above-described written request, any Responsible Officer may give Agent telephonic notice of such request by the required time. In such circumstances, Borrowers agree that any such telephonic notice will be confirmed in writing within 24 hours of the giving of such telephonic notice, but the failure to provide such written confirmation shall not affect the validity of the request.

(i) Promptly after receipt of a request for a Borrowing pursuant to Section 2.3(a), Agent shall notify the Lenders, not later than 11:00 a.m. (California time) on the Funding Date applicable thereto, by telecopy, telephone, or other similar form of transmission, of the requested Borrowing. Each Lender shall make the amount of such Lender’s Pro Rata Share of the requested Borrowing available to Agent in immediately available funds, to Agent’s Account, not later than 1:00 p.m. (California time) on the Funding Date applicable thereto. After Agent’s receipt of the proceeds of such Advances, Agent shall make the proceeds thereof available to Administrative Borrower on the applicable Funding Date by transferring immediately available funds equal to such proceeds received by Agent to Administrative Borrower’s Designated Account; provided, however, that, Agent shall not request any Lender to make, and no Lender shall have the obligation to make, any Advance if Agent shall have actual knowledge that (1) one or more of the applicable conditions precedent set forth in Section 3 will not be satisfied on the requested Funding Date for the applicable Borrowing unless such condition has been waived, or (2) the requested Borrowing would exceed the Availability on such Funding Date.

(ii) Unless Agent receives notice from a Lender prior to 9:00 a.m. (California time) on the date of a Borrowing, that such Lender will not make available as and when required hereunder to Agent for the account of Borrowers the amount of that Lender’s Pro Rata Share of the Borrowing, Agent may assume that each Lender has made or will make such amount available to Agent in immediately available funds on the Funding Date and Agent may (but shall not be so required), in reliance upon such assumption, make available to Borrowers on such date a corresponding amount. If and to the extent any Lender shall not have made its full amount available to Agent in immediately available funds and Agent in such circumstances has made available to Borrowers such amount, that Lender shall on the Business Day following such Funding Date make such amount available to Agent, together with interest at the Defaulting Lender Rate for each day during such period. A notice submitted by Agent to any Lender with respect to amounts owing under this subsection shall be conclusive, absent manifest error. If such amount is so made available, such payment to Agent shall constitute such Lender’s Advance on the date of Borrowing for all purposes of this Agreement. If such amount is not made available to Agent on the Business Day following the Funding Date, Agent will notify Administrative Borrower of such failure to fund and, upon demand by Agent, Borrowers shall pay such amount to Agent for Agent’s account, together with interest thereon for each day elapsed since the date of such Borrowing, at a rate per annum equal to the interest rate applicable at the time to the Advances composing such Borrowing. The failure of any Lender to make any Advance on any Funding Date shall not relieve any other Lender of any obligation hereunder to make an Advance on such Funding Date, but no Lender shall be responsible for the failure of any other Lender to make the Advance to be made by such other Lender on any Funding Date.

(iii) Agent shall not be obligated to transfer to a Defaulting Lender any payments made by Borrowers to Agent for the Defaulting Lender’s benefit, and, in the absence of such transfer to the Defaulting Lender, Agent shall transfer any such payments to each other non-Defaulting Lender member of the Lender Group ratably in accordance with their Commitments (but only to the extent that such Defaulting Lender’s Advance was funded by the other members of the Lender Group) or, if so directed by Administrative Borrower and if no Default or Event of Default had occurred and is continuing (and to the extent such Defaulting Lender’s Advance was not funded by the Lender Group), retain same to be re-advanced to Borrowers as if such Defaulting Lender had made Advances to Borrowers. Subject to the foregoing, Agent may hold and, in its Permitted Discretion, re-lend to Borrowers for the account of such Defaulting Lender the amount of all such payments received and retained by Agent for the account of such Defaulting Lender. Solely for the purposes of voting or consenting to matters with respect to the Loan Documents, such Defaulting Lender shall be deemed not to be a “Lender” and such Lender’s Commitment shall be deemed to be zero. This Section shall remain effective with respect to such Lender until (x) the Obligations under this Agreement shall have been declared or shall have become immediately due and payable, (y) the non-Defaulting Lenders, Agent, and Administrative Borrower shall have waived such Defaulting Lender’s default in writing, or (z) the Defaulting Lender makes its Pro Rata Share of the applicable Advance and pays to Agent all amounts owing by Defaulting Lender in respect thereof. The operation of this Section shall not be construed to increase or otherwise affect the Commitment of any Lender, to relieve or excuse the performance by such Defaulting Lender or any other Lender of its duties and obligations hereunder, or to relieve or excuse the performance by Borrowers of their duties and obligations hereunder to Agent or to the Lenders other than such Defaulting Lender. Any such failure to fund by any Defaulting Lender shall constitute a material breach by such Defaulting Lender of this Agreement and shall entitle Administrative Borrower at its option, upon written notice to Agent, to arrange for a substitute Lender to assume the Commitment of such Defaulting Lender, such substitute Lender to be reasonably acceptable to Agent. In connection with the arrangement of such a substitute Lender, the Defaulting Lender shall have no right to refuse to be replaced hereunder, and agrees to execute and deliver a completed form of Assignment and Acceptance in favor of the substitute Lender (and agrees that it shall be deemed to have executed and delivered such document if it fails to do so) subject only to being repaid its share of the outstanding Obligations (other than Bank Product Obligations, but including an assumption of its Pro Rata Share of the Risk Participation Liability) without any premium or penalty of any kind whatsoever; provided however, that any such assumption of the Commitment of such Defaulting Lender shall not be deemed to constitute a waiver of any of the Lender Groups’ or Borrowers’ rights or remedies against any such Defaulting Lender arising out of or in relation to such failure to fund.

(i) Agent hereby is authorized by Borrowers and the Lenders, from time to time in Agent’s sole discretion, (A) after the occurrence and during the continuance of a Default or an Event of Default, or (B) at any time that any of the other applicable conditions precedent set forth in Section 3 are not satisfied, to make Advances to Borrowers on behalf of the Lenders that Agent, in its Permitted Discretion deems necessary or desirable (1) to preserve or protect the Collateral, or any portion thereof, (2) to enhance the likelihood of repayment of the Obligations (other than the Bank Product Obligations), or (3) to pay any other amount chargeable to Borrowers pursuant to the terms of this Agreement, including Lender Group Expenses and the costs, fees, and expenses described in Section 9 (any of the Advances described in this Section 2.3(c)(i) shall be referred to as “Protective Advances”).

(ii) Each Protective Advance shall be deemed to be an Advance hereunder, except that no Protective Advance shall be eligible to be a LIBOR Rate Loan and all payments on the Protective Advances shall be payable to Agent solely for its own account. The Protective Advances shall be repayable on demand, secured by the Agent’s Liens, constitute Obligations hereunder, and bear interest at the rate applicable from time to time to Advances that are Base Rate Loans. The provisions of this Section 2.3(c) are for the exclusive benefit of Agent and the Lenders and are not intended to benefit any Borrower in any way.

(d) Settlement. It is agreed that each Lender’s funded portion of the Advances is intended by the Lenders to equal, at all times, such Lender’s Pro Rata Share of the outstanding Advances. Such agreement notwithstanding, Agent and the other Lenders agree (which agreement shall not be for the benefit of any Borrower) that in order to facilitate the administration of this Agreement and the other Loan Documents, settlement among the Lenders as to the Advances and the Protective Advances shall take place on a periodic basis in accordance with the following provisions:

(i) Agent shall request settlement (“Settlement”) with the Lenders on a weekly basis, or on a more frequent basis if so determined by Agent (1) for itself, with respect to the outstanding Protective Advances, and (2) with respect to Borrowers’ or their Subsidiaries’ Collections received, as to each by notifying the Lenders by telecopy, telephone, or other similar form of transmission, of such requested Settlement, no later than 2:00 p.m. (California time) on the Business Day immediately prior to the date of such requested Settlement (the date of such requested Settlement being the “Settlement Date”). Such notice of a Settlement Date shall include a summary statement of the amount of outstanding Advances and Protective Advances for the period since the prior Settlement Date. Subject to the terms and conditions contained herein (including Section 2.3(b)(iii)): (y) if a Lender’s balance of the Advances (including Protective Advances) exceeds such Lender’s Pro Rata Share of the Advances (including Protective Advances) as of a Settlement Date, then Agent shall, by no later than 12:00 p.m. (California time) on the Settlement Date, transfer in immediately available funds to a Deposit Account of such Lender (as such Lender may designate), an amount such that each such Lender shall, upon receipt of such amount, have as of the Settlement Date, its Pro Rata Share of the Advances (including Protective Advances), and (z) if a Lender’s balance of the Advances (including Protective Advances) is less than such Lender’s Pro Rata Share of the Advances (including Protective Advances) as of a Settlement Date, such Lender shall no later than 12:00 p.m. (California time) on the Settlement Date transfer in immediately available funds to the Agent’s Account, an amount such that each such Lender shall, upon transfer of such amount, have as of the Settlement Date, its Pro Rata Share of the Advances (including Protective Advances). Such amounts made available to Agent under clause (z) of the immediately preceding sentence shall be applied against the amounts of the applicable Protective Advances and shall constitute Advances of such Lenders. If any such amount is not made available to Agent by any Lender on the Settlement Date applicable thereto to the extent required by the terms hereof, Agent shall be entitled to recover for its account such amount on demand from such Lender together with interest thereon at the Defaulting Lender Rate.

(ii) In determining whether a Lender’s balance of the Advances and Protective Advances is less than, equal to, or greater than such Lender’s Pro Rata Share of the Advances and Protective Advances as of a Settlement Date, Agent shall, as part of the relevant Settlement, apply to such balance the portion of payments actually received in good funds by Agent with respect to principal, interest, fees payable by Borrowers and allocable to the Lenders hereunder, and proceeds of Collateral. To the extent that a net amount is owed to any such Lender after such application, such net amount shall be distributed by Agent to that Lender as part of such next Settlement.

(e) Notation; Register. Agent shall record on its books the principal amount of the Advances owing to each Lender, Protective Advances owing to Agent, and the interests therein of each Lender, from time to time and such records shall, absent manifest error, conclusively be presumed to be correct and accurate. Agent, acting solely for this purpose as a non-fiduciary agent of each Borrower (but without creating any duties except those set forth in this paragraph), shall maintain at its office a register for the recordation of the name and address of each Lender, and the Revolver Commitment of each Lender, and outstanding principal amount of the Advances owing to each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive, and each of the Borrowers and each member of the Lender Group shall treat the Person(s) whose name(s) are recorded in the Register pursuant to the terms hereof as Lender(s) hereunder for all purposes of this Agreement, any note and any other Loan Document, notwithstanding notice to the contrary. The Register shall be available for inspection by any Borrower at any reasonable time and from time to time upon reasonable prior notice.

(f) Lenders’ Failure to Perform. All Advances (other than Protective Advances) shall be made by the Lenders contemporaneously and in accordance with their Pro Rata Shares. It is understood that (i) no Lender shall be responsible for any failure by any other Lender to perform its obligation to make any Advance (or other extension of credit) hereunder, nor shall any Commitment of any Lender be increased or decreased as a result of any failure by any other Lender to perform its obligations hereunder, and (ii) no failure by any Lender to perform its obligations hereunder shall excuse any other Lender from its obligations hereunder.

(i) Except as otherwise expressly provided herein, all payments by Borrowers shall be made to Agent’s Account for the account of the Lender Group and shall be made in immediately available funds, no later than 11:00 a.m. (California time) on the date specified herein. Any payment received by Agent later than 11:00 a.m. (California time), shall be deemed solely for the purpose of calculating interest and fees to have been received on the following Business Day and any applicable interest or fee shall continue to accrue until such following Business Day.

(ii) Unless Agent receives notice from Administrative Borrower prior to the date on which any payment is due to the Lenders that Borrowers will not make such payment in full as and when required, Agent may assume that Borrowers have made (or will make) such payment in full to Agent on such date in immediately available funds and Agent may (but shall not be so required), in reliance upon such assumption, distribute to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent Borrowers do not make such payment in full to Agent on the date when due, each Lender severally shall repay to Agent on demand such amount distributed to such Lender, together with interest thereon at the Defaulting Lender Rate for each day from the date such amount is distributed to such Lender until the date repaid.

(i) So long as no Event of Default has occurred and is continuing and except as otherwise provided with respect to Defaulting Lenders, all principal and interest payments shall be apportioned ratably among the Lenders (according to the unpaid principal balance of the Obligations to which such payments relate held by each Lender) and all payments of fees and expenses (other than fees or expenses that are for Agent’s separate account) shall be apportioned ratably among the Lenders having a Pro Rata Share of the Revolver Commitment or Obligation to which a particular fee or expense relates. All payments to be made hereunder by Borrowers shall be remitted to Agent and all (subject to Section 2.4(b)(iv) hereof) such payments, and all proceeds of Collateral received by Agent, shall be applied, so long as no Event of Default has occurred and is continuing, to reduce the balance of the Advances outstanding and, thereafter, to Borrowers (to be wired to the Designated Account) or such other Person entitled thereto under applicable law.

(ii) At any time that an Event of Default has occurred and is continuing and the Agent has declared all or any portion of the Obligations immediately due and payable in accordance with Section 8.1, and except as otherwise provided with respect to Defaulting Lenders, all payments remitted to Agent and all proceeds of Collateral received by Agent shall be applied as follows:

(A) first, to pay any Lender Group Expenses (including cost or expense reimbursements) or indemnities then due to Agent under the Loan Documents, until paid in full,

(B) second, to pay any fees or premiums then due to Agent under the Loan Documents until paid in full,

(E) fifth, ratably to pay any Lender Group Expenses (including cost or expense reimbursements) or indemnities then due to any of the Lenders under the Loan Documents, until paid in full,

(F) sixth, ratably to pay any fees or premiums then due to any of the Lenders under the Loan Documents until paid in full,

(G) seventh, ratably to pay interest due in respect of the Advances (other than Protective Advances) until paid in full,

(H) eighth, ratably (i) to pay the principal of all Advances until paid in full, (ii) to Agent, to be held by Agent, for the ratable benefit of Issuing Lender and those Lenders having a Revolver Commitment, as cash collateral in an amount up to 105% of the Letter of Credit Usage, and (iii) to Agent, to be held by Agent, for the benefit of the Bank Product Providers, as cash collateral in an amount up to the amount of the Bank Product Reserve established prior to the occurrence of, and not in contemplation of, the subject Event of Default,

(I) ninth, to pay any other Obligations (including the provision of amounts to Agent, to be held by Agent, for the benefit of the Bank Product Providers, as cash collateral in an amount up to the amount determined by Agent in its Permitted Discretion as the amount necessary to secure Borrowers’ and their Subsidiaries’ obligations in respect of Bank Products), and

(J) tenth, to Borrowers (to be wired to the Designated Account) or such other Person entitled thereto under applicable law.

(iii) Agent promptly shall distribute to each Lender, pursuant to the applicable wire instructions received from each Lender in writing, such funds as it may be entitled to receive, subject to a Settlement delay as provided in Section 2.3(d).

(iv) In each instance, so long as no Event of Default has occurred and is continuing, Section 2.4(b)(i) shall not apply to any payment made by Borrowers to Agent and specified by Borrowers to be for the payment of specific Obligations then due and payable (or prepayable) under any provision of this Agreement.

(v) For purposes of Section 2.4(b)(ii), “paid in full” means payment of all amounts owing under the Loan Documents according to the terms thereof, including loan fees, service fees, professional fees, interest (and specifically including interest accrued after the commencement of any Insolvency Proceeding), default interest, interest on interest, and expense reimbursements, whether or not any of the foregoing would be or is allowed or disallowed in whole or in part in any Insolvency Proceeding.

(vi) In the event of a direct conflict between the priority provisions of this Section 2.4 and any other provision contained in any other Loan Document, it is the intention of the parties hereto that such provisions be read together and construed, to the fullest extent possible, to be in concert with each other. In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms and provisions of this Section 2.4 shall control and govern.

(ii) Immediately upon the receipt by Borrowers or any of their Subsidiaries of the proceeds of any voluntary or involuntary sale or disposition by Borrowers or any of their Subsidiaries of property or assets (including casualty losses or condemnations but excluding sales or dispositions which qualify as Permitted Dispositions), Borrowers shall prepay the outstanding principal amount of the Obligations in accordance with Section 2.4(d) in an amount equal to 100% of the Net Cash Proceeds (including condemnation awards and payments in lieu thereof) received by such Person in connection with such sales or dispositions. Nothing contained in this Section 2.4(c)(ii) shall permit Borrowers or any of their Subsidiaries to sell or otherwise dispose of any property or assets other than in accordance with Section 6.4.

(iii) Immediately upon the receipt by Borrowers or any of their Subsidiaries of any Extraordinary Receipts, Borrowers shall prepay the outstanding principal amount of the Obligations in accordance with Section 2.4(d) in an amount equal to 100% of such Extraordinary Receipts, net of any reasonable expenses incurred in collecting such Extraordinary Receipts.

(iv) Immediately upon the issuance or incurrence by Borrowers or any of their Subsidiaries of any Indebtedness (other than Indebtedness permitted under Section 6.1(a), (b), (c), (d), (e) or (f)) or the issuance by Borrowers or any of their Subsidiaries of any shares of Borrowers’ Stock or their Subsidiaries’ Stock (other than in the event that Borrowers or any of Subsidiary of a Borrower forms a Subsidiary in accordance with the terms hereof, the issuance by such Subsidiary of Stock to a Borrower or such Subsidiary, as applicable), Borrowers shall prepay the outstanding principal amount of the Obligations in accordance with Section 2.4(d) in an amount equal to 100% of the Net Cash Proceeds received by such Person in connection with such issuance or incurrence. The provisions of this Section 2.4(c)(iv) shall not be deemed to be implied consent to any such issuance or incurrence otherwise prohibited by the terms and conditions of this Agreement.

(d) Application of Payments. Each prepayment pursuant to Section 2.4(c)(ii), 2.4(c)(iii) or 2.4(c)(iv) above shall be applied in the manner set forth in Section 2.4(b)(ii) (with, solely in the case of prepayments pursuant to Section 2.4(c)(ii) or 2.4(c)(iv), a corresponding permanent reduction of the Maximum Revolver Amount).

2.6. Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations.

(a) Interest Rates. Except as provided in Section 2.6(c), all Obligations (except for undrawn Letters of Credit and except for Bank Product Obligations) that have been charged to the Loan Account pursuant to the terms hereof shall bear interest on the Daily Balance thereof as follows (i) if the relevant Obligation is an Advance that is a LIBOR Rate Loan, at a per annum rate equal to the LIBOR Rate plus the LIBOR Rate Margin, and (ii) otherwise, at a per annum rate equal to the Base Rate plus the Base Rate Margin.

The foregoing notwithstanding, at no time shall any portion of the Obligations (other than Bank Product Obligations) bear interest on the Daily Balance thereof at a per annum rate less than 5%. To the extent that interest accrued hereunder at the rate set forth herein would be less than the foregoing minimum daily rate, the interest rate chargeable hereunder for such day automatically shall be deemed increased to the minimum rate.

(b) Letter of Credit Fee. Borrowers shall pay Agent (for the ratable benefit of the Lenders with a Revolver Commitment, subject to any agreements between Agent and individual Lenders), a Letter of Credit fee (in addition to the charges, commissions, fees, and costs set forth in Section 2.12(e)) which shall accrue at a rate equal to 5.5% per annum times the Daily Balance of the undrawn amount of all outstanding Letters of Credit.

(c) Default Rate. Upon the occurrence and during the continuation of an Event of Default, at the election of the Required Lenders,

(i) all Obligations (except for undrawn Letters of Credit and except for Bank Product Obligations) that have been charged to the Loan Account pursuant to the terms hereof shall bear interest on the Daily Balance thereof at a per annum rate equal to 2 percentage points above the per annum rate otherwise applicable hereunder, and

(ii) the Letter of Credit fee provided for in Section 2.6(b) shall be increased to 2 percentage points above the per annum rate otherwise applicable hereunder.

(d) Payment. Except as provided to the contrary in Section 2.11 or Section 2.13(a), interest, Letter of Credit fees, and all other fees payable hereunder shall be due and payable, in arrears, on the first day of each month at any time that Obligations or Revolver Commitments are outstanding. Borrowers hereby authorize Agent, from time to time, without prior notice to Borrowers, to charge all interest and fees (when due and payable), all Lender Group Expenses (as and when incurred), all charges, commissions, fees, and costs provided for in Section 2.12(e) (as and when accrued or incurred), all fees and costs provided for in Section 2.11 (as and when accrued or incurred), and all other payments as and when due and payable under any Loan Document (including any amounts due and payable to the Bank Product Providers in respect of Bank Products up to the amount of the Bank Product Reserve) to Borrowers’ Loan Account, which amounts thereafter shall constitute Advances hereunder and shall accrue interest at the rate then applicable to Advances that are Base Rate Loans. Any interest not paid when due shall be compounded by being charged to the Loan Account and shall thereafter constitute Advances hereunder and shall accrue interest at the rate then applicable to Advances that are Base Rate Loans.

(e) Computation. All interest and fees chargeable under the Loan Documents shall be computed on the basis of a 360 day year for the actual number of days elapsed. In the event the Base Rate is changed from time to time hereafter, the rates of interest hereunder based upon the Base Rate automatically and immediately shall be increased or decreased by an amount equal to such change in the Base Rate.

(f) Intent to Limit Charges to Maximum Lawful Rate. In no event shall the interest rate or rates payable under this Agreement, plus any other amounts paid in connection herewith, exceed the highest rate permissible under any law that a court of competent jurisdiction shall, in a final determination, deem applicable. Borrowers and the Lender Group, in executing and delivering this Agreement, intend legally to agree upon the rate or rates of interest and manner of payment stated within it; provided, however, that, anything contained herein to the contrary notwithstanding, if said rate or rates of interest or manner of payment exceeds the maximum allowable under applicable law, then, ipso facto, as of the date of this Agreement, Borrowers are and shall be liable only for the payment of such maximum as allowed by law, and payment received from Borrowers in excess of such legal maximum, whenever received, shall be applied to reduce the principal balance of the Obligations to the extent of such excess.

(a) Borrowers shall and shall cause each of their U.S. Subsidiaries to (i) establish and maintain cash management services of a type and on terms satisfactory to Agent at one or more of the banks set forth on Schedule 2.7(a) (each a “Cash Management Bank”), and shall request in writing and otherwise take such reasonable steps to ensure that all of their and their U.S. Subsidiaries’ Account Debtors forward payment of the amounts owed by them directly to such Cash Management Bank, and (ii) deposit or cause to be deposited promptly, and in any event no later than the first Business Day after the date of receipt thereof, all of their Collections (including those sent directly by their Account Debtors to Borrowers or their Subsidiaries, but excluding disputed checks) into a bank account in Agent’s name (a “Cash Management Account”) at one of the Cash Management Banks.

(b) Each Cash Management Bank shall establish and maintain Cash Management Agreements with Agent and Borrowers. Each such Cash Management Agreement shall provide, among other things, that (i) the Cash Management Bank will comply with any instructions originated by Agent directing the disposition of the funds in such Cash Management Account without further consent by Borrowers or their Subsidiaries, as applicable, (ii) the Cash Management Bank has no rights of setoff or recoupment or any other claim against the applicable Cash Management Account, other than for payment of its service fees and other charges directly related to the administration of such Cash Management Account and for returned checks or other items of payment, and (iii) it will forward, by daily sweep, all amounts in the applicable Cash Management Account to the Agent’s Account.

(c) So long as no Default or Event of Default has occurred and is continuing, Administrative Borrower may amend Schedule 2.7(a) to add or replace a Cash Management Bank or Cash Management Account; provided, however, that (i) such prospective Cash Management Bank shall be reasonably satisfactory to Agent, and (ii) prior to the time of the opening of such Cash Management Account, a Borrower (or its U.S. Subsidiary, as applicable) and such prospective Cash Management Bank shall have executed and delivered to Agent a Cash Management Agreement. Borrowers (or their U.S. Subsidiaries, as applicable) shall close any of their Cash Management Accounts (and establish replacement cash management accounts in accordance with the foregoing sentence) promptly and in any event within 30 days of notice from Agent that the creditworthiness of any Cash Management Bank is no longer acceptable in Agent’s reasonable judgment, or as promptly as practicable and in any event within 60 days of notice from Agent that the operating performance, funds transfer, or availability procedures or performance of the Cash Management Bank with respect to Cash Management Accounts or Agent’s liability under any Cash Management Agreement with such Cash Management Bank is no longer acceptable in Agent’s reasonable judgment.

(d) Each Cash Management Account shall be a cash collateral account subject to a Control Agreement.

(e) Although the prior provisions of this Section 2.7 pertain solely to Borrowers and each of their U.S. Subsidiaries, on the 15th day after the Closing Date, such provisions shall pertain to all Subsidiaries (other than Dormant Subsidiaries and Enesco France S.A. (if in the case of Enesco France S.A., providing Cash Management Agreements would conflict with any provision of the credit facility of Enesco France S.A. as it exists on the date hereof)). The requirement of this paragraph (e) to obtain Cash Management Agreements will be on a best efforts basis and such Cash Management Agreements need not require daily cash sweeps in the absence of an Event of Default.

(f) Within 15 days after the Closing Date, Borrowers will either (i) close their account(s) at Wilmington Trust and cause all funds that would otherwise have been deposited in such account(s) consistent with past practice, to be deposited in an account subject to a Cash Management Agreement, (ii) cause such accounts to be subject to a Cash Management Agreement, or (iii) open a replacement account in Delaware that is subject to a Cash Management Agreement.

2.8. Crediting Payments; Clearance Charge. The receipt of any payment item by Agent (whether from transfers to Agent by the Cash Management Banks pursuant to the Cash Management Agreements or otherwise) shall not be considered a payment on account unless such payment item is a wire transfer of immediately available federal funds made to the Agent’s Account or unless and until such payment item is honored when presented for payment. Should any payment item not be honored when presented for payment, then Borrowers shall be deemed not to have made such payment and interest shall be calculated accordingly. Anything to the contrary contained herein notwithstanding, any payment item shall be deemed received by Agent only if it is received into the Agent’s Account on a Business Day on or before 11:00 a.m. (California time). If any payment item is received into the Agent’s Account on a non-Business Day or after 11:00 a.m. (California time) on a Business Day, it shall be deemed solely for the purpose of calculating interest and fees to have been received by Agent as of the opening of business on the immediately following Business Day. From and after the Closing Date, Agent shall be entitled to charge Borrowers for one Business Days of ‘clearance’ at the rate then applicable under Section 2.6 to Advances that are Base Rate Loans on all Collections that are received by Borrowers and their Subsidiaries (regardless of whether forwarded by the Cash Management Banks to Agent). This across-the-board one Business Day clearance charge on all Collections of Borrowers and their Subsidiaries is acknowledged by the parties to constitute an integral aspect of the pricing of the financing of Borrowers and shall apply irrespective of whether or not there are any outstanding monetary Obligations; the effect of such clearance charge being the equivalent of charging interest on such Collections through the completion of a period ending one Business Days after the receipt thereof. The parties acknowledge and agree that the economic benefit of the foregoing provisions of this Section 2.8 shall be for the exclusive benefit of Agent.

2.9. Designated Account. Agent is authorized to make the Advances, and Issuing Lender is authorized to issue the Letters of Credit, under this Agreement based upon telephonic or other instructions received from anyone purporting to be a Responsible Officer or, without instructions, if pursuant to Section 2.6(d). Administrative Borrower agrees to establish and maintain the Designated Account with the Designated Account Bank for the purpose of receiving the proceeds of the Advances requested by Borrowers and made by Agent or the Lenders hereunder. Unless otherwise agreed by Agent and Administrative Borrower, any Advance or Protective Advance shall be made to the Designated Account.

2.10. Maintenance of Loan Account; Statements of Obligations. Agent shall maintain an account on its books in the name of Borrowers (the “Loan Account”) on which Borrowers will be charged with all Advances (including Protective Advances) made by Agent or the Lenders to Borrowers or for Borrowers’ account, the Letters of Credit issued by Issuing Lender for Borrowers’ account, and with all other payment Obligations hereunder or under the other Loan Documents (except for Bank Product Obligations), including, accrued interest, fees and expenses, and Lender Group Expenses. In accordance with Section 2.8, the Loan Account will be credited with all payments received by Agent from Borrowers or for Borrowers’ account, including all amounts received in the Agent’s Account from any Cash Management Bank. Agent shall render statements regarding the Loan Account to Administrative Borrower, including principal, interest, fees, and including an itemization of all charges and expenses constituting Lender Group Expenses owing, and such statements, absent manifest error, shall be conclusively presumed to be correct and accurate and constitute an account stated between Borrowers and the Lender Group unless, within 30 days after receipt thereof by Administrative Borrower, Administrative Borrower shall deliver to Agent written objection thereto describing the error or errors contained in any such statements.

2.11. Fees. Borrowers shall pay to Agent, as and when due and payable under the terms of the Fee Letter, the fees set forth in the Fee Letter.

(a) Subject to the terms and conditions of this Agreement, the Issuing Lender agrees to issue letters of credit for the account of Borrowers (each, an “L/C”) or to purchase participations or execute indemnities or reimbursement obligations (each such undertaking, an "L/C Undertaking”) with respect to letters of credit issued by an Underlying Issuer (as of the Closing Date, the prospective Underlying Issuer is to be Wells Fargo) for the account of Borrowers. Each request for the issuance of a Letter of Credit or the amendment, renewal, or extension of any outstanding Letter of Credit, shall be made in writing by a Responsible Officer and delivered to the Issuing Lender and Agent via hand delivery, telefacsimile, or other electronic method of transmission reasonably in advance of the requested date of issuance, amendment, renewal, or extension. Each such request shall be in form and substance satisfactory to the Issuing Lender in its Permitted Discretion and shall specify (i) the amount of such Letter of Credit, (ii) the date of issuance, amendment, renewal, or extension of such Letter of Credit, (iii) the expiration date of such Letter of Credit, (iv) the name and address of the beneficiary thereof (or the beneficiary of the Underlying Letter of Credit, as applicable), and (v) such other information (including, in the case of an amendment, renewal, or extension, identification of the outstanding Letter of Credit to be so amended, renewed, or extended) as shall be necessary to prepare, amend, renew, or extend such Letter of Credit. If requested by the Issuing Lender, Borrowers also shall be an applicant under the application with respect to any Underlying Letter of Credit that is to be the subject of an L/C Undertaking. The Issuing Lender shall have no obligation to issue a Letter of Credit if any of the following would result after giving effect to the issuance of such requested Letter of Credit:

(ii) the Letter of Credit Usage would exceed the Maximum Revolver Amount less the outstanding amount of Advances less the Bank Product Reserve.

Borrowers and the Lender Group acknowledge and agree that certain Underlying Letters of Credit may be issued to support letters of credit that already are outstanding as of the Closing Date. Each Letter of Credit (and corresponding Underlying Letter of Credit) shall be in form and substance acceptable to the Issuing Lender (in the exercise of its Permitted Discretion), including the requirement that the amounts payable thereunder must be payable in Dollars. If Issuing Lender is obligated to advance funds under a Letter of Credit, Borrowers immediately shall reimburse such L/C Disbursement to Issuing Lender by paying to Agent an amount equal to such L/C Disbursement not later than 11:00 a.m., California time, on the date that such L/C Disbursement is made, if Administrative Borrower shall have received written or telephonic notice of such L/C Disbursement prior to 10:00 a.m., California time, on such date, or, if such notice has not been received by Administrative Borrower prior to such time on such date, then not later than 11:00 a.m., California time, on the Business Day that Administrative Borrower receives such notice, if such notice is received prior to 10:00 a.m., California time, on the date of receipt, and, in the absence of such reimbursement, the L/C Disbursement immediately and automatically shall be deemed to be an Advance hereunder and, initially, shall bear interest at the rate then applicable to Advances that are Base Rate Loans. To the extent an L/C Disbursement is deemed to be an Advance hereunder, Borrowers’ obligation to reimburse such L/C Disbursement shall be discharged and replaced by the resulting Advance. Promptly following receipt by Agent of any payment from Borrowers pursuant to this paragraph, Agent shall distribute such payment to the Issuing Lender or, to the extent that Lenders have made payments pursuant to Section 2.12(b) to reimburse the Issuing Lender, then to such Lenders and the Issuing Lender as their interests may appear.

(b) Promptly following receipt of a notice of L/C Disbursement pursuant to Section 2.12(a), each Lender with a Revolver Commitment agrees to fund its Pro Rata Share of any Advance deemed made pursuant to the foregoing subsection on the same terms and conditions as if Borrowers had requested such Advance and Agent shall promptly pay to Issuing Lender the amounts so received by it from the Lenders. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the Issuing Lender or the Lenders with Revolver Commitments, the Issuing Lender shall be deemed to have granted to each Lender with a Revolver Commitment, and each Lender with a Revolver Commitment shall be deemed to have purchased, a participation in each Letter of Credit, in an amount equal to its Pro Rata Share of the Risk Participation Liability of such Letter of Credit, and each such Lender agrees to pay to Agent, for the account of the Issuing Lender, such Lender’s Pro Rata Share of any payments made by the Issuing Lender under such Letter of Credit. In consideration and in furtherance of the foregoing, each Lender with a Revolver Commitment hereby absolutely and unconditionally agrees to pay to Agent, for the account of the Issuing Lender, such Lender’s Pro Rata Share of each L/C Disbursement made by the Issuing Lender and not reimbursed by Borrowers on the date due as provided in Section 2.12(a), or of any reimbursement payment required to be refunded to Borrowers for any reason. Each Lender with a Revolver Commitment acknowledges and agrees that its obligation to deliver to Agent, for the account of the Issuing Lender, an amount equal to its respective Pro Rata Share of each L/C Disbursement made by the Issuing Lender pursuant to this Section 2.12(b) shall be absolute and unconditional and such remittance shall be made notwithstanding the occurrence or continuation of an Event of Default or Default or the failure to satisfy any condition set forth in Section 3. If any such Lender fails to make available to Agent the amount of such Lender’s Pro Rata Share of each L/C Disbursement made by the Issuing Lender in respect of such Letter of Credit as provided in this Section, such Lender shall be deemed to be a Defaulting Lender and Agent (for the account of the Issuing Lender) shall be entitled to recover such amount on demand from such Lender together with interest thereon at the Defaulting Lender Rate until paid in full.

(c) Each Borrower hereby agrees to indemnify, save, defend, and hold the Lender Group harmless from any loss, cost, expense, or liability, and reasonable attorneys fees incurred by the Lender Group arising out of or in connection with any Letter of Credit; provided, however, that no Borrower shall be obligated hereunder to indemnify for any loss, cost, expense, or liability to the extent that it is caused by the gross negligence or willful misconduct of the Issuing Lender or any other member of the Lender Group. Each Borrower agrees to be bound by the Underlying Issuer’s regulations and interpretations of any Underlying Letter of Credit or by Issuing Lender’s interpretations of any L/C issued by Issuing Lender to or for such Borrower’s account, even though this interpretation may be different from such Borrower’s own, and each Borrower understands and agrees that the Lender Group shall not be liable for any error, negligence, or mistake, whether of omission or commission, in following Borrowers’ instructions or those contained in the Letter of Credit or any modifications, amendments, or supplements thereto. Each Borrower understands that the L/C Undertakings may require Issuing Lender to indemnify the Underlying Issuer for certain costs or liabilities arising out of claims by Borrowers against such Underlying Issuer. Each Borrower hereby agrees to indemnify, save, defend, and hold the Lender Group harmless with respect to any loss, cost, expense (including reasonable attorneys fees), or liability incurred by the Lender Group under any L/C Undertaking as a result of the Lender Group’s indemnification of any Underlying Issuer; provided, however, that no Borrower shall be obligated hereunder to indemnify for any loss, cost, expense, or liability to the extent that it is caused by the gross negligence or willful misconduct of the Issuing Lender or any other member of the Lender Group. Each Borrower hereby acknowledges and agrees that neither the Lender Group nor the Issuing Lender shall be responsible for delays, errors, or omissions resulting from the malfunction of equipment in connection with any Letter of Credit.

(d) Each Borrower hereby authorizes and directs any Underlying Issuer to deliver to the Issuing Lender all instruments, documents, and other writings and property received by such Underlying Issuer pursuant to such Underlying Letter of Credit and to accept and rely upon the Issuing Lender’s instructions with respect to all matters arising in connection with such Underlying Letter of Credit and the related application.

(e) Any and all issuance charges, commissions, fees, and costs incurred by the Issuing Lender relating to Underlying Letters of Credit shall be Lender Group Expenses for purposes of this Agreement and immediately shall be reimbursable by Borrowers to Agent for the account of the Issuing Lender; it being acknowledged and agreed by each Borrower that, as of the Closing Date, the issuance charge imposed by the prospective Underlying Issuer is .875% per annum times the undrawn amount of each Underlying Letter of Credit, that such issuance charge may be changed from time to time, and that the Underlying Issuer also imposes a schedule of charges for amendments, extensions, drawings, and renewals.

(f) If by reason of (i) any change after the Closing Date in any applicable law, treaty, rule, or regulation or any change in the interpretation or application thereof by any Governmental Authority, or (ii) compliance by the Underlying Issuer or the Lender Group with any direction, request, or requirement (irrespective of whether having the force of law) of any Governmental Authority or monetary authority including, Regulation D of the Federal Reserve Board as from time to time in effect (and any successor thereto):

(i) any reserve, deposit, or similar requirement is or shall be imposed or modified in respect of any Letter of Credit issued hereunder, or

(ii) there shall be imposed on the Underlying Issuer or the Lender Group any other condition regarding any Underlying Letter of Credit or any Letter of Credit issued pursuant hereto;

and the result of the foregoing is to increase, directly or indirectly, the cost to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter of Credit or to reduce the amount receivable in respect thereof by the Lender Group, then, and in any such case, Agent may, at any time within a reasonable period after the additional cost is incurred or the amount received is reduced, notify Administrative Borrower, and Borrowers shall pay on demand such amounts as Agent may specify to be necessary to compensate the Lender Group for such additional cost or reduced receipt, together with interest on such amount from the date of such demand until payment in full thereof at the rate then applicable to Base Rate Loans hereunder. The determination by Agent of any amount due pursuant to this Section, as set forth in a certificate setting forth the calculation thereof in reasonable detail, shall, in the absence of manifest or demonstrable error, be final and conclusive and binding on all of the parties hereto. Notwithstanding the provisions of this paragraph, the Borrowers shall not be obligated to pay any amounts pursuant to this paragraph for periods occurring prior to the 180th day before the giving of written demand hereunder.

(a) Interest and Interest Payment Dates. In lieu of having interest charged at the rate based upon the Base Rate, Borrowers shall have the option (the “LIBOR Option”) to have interest on all or a portion of the Advances be charged (whether at the time when made (unless otherwise provided herein), upon conversion from a Base Rate Loan to a LIBOR Rate Loan, or upon continuation of a LIBOR Rate Loan as a LIBOR Rate Loan) at a rate of interest based upon the LIBOR Rate. Interest on LIBOR Rate Loans shall be payable on the earliest of (i) the last day of the Interest Period applicable thereto, (ii) the date on which all of the Obligations are accelerated pursuant to the terms hereof, or (iii) the date on which this Agreement is terminated pursuant to the terms hereof. On the last day of each applicable Interest Period, unless Administrative Borrower properly has exercised the LIBOR Option with respect thereto, the interest rate applicable to such LIBOR Rate Loan automatically shall convert to the rate of interest then applicable to Base Rate Loans of the same type hereunder. At any time that an Event of Default has occurred and is continuing, Borrowers no longer shall have the option to request that Advances bear interest at a rate based upon the LIBOR Rate.

(i) Administrative Borrower may, at any time and from time to time, so long as no Event of Default has occurred and is continuing, elect to exercise the LIBOR Option by notifying Agent prior to 11:00 a.m. (California time) at least 3 Business Days prior to the commencement of the proposed Interest Period (the “LIBOR Deadline”). Notice of Administrative Borrower’s election of the LIBOR Option for a portion of the Advances shall be made by delivery to Agent of a LIBOR Notice received by Agent before the LIBOR Deadline, or by telephonic notice received by Agent before the LIBOR Deadline (to be confirmed by delivery to Agent of a LIBOR Notice received by Agent prior to 5:00 p.m. (California time) on the same day). Promptly upon its receipt of each such LIBOR Notice, Agent shall provide a copy thereof to each of the affected Lenders.

(ii) Each LIBOR Notice shall be irrevocable and binding on Borrowers. In connection with each LIBOR Rate Loan, each Borrower shall indemnify, defend, and hold Agent and the Lenders harmless against any loss, cost, or expense incurred by Agent or any Lender as a result of (A) the payment of any principal of any LIBOR Rate Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (B) the conversion of any LIBOR Rate Loan other than on the last day of the Interest Period applicable thereto, or (C) the failure to borrow, convert, continue or prepay any LIBOR Rate Loan on the date specified in any LIBOR Notice delivered pursuant hereto (such losses, costs, or expenses, “Funding Losses”). Funding Losses shall, with respect to Agent or any Lender, be deemed to equal the amount determined by Agent or such Lender to be the excess, if any, of (1) the amount of interest that would have accrued on the principal amount of such LIBOR Rate Loan had such event not occurred, at the LIBOR Rate that would have been applicable thereto, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert, or continue, for the period that would have been the Interest Period therefor), minus (2) the amount of interest that would accrue on such principal amount for such period at the interest rate which Agent or such Lender would be offered were it to be offered, at the commencement of such period, Dollar deposits of a comparable amount and period in the London interbank market. A certificate of Agent or a Lender delivered to Administrative Borrower setting forth any amount or amounts that Agent or such Lender is entitled to receive pursuant to this Section 2.13 shall be conclusive absent manifest error.

(iii) Borrowers shall have not more than 4 LIBOR Rate Loans in effect at any given time. Borrowers only may exercise the LIBOR Option for LIBOR Rate Loans of at least $1,000,000 and integral multiples of $500,000 in excess thereof.

(c) Prepayments. Borrowers may prepay LIBOR Rate Loans at any time; provided, however, that in the event that LIBOR Rate Loans are prepaid on any date that is not the last day of the Interest Period applicable thereto, including as a result of any automatic prepayment through the required application by Agent of proceeds of Borrowers’ and their Subsidiaries’ Collections in accordance with Section 2.4(b) or for any other reason, including early termination of the term of this Agreement or acceleration of all or any portion of the Obligations pursuant to the terms hereof, each Borrower shall indemnify, defend, and hold Agent and the Lenders and their Participants harmless against any and all Funding Losses in accordance with Section 2.13 (b)(ii) above.

(i) The LIBOR Rate may be adjusted by Agent with respect to any Lender on a prospective basis to take into account any additional or increased costs to such Lender of maintaining or obtaining any eurodollar deposits or increased costs, in each case, due to changes in applicable law occurring subsequent to the commencement of the then applicable Interest Period, including changes in tax laws (except changes of general applicability in corporate income tax laws) and changes in the reserve requirements imposed by the Board of Governors of the Federal Reserve System (or any successor), excluding the Reserve Percentage, which additional or increased costs would increase the cost of funding or maintaining loans bearing interest at the LIBOR Rate. In any such event, the affected Lender shall give Administrative Borrower and Agent notice of such a determination and adjustment and Agent promptly shall transmit the notice to each other Lender and, upon its receipt of the notice from the affected Lender, Administrative Borrower may, by notice to such affected Lender (y) require such Lender to furnish to Administrative Borrower a statement setting forth the basis for adjusting such LIBOR Rate and the method for determining the amount of such adjustment, or (z) repay the LIBOR Rate Loans with respect to which such adjustment is made (together with any amounts due under Section 2.13(b)(ii)).

(ii) In the event that any change in market conditions or any law, regulation, treaty, or directive, or any change therein or in the interpretation of application thereof, shall at any time after the date hereof, in the reasonable opinion of any Lender, make it unlawful or impractical for such Lender to fund or maintain LIBOR Rate Loans or to continue such funding or maintaining, or to determine or charge interest rates at the LIBOR Rate, such Lender shall give notice of such changed circumstances to Agent and Administrative Borrower and Agent promptly shall transmit the notice to each other Lender and (y) in the case of any LIBOR Rate Loans of such Lender that are outstanding, the date specified in such Lender’s notice shall be deemed to be the last day of the Interest Period of such LIBOR Rate Loans, and interest upon the LIBOR Rate Loans of such Lender thereafter shall accrue interest at the rate then applicable to Base Rate Loans, and (z) Borrowers shall not be entitled to elect the LIBOR Option until such Lender determines that it would no longer be unlawful or impractical to do so.

(e) No Requirement of Matched Funding. Anything to the contrary contained herein notwithstanding, neither Agent, nor any Lender, nor any of their Participants, is required actually to acquire eurodollar deposits to fund or otherwise match fund any Obligation as to which interest accrues at the LIBOR Rate. The provisions of this Section shall apply as if each Lender or its Participants had match funded any Obligation as to which interest is accruing at the LIBOR Rate by acquiring eurodollar deposits for each Interest Period in the amount of the LIBOR Rate Loans.

2.14. Capital Requirements. If, after the date hereof, any Lender determines that (i) the adoption of or change in any law, rule, regulation or guideline regarding capital requirements for banks or bank holding companies, or any change in the interpretation or application thereof by any Governmental Authority charged with the administration thereof, or (ii) compliance by such Lender or its parent bank holding company with any guideline, request or directive of any such entity regarding capital adequacy (whether or not having the force of law), has the effect of reducing the return on such Lender’s or such holding company’s capital as a consequence of such Lender’s Revolver Commitments hereunder to a level below that which such Lender or such holding company could have achieved but for such adoption, change, or compliance (taking into consideration such Lender’s or such holding company’s then existing policies with respect to capital adequacy and assuming the full utilization of such entity’s capital) by any amount deemed by such Lender to be material, then such Lender may notify Administrative Borrower and Agent thereof. Following receipt of such notice, Borrowers agree to pay such Lender on demand the amount of such reduction of return of capital as and when such reduction is determined, payable within 90 days after presentation by such Lender of a statement in the amount and setting forth in reasonable detail such Lender’s calculation thereof and the assumptions upon which such calculation was based (which statement shall be deemed true and correct absent manifest error). In determining such amount, such Lender may use any reasonable averaging and attribution methods. Notwithstanding the provisions of this paragraph, (a) the Borrowers shall not be obligated to pay any amounts pursuant to this paragraph for periods occurring prior to the 180th day before the giving of written demand hereunder and (b) the Borrowers shall not be obligated to pay any amounts to any Lender pursuant to this paragraph unless such Lender is generally demanding payment under comparable provisions of its agreements with similarly situated borrowers.

(a) Each Borrower is accepting joint and several liability hereunder and under the other Loan Documents in consideration of the financial accommodations to be provided by the Lender Group under this Agreement, for the mutual benefit, directly and indirectly, of each Borrower and in consideration of the undertakings of the other Borrowers to accept joint and several liability for the Obligations.

(b) Each Borrower, jointly and severally, hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other Borrowers, with respect to the payment and performance of all of the Obligations (including, without limitation, any Obligations arising under this Section 2.15), it being the intention of the parties hereto that all the Obligations shall be the joint and several obligations of each Borrower without preferences or distinction among them.

(c) If and to the extent that any Borrower shall fail to make any payment with respect to any of the Obligations as and when due or to perform any of the Obligations in accordance with the terms thereof, then in each such event the other Borrowers will make such payment with respect to, or perform, such Obligation.

(d) The Obligations of each Borrower under the provisions of this Section 2.15 constitute the absolute and unconditional, full recourse Obligations of each Borrower enforceable against each Borrower to the full extent of its properties and assets, irrespective of the validity, regularity or enforceability of this Agreement or any other circumstances whatsoever.

(e) Except as otherwise expressly provided in this Agreement, each Borrower hereby waives notice of acceptance of its joint and several liability, notice of any Advances or Letters of Credit issued under or pursuant to this Agreement, notice of the occurrence of any Default, Event of Default, or of any demand for any payment under this Agreement, notice of any action at any time taken or omitted by Agent or Lenders under or in respect of any of the Obligations and, generally, to the extent permitted by applicable law, all demands, notices and other formalities of every kind in connection with this Agreement (except as otherwise provided in this Agreement). Each Borrower hereby assents to, and waives notice of, any extension or postponement of the time for the payment of any of the Obligations, the acceptance of any payment of any of the Obligations, the acceptance of any partial payment thereon, any waiver, consent or other action or acquiescence by Agent or Lenders at any time or times in respect of any default by any other Borrower in the performance or satisfaction of any term, covenant, condition or provision of this Agreement, any and all other indulgences whatsoever by Agent or Lenders in respect of any of the Obligations, and the taking, addition, substitution or release, in whole or in part, at any time or times, of any security for any of the Obligations or the addition, substitution or release, in whole or in part, of any other Borrower. Without limiting the generality of the foregoing, each Borrower assents to any other action or delay in acting or failure to act on the part of any Agent or Lender with respect to the failure by any other Borrower to comply with any of its respective Obligations, including, without limitation, any failure strictly or diligently to assert any right or to pursue any remedy or to comply fully with applicable laws or regulations thereunder, which might, but for the provisions of this Section 2.15 afford grounds for terminating, discharging or relieving any other Borrower, in whole or in part, from any of its Obligations under this Section 2.15, it being the intention of each Borrower that, so long as any of the Obligations hereunder remain unsatisfied, the Obligations of each Borrower under this Section 2.15 shall not be discharged except by performance and then only to the extent of such performance. The Obligations of each Borrower under this Section 2.15 shall not be diminished or rendered unenforceable by any winding up, reorganization, arrangement, liquidation, reconstruction or similar proceeding with respect to any other Borrower or any Agent or Lender.

(f) Each Borrower represents and warrants to Agent and Lenders that such Borrower is currently informed of the financial condition of Borrowers and of all other circumstances which a diligent inquiry would reveal and which bear upon the risk of nonpayment of the Obligations. Each Borrower further represents and warrants to Agent and Lenders that such Borrower has read and understands the terms and conditions of the Loan Documents. Each Borrower hereby covenants that such Borrower will continue to keep informed of Borrowers’ financial condition, the financial condition of other guarantors, if any, and of all other circumstances which bear upon the risk of nonpayment or nonperformance of the Obligations.

(g) Each Borrower waives all rights and defenses arising out of an election of remedies by Agent or any Lender, even though that election of remedies, such as a non-judicial foreclosure with respect to security for a guaranteed obligation, has destroyed Agent’s or such Lender’s rights of subrogation and reimbursement against such Borrower by the operation of Section 580(d) of the California Code of Civil Procedure or otherwise.

(h) Each Borrower waives all rights and defenses that such Borrower may have because the Obligations are secured by Real Property. This means, among other things:

(i) Agent and Lenders may collect from such Borrower without first foreclosing on any Collateral pledged by Borrowers or any other Person;

(ii) If Agent or any Lender forecloses on any Real Property Collateral pledged by any Borrower or any other Person:

(A) The amount of the Obligations may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price;

(B) Agent and Lenders may collect from such Borrower even if Agent or Lenders, by foreclosing on the Real Property Collateral, has destroyed any right such Borrower may have to collect from the other Borrowers.

(i) The provisions of this Section 2.15 are made for the benefit of Agent, Lenders and their respective successors and assigns, and may be enforced by it or them from time to time against any or all Borrowers as often as occasion therefor may arise and without requirement on the part of any such Agent, Lender, successor or assign first to marshal any of its or their claims or to exercise any of its or their rights against any Borrower or to exhaust any remedies available to it or them against any Borrower or to resort to any other source or means of obtaining payment of any of the Obligations hereunder or to elect any other remedy. The provisions of this Section 2.15 shall remain in effect until all of the Obligations shall have been paid in full or otherwise fully satisfied. If at any time, any payment, or any part thereof, made in respect of any of the Obligations, is rescinded or must otherwise be restored or returned by any Agent or Lender upon the insolvency, bankruptcy or reorganization of any Borrower, or otherwise, the provisions of this Section 2.15 will forthwith be reinstated in effect, as though such payment had not been made.

(j) Each Borrower hereby agrees that it will not enforce any of its rights of contribution or subrogation against any other Borrower with respect to any liability incurred by it hereunder or under any of the other Loan Documents, any payments made by it to Agent or Lenders with respect to any of the Obligations or any collateral security therefor until such time as all of the Obligations have been paid in full in cash. Any claim which any Borrower may have against any other Borrower with respect to any payments to any Agent or Lender hereunder or under any other Loan Documents are hereby expressly made subordinate and junior in right of payment, without limitation as to any increases in the Obligations arising hereunder or thereunder, to the prior payment in full in cash of the Obligations and, in the event of any insolvency, bankruptcy, receivership, liquidation, reorganization or other similar proceeding under the laws of any jurisdiction relating to any Borrower, its debts or its assets, whether voluntary or involuntary, all such Obligations shall be paid in full in cash before any payment or distribution of any character, whether in cash, securities or other property, shall be made to any other Borrower therefor.

(k) Each Borrower hereby agrees that, after the occurrence and during the continuance of any Default or Event of Default, the payment of any amounts due with respect to the indebtedness owing by any Borrower to any other Borrower is hereby subordinated to the prior payment in full in cash of the Obligations. Each Borrower hereby agrees that after the occurrence and during the continuance of any Default or Event of Default, upon request of Agent, such Borrower will not demand, sue for or otherwise attempt to collect any indebtedness of any other Borrower owing to such Borrower until the Obligations shall have been paid in full in cash. If, notwithstanding the foregoing sentence, such Borrower shall collect, enforce or receive any amounts in respect of such indebtedness, such amounts shall be collected, enforced and received by such Borrower as trustee for Agent, and such Borrower shall deliver any such amounts to Agent for application to the Obligations in accordance with Section 2.4(b).

3.1. Conditions Precedent to the Initial Extension of Credit. The obligation of each Lender to make its initial extension of credit provided for hereunder, is subject to the fulfillment, to the satisfaction of Agent and each Lender of each of the conditions precedent set forth on Schedule 3.1 in accordance with such Schedule 3.1.

3.2. Conditions Precedent to all Extensions of Credit. The obligation of the Lender Group (or any member thereof) to make any Advances hereunder (or to extend any other credit hereunder) at any time shall be subject to the following conditions precedent:

(a) the representations and warranties contained in this Agreement or in the other Loan Documents shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on and as of the date of such extension of credit, as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date);

(b) no Default or Event of Default shall have occurred and be continuing on the date of such extension of credit, nor shall either result from the making thereof;

(c) no injunction, writ, restraining order, or other order of any nature restricting or prohibiting, directly or indirectly, the extending of such credit shall have been issued and remain in force by any Governmental Authority against any Borrower, Agent, or any Lender; and

3.3. Term. This Agreement shall continue in full force and effect for a term ending on that date (the “Maturity Date”) that is the earliest to occur of: (a) the date on which Agent provides written notice pursuant to the Financing Order to counsel to the Administrative Borrower and counsel for any creditors committee of the occurrence and continuance of an Event of Default and Agent’s election to cease funding and accelerate the Obligations and terminate the Revolver Commitments pursuant to the terms of this Agreement; (b) the entry of an order converting the Bankruptcy Case to a case under chapter 7 of the Code or dismissing the Bankruptcy Case; (c) the effective date of any plan of reorganization or liquidation confirmed in the Bankruptcy Case; (d) 90 calendar days after the date on which the interim Financing Order is entered by the Bankruptcy Court, unless extended in writing by Agent; (e) the closing date of a sale of all or substantially all of the Collateral pursuant to Bankruptcy Code § 363; (f) if the final Financing Order authorizing the Borrowers to incur the Indebtedness hereunder on a final basis is not entered on or before February 21, 2007; or (g) the date of the Final Hearing, if a final Financing Order acceptable to Agent is not entered in connection therewith.

3.4. Effect of Termination. On the date of termination of this Agreement, all Obligations (including contingent reimbursement obligations of Borrowers with respect to outstanding Letters of Credit and including all Bank Product Obligations) immediately shall become due and payable without notice or demand (including (a) either (i) providing cash collateral to be held by Agent for the benefit of those Lenders with a Revolver Commitment in an amount equal to 105% of the Letter of Credit Usage, or (ii) causing the original Letters of Credit to be returned to the Issuing Lender, and (b) providing cash collateral (in an amount determined by Agent as sufficient to satisfy the reasonably estimated credit exposure) to be held by Agent for the benefit of the Bank Product Providers with respect to the Bank Product Obligations). No termination of this Agreement, however, shall relieve or discharge Borrowers or their Subsidiaries of their duties, Obligations, or covenants hereunder or under any other Loan Document and the Agent’s Liens in the Collateral shall remain in effect until all Obligations have been paid in full and the Lender Group’s obligations to provide additional credit hereunder have been terminated. When this Agreement has been terminated and all of the Obligations have been paid in full and the Lender Group’s obligations to provide additional credit under the Loan Documents have been terminated irrevocably, Agent will, at Borrowers’ sole expense, execute and deliver any termination statements, lien releases, mortgage releases, re-assignments of trademarks, discharges of security interests, and other similar discharge or release documents (and, if applicable, in recordable form) as are reasonably requested by a Borrower to release, as of record, the Agent’s Liens and all notices of security interests and liens previously filed by Agent with respect to the Obligations.

3.5. Early Termination by Borrowers. Borrowers have the option, at any time upon 5 days prior written notice by Administrative Borrower to Agent, to terminate this Agreement and terminate the Revolver Commitments hereunder without premium or penalty by paying to Agent, in cash, the Obligations (including (a) either (i) providing cash collateral to be held by Agent for the benefit of those Lenders with a Revolver Commitment in an amount equal to 105% of the Letter of Credit Usage, or (ii) causing the original Letters of Credit to be returned to the Issuing Lender, and (b) providing cash collateral (in an amount determined by Agent as sufficient to satisfy the reasonably estimated credit exposure) to be held by Agent for the benefit of the Bank Product Providers with respect to the Bank Product Obligations), in full. If Administrative Borrower has sent a notice of termination pursuant to the provisions of this Section, then the Revolver Commitments shall terminate and Borrowers shall be obligated to repay the Obligations (including (a) either (i) providing cash collateral to be held by Agent for the benefit of those Lenders with a Revolver Commitment in an amount equal to 105% of the Letter of Credit Usage, or (ii) causing the original Letters of Credit to be returned to the Issuing Lender, and (b) providing cash collateral (in an amount determined by Agent as sufficient to satisfy the reasonably estimated credit exposure) to be held by Agent for the benefit of the Bank Product Providers with respect to the Bank Product Obligations), in full, on the date set forth as the date of termination of this Agreement in such notice.

In order to induce the Lender Group to enter into this Agreement, each Borrower makes the following representations and warranties to the Lender Group which shall be true, correct, and complete, in all material respects, as of the date hereof, and shall be true, correct, and complete, in all material respects, as of the Closing Date, and at and as of the date of the making of each Advance (or other extension of credit) made thereafter, as though made on and as of the date of such Advance (or other extension of credit) (except to the extent that such representations and warranties relate solely to an earlier date) and such representations and warranties shall survive the execution and delivery of this Agreement:

4.1. No Encumbrances. Each Borrower and its Subsidiaries has good and indefeasible title to, or a valid leasehold interest in, their personal property assets and good and marketable title to, or a valid leasehold interest in, their Real Property, in each case, free and clear of Liens except for Permitted Liens.

4.4. Equipment. Each material item of Equipment of Borrowers and their Subsidiaries is used or held for use in their business and is in good working order, ordinary wear and tear and damage by casualty excepted.

4.5. Location of Inventory and Equipment. The Inventory and Equipment (other than vehicles or Equipment out for repair and Inventory and Equipment with an aggregate value at any one U.S. domestic location of $50,000 or less ($300,000 or less in the case of any foreign location)) of Borrowers and their Subsidiaries are located only at, or in-transit between, to, or from, the locations identified on Schedule 4.5 (as such Schedule may be updated pursuant to Section 5.9).

4.6. Inventory Records. Each Borrower keeps correct and accurate records itemizing and describing the type, quality, and quantity of its and its Subsidiaries’ Inventory and the book value thereof.

4.7. Jurisdiction of Organization; Location of Chief Executive Office; Organizational Identification Number; Commercial Tort Claims.

(a) The name of (within the meaning of Section 9-503 of the Code) and jurisdiction of organization of each Borrower and each of its Subsidiaries is set forth on Schedule 4.7(a) (as such Schedule may be updated from time to time to reflect changes permitted to be made under Section 6.5).

(b) The chief executive office of each Borrower and each of its Subsidiaries is located at the address indicated on Schedule 4.7(b) (as such Schedule may be updated from time to time to reflect changes permitted to be made under Section 5.9).

(c) Each Borrower’s and each of its Subsidiaries’ tax identification numbers and organizational identification numbers, if any, are identified on Schedule 4.7(c) (as such Schedule may be updated from time to time to reflect changes permitted to be made under Section 6.5).

(d) As of the Closing Date, Borrowers and their U.S. Subsidiaries do not hold any commercial tort claims in excess of $50,000 individually, except as set forth on Schedule 4.7(d).

(a) Each Borrower and each of its Subsidiaries is duly organized and existing and in good standing (or the foreign equivalent thereof) under the laws of the jurisdiction of its organization and qualified to do business in any state where the failure to be so qualified reasonably could be expected to result in a Material Adverse Change.

(b) Set forth on Schedule 4.8(b) (as such Schedule may be updated from time to time to reflect changes permitted to be made under Section 5.16), is a complete and accurate description of the authorized capital Stock of each Borrower, by class, and, as of the Closing Date, a description of the number of shares of each such class that are issued and outstanding. Other than as described on Schedule 4.8(b), there are no subscriptions, options, warrants, or calls relating to any shares of each Borrower’s capital Stock, including any right of conversion or exchange under any outstanding security or other instrument. No Borrower is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capital Stock or any security convertible into or exchangeable for any of its capital Stock.

(c) Set forth on Schedule 4.8(c) (as such Schedule may be updated from time to time to reflect changes permitted to be made under Section 5.16), is a complete and accurate list of each Borrower’s direct and indirect Subsidiaries, showing: (i) the jurisdiction of their organization, (ii) the number of shares of each class of common and preferred Stock authorized for each of such Subsidiaries, and (iii) the number and the percentage of the outstanding shares of each such class owned directly or indirectly by the applicable Borrower. All of the outstanding capital Stock of each such Subsidiary has been validly issued and is fully paid and non-assessable.

(d) Except as set forth on Schedule 4.8(c), there are no subscriptions, options, warrants, or calls relating to any shares of any Borrower’s Subsidiaries’ capital Stock, including any right of conversion or exchange under any outstanding security or other instrument. No Borrower or any of its respective Subsidiaries is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of any Borrower’s Subsidiaries’ capital Stock or any security convertible into or exchangeable for any such capital Stock.

(a) Subject to the approval of the Bankruptcy Court pursuant to the Financing Order, as to each Borrower, the execution, delivery, and performance by such Borrower of this Agreement and the Loan Documents to which it is a party have been duly authorized by all necessary action on the part of such Borrower.

(b) Subject to the approval of the Bankruptcy Court pursuant to the Financing Order, as to each Borrower, the execution, delivery, and performance by such Borrower of this Agreement and the other Loan Documents to which it is a party do not and will not (i) violate any provision of federal, state, or local law or regulation applicable to any Borrower, the Governing Documents of any Borrower, or any order, judgment, or decree of any court or other Governmental Authority binding on any Borrower, (ii) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any material contractual obligation of any Borrower, (iii) result in or require the creation or imposition of any Lien of any nature whatsoever upon any properties or assets of Borrower, other than Permitted Liens, or (iv) require any approval of any Borrower’s stockholders or any approval or consent of any Person under any material contractual obligation of any Borrower, other than consents or approvals that have been obtained and that are still in force and effect.

(c) Subject to the approval of the Bankruptcy Court pursuant to the Financing Order, the execution, delivery, and performance by each Borrower of this Agreement and the other Loan Documents to which such Borrower is a party do not and will not require any registration with, consent, or approval of, or notice to, or other action with or by, any Governmental Authority, other than consents or approvals that have been obtained and that are still in force and effect.

(d) Subject to the approval of the Bankruptcy Court pursuant to the Financing Order, as to each Borrower, this Agreement and the other Loan Documents to which such Borrower is a party, and all other documents contemplated hereby and thereby, when executed and delivered by such Borrower will be the legally valid and binding obligations of such Borrower, enforceable against such Borrower in accordance with their respective terms.

(e) Subject to the approval of the Bankruptcy Court pursuant to the Financing Order, the Agent’s Liens are validly created, perfected, and first priority Liens (other than with respect to the Retained Professionals Carveout and UST Fees) and there are no other Liens on any of the Collateral other than Permitted Liens.

(f) The execution, delivery, and performance by each Guarantor of the Loan Documents to which it is a party have been duly authorized by all necessary action on the part of such Guarantor.

(g) The execution, delivery, and performance by each Guarantor of the Loan Documents to which it is a party do not and will not (i) violate any provision of federal, state, or local law or regulation applicable to such Guarantor, the Governing Documents of such Guarantor, or any order, judgment, or decree of any court or other Governmental Authority binding on such Guarantor, (ii) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any material contractual obligation of such Guarantor, (iii) result in or require the creation or imposition of any Lien of any nature whatsoever upon any properties or assets of such Guarantor, other than Permitted Liens, or (iv) require any approval of such Guarantor’s interestholders or any approval or consent of any Person under any material contractual obligation of such Guarantor, other than consents or approvals that have been obtained and that are still in force and effect.

(h) The execution, delivery, and performance by each Guarantor of the Loan Documents to which such Guarantor is a party do not and will not require any registration with, consent, or approval of, or notice to, or other action with or by, any Governmental Authority, other than (i) consents or approvals that have been obtained and that are still in force and effect and (ii) registration of each of the UK Security Documents with (a) the United Kingdom Registrar of Companies and (b) Registers of Scotland (as applicable) (together the “UK Registrations”).

(i) The Loan Documents to which each Guarantor is a party, and all other documents contemplated hereby and thereby, when executed and delivered by such Guarantor will be the legally valid and binding obligations of such Guarantor, enforceable against such Guarantor in accordance with their respective terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally.

4.10. Litigation. Other than the Bankruptcy Case and other than those matters disclosed on Schedule 4.10 and other than matters arising after the Closing Date that reasonably could not be expected to result in a Material Adverse Change, there are no actions, suits, or proceedings pending or, to the best knowledge of each Borrower, threatened against any Borrower or any of its Subsidiaries.

4.11. Financial Statements. All financial statements relating to Borrowers and their Subsidiaries that have been delivered by Borrowers to the Lender Group have been prepared in accordance with GAAP (except, in the case of unaudited financial statements, for the lack of footnotes and being subject to year-end audit adjustments) and present fairly in all material respects, Borrowers’ and their Subsidiaries’ financial condition as of the date thereof and results of operations for the period then ended.

4.12. Dormant Subsidiaries . Each of Lilliput Lane Limited, Border Fine Arts Company Limited, Fine Ceramic Transfer Limited, Bilston & Battersea Enamels Limited, Enesco (2004) Ltd., Enesco (2005) Ltd., Enesco (2006) Ltd. and Stanley Home Produtos de Limpeza Ltda. is a Dormant Subsidiary.

4.13. Employee Benefits. Except as set forth on Schedule 4.13, none of Borrowers, any of their Subsidiaries, or any of their ERISA Affiliates maintains or contributes to any Benefit Plan.

4.14. Environmental Condition. Except as set forth on Schedule 4.14, (a) to Borrowers’ knowledge, none of Borrowers’ or their Subsidiaries’ properties or assets has ever been used by Borrowers, their Subsidiaries, or by previous owners or operators in the disposal of, or to produce, store, handle, treat, release, or transport, any Hazardous Materials, where such use, production, storage, handling, treatment, release or transport was in violation, in any material respect, of any applicable Environmental Law, (b) to Borrowers’ knowledge, none of Borrowers’ nor their Subsidiaries’ properties or assets has ever been designated or identified in any manner pursuant to any environmental protection statute as a Hazardous Materials disposal site, (c) none of Borrowers nor any of their Subsidiaries have received notice that a Lien arising under any Environmental Law has attached to any revenues or to any Real Property owned or operated by Borrowers or their Subsidiaries, and (d) none of Borrowers nor any of their Subsidiaries have received a material summons, citation, notice, or directive from the United States Environmental Protection Agency or any other federal or state governmental agency concerning any action or omission by any Borrower or any Subsidiary of a Borrower resulting in the releasing or disposing of Hazardous Materials into the environment which could reasonably be expected to result in a Material Adverse Change.

4.15. Intellectual Property. Each Borrower and each Subsidiary of a Borrower owns, or holds licenses in, all trademarks, trade names, copyrights, patents, patent rights, and licenses that are necessary to the conduct of its business as currently conducted, and attached hereto as Schedule 4.15 (as updated from time to time) is a true, correct, and complete listing of all material patents, patent applications, trademarks, trademark applications, copyrights, and copyright registrations as to which each Borrower or one of its Subsidiaries is the owner or is an exclusive licensee; provided, however, that Borrowers may amend Schedule 4.15 to add additional property so long as such amendment occurs by written notice to Agent not less than 2 days before the date on which a Borrower or any Subsidiary of Borrower acquires any such property after the Closing Date and Schedule 4.15 will automatically be deemed amended without any further consent of the Agent or any Lender.

4.16. Leases. Borrowers and their Subsidiaries enjoy peaceful and undisturbed possession under all leases material to their business and to which they are parties or under which they are operating and all of such material leases are valid and subsisting.

4.17. Deposit Accounts and Securities Accounts. Set forth on Schedule 4.17 is a listing of all of Borrowers’ and their Subsidiaries’ Deposit Accounts and Securities Accounts as of the date hereof, including, with respect to each bank or securities intermediary (a) the name and address of such Person, and (b) the account numbers of the Deposit Accounts or Securities Accounts maintained with such Person.

4.18. Complete Disclosure. All factual information (taken as a whole) furnished by or on behalf of Borrowers or their Subsidiaries in writing to Agent or any Lender (including all information contained in the Schedules hereto or in the other Loan Documents) for purposes of or in connection with this Agreement, the other Loan Documents, or any transaction contemplated herein or therein is, and all other such factual information (taken as a whole) hereafter furnished by or on behalf of Borrowers or their Subsidiaries in writing to Agent or any Lender will be, true and accurate in all material respects on the date as of which such information is dated or certified and not incomplete by omitting to state any material fact necessary to make such information (taken as a whole) not misleading in any material respect at such time in light of the circumstances under which such information was provided. Any Projections that are delivered to Agent will represent, Borrowers’ good faith estimate of their and their Subsidiaries’ future performance for the periods covered thereby based upon assumptions believed by Borrowers to be reasonable at the time of the delivery thereof to Agent (it being understood that such projections and forecasts are subject to uncertainties and contingencies, many of which are beyond the control of Borrowers and their Subsidiaries and no assurances can be given that such projections or forecasts will be realized).

4.19. Indebtedness. Set forth on Schedule 4.19 is a true and complete list of all Indebtedness of each Borrower and each Subsidiary of a Borrower outstanding immediately prior to the Closing Date that is to remain outstanding after the Closing Date and such Schedule accurately sets forth the aggregate principal amount of such Indebtedness as of the Closing Date.

4.20. Matters Relating to Liens and Property Rights. The entry of the Financing Order is effective to create in favor of Agent, for the benefit of Lenders, as security for the Obligations, (i) a valid first priority (other than with respect to the Retained Professionals Carveout and UST Fees) Lien on all of the Collateral, and (ii) an allowed administrative expense in the Bankruptcy Case having priority under Section 364(c)(1) of the Bankruptcy Code over all other administrative expenses, subject only to the Retained Professionals Carveout and UST Fees. Except for the Financing Order and the UK Registrations, no authorization, approval or other action by, and no notice to or filing with, any Governmental Authority is required for either (i) the pledge or grant by any Borrower or any or its Subsidiaries of the Liens purported to be created in favor of Agent pursuant to this Agreement or any of the Loan Documents or (ii) the exercise by Agent of any rights or remedies in respect of any Collateral (whether specifically granted or created pursuant to this Agreement, any of the Loan Documents or created or provided for by applicable law), except as may be required, in connection with the disposition of any pledged Collateral, by laws generally affecting the offering and sale of securities.

4.21. Budget. The Budget was prepared by Borrowers’ financial personnel and represents the good faith belief of such Persons at such time as to the probable course of Borrowers’ business and financial affairs, over the periods shown therein, subject to the assumptions stated therein.

Each Borrower covenants and agrees that, until termination of all of the Revolver Commitments and payment in full of the Obligations (other than Bank Product Obligations and unasserted contingent obligations that survive the termination of this Agreement), Borrowers shall and shall cause each of their respective Subsidiaries to do all of the following (provided that Borrowers shall not be required to cause Enesco France S.A. to do any of the following if doing so would cause such Subsidiary to violate any provision of its credit facility as such credit facility exists as of the date hereof):

5.1. Accounting System. Maintain a system of accounting that enables Borrowers to produce financial statements in accordance with GAAP and maintain records pertaining to the Collateral that contain information as from time to time reasonably may be requested by Agent. Borrowers also shall keep a reporting system that shows all additions, sales, claims, returns, and allowances with respect to their and their Subsidiaries’ sales.

5.2. Collateral Reporting. Provide Agent (and if so requested by Agent, with copies for each Lender) with each of the reports and documents set forth on Schedule 5.2 at the times specified therein.

5.3. Financial Statements, Reports, Certificates. Deliver to Agent, with copies to each Lender, each of the financial statements, reports, or other items set forth on Schedule 5.3 at the times specified therein. In addition, Parent agrees that no Subsidiary of Parent will have a fiscal year different from that of Parent.

5.4. Guarantor Reports Cause each Guarantor to deliver its annual financial statements at the time when Parent provides its audited financial statements to Agent, but only to the extent such Guarantor’s financial statements are not consolidated with Parent’s financial statements.

5.5. Inspection. Permit Agent, each Lender, and each of their duly authorized representatives or agents to visit any of its properties and inspect any of its assets or books and records, to examine and make copies of its books and records, and to discuss its affairs, finances, and accounts with, and to be advised as to the same by, its officers and employees at such reasonable times and intervals as Agent or any such Lender may designate and, so long as no Default or Event of Default exists, with reasonable prior notice to Administrative Borrower. Without limiting the foregoing, Agent may engage appraisers to conduct appraisals of the Collateral from time to time.

5.6. Maintenance of Properties. Within the restrictions set forth in the Budget, maintain and preserve all of their properties which are necessary or useful in the proper conduct of their business in good working order and condition, ordinary wear, tear, and casualty excepted (except where the failure to do so could not reasonably be expected to result in a Material Adverse Change) , and comply at all times with the provisions of all material leases to which it is a party as lessee, so as to prevent any loss or forfeiture thereof or thereunder.

5.7. Taxes. Cause all material assessments and income, franchise, and other material taxes with respect to periods after the Filing Date, whether real, personal, or otherwise, due or payable by, or imposed, levied, or assessed against Borrowers, their Subsidiaries, or any of their respective assets to be paid in full, before delinquency or before the expiration of any extension period (including any extension by virtue of the Bankruptcy Case), except to the extent that the validity of such assessment or tax shall be the subject of a Permitted Protest. Borrowers will and will cause their Subsidiaries to make timely payment or deposit of all tax payments and withholding taxes required of them by applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal income taxes, and will, upon reasonable request, furnish Agent with proof reasonably satisfactory to Agent indicating that the applicable Borrower or Subsidiary of a Borrower has made such payments or deposits.

(a) At Borrowers’ expense, maintain insurance respecting their and their Subsidiaries’ assets wherever located, covering loss or damage by fire, theft, explosion, and all other hazards and risks as ordinarily are insured against by other Persons engaged in the same or similar businesses. Borrowers also shall maintain business interruption, public liability, and product liability insurance, as well as insurance against larceny, embezzlement, and criminal misappropriation. All such policies of insurance shall be in such amounts and with such insurance companies as are reasonably satisfactory to Agent. Borrowers shall deliver copies of all such policies to Agent with an endorsement naming Agent as the sole loss payee (under a satisfactory lender’s loss payable endorsement) or additional insured, as appropriate. Each policy of insurance or endorsement shall contain a clause requiring the insurer to endeavor to give not less than 30 days prior written notice to Agent in the event of cancellation of the policy for any reason whatsoever (except 10 days prior written notice shall be sufficient for cancellation of the policy for non-payment of premium).

(b) Administrative Borrower shall give Agent prompt notice of any loss exceeding $100,000 covered by such insurance. So long as no Event of Default has occurred and is continuing, Borrowers shall have the exclusive right to adjust any losses payable under any such insurance policies which are less than $100,000. Following the occurrence and during the continuation of an Event of Default, or in the case of any losses payable under such insurance exceeding $100,000, Agent shall have the exclusive right to adjust any losses payable under any such insurance policies, without any liability to Borrowers whatsoever in respect of such adjustments (it being agreed that this Section 5.8 does not apply to any executive risk, director’s and officer’s liability or other similar insurance).

5.9. Location of Inventory and Equipment. Keep Borrowers’ and their Subsidiaries’ Inventory and Equipment (other than vehicles and Equipment out for repair) with an aggregate value in excess of $50,000 at any location ($300,000 in the case of any foreign location) only at the locations identified on Schedule 4.5 and their chief executive offices only at the locations identified on Schedule 4.7(b); provided, however, that Administrative Borrower may amend Schedule 4.5 or Schedule 4.7(b) so long as such amendment occurs by written notice to Agent prior to the date on which such Inventory or Equipment is moved to such new location or such chief executive office is relocated (and Schedules 4.5 and 4.7(b) will automatically be deemed so amended without any further consent of the Agent or any Lender), and so long as the applicable Borrower uses commercially reasonable efforts to provide Agent a Collateral Access Agreement with respect thereto.

5.10. Compliance with Laws. Comply with the requirements of all applicable laws, rules, regulations, and orders of any Governmental Authority, other than laws, rules, regulations, and orders the non-compliance with which, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Change.

5.11. Leases. Pay when due all rents and other amounts accruing or becoming due after the Filing Date and payable under any material leases to which any Borrower or any Subsidiary of a Borrower is a party or by which any Borrower’s or any of its Subsidiaries’ properties and assets are bound with respect to periods after the Filing Date, unless such payments are the subject of a Permitted Protest.

5.12. Existence. At all times preserve and keep in full force and effect each Borrower’s and each of its Subsidiaries’, valid existence and good standing in its jurisdiction of organization and, except as could not reasonably be expected to result in a Material Adverse Change, any rights, franchises, permits, licenses, accreditations, authorizations, or other approvals material to their businesses.

5.13. Environmental. (a) Keep any property either owned or operated by any Borrower or any Subsidiary of a Borrower free of any Environmental Liens or post bonds or other financial assurances sufficient to satisfy the obligations or liability evidenced by such Environmental Liens, (b) comply, in all material respects, with Environmental Laws and provide to Agent documentation of such compliance which Agent reasonably requests, (c) promptly notify Agent of any release of a Hazardous Material in any reportable quantity from or onto property owned or operated by any Borrower or any Subsidiary of a Borrower and take any Remedial Actions required to abate said release or otherwise to come into compliance with applicable Environmental Law, and (d) promptly, but in any event within 5 days of its receipt thereof, provide Agent with written notice of any of the following: (i) notice that an Environmental Lien has been filed against any of the real or personal property of any Borrower or any Subsidiary of a Borrower, (ii) commencement of any Environmental Action or notice that an Environmental Action will be filed against any Borrower or any Subsidiary of a Borrower, and (iii) notice of a violation, citation, or other administrative order which reasonably could be expected to result in a Material Adverse Change.

5.14. Disclosure Updates. Promptly and in no event later than 5 Business Days after obtaining knowledge thereof, notify Agent if any written information, exhibit, or report furnished to the Lender Group contained, at the time it was furnished, any untrue statement of a material fact or omitted to state any material fact necessary to make the statements contained therein not misleading in light of the circumstances in which made. The foregoing to the contrary notwithstanding, any notification pursuant to the foregoing provision will not cure or remedy the effect of the prior untrue statement of a material fact or omission of any material fact nor shall any such notification have the effect of amending or modifying this Agreement or any of the Schedules hereto.

5.15. Control Agreements. Notify Agent in writing prior to opening any new Securities Account or Deposit Account and take all steps reasonably required by Agent in order for Agent to obtain control in accordance with Sections 8-106, 9-104, 9-105, 9-106, and 9-107 of the Code with respect to (subject to the proviso contained in Section 6.12) all of its Securities Accounts, Deposit Accounts, electronic chattel paper, investment property, and letter-of-credit rights.

5.16. Formation of Subsidiaries. At the time that any Borrower or any Subsidiary forms any direct or indirect Subsidiary or acquires any direct or indirect Subsidiary after the Closing Date, such Borrower or such Subsidiary shall (a) cause such new Subsidiary to provide to Agent a joinder to the Guaranty and the Security Agreement, together with such other security documents (including Mortgages with respect to any Real Property of such new Subsidiary), as well as appropriate financing statements (and with respect to all property subject to a Mortgage, fixture filings), all in form and substance reasonably satisfactory to Agent (including being sufficient to grant Agent a first priority Lien (subject only to Permitted Liens) in and to the assets of such newly formed or acquired Subsidiary), (b) provide to Agent a pledge agreement and appropriate certificates and powers or financing statements, hypothecating all of the direct or beneficial ownership interest in such new Subsidiary, in form and substance reasonably satisfactory to Agent, and (c) provide to Agent all other documentation, including one or more opinions of counsel reasonably satisfactory to Agent, which in its opinion is appropriate with respect to the execution and delivery of the applicable documentation referred to above (including policies of title insurance or other documentation with respect to all property subject to a Mortgage). Any document, agreement, or instrument executed or issued pursuant to this Section 5.16 shall be a Loan Document. Upon complying with this Section, Administrative Borrower may amend Schedule 4.8(b) or Schedule 4.8(c) by sending updated schedules to the Agent and such schedules shall be deemed to be automatically amended without further consent from the Agent or any Lender.

5.17. Further Assurances. At any time upon the request of Agent, Borrowers shall execute or deliver to Agent, and shall cause their Subsidiaries to execute or deliver to Agent, any and all financing statements, fixture filings, security agreements, pledges, assignments, endorsements of certificates of title, mortgages, deeds of trust, opinions of counsel, and all other documents (collectively, the “Additional Documents”) that Agent may reasonably request in form and substance reasonably satisfactory to Agent, to create, perfect, and continue perfected or to better perfect the Agent’s Liens in all of the properties and assets of Borrowers and their Subsidiaries (whether now owned or hereafter arising or acquired, tangible or intangible, real or personal), to create and perfect Liens in favor of Agent in any Real Property acquired by Borrowers or their Subsidiaries after the Closing Date, and in order to fully consummate all of the transactions contemplated hereby and under the other Loan Documents. To the maximum extent permitted by applicable law, Borrowers authorize Agent to execute any such Additional Documents in Borrowers’ or their Subsidiaries’ names, as applicable, and authorizes Agent to file such executed Additional Documents in any appropriate filing office.

5.18. Consultants/Financial Advisor. Upon the request of Agent, retain a consultant, or such other management consulting firm acceptable to Agent, or such other financial advisory/investment banking firm acceptable to Agent, which shall assist Borrowers in the management of their businesses, including assisting Borrowers in the preparation of forecasts and projections and the development and implementation of strategies with respect to the marketing for sale of their businesses and properties and in connection with maximizing the value of the Collateral. Borrowers hereby irrevocably authorize and instruct each such Person to share with Agent and Lenders all budgets, records, projections, financial information, reports and other information relating to the Collateral, the financial condition, operations and the sale/marketing process of the Borrowers’ businesses, except to the extent access to such information would compromise the Borrowers’ attorney-client privilege. Borrowers agree to provide each such Person, Agent and each Lender with complete access to all of the Borrowers’ books and records, all of Borrowers’ premises and to Borrowers’ management as and when deemed necessary by any such Person, the Agent or such Lender. It is the understanding of the parties, that as of the Closing Date, the Agent has no intention to require the retention of a consultant or any other firm described above, and that the basis for doing so would likely be limited to a concern over deteriorating collateral values or the belief that a Default or Event of Default has or will occur.

Each Borrower covenants and agrees that, until termination of all of the Commitments and payment in full of the Obligations (other than Bank Product Obligations and unasserted contingent obligations that survive the termination of this Agreement), Borrowers will not and will not permit any of their respective Subsidiaries to do any of the following (provided that Borrowers may permit Enesco France S.A. to do any of the following to the extent that such Subsidiary is required to do so pursuant to any provision of its credit facility as such credit facility exists as of the date hereof)::

6.1. Indebtedness. Create, incur, assume, suffer to exist, guarantee, or otherwise become or remain, directly or indirectly, liable with respect to any Indebtedness, except:

(a) Indebtedness evidenced by this Agreement and the other Loan Documents, together with Indebtedness owed to Underlying Issuers with respect to Underlying Letters of Credit,

(b) Indebtedness set forth on Schedule 4.19 and any refinancings, renewals or replacements thereof provided the principal amount of such Indebtedness shall not be increased (other than by accrued interest),

(e) Indebtedness permitted to be incurred in accordance with the Financing Order, and

6.2. Liens. Create, incur, assume, or suffer to exist, directly or indirectly, any Lien on or with respect to any of its assets, of any kind, whether now owned or hereafter acquired, or any income or profits therefrom, except for Permitted Liens. Notwithstanding anything to the contrary in this Agreement or other Loan Documents, Borrowers shall not, and shall not permit any of their respective Subsidiaries to, directly or indirectly, create, assume or suffer to exist any Lien with priority over the Liens created by the Loan Documents, except the Permitted Liens securing the Retained Professionals Carveout and UST Fees.

(a) Enter into any merger, consolidation, reorganization, or recapitalization, or reclassify its Stock,

(b) Except for Dormant Subsidiaries, liquidate, wind up, or dissolve itself (or suffer any liquidation or dissolution),

6.4. Disposal of Assets. Other than Permitted Dispositions, convey, sell, lease, license, assign, transfer, or otherwise dispose of (or enter into an agreement (other than an agreement with Voting Participant) to convey, sell, lease, license, assign, transfer, or otherwise dispose of) any of the assets of any Borrowers or any Subsidiary of a Borrower.

6.5. Change Name. Change any Borrower’s or any of its Subsidiaries’ name, organizational identification number, state of organization or organizational identity, in each case, if applicable; provided, however, that a Borrower or a Subsidiary of a Borrower may change its name upon at least 10 days prior written notice by Administrative Borrower to Agent of such change and so long as, at the time of such written notification, such Borrower or such Subsidiary provides any financing statements necessary to perfect and continue perfected the Agent’s Liens.

6.6. Nature of Business. Make any change in the nature of their business as described in Schedule 6.6 or acquire any properties or assets that are not reasonably related to the conduct of such business activities.

(a) Optionally prepay, redeem, defease, purchase, or otherwise acquire any Indebtedness of any Borrower or any Subsidiary of a Borrower, other than the Obligations in accordance with this Agreement or pursuant to the Financing Order and other than Indebtedness of non-U.S. Subsidiaries evidenced by Hedge Agreements which are terminated in the ordinary course of business consistent with past practices,

(b) make any payment on account of Indebtedness that has been contractually subordinated in right of payment if such payment is not permitted at such time under the subordination terms and conditions, or

(c) directly or indirectly, amend, modify, alter, increase, or change any of the terms or conditions of any agreement, instrument, document, indenture, or other writing evidencing or concerning Indebtedness permitted under Section 6.1(b) to be less favorable to any Borrower or any Subsidiary.

6.8. Change of Control. Cause, permit, or suffer, directly or indirectly, any Change of Control.

6.9. Consignments. Consign Inventory or sell any of their Inventory in an aggregate amount greater than $60,000 on bill and hold, sale or return, sale on approval, or other conditional terms of sale.

6.10. Distributions. Make any distribution or declare or pay any dividends (in cash or other property, other than common Stock) on, or purchase, acquire, redeem, or retire any of Parent’s Stock, of any class, whether now or hereafter outstanding.

6.11. Accounting Methods. Modify or change their fiscal year or their method of accounting (other than as may be required to conform to GAAP) or enter into, modify, or terminate any agreement currently existing, or at any time hereafter entered into with any third party accounting firm or service bureau for the preparation or storage of Borrowers’ or their Subsidiaries’ accounting records without said accounting firm or service bureau agreeing to provide Agent information regarding Borrowers’ and their Subsidiaries’ financial condition.

6.12. Investments. Except for Permitted Investments, directly or indirectly, make or acquire any Investment or incur any liabilities (including contingent obligations) for or in connection with any Investment.

6.13. Transactions with Affiliates. Directly or indirectly enter into or permit to exist any transaction with any Affiliate of any Borrower or any Subsidiary of a Borrower except for:

(a) transactions solely among Borrowers or their Subsidiaries or any combination of the foregoing in the ordinary course of business and consistent with the Budget and past practices;

(b) transactions (other the payment of management, consulting, monitoring, or advisory fees) between Borrowers or their Subsidiaries, on the one hand, and any Affiliate of Borrowers or their Subsidiaries, on the other hand, so long as such transactions (i) are upon fair and reasonable terms, (ii) are fully disclosed to Agent if they involve one or more payments by any Borrower or any of Subsidiary of a Borrower in excess of $25,000 for any single transaction or series of transactions, and (iii) are no less favorable to Borrowers or their Subsidiaries, as applicable, than would be obtained in an arm’s length transaction with a non-Affiliate; and

(c) the payment of reasonable fees, compensation, severance (to the extent included in the Budget) or employee benefit arrangements to, and any indemnity provided for the benefit of, officers and directors of Parent in the ordinary course of business and consistent with past practice.

6.14. Use of Proceeds. Use the proceeds of the Advances for any purpose other than (a) on the Closing Date, (i) to satisfy and extinguish the outstanding principal, accrued interest, and accrued fees and expenses and any other indebtedness owing to Existing Lender, and (ii) to pay transactional fees, costs, and expenses incurred in connection with this Agreement, the other Loan Documents, and the transactions contemplated hereby and thereby, and (b) thereafter, consistent with the terms and conditions hereof, for its lawful and permitted purposes as permitted by, and consistent in all respects with, the Budget and the Financing Order.

6.15. Inventory and Equipment with Bailees. Store the Inventory or Equipment of Borrowers or their Subsidiaries with an aggregate value in excess of $100,000 at any time now or hereafter with a bailee, warehouseman, or similar party unless the applicable Borrower or Subsidiary shall have used commercially reasonable efforts to have the applicable bailee, warehouseman, or similar party execute and deliver to Agent a Collateral Access Agreement.

6.16. Budget. (a) As of any Friday after the Closing Date, have total cash receipts of less than 90% of the “Total Cash Receipts” set forth in the Budget, measured cumulatively, for the week(s) ended on such Friday, or (b) have made, as of any week set forth in the Budget, cash disbursements for post-petition payables in an amount that exceeds 110% of the applicable budgeted amount of “Post-Petition Cash Disbursements” set forth in the Budget, measured cumulatively for such week(s), as set forth in the Budget, or (c) have made, as of any week set forth in the Budget, cash disbursements for pre-petition payables in an amount that exceeds 110% of the applicable budgeted amount of “Pre-Petition Cash Disbursements” set forth in the Budget, measured cumulatively for such week(s), as set forth in the Budget, or (d) as of any Friday after the Closing Date, have net cash flow (defined as total cash receipts less total cash disbursements for post-petition payables) set forth in the Budget, measured cumulatively, of less than 90% of the “Net Cash Flow” set forth in the Budget for the week(s) ended on such Friday.

6.17. Financing Order; Administrative Expense Priority; Lien Priority; Payments.

(i) Seek, consent to or suffer to exist at any time any modification, stay, vacation or amendment of the Financing Order, except for modifications and amendments joined in or agreed to in writing by Agent.

(ii) Suffer to exist at any time a priority for any administrative expense or unsecured claim against any Borrower (now existing or hereafter arising of any kind or nature whatsoever, including, without limitation, any administrative expenses of the kind specified in Sections 503(b) and 507(b) of the Bankruptcy Code) equal or superior to the priority of the Lender Group in respect of the Obligations, except for the Retained Professionals Carveout and UST Fees having a priority over the Obligations to the extent set forth in the definition of Agreed Administrative Expense Priorities.

(iii) Suffer to exist at any time any Lien on any properties, assets or rights (including, without limitation, Accounts, Inventory and all other Collateral) except for Permitted Liens.

(iv) Prior to the date on which the Obligations have been paid in full in cash, all Letters of Credit have been cash collateralized or returned for cancellation pursuant to this Agreement, and this Agreement has been terminated, pay any administrative expenses, except administrative expenses incurred in the ordinary course of the business of Borrowers, in each case subject to the extent and having the order of priority set forth in the definition of Agreed Administrative Expense Priorities.

(v) Notwithstanding the foregoing, the Borrowers shall be permitted to pay as the same may become due and payable (i) administrative expenses of the kind specified in Section 503(b) of the Bankruptcy Code incurred in the ordinary course of business and to the extent otherwise authorized under the Financing Order and this Agreement and (ii) compensation and reimbursement of expenses to professionals allowed and payable under Sections 330 and 331 of the Bankruptcy Code to the extent permitted by the Financing Order.

Any one or more of the following events shall constitute an event of default (each, an "Event of Default”) under this Agreement:

7.1. If Borrowers fail to pay when due and payable, or when declared due and payable, (a) all or any portion of the Obligations consisting of interest, fees, or charges due the Lender Group, reimbursement of Lender Group Expenses, or other amounts (other than any portion thereof constituting principal) constituting Obligations (including any portion thereof that accrues after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), and such failure continues for a period of 3 Business Days, or (b) all or any portion of the principal of the Obligations;

(a) fails to perform or observe any covenant or other agreement contained in any of Sections 2.7, 5.5, 5.8, 5.12, 5.14, 5.16, 5.17, 5.18, and any provision of Section 6 of this Agreement;

(b) fails to perform or observe any covenant or other agreement contained in any of Sections 5.2, 5.3, and 5.4 of this Agreement and such failure continues for a period of 5 days after the earlier of (i) the date on which such failure shall first become known to any Responsible Officer of any Borrower and (ii) written notice thereof is given to Administrative Borrower by Agent;

(c) fails to perform or observe any covenant or other agreement contained in any of Sections 5.6, 5.7, 5.9, 5.10, 5.11 and 5.15 of this Agreement and such failure continues for a period of 10 days after the earlier of (i) the date on which such failure shall first become known to any Responsible Officer of any Borrower and (ii) written notice thereof is given to Administrative Borrower by Agent;

(d) fails to perform or observe any covenant or other agreement contained in this Agreement, or in any of the other Loan Documents, in each case, other than any such covenant or agreement that is the subject of another provision of this Section 7 (in which event such other provision of this Section 7 shall govern), and such failure continues for a period of 20 days after the earlier of (i) the date on which such failure shall first become known to any Responsible Officer of any Borrower and (ii) written notice thereof is given to Administrative Borrower by Agent;

7.3. If any material portion of any Borrower’s or any of its Subsidiaries’ assets is attached, seized, subjected to a writ or distress warrant, or is levied upon, or comes into the possession of any third Person and the same is not discharged before the earlier of 30 days after the date it first arises or 5 days prior to the date on which such property or asset is subject to forfeiture by such Borrower or the applicable Subsidiary;

7.4. If any Borrower or any Subsidiary of a Borrower is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part (a part involving more than 10% of its revenue-producing activities) of its business affairs;

7.5. If, after the Filing Date, one or more judgments, orders, or awards involving an aggregate amount of $100,000, or more (except to the extent fully covered by insurance pursuant to which the insurer has accepted liability therefor in writing) shall be entered or filed against any Borrower or any Subsidiary of any Borrower or with respect to any of their respective assets, and the same is not released, discharged, bonded against, or stayed pending appeal before the earlier of 30 days after the date it first arises or 5 days prior to the date on which such asset is subject to being forfeited by the applicable Borrower or the applicable Subsidiary;

7.6. If, after the Filing Date, a default occurs with respect to one or more agreements to which any Borrower or any Subsidiary of a Borrower is a party with one or more third Persons relative to Indebtedness of any Borrower or any Subsidiary of any Borrower involving an aggregate amount of $100,000 or more, and such default (i) occurs at the final maturity of the obligations thereunder, or (ii) results in a right by such third Person(s), irrespective of whether exercised, to accelerate the maturity of the applicable Borrower’s or Subsidiary’s obligations thereunder, other than: any default arising (x) prior to Borrowers’ filing of the Bankruptcy Case; (y) due to Borrowers’ filing of the Bankruptcy Case; or (z) due to restrictions on payment arising thereby;

7.7. If any warranty, representation, statement, or Record made herein or in any other Loan Document or delivered to Agent or any Lender in connection with this Agreement or any other Loan Document proves to be untrue in any material respect (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) as of the date of issuance or making or deemed making thereof;

7.8. If the obligation of any Guarantor under any Guaranty is materially limited or terminated by operation of law or by such Guarantor, or any such Guarantor becomes the subject of an Insolvency Proceeding;

7.9. If the Security Agreement or any other Loan Document that purports to create a Lien, shall, for any reason, fail or cease to create a valid and, except to the extent permitted by the terms hereof or thereof, perfected and first priority Lien on or security interest in the Collateral covered hereby or thereby, except as a result of a disposition of the applicable Collateral in a transaction permitted under this Agreement;

7.10. Any material provision of any Loan Document shall at any time for any reason be declared to be null and void, or the validity or enforceability thereof shall be contested by any Borrower or any Subsidiary of a Borrower, or a proceeding shall be commenced by any Borrower or any Subsidiary of a Borrower, or by any Governmental Authority having jurisdiction over any Borrower or any Subsidiary of a Borrower, seeking to establish the invalidity or unenforceability thereof, or any Borrower or any Subsidiary of a Borrower shall deny that it has any liability or obligation purported to be created under any Loan Document;

7.11. If Borrower or any Subsidiary makes any payment on account of any Indebtedness existing as of the Filing Date or described in Section 6.1(b), except for any payments expressly authorized by the Financing Order or this Agreement;

7.12. If the Financing Order is stayed, revised, revoked, remanded, rescinded, amended, reversed, vacated, or modified in any manner not acceptable to the Agent;

7.13. If an order with respect to the Bankruptcy Case shall be entered by the Bankruptcy Court appointing (i) a trustee under Section 1104, or (ii) an examiner with enlarged powers (powers beyond those set forth in Section 1106(a)(3) and (4) of the Bankruptcy Code) under Section 1106(b) of the Bankruptcy Code;

7.14. If any Person other than Borrowers shall assert any claim in the Bankruptcy Case arising under Section 506(c) of the Bankruptcy Code against Agent, any Lender or the Collateral, and either (a) the same shall remain unopposed by the Borrowers for more than 5 Business Days, or (b) in any event, any such claim shall not be dismissed or withdrawn, with prejudice, within 60 days after the assertion thereof;

7.15. If (a) any Person other than the Borrowers shall commence any action in any Bankruptcy Case which challenges or objects to the existence, extent, validity or priority of any portion of the Obligations, the Liens therefor or any rights and remedies of the Lender Group under the Loan Documents, the Financing Order or any other order of the Bankruptcy Court and (b) either (i) the same shall remain unopposed by the Borrowers for more than 5 Business Days, or (ii) in any event, any such claim shall not be dismissed or withdrawn, with prejudice, within 60 days after the assertion thereof;

7.16. If (a) any Borrowers or any of their Subsidiaries shall attempt to invalidate, reduce or otherwise impair the Liens or security interests of Agent and the Lenders, claims or rights against any Borrower or any of their Subsidiaries or to subject any Collateral to assessment pursuant to Section 506(c) of the Bankruptcy Code, (b) any Lien or security interest created by this Agreement or the Financing Order shall, for any reason, ceases to be valid or (c) any action is commenced by any Borrower or any of their Subsidiaries which contests the validity, perfection or enforceability of any of the Liens and security interests of Agent and the Lenders created by this Agreement or the Financing Order;

7.17. If an order with respect to the Bankruptcy Case shall be entered by the Bankruptcy Court converting the Bankruptcy Case (or any case comprising part of the Bankruptcy Case) to a case under chapter 7 of the Bankruptcy Code;

7.18. If an order shall be entered by the Bankruptcy Court confirming a reorganization plan in the Bankruptcy Case which does not (a) contain a provision for termination of this Agreement, the cash collateralization in accordance with the provisions of Section 3.4 or return for cancellation of all Letters of Credit and the indefeasible payment in full in cash of all Obligations in a manner satisfactory to the Agent on or before the effective date, or substantial consummation, of such plan and (b) provide for the continuation of the Liens and security interests granted to Agent and priorities until such plan effective date;

7.19. If an order shall be entered by the Bankruptcy Court dismissing the Bankruptcy Case which does not contain a provision for termination of this Agreement, the cash collateralization in accordance with the provisions of Section 3.4 or return for cancellation of all Letters of Credit and the indefeasible and final payment in full in cash of all Obligations in a manner satisfactory to Agent upon such dismissal;

7.20. If an order with respect to the Bankruptcy Case shall be entered without the express prior written consent of Agent, (i) to revoke, vacate, reverse, stay, modify, supplement or amend this Agreement and the transactions contemplated hereby, any Loan Document or the Financing Order, or (ii) to permit any administrative expense or any claim (now existing or hereafter arising, of any kind or nature whatsoever) to have administrative priority as to Borrowers equal or superior to the priority of the Lender Group in respect of the Obligations, except for the Retained Professionals Carveout and UST Fees having a priority over the Obligations to the extent set forth in the definition of Agreed Administrative Expense Priorities;

7.21. If an order shall be entered by the Bankruptcy Court granting relief from the automatic stay to any creditor(s) of any Borrower or any Subsidiary of any Borrower with respect to any claim in an amount equal to or exceeding $50,000 in the aggregate; provided, however, that it shall not be an Event of Default if relief from the automatic stay is granted (i) solely for the purpose of allowing such creditor to determine the liquidated amount of its claim against any such Person or (ii) to permit the commencement of or prosecution of a proceeding to collect solely against an insurance company;

7.22. If an order shall be entered in any Bankruptcy Case that (a) permits any Borrower or any Subsidiary of any Borrower to incur Indebtedness secured by any claim under Bankruptcy Code Section 364(c)(1) or by a Lien pari passu with or superior to the Lien granted to the Agent under the Loan Documents and Bankruptcy Code Sections 364(c)(2) or (d), unless (i) all of the Obligations have been indefeasibly and finally paid in cash at the time of the entry of any such order, or (ii) such debt is used immediately to indefeasibly and finally pay all of the Obligations in cash, or (b) permits any Borrower or any Subsidiary of any Borrower the right to use Collateral other than in accordance with the terms of the Financing Order, unless all of the Obligations shall have been indefeasibly and finally in paid in cash;

7.23. If an application for any of the orders described in Sections 7.14 and 7.16 or 7.21 herein shall be made by Borrower or any Subsidiary of any Borrower or any other Person and such application (if made by any Person other than a Borrower or any Subsidiary of a Borrower) is not contested by the Borrowers in good faith or the relief requested is granted in an order that is not stayed pending appeal;

7.24. If the Board of Directors of any Borrower or any Subsidiary of any Borrower authorizes the liquidation of all or substantially all of any such Person’s assets pursuant to sales to be conducted under Section 363 of the Bankruptcy Code or otherwise, other than as consented to by Agent or as allowed to pursuant to Section 6.4 herein;

7.25. If the Bankruptcy Court shall approve the termination of a Material License under Section 365 of the Bankruptcy Code or if any licensee shall suspend or fail to renew any Material License;

7.26. Any Dormant Subsidiary existing as of the Closing Date conducts any business or owns any assets, other than assets having an aggregate value not to exceed the applicable amount set forth in the definition of the term “Dormant Subsidiary”.

8.1. Rights and Remedies. Notwithstanding the provisions of Section 362 of the Bankruptcy Code, upon the occurrence, and during the continuation, of an Event of Default, the Required Lenders (at their election but without notice of their election and without demand) may authorize and instruct Agent to do any one or more of the following on behalf of the Lender Group (and Agent, acting upon the instructions of the Required Lenders, shall do the same on behalf of the Lender Group), all of which are authorized by Borrowers:

(a) Declare all or any portion of the Obligations, whether evidenced by this Agreement, by any of the other Loan Documents, or otherwise, immediately due and payable;

(b) Cease advancing money or extending credit to or for the benefit of Borrowers under this Agreement, under any of the Loan Documents, or under any other agreement between Borrowers and the Lender Group;

(c) Subject to the applicable terms, if any, of the Financing Order, terminate this Agreement and any of the other Loan Documents as to any future liability or obligation of the Lender Group, but without affecting any of the Agent’s Liens in the Collateral and without affecting the Obligations; and

(d) Subject to the applicable terms, if any, of the Financing Order, the Lender Group shall have all other rights and remedies available at law or in equity or pursuant to any other Loan Document.

8.2. Remedies Cumulative. The rights and remedies of the Lender Group under this Agreement, the other Loan Documents, and all other agreements shall be cumulative. The Lender Group shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No exercise by the Lender Group of one right or remedy shall be deemed an election, and no waiver by the Lender Group of any Event of Default shall be deemed a continuing waiver. No delay by the Lender Group shall constitute a waiver, election, or acquiescence by it.

If, with respect to any period after the Filing Date, any Borrower fails to pay any monies (whether taxes, assessments, insurance premiums, or, in the case of leased properties or assets, rents or other amounts payable under such leases) due to third Persons, or fails to make any deposits or furnish any required proof of payment or deposit, all as required under the terms of this Agreement, then, Agent, in its sole discretion and without prior notice to any Borrower, may do any or all of the following: (a) make payment of the same or any part thereof, (b) set up such reserves against the Maximum Revolver Amount as Agent deems necessary to protect the Lender Group from the exposure created by such failure, or (c) in the case of the failure to comply with Section 5.8 hereof, obtain and maintain insurance policies of the type described in Section 5.8 and take any action with respect to such policies as Agent deems prudent. Any such amounts paid by Agent shall constitute Lender Group Expenses and any such payments shall not constitute an agreement by the Lender Group to make similar payments in the future or a waiver by the Lender Group of any Event of Default under this Agreement. Agent need not inquire as to, or contest the validity of, any such expense, tax, or Lien and the receipt of the usual official notice for the payment thereof shall be conclusive evidence that the same was validly due and owing.

10.1. Demand; Protest; etc. Each Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment, nonpayment at maturity, release, compromise, settlement, extension, or renewal of documents, instruments, chattel paper, and guarantees at any time held by the Lender Group on which any such Borrower may in any way be liable.

10.2. The Lender Group’s Liability for Borrower Collateral. Each Borrower hereby agrees that: (a) so long as Agent complies with its obligations, if any, under the Code, the Lender Group shall not in any way or manner be liable or responsible for: (i) the safekeeping of the Collateral, (ii) any loss or damage thereto occurring or arising in any manner or fashion from any cause, (iii) any diminution in the value thereof, or (iv) any act or default of any carrier, warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of loss, damage, or destruction of the Collateral shall be borne by Borrowers.

10.3. Indemnification. Each Borrower shall pay, indemnify, defend, and hold the Agent-Related Persons, the Lender-Related Persons, and each Voting Participant (each, an "Indemnified Person”) harmless (to the fullest extent permitted by law) from and against any and all claims, demands, suits, actions, investigations, proceedings, liabilities, fines, costs, penalties, and damages, and all reasonable fees and disbursements of attorneys, experts, or consultants and all other costs and expenses actually incurred in connection therewith or in connection with the enforcement of this indemnification (as and when they are incurred and irrespective of whether suit is brought), at any time asserted against, imposed upon, or incurred by any of them (a) in connection with or as a result of or related to the execution, delivery, enforcement, performance, or administration (including any restructuring or workout with respect hereto) of this Agreement, any of the other Loan Documents, or the transactions contemplated hereby or thereby or the monitoring of Borrowers’ and their Subsidiaries’ compliance with the terms of the Loan Documents, (b) with respect to any investigation, litigation, or proceeding related to this Agreement, any other Loan Document, or the use of the proceeds of the credit provided hereunder (irrespective of whether any Indemnified Person is a party thereto), or any act, omission, event, or circumstance in any manner related thereto, and (c) in connection with or arising out of any presence or release of Hazardous Materials at, on, under, to or from any assets or properties owned, leased or operated by Parent or any of its Subsidiaries or any Environmental Actions, Environmental Liabilities and Costs or Remedial Actions related in any way to any such assets or properties of Parent or any of its Subsidiaries (each and all of the foregoing, the "Indemnified Liabilities”). Any provision of any Loan Document to the contrary notwithstanding, Borrowers shall have no obligation to any Indemnified Person under this Section 10.3 with respect to any Indemnified Liability that a court of competent jurisdiction finally determines to have resulted from the gross negligence or willful misconduct of such Indemnified Person. This provision shall survive the termination of this Agreement and the repayment of the Obligations. If any Indemnified Person makes any payment to any other Indemnified Person with respect to an Indemnified Liability as to which Borrowers were required to indemnify the Indemnified Person receiving such payment, the Indemnified Person making such payment is entitled to be indemnified and reimbursed by Borrowers with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT (BUT NOT GROSSLY NEGLIGENT) ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.

Unless otherwise provided in this Agreement, all notices or demands by Borrowers or Agent to the other relating to this Agreement or any other Loan Document shall be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by registered or certified mail (postage prepaid, return receipt requested), overnight courier, electronic mail (at such email addresses as Administrative Borrower or Agent, as applicable, may designate to each other in accordance herewith), or telefacsimile to Borrowers in care of Administrative Borrower or to Agent, as the case may be, at its address set forth below:

Agent and Borrowers may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other party. All notices or demands sent in accordance with this Section 11, other than notices by Agent in connection with enforcement rights against the Collateral under the provisions of the Code, shall be deemed received on the earlier of the date of actual receipt or 3 Business Days after the deposit thereof in the mail. Each Borrower acknowledges and agrees that notices sent by the Lender Group in connection with the exercise of enforcement rights against Collateral under the provisions of the Code shall be deemed sent when deposited in the mail or personally delivered, or, where permitted by law, transmitted by telefacsimile or any other method set forth above.

(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS AND, TO THE EXTENT APPLICABLE, THE BANKRUPTCY CODE

(b) IF THE BANKRUPTCY COURT ABSTAINS FROM HEARING OR REFUSES TO EXERCISE JURISDICTION OVER ANY OF THE FOLLOWING, THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF COOK, STATE OF ILLINOIS; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWERS AND EACH MEMBER OF THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 12(b).

(c) BORROWERS AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. BORROWERS AND EACH MEMBER OF THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

(a) Any Lender may assign and delegate to one or more assignees (each an “Assignee”) that are Eligible Transferees all or any portion, of the Obligations, the Revolver Commitments and the other rights and obligations of such Lender hereunder and under the other Loan Documents, in a minimum amount (unless waived by the Agent) of $7,500,000 (except such minimum amount shall not apply to (x) an assignment or delegation by any Lender to any other Lender or an Affiliate of any Lender or (y) a group of new Lenders, each of whom is an Affiliate of each other or a fund or account managed by any such new Lender or an Affiliate of such new Lender to the extent that the aggregate amount to be assigned to all such new Lenders is at least $7,500,000); provided, however, that Borrowers and Agent may continue to deal solely and directly with such Lender in connection with the interest so assigned to an Assignee until (i) written notice of such assignment, together with payment instructions, addresses, and related information with respect to the Assignee, have been given to Administrative Borrower and Agent by such Lender and the Assignee, (ii) except in the case of an assignment to EGI Acquisition, LLC or any Affiliate thereof (other than individuals), such Lender and its Assignee have delivered to Administrative Borrower and Agent an Assignment and Acceptance and Agent has notified the assigning Lender of its receipt thereof in accordance with Section 13.1(b), and (iii) unless waived by the Agent, the assigning Lender or Assignee has paid to Agent for Agent’s separate account a processing fee in the amount of $3,500. Anything contained herein to the contrary notwithstanding, the payment of any fees shall not be required and the Assignee need not be an Eligible Transferee if such assignment is in connection with any merger, consolidation, sale, transfer, or other disposition of all or any substantial portion of the business or loan portfolio of the assigning Lender.

(b) From and after the date that Agent notifies the assigning Lender (with a copy to Administrative Borrower) that it has received an executed Assignment and Acceptance (or in the case of an assignment to EGI Acquisition, LLC or any Affiliate thereof (other than individuals) written notice of such assignment) and, if applicable, payment of the required processing fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance (or otherwise), shall have the rights and obligations of a Lender under this Agreement and the other Loan Documents, and (ii) the assigning Lender shall, to the extent that rights and obligations hereunder and under the other Loan Documents have been assigned by it pursuant to such Assignment and Acceptance (or otherwise), relinquish its rights (except with respect to Section 10.3 hereof) and be released from any future obligations under this Agreement (and in the case of an Assignment and Acceptance or other document covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement and the other Loan Documents, such Lender shall cease to be a party hereto and thereto), and such assignment shall effect a novation among Borrowers, the assigning Lender, and the Assignee; provided, however, that nothing contained herein shall release any assigning Lender from obligations that survive the termination of this Agreement, including such assigning Lender’s obligations under Section 15 and Section 16.7(a) of this Agreement.

(c) By executing and delivering an Assignment and Acceptance (or a comparable document in the case of EGI Acquisition, LLC or any Affiliate thereof (other than individuals)), the assigning Lender thereunder and the Assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance or other document, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other Loan Document furnished pursuant hereto, (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of Borrowers or the performance or observance by Borrowers of any of their obligations under this Agreement or any other Loan Document furnished pursuant hereto, (iii) such Assignee confirms that it has received a copy of this Agreement, together with such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance or other document, (iv) such Assignee will, independently and without reliance upon Agent, such assigning Lender or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement, (v) such Assignee appoints and authorizes Agent to take such actions and to exercise such powers under this Agreement as are delegated to Agent, by the terms hereof, together with such powers as are reasonably incidental thereto, and (vi) such Assignee agrees that it will perform all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender.

(d) Immediately upon Agent’s receipt of the required processing fee, if applicable, and delivery of notice to the assigning Lender pursuant to Section 13.1(b), this Agreement shall be deemed to be amended to the extent, but only to the extent, necessary to reflect the addition of the Assignee and the resulting adjustment of the Revolver Commitments arising therefrom. The Revolver Commitment allocated to each Assignee shall reduce such Revolver Commitments of the assigning Lender pro tanto.

(e) Any Lender may at any time sell to one or more commercial banks, financial institutions, or other Persons (a “Participant”) participating interests in all or any portion of its Obligations, its Revolver Commitment, and the other rights and interests of that Lender (the "Originating Lender”) hereunder and under the other Loan Documents; provided, however, that (i) the Originating Lender shall remain a “Lender” for all purposes of this Agreement and the other Loan Documents and the Participant receiving the participating interest in the Obligations, the Revolver Commitments, and the other rights and interests of the Originating Lender hereunder shall not constitute a “Lender” hereunder or under the other Loan Documents and the Originating Lender’s obligations under this Agreement shall remain unchanged, (ii) the Originating Lender shall remain solely responsible for the performance of such obligations, (iii) Borrowers, Agent, and the Lenders shall continue to deal solely and directly with the Originating Lender in connection with the Originating Lender’s rights and obligations under this Agreement and the other Loan Documents, and (iv) all amounts payable by Borrowers hereunder shall be determined as if such Lender had not sold such participation, except that, if amounts outstanding under this Agreement are due and unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have the right of set off in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement. No Participant shall have the right to participate directly in the making of decisions by the Lenders among themselves or shall have any voting rights other than any Voting Participant.

(f) In connection with any such assignment or participation or proposed assignment or participation, a Lender may, subject to the provisions of Section 16.7, disclose all documents and information which it now or hereafter may have relating to Borrowers and their Subsidiaries and their respective businesses.

(g) Any other provision in this Agreement notwithstanding, any Lender may at any time create a security interest in, or pledge, all or any portion of its rights under and interest in this Agreement in favor of any Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank or U.S. Treasury Regulation 31 CFR § 203.24, and such Federal Reserve Bank may enforce such pledge or security interest in any manner permitted under applicable law.

13.2. Successors. This Agreement shall bind and inure to the benefit of the respective successors and assigns of each of the parties; provided, however, that Borrowers may not assign this Agreement or any rights or duties hereunder without the Lenders’ prior written consent and any prohibited assignment shall be absolutely void ab initio. No consent to assignment by the Lenders shall release any Borrower from its Obligations. A Lender may not assign this Agreement and the other Loan Documents and its rights and duties hereunder and thereunder except pursuant to Section 13.1 hereof and, except as expressly required pursuant to Section 13.1 hereof, no consent or approval by any Borrower is required in connection with any such assignment.

14.1. Amendments and Waivers. No amendment or waiver of any provision of this Agreement or any other Loan Document (other than Bank Product Agreements or the Fee Letter), and no consent with respect to any departure by Borrowers therefrom, shall be effective unless the same shall be in writing and signed by the Required Lenders (or by Agent at the written request of the Required Lenders) and Administrative Borrower (on behalf of all Borrowers) and then any such waiver or consent shall be effective, but only in the specific instance and for the specific purpose for which given; provided, however, that no such waiver, amendment, or consent shall, unless in writing and signed by all of the Lenders directly affected thereby and Administrative Borrower (on behalf of all Borrowers), do any of the following:

(b) postpone or delay any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees, or other amounts due hereunder or under any other Loan Document,

(c) reduce the principal of, or the rate of interest on, any loan or other extension of credit hereunder, or reduce any fees or other amounts payable hereunder or under any other Loan Document,

(e) amend or modify this Section or any provision of this Agreement providing for consent or other action by all Lenders,

(f) other than as permitted by Section 15.12, release Agent’s Lien in and to any of the Collateral,

(i) other than in connection with a merger, liquidation, dissolution or sale of such Person expressly permitted by the terms hereof or the other Loan Documents, release any Borrower or any Guarantor from any obligation for the payment of money,

(k) change the definition of Maximum Revolver Amount or change Section 2.1(b), or

and, provided further, however, that no amendment, waiver or consent shall, unless in writing and signed by Agent or Issuing Lender, as applicable, affect the rights or duties of Agent or Issuing Lender, as applicable, under this Agreement or any other Loan Document. The foregoing notwithstanding, any amendment, modification, waiver, consent, termination, or release of, or with respect to, any provision of this Agreement or any other Loan Document that relates only to the relationship of the Lender Group among themselves (and shall not include voting rights), and that does not affect the rights or obligations of Borrowers, shall not require consent by or the agreement of Borrowers.

(a) If any action to be taken by the Lender Group or Agent hereunder requires the unanimous consent, authorization, or agreement of all Lenders, and a Lender (“Holdout Lender”) fails to give its consent, authorization, or agreement, then Agent, upon at least 5 Business Days prior irrevocable notice to the Holdout Lender, may permanently replace the Holdout Lender with one or more substitute Lenders (each, a “Replacement Lender”), and the Holdout Lender shall have no right to refuse to be replaced hereunder. Such notice to replace the Holdout Lender shall specify an effective date for such replacement, which date shall not be later than 15 Business Days after the date such notice is given.

(b) Prior to the effective date of such replacement, the Holdout Lender and each Replacement Lender shall execute and deliver an Assignment and Acceptance, subject only to the Holdout Lender being repaid its share of the outstanding Obligations (including an assumption of its Pro Rata Share of the Risk Participation Liability) without any premium or penalty of any kind whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver any such Assignment and Acceptance prior to the effective date of such replacement, the Holdout Lender shall be deemed to have executed and delivered such Assignment and Acceptance. The replacement of any Holdout Lender shall be made in accordance with the terms of Section 13.1. Until such time as the Replacement Lenders shall have acquired all of the Obligations, the Revolver Commitments, and the other rights and obligations of the Holdout Lender hereunder and under the other Loan Documents, the Holdout Lender shall remain obligated to make the Holdout Lender’s Pro Rata Share of Advances and to purchase a participation in each Letter of Credit, in an amount equal to its Pro Rata Share of the Risk Participation Liability of such Letter of Credit.

14.3. No Waivers; Cumulative Remedies. No failure by Agent or any Lender to exercise any right, remedy, or option under this Agreement or any other Loan Document, or delay by Agent or any Lender in exercising the same, will operate as a waiver thereof. No waiver by Agent or any Lender will be effective unless it is in writing, and then only to the extent specifically stated. No waiver by Agent or any Lender on any occasion shall affect or diminish Agent’s and each Lender’s rights thereafter to require strict performance by Borrowers of any provision of this Agreement. Agent’s and each Lender’s rights under this Agreement and the other Loan Documents will be cumulative and not exclusive of any other right or remedy that Agent or any Lender may have.

15.1. Appointment and Authorization of Agent. Each Lender hereby designates and appoints WFF as its representative under this Agreement and the other Loan Documents and each Lender hereby irrevocably authorizes Agent to execute and deliver each of the other Loan Documents on its behalf and to take such other action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to Agent by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto. Agent agrees to act as such on the express conditions contained in this Section 15. The provisions of this Section 15 (other than Section 15.11) are solely for the benefit of Agent, and the Lenders, and Borrowers and their Subsidiaries shall have no rights as a third party beneficiary of any of the provisions contained herein. Any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall Agent have or be deemed to have any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against Agent; it being expressly understood and agreed that the use of the word “Agent” is for convenience only, that WFF is merely the representative of the Lenders, and only has the contractual duties set forth herein. Except as expressly otherwise provided in this Agreement, Agent shall have and may use its sole discretion with respect to exercising or refraining from exercising any discretionary rights or taking or refraining from taking any actions that Agent expressly is entitled to take or assert under or pursuant to this Agreement and the other Loan Documents. Without limiting the generality of the foregoing, or of any other provision of the Loan Documents that provides rights or powers to Agent, Lenders agree that Agent shall have the right to exercise the following powers as long as this Agreement remains in effect: (a) maintain, in accordance with its customary business practices, ledgers and records reflecting the status of the Obligations, the Collateral, the Collections of Borrowers and their Subsidiaries, and related matters, (b) execute or file any and all financing or similar statements or notices, amendments, renewals, supplements, documents, instruments, proofs of claim, notices and other written agreements with respect to the Loan Documents, (c) make Advances, for itself or on behalf of Lenders as provided in the Loan Documents, (d) exclusively receive, apply, and distribute the Collections of Borrowers and their Subsidiaries as provided in the Loan Documents, (e) open and maintain such bank accounts and cash management arrangements as Agent deems necessary and appropriate in accordance with the Loan Documents for the foregoing purposes with respect to the Collateral and the Collections of Borrowers and their Subsidiaries, (f) perform, exercise, and enforce any and all other rights and remedies of the Lender Group with respect to Borrowers, the Obligations, the Collateral, the Collections of Borrowers and their Subsidiaries, or otherwise related to any of same as provided in the Loan Documents, and (g) incur and pay such Lender Group Expenses as Agent may deem necessary or appropriate for the performance and fulfillment of its functions and powers pursuant to the Loan Documents.

15.2. Delegation of Duties. Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys in fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. Agent shall not be responsible for the negligence or misconduct of any agent or attorney in fact that it selects as long as such selection was made without gross negligence or willful misconduct.

15.3. Liability of Agent. None of the Agent Related Persons shall (a) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct), or (b) be responsible in any manner to any of the Lenders for any recital, statement, representation or warranty made by any Borrower or any Subsidiary or Affiliate of any Borrower, or any officer or director thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of any Borrower or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the books and records or properties of Borrowers or the books or records or properties of any of Borrowers’ Subsidiaries or Affiliates.

15.4. Reliance by Agent. Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, telefacsimile or other electronic method of transmission, telex or telephone message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent, or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to Borrowers or counsel to any Lender), independent accountants and other experts selected by Agent. Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless Agent shall first receive such advice or concurrence of the Lenders as it deems appropriate and until such instructions are received, Agent shall act, or refrain from acting, as it deems advisable. If Agent so requests, it shall first be indemnified to its reasonable satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the requisite Lenders and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Lenders.

15.5. Notice of Default or Event of Default. Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest, fees, and expenses required to be paid to Agent for the account of the Lenders and, except with respect to Events of Default of which Agent has actual knowledge, unless Agent shall have received written notice from a Lender or Administrative Borrower referring to this Agreement, describing such Default or Event of Default, and stating that such notice is a “notice of default.” Agent promptly will notify the Lenders of its receipt of any such notice or of any Event of Default of which Agent has actual knowledge. If any Lender obtains actual knowledge of any Event of Default, such Lender promptly shall notify the other Lenders and Agent of such Event of Default. Each Lender shall be solely responsible for giving any notices to its Participants, if any. Subject to Section 15.4, Agent shall take such action with respect to such Default or Event of Default as may be requested by the Required Lenders in accordance with Section 8; provided, however, that unless and until Agent has received any such request, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable.

15.6. Credit Decision. Each Lender acknowledges that none of the Agent Related Persons has made any representation or warranty to it, and that no act by Agent hereinafter taken, including any review of the affairs of Borrowers and their Subsidiaries or Affiliates, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender. Each Lender represents to Agent that it has, independently and without reliance upon any Agent-Related Person and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of Borrowers and any other Person party to a Loan Document, and all applicable bank regulatory laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to Borrowers. Each Lender also represents that it will, independently and without reliance upon any Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of Borrowers and any other Person party to a Loan Document. Except for notices, reports, and other documents expressly herein required to be furnished to the Lenders by Agent, Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of Borrowers and any other Person party to a Loan Document that may come into the possession of any of the Agent Related Persons.

15.7. Costs and Expenses; Indemnification. Agent may incur and pay Lender Group Expenses to the extent Agent reasonably deems necessary or appropriate for the performance and fulfillment of its functions, powers, and obligations pursuant to the Loan Documents, including court costs, attorneys fees and expenses, fees and expenses of financial accountants, advisors, consultants, and appraisers, costs of collection by outside collection agencies, auctioneer fees and expenses, and costs of security guards or insurance premiums paid to maintain the Collateral, whether or not Borrowers are obligated to reimburse Agent or Lenders for such expenses pursuant to this Agreement or otherwise. Agent is authorized and directed to deduct and retain sufficient amounts from the Collections of Borrowers and their Subsidiaries received by Agent to reimburse Agent for such out-of-pocket costs and expenses prior to the distribution of any amounts to Lenders. In the event Agent is not reimbursed for such costs and expenses by Borrowers or their Subsidiaries, each Lender hereby agrees that it is and shall be obligated to pay to Agent such Lender’s Pro Rata Share thereof. Whether or not the transactions contemplated hereby are consummated, the Lenders shall indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by or on behalf of Borrowers and without limiting the obligation of Borrowers to do so), according to their Pro Rata Shares, from and against any and all Indemnified Liabilities; provided, however, that no Lender shall be liable for the payment to any Agent-Related Person of any portion of such Indemnified Liabilities resulting solely from such Person’s gross negligence or willful misconduct nor shall any Lender be liable for the obligations of any Defaulting Lender in failing to make an Advance or other extension of credit hereunder. Without limitation of the foregoing, each Lender shall reimburse Agent upon demand for such Lender’s Pro Rata Share of any costs or out of pocket expenses (including attorneys, accountants, advisors, and consultants fees and expenses) incurred by Agent in connection with the preparation, execution, delivery, administration, modification, amendment, or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein, to the extent that Agent is not reimbursed for such expenses by or on behalf of Borrowers. The undertaking in this Section shall survive the payment of all Obligations hereunder and the resignation or replacement of Agent.

15.8. Agent in Individual Capacity. WFF and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in, and generally engage in any kind of banking, trust, financial advisory, underwriting, or other business with Borrowers and their Subsidiaries and Affiliates and any other Person party to any Loan Documents as though WFF were not Agent hereunder, and, in each case, without notice to or consent of the other members of the Lender Group. The other members of the Lender Group acknowledge that, pursuant to such activities, WFF or its Affiliates may receive information regarding Borrowers or their Affiliates and any other Person party to any Loan Documents that is subject to confidentiality obligations in favor of Borrowers or such other Person and that prohibit the disclosure of such information to the Lenders, and the Lenders acknowledge that, in such circumstances (and in the absence of a waiver of such confidentiality obligations, which waiver Agent will use its reasonable best efforts to obtain), Agent shall not be under any obligation to provide such information to them. The terms “Lender” and “Lenders” include WFF in its individual capacity.

15.9. Successor Agent. Agent may resign as Agent upon 45 days notice to the Lenders (unless such notice is waived by the Required Lenders). If Agent resigns under this Agreement, the Required Lenders shall appoint a successor Agent for the Lenders. If no successor Agent is appointed prior to the effective date of the resignation of Agent, Agent may appoint, after consulting with the Lenders, a successor Agent. If Agent has materially breached or failed to perform any material provision of this Agreement or of applicable law, the Required Lenders may agree in writing to remove and replace Agent with a successor Agent from among the Lenders. In any such event, upon the acceptance of its appointment as successor Agent hereunder, such successor Agent shall succeed to all the rights, powers, and duties of the retiring Agent and the term “Agent” shall mean such successor Agent and the retiring Agent’s appointment, powers, and duties as Agent shall be terminated. After any retiring Agent’s resignation hereunder as Agent, the provisions of this Section 15 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. If no successor Agent has accepted appointment as Agent by the date which is 45 days following a retiring Agent’s notice of resignation, the retiring Agent’s resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of Agent hereunder until such time, if any, as the Lenders appoint a successor Agent as provided for above.

15.10. Lender in Individual Capacity. Any Lender and its respective Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting, or other business with Borrowers and their Subsidiaries and Affiliates and any other Person party to any Loan Documents as though such Lender were not a Lender hereunder without notice to or consent of the other members of the Lender Group. The other members of the Lender Group acknowledge that, pursuant to such activities, such Lender and its respective Affiliates may receive information regarding Borrowers or their Affiliates and any other Person party to any Loan Documents that is subject to confidentiality obligations in favor of Borrowers or such other Person and that prohibit the disclosure of such information to the Lenders, and the Lenders acknowledge that, in such circumstances (and in the absence of a waiver of such confidentiality obligations, which waiver such Lender will use its reasonable best efforts to obtain), such Lender shall not be under any obligation to provide such information to them.

(a) All payments made by any Borrower hereunder or under any note or other Loan Document will be made without setoff, counterclaim, or other defense. In addition, except as otherwise provided in this Section 15.11, all such payments will be made free and clear of, and without deduction or withholding for, any present or future Taxes, and in the event any deduction or withholding of Taxes is required, each Borrower shall comply with the penultimate sentence of this Section 15.11(a). If any Taxes are so levied or imposed, each Borrower agrees to pay the full amount of such Taxes and, if such Taxes are Indemnified Taxes, such additional amounts as may be necessary so that every payment of all amounts due under this Agreement, any note, or Loan Document, including any amount paid pursuant to this Section 15.11(a) after withholding or deduction for or on account of any Indemnified Taxes, will not be less than the amount provided for herein; provided, however, that no Borrower shall be required to pay any such additional amounts if such additional amounts payable result from Agent’s or such Lender’s own willful misconduct or gross negligence (as finally determined by a court of competent jurisdiction). Each Borrower will furnish to Agent as promptly as possible after the date the payment of any Tax is due pursuant to applicable law certified copies of tax receipts evidencing such payment by such Borrower or such other evidence of payment as is reasonably acceptable to Agent.

(b) If Agent or a Lender claims an exemption from or reduction of United States withholding Tax, such Person agrees with and in favor of Agent and each Borrower, to deliver to Agent and each Borrower, and Agent agrees to deliver to each Borrower:

(i) if such Person claims an exemption from United States withholding Tax pursuant to the portfolio interest exception, (A) a statement of such Person, signed under penalty of perjury, that it is not a (I) a “bank” as described in Section 881(c)(3)(A) of the IRC, (II) a 10% shareholder of any Borrower (within the meaning of Section 871(h)(3)(B) of the IRC), or (III) a controlled foreign corporation related to any Borrower within the meaning of Section 864(d)(4) of the IRC, and (B) a properly completed and executed IRS Form W-8BEN, before receiving its first payment under this Agreement, any note or any other Loan Document, and at any other time reasonably requested by Agent or any Borrower, as applicable;

(ii) if such Person claims an exemption from, or a reduction of, withholding Tax under a United States tax treaty, a properly completed and executed IRS Form W-8BEN before receiving its first payment under this Agreement, any note or any other Loan Document, and at any other time reasonably requested by Agent or any Borrower, as applicable;

(iii) if such Person claims that interest or any other amount paid under this Agreement, any note or any other Loan Document is exempt from United States withholding Tax because it is effectively connected with a United States trade or business of such Person, two properly completed and executed copies of IRS Form W-8ECI before receiving its first payment under this Agreement, any note or any other Loan Document, and at any other time reasonably requested by Agent or any Borrower, as applicable; or

(iv) such other form or forms, including IRS Form W-9 and IRS Form W-8 IMY (including supporting documentation), as may be required under the IRC or other laws of the United States as a condition to exemption from, or reduction of, United States withholding or backup withholding Tax before receiving its first payment under this Agreement, as applicable, any note or any other Loan Document, as applicable and at any other time reasonably requested by Agent or any Borrower, as applicable.

Each Lender agrees promptly to notify Agent and Administrative Borrower of any change in its circumstances which would modify or render invalid any claimed exemption or reduction form.

(c) If Agent or a Lender claims an exemption from or reduction of withholding Tax in a jurisdiction other than the United States, such Lender agrees with and in favor of Agent and Borrowers, to deliver to Agent and each Borrower, and Agent agrees to deliver to each Borrower, any such form or forms, as may be required under the laws of such jurisdiction as a condition to exemption from, or reduction of, foreign withholding or backup withholding Tax before receiving its first payment under this Agreement, any note or any other Loan Document and at any other time reasonably requested in writing by Agent or any Borrower as applicable.

Each Lender agrees promptly to notify Agent and Administrative Borrower of any change in its circumstances which would modify or render invalid any claimed exemption or reduction form.

(d) If any Lender claims exemption from, or reduction of, withholding Tax and such Lender sells, assigns, grants a participation in, or otherwise transfers all or part of the Obligations of Borrowers to such Lender, such Lender shall promptly notify Agent and Administrative Borrower of the percentage amount as to which it is no longer the beneficial owner of Obligations of Borrowers to such Lender. To the extent of such percentage amount, Agent and Borrowers will treat such Lender’s documentation provided pursuant to Sections 15.11(b) or 15.11(c) as no longer valid. With respect to such percentage amount, Lender shall provide new documentation, pursuant to Sections 15.11(b) or 15.11(c), as applicable.

(e) If Agent or any Lender is entitled to a reduction in the applicable withholding Tax, and has timely delivered to Agent and each Borrower the form or forms required pursuant to Section 15.11(b), 15.11(c) or 15.11(d), as applicable, Agent or the relevant Borrower may withhold from any interest or other payment to such Person an amount equal to the applicable withholding Tax after taking into account such reduction. If the forms or other documentation required by Section 15.11(b), 15.11(c) or 15.11(d), as applicable, are not delivered or timely delivered to Agent or such Borrower, then Agent or such Borrower may withhold from any interest or other payment to such Person not providing such forms or other documentation an amount equal to the applicable withholding Tax required by applicable law as the result of not providing such form or documentation and Agent or such Lender, as applicable, shall not be entitled to receive any additional amount on account of such withholding Tax from any Borrower pursuant to the penultimate sentence of Section 15.11(a). The preceding sentence shall not apply to any additional amounts required to be paid pursuant to the penultimate sentence of Section 15.11(a) on account of withholding Taxes that would have been imposed regardless of the failure to deliver (or timely deliver) the applicable form or documentation.

(f) If the IRS or any other Governmental Authority of the United States or any other jurisdiction asserts a claim that Agent or any Borrower did not properly withhold Tax from amounts paid to or for the account of any Lender due to a failure on the part of the Lender (because the appropriate form was not timely delivered, was not properly completed or executed, or because such Lender failed to notify Agent or such Borrower of a change in circumstances which rendered the exemption from, or reduction of, withholding Tax ineffective, or for any other reason) such Lender shall indemnify and hold Agent or such Borrower harmless for all amounts paid, directly or indirectly, by Agent or such Borrower, as Tax or otherwise, including penalties and interest, and including any Taxes imposed by any jurisdiction on the amounts payable to Agent under this Section 15.11, together with all costs and expenses (including attorneys fees and expenses). The obligation of the Lenders under this subsection shall survive the payment of all Obligations and the resignation or replacement of Agent.

(g) So long as no Default or Event of Default is continuing, if Agent or any Lender shall become aware that it is entitled to receive a refund in respect of Indemnified Taxes as to which it has received additional amounts from any Borrower pursuant to the penultimate sentence of Section 15.11(a), it shall promptly notify such Borrower of the availability of such refund and shall, within 30 days after receipt of a request by such Borrower, apply for such refund at such Borrower’s sole cost and expense. If Agent or any Lender receives a refund in respect of any Indemnified Taxes as to which it has received additional amounts from any Borrower pursuant to the penultimate sentence of Section 15.11(a), it shall promptly notify such Borrower of its receipt of such refund and shall, within 30 days after receipt of a request by such Borrower (or promptly upon receipt of the refund, if such Borrower has requested application for such refund pursuant hereto), pay the amount of such refund to such Borrower, net of Agent’s or such Lender’s, as applicable, costs and expenses, and without interest thereon; provided, however, that such Borrower, upon request by Agent or such Lender, shall return such refund to Agent or such Lender, as applicable, in the event that Agent or such Lender is required to repay such refund to the relevant Governmental Authority. Nothing contained in this Section 15.11(g) shall require Agent or any Lender to (i) make available to any Borrower any of such Person’s tax returns or any other information relating to its taxes that it deems to be confidential; (ii) pursue any claim for refund without adequate assurance and indemnity from Borrower that the Lender’s or Agent’s costs and expenses for pursuing such refund will be paid by Borrower or (iii) pursue any claim for refund that would subject Lender to additional Taxes or penalties.

(a) The Lenders hereby irrevocably authorize Agent, at its option and in its sole discretion, to release any Lien on any Collateral (i) upon the termination of the Revolver Commitments and payment and satisfaction in full by Borrowers of all Obligations, (ii) constituting property being sold or disposed of if a release is required or desirable in connection therewith and if Administrative Borrower certifies to Agent that the sale or disposition is permitted under Section 6.4 of this Agreement or the other Loan Documents (and Agent may rely conclusively on any such certificate, without further inquiry), (iii) constituting property in which no Borrower or its Subsidiaries owned any interest at the time the Agent’s Lien was granted nor at any time thereafter, or (iv) constituting property leased to a Borrower or its Subsidiaries under a lease that has expired or is terminated in a transaction permitted under this Agreement. Except as provided above, Agent will not execute and deliver a release of any Lien on any Collateral without the prior written authorization of (y) if the release is of all or substantially all of the Collateral, all of the Lenders, or (z) otherwise, the Required Lenders. Upon request by Agent or Administrative Borrower at any time, the Lenders will confirm in writing Agent’s authority to release any such Liens on particular types or items of Collateral pursuant to this Section 15.12; provided, however, that (1) Agent shall not be required to execute any document necessary to evidence such release on terms that, in Agent’s opinion, would expose Agent to liability or create any obligation or entail any consequence other than the release of such Lien without recourse, representation, or warranty, and (2) such release shall not in any manner discharge, affect, or impair the Obligations or any Liens (other than those expressly being released) upon (or obligations of Borrowers in respect of) all interests retained by Borrowers, including, the proceeds of any sale, all of which shall continue to constitute part of the Collateral.

(b) Agent shall have no obligation whatsoever to any of the Lenders to assure that the Collateral exists or is owned by Borrowers or is cared for, protected, or insured or has been encumbered, or that the Agent’s Liens have been properly or sufficiently or lawfully created, perfected, protected, or enforced or are entitled to any particular priority, or to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to Agent pursuant to any of the Loan Documents, it being understood and agreed that in respect of the Collateral, or any act, omission, or event related thereto, subject to the terms and conditions contained herein, Agent may act in any manner it may deem appropriate, in its sole discretion given Agent’s own interest in the Collateral in its capacity as one of the Lenders and that Agent shall have no other duty or liability whatsoever to any Lender as to any of the foregoing, except as otherwise provided herein.

(a) Each of the Lenders agrees that it shall not, without the express written consent of Agent, and that it shall, to the extent it is lawfully entitled to do so, upon the written request of Agent, set off against the Obligations, any amounts owing by such Lender to Borrowers or any deposit accounts of Borrowers now or hereafter maintained with such Lender. Each of the Lenders further agrees that it shall not, unless specifically requested to do so in writing by Agent, take or cause to be taken any action, including, the commencement of any legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce any security interest in, any of the Collateral.

(b) If, at any time or times any Lender shall receive (i) by payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments with respect to the Obligations, except for any such proceeds or payments received by such Lender from Agent pursuant to the terms of this Agreement, or (ii) payments from Agent in excess of such Lender’s Pro Rata Share of all such distributions by Agent, such Lender promptly shall (A) turn the same over to Agent, in kind, and with such endorsements as may be required to negotiate the same to Agent, or in immediately available funds, as applicable, for the account of all of the Lenders and for application to the Obligations in accordance with the applicable provisions of this Agreement, or (B) purchase, without recourse or warranty, an undivided interest and participation in the Obligations owed to the other Lenders so that such excess payment received shall be applied ratably as among the Lenders in accordance with their Pro Rata Shares; provided, however, that to the extent that such excess payment received by the purchasing party is thereafter recovered from it, those purchases of participations shall be rescinded in whole or in part, as applicable, and the applicable portion of the purchase price paid therefor shall be returned to such purchasing party, but without interest except to the extent that such purchasing party is required to pay interest in connection with the recovery of the excess payment.

15.14. Agency for Perfection. Agent hereby appoints each other Lender as its agent (and each Lender hereby accepts such appointment) for the purpose of perfecting the Agent’s Liens in assets which, in accordance with Article 8 or Article 9, as applicable, of the Code can be perfected only by possession or control. Should any Lender obtain possession or control of any such Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent’s request therefor shall deliver possession or control of such Collateral to Agent or in accordance with Agent’s instructions.

15.15. Payments by Agent to the Lenders. All payments to be made by Agent to the Lenders shall be made by bank wire transfer of immediately available funds pursuant to such wire transfer instructions as each party may designate for itself by written notice to Agent. Concurrently with each such payment, Agent shall identify whether such payment (or any portion thereof) represents principal, premium, fees, or interest of the Obligations.

15.16. Concerning the Collateral and Related Loan Documents. Each member of the Lender Group authorizes and directs Agent to enter into this Agreement and the other Loan Documents. Each member of the Lender Group agrees that any action taken by Agent in accordance with the terms of this Agreement or the other Loan Documents relating to the Collateral and the exercise by Agent of its powers set forth therein or herein, together with such other powers that are reasonably incidental thereto, shall be binding upon all of the Lenders.

15.17. Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports and Information. By becoming a party to this Agreement, each Lender:

(a) is deemed to have requested that Agent furnish such Lender, promptly after it becomes available, a copy of each field audit or examination report (each a “Report” and collectively, “Reports”) prepared by or at the request of Agent, and Agent shall so furnish each Lender with such Reports,

(b) expressly agrees and acknowledges that Agent does not (i) make any representation or warranty as to the accuracy of any Report, and (ii) shall not be liable for any information contained in any Report,

(c) expressly agrees and acknowledges that the Reports are not comprehensive audits or examinations, that Agent or other party performing any audit or examination will inspect only specific information regarding Borrowers and will rely significantly upon Borrowers’ and their Subsidiaries’ books and records, as well as on representations of Borrowers’ personnel,

(d) agrees to keep all Reports and other material, non-public information regarding Borrowers and their Subsidiaries and their operations, assets, and existing and contemplated business plans in a confidential manner in accordance with Section 16.7, and

(e) without limiting the generality of any other indemnification provision contained in this Agreement, agrees: (i) to hold Agent and any such other Lender preparing a Report harmless from any action the indemnifying Lender may take or fail to take or any conclusion the indemnifying Lender may reach or draw from any Report in connection with any loans or other credit accommodations that the indemnifying Lender has made or may make to Borrowers, or the indemnifying Lender’s participation in, or the indemnifying Lender’s purchase of, a loan or loans of Borrowers; and (ii) to pay and protect, and indemnify, defend and hold Agent, and any such other Lender preparing a Report harmless from and against, the claims, actions, proceedings, damages, costs, expenses, and other amounts (including, attorneys fees and costs) incurred by Agent and any such other Lender preparing a Report as the direct or indirect result of any third parties who might obtain all or part of any Report through the indemnifying Lender.

In addition to the foregoing: (x) any Lender may from time to time request of Agent in writing that Agent provide to such Lender a copy of any report or document provided by Borrowers to Agent that has not been contemporaneously provided by Borrowers to such Lender, and, upon receipt of such request, Agent promptly shall provide a copy of same to such Lender, (y) to the extent that Agent is entitled, under any provision of the Loan Documents, to request additional reports or information from Borrowers, any Lender may, from time to time, reasonably request Agent to exercise such right as specified in such Lender’s notice to Agent, whereupon Agent promptly shall request of Administrative Borrower the additional reports or information reasonably specified by such Lender, and, upon receipt thereof from Administrative Borrower, Agent promptly shall provide a copy of same to such Lender, and (z) any time that Agent renders to Administrative Borrower a statement regarding the Loan Account, Agent shall send a copy of such statement to each Lender.

15.18. Several Obligations; No Liability. Notwithstanding that certain of the Loan Documents now or hereafter may have been or will be executed only by or in favor of Agent in its capacity as such, and not by or in favor of the Lenders, any and all obligations on the part of Agent (if any) to make any credit available hereunder shall constitute the several (and not joint) obligations of the respective Lenders on a ratable basis, according to their respective Revolver Commitments, to make an amount of such credit not to exceed, in principal amount, at any one time outstanding, the amount of their respective Revolver Commitments. Nothing contained herein shall confer upon any Lender any interest in, or subject any Lender to any liability for, or in respect of, the business, assets, profits, losses, or liabilities of any other Lender. Each Lender shall be solely responsible for notifying its Participants of any matters relating to the Loan Documents to the extent any such notice may be required, and no Lender shall have any obligation, duty, or liability to any Participant of any other Lender. Except as provided in Section 15.7, no member of the Lender Group shall have any liability for the acts of any other member of the Lender Group. No Lender shall be responsible to any Borrower or any other Person for any failure by any other Lender to fulfill its obligations to make credit available hereunder, nor to advance for it or on its behalf in connection with its Revolver Commitment, nor to take any other action on its behalf hereunder or in connection with the financing contemplated herein.

15.19. Bank Product Providers. Each Bank Product Provider shall be deemed a party hereto for purposes of any reference in a Loan Document to the parties for whom Agent is acting; it being understood and agreed that the rights and benefits of such Bank Product Provider under the Loan Documents consist exclusively of such Bank Product Provider’s right to share in payments and collections out of the Collateral as more fully set forth herein. In connection with any such distribution of payments and collections, Agent shall be entitled to assume no amounts are due to any Bank Product Provider unless such Bank Product Provider has notified Agent in writing of the amount of any such liability owed to it prior to such distribution.

16.1. Effectiveness. This Agreement shall be binding and deemed effective when executed by Borrowers, Agent, and each Lender whose signature is provided for on the signature pages hereof.

16.2. Section Headings. Headings and numbers have been set forth herein for convenience only. Unless the contrary is compelled by the context, everything contained in each Section applies equally to this entire Agreement.

16.3. Interpretation. Neither this Agreement nor any uncertainty or ambiguity herein shall be construed against the Lender Group or Borrowers, whether under any rule of construction or otherwise. On the contrary, this Agreement has been reviewed by all parties and shall be construed and interpreted according to the ordinary meaning of the words used so as to accomplish fairly the purposes and intentions of all parties hereto.

16.4. Severability of Provisions. Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.

16.5. Counterparts; Electronic Execution. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. Delivery of an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission shall be equally as effective as delivery of an original executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement. The foregoing shall apply to each other Loan Document mutatis mutandis.

16.6. Revival and Reinstatement of Obligations. If the incurrence or payment of the Obligations by any Borrower or Guarantor or the transfer to the Lender Group of any property should for any reason subsequently be declared to be void or voidable under any state or federal law relating to creditors’ rights, including provisions of the Bankruptcy Code relating to fraudulent conveyances, preferences, or other voidable or recoverable payments of money or transfers of property (each, a “Voidable Transfer”), and if the Lender Group is required to repay or restore, in whole or in part, any such Voidable Transfer, or elects to do so upon the reasonable advice of its counsel, then, as to any such Voidable Transfer, or the amount thereof that the Lender Group is required or elects to repay or restore, and as to all reasonable costs, expenses, and attorneys fees of the Lender Group related thereto, the liability of Borrowers or Guarantor, if any, automatically shall be revived, reinstated, and restored and shall exist as though such Voidable Transfer had never been made.

(a) Agent and Lenders each individually (and not jointly or jointly and severally) agree that information regarding Borrowers and their Subsidiaries, their operations, assets, and existing and contemplated business plans shall be treated by Agent and the Lenders in a confidential manner, and shall not be disclosed by Agent and the Lenders to Persons who are not parties to this Agreement, except: (i) to attorneys for and other advisors, accountants, auditors, and consultants to any member of the Lender Group, (ii) to Subsidiaries and Affiliates of any member of the Lender Group (including the Bank Product Providers), provided that any such Subsidiary or Affiliate shall have agreed to receive such information hereunder subject to the terms of this Section 16.7, (iii) as may be required by statute, decision, or judicial or administrative order, rule, or regulation, (iv) as may be agreed to in advance by Administrative Borrower or its Subsidiaries or as requested or required by any Governmental Authority pursuant to any subpoena or other legal process, (v) as to any such information that is or becomes generally available to the public (other than as a result of prohibited disclosure by Agent or the Lenders), (vi) in connection with any assignment, participation or pledge of any Lender’s interest under this Agreement, provided that any such assignee, participant, or pledgee shall have agreed in writing to receive such information hereunder subject to the terms of this Section, and (vii) in connection with any litigation or other adversary proceeding involving parties hereto which such litigation or adversary proceeding involves claims related to the rights or duties of such parties under this Agreement or the other Loan Documents. The provisions of this Section 16.7(a) shall survive for 2 years after the payment in full of the Obligations.

(b) Anything in this Agreement to the contrary notwithstanding, Agent may provide information concerning the terms and conditions of this Agreement and the other Loan Documents to loan syndication and pricing reporting services.

16.8. Lender Group Expenses. Borrowers agree to pay any and all Lender Group Expenses within 5 days after demand therefor by Agent. If Borrowers do not object to any Lender Group Expenses within 5 days of the date so demanded, then the demanded Lender Group Expenses shall be conclusive (this sentence shall not limit any Borrower’s obligations to pay any Lender Group Expenses pursuant to the terms of this Agreement or any other Loan Document). Borrowers agree that their obligations contained in this Section 16.8 shall survive payment or satisfaction in full of all other Obligations.

16.9. Integration. This Agreement, together with the other Loan Documents, reflects the entire understanding of the parties with respect to the transactions contemplated hereby and shall not be contradicted or qualified by any other agreement, oral or written, before the date hereof.

16.10. Parent as Agent for Borrowers. Each Borrower hereby irrevocably appoints Parent as the borrowing agent and attorney-in-fact for all Borrowers (the “Administrative Borrower”) which appointment shall remain in full force and effect unless and until Agent shall have received prior written notice signed by each Borrower that such appointment has been revoked and that another Borrower has been appointed Administrative Borrower. Each Borrower hereby irrevocably appoints and authorizes the Administrative Borrower (i) to provide Agent with all notices with respect to Advances and Letters of Credit obtained for the benefit of any Borrower and all other notices and instructions under this Agreement and (ii) to take such action as the Administrative Borrower deems appropriate on its behalf to obtain Advances and Letters of Credit and to exercise such other powers as are reasonably incidental thereto to carry out the purposes of this Agreement. It is understood that the handling of the Loan Account and Collateral of Borrowers in a combined fashion, as more fully set forth herein, is done solely as an accommodation to Borrowers in order to utilize the collective borrowing powers of Borrowers in the most efficient and economical manner and at their request, and that Lender Group shall not incur liability to any Borrower as a result hereof. Each Borrower expects to derive benefit, directly or indirectly, from the handling of the Loan Account and the Collateral in a combined fashion since the successful operation of each Borrower is dependent on the continued successful performance of the integrated group. To induce the Lender Group to do so, and in consideration thereof, each Borrower hereby jointly and severally agrees to indemnify each member of the Lender Group and hold each member of the Lender Group harmless against any and all liability, expense, loss or claim of damage or injury, made against the Lender Group by any Borrower or by any third party whosoever, arising from or incurred by reason of (a) the handling of the Loan Account and Collateral of Borrowers as herein provided, (b) the Lender Group’s relying on any instructions of the Administrative Borrower, or (c) any other action taken by the Lender Group hereunder or under the other Loan Documents, except that Borrowers will have no liability to the relevant Agent-Related Person or Lender-Related Person under this Section 16.10 with respect to any liability that has been finally determined by a court of competent jurisdiction to have resulted solely from the gross negligence or willful misconduct of such Agent-Related Person or Lender-Related Person, as the case may be.

16.11. USA Patriot Act Each Lender that is subject to the requirements of the USA Patriot Act (Title 111 of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”) hereby notifies Borrowers that pursuant to the requirements of the Act, it is required to obtain, verify and record information that identifies Borrowers, which information includes the name and address of Borrowers and other information that will allow such Lender to identify Borrowers in accordance with the Act.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered as of the date first above written.

ENESCO INTERNATIONAL LTD.,

a Delaware corporation, as debtor and debtor-in-possession

By: /s/ Charles E. Sanders

Title: Treasurer

GREGG MANUFACTURING, INC.,

a California corporation, as debtor and debtor-in-possession

By: /s/ Charles E. Sanders

Title: Chief Financial Officer, Treasurer, and Secretary

WELLS FARGO FOOTHILL, INC., a California corporation, as Agent and as a Lender By: /s/ Katherine McDonald Title: Vice President, Underwriter WELLS FARGO FOOTHILL, INC.,

a California corporation, as Agent and as a Lender

By: /s/ Katherine McDonald

Title: Vice President, Underwriter

Exhibit 99.1

For Immediate Release

Contact: Donna Shaults
Enesco Group, Inc.
630-875-5464
dshaults@enesco.com

ENESCO GROUP, INC. ANNOUNCES DEFINITIVE

SALE AND FINANCING AGREEMENTS

Itasca, Ill. – January 23, 2007 – Enesco Group, Inc., a leader in the giftware, and home and garden décor industries, today announced that the Company and an affiliate of Tinicum Capital Partners II, L.P. (“Tinicum”), a private investment partnership, have entered into a definitive asset purchase agreement, which provides for the Tinicum affiliate to purchase substantially all of the assets of Enesco and to assume certain of Enesco’s unsecured liabilities. Under the agreement, the purchase price for Enesco’s business, operations and assets would be paid by the repayment of all or substantially all of Enesco’s senior secured debtor-in-possession financing facility, the forgiveness of certain obligations owed to Tinicum or its affiliates, the assumption of certain of Enesco’s liabilities, and the payment in cash of $600,000.

After the transaction, substantially all of Enesco’s assets would be owned by the Tinicum affiliate, a private company. As previously announced, Enesco does not anticipate there would be any distribution to its stockholders from the transaction, which remains subject to approval by the U.S. Bankruptcy Court. On January 22, 2007, the U.S. Bankruptcy Court entered an order establishing certain procedures to govern the sale process and setting a hearing for February 15, 2007 to consider the proposed Tinicum transaction.

Enesco also announced that the U.S. Bankruptcy Court yesterday gave interim approval to its Debtor-In-Possession financing arrangement with Wells Fargo Foothill, part of Wells Fargo & Company (NYSE: WFC). The financing arrangement, in which Tinicum has purchased a 100% participation interest, provides for a revolving loan facility of up to $65 million, the proceeds of which will be used to pay off Enesco’s existing senior secured debt and to provide working capital for the period prior to the closing of the sale to the Tinicum affiliate. Final approval of the facility is expected to come at a hearing before the U.S. Bankruptcy Court on February 7, 2007.

Basil Elliott, President and CEO of Enesco Group, Inc., said, “This transaction with Tinicum will represent a new era for Enesco. Smooth and continuous operations are critical to Enesco’s success and we greatly appreciate the efforts of all our employees and partners through this transitional phase. We look forward to continuing this strong relationship with all our partners. The employees of Enesco, our retail customers and vendors are eagerly anticipating the partnership with Tinicum to springboard us into a profitable, innovative and exciting future.”

-more-

Terence M. O’Toole, co-managing partner of Tinicum added, “The passion, loyalty, and determination of the employees, vendors and licensors have been both compelling and overwhelming. We are looking forward to becoming an integral part of the Enesco family and the future growth trajectory of the Company.”

About Enesco Group, Inc.

Enesco Group, Inc. is a world leader in the giftware, and home and garden décor industries. Serving more than 44,000 customers globally, Enesco distributes products to a wide variety of specialty card and gift retailers, home décor boutiques, as well as mass-market chains and direct mail retailers. Internationally, Enesco serves markets operating in the United Kingdom, Canada, Europe, Mexico, Australia and Asia. With subsidiaries located in Europe and Canada, and a business unit in Hong Kong, Enesco’s international distribution network is a leader in the industry. The Company’s product lines include some of the world’s most recognizable brands, including Border Fine Arts, Circle of Love, Foundations, Halcyon Days, Jim Shore Designs, Lilliput Lane, Pooh & Friends, Walt Disney Classics Collection, and Walt Disney Company, among others. Further information is available on the Company’s web site at www.enesco.com.

The forward-looking statements contained in this release are based on estimates of future performance and are highly dependent upon a variety of factors, which could cause actual results to differ materially. These factors include the market acceptance of existing and new products, the ability to control manufacturing and operating costs, the successful completion of the Company’s restructuring efforts, achieving forecasted operating and cash flow projections, normal pre-merger notification requirements under federal law, the execution of definitive agreements for the credit facility, successfully satisfy the conditions precedent to the closing of the transactions contemplated by the definitive agreements for the refinancing of Enesco’s debt and purchase and sale of Enesco’s business, operations and assets and successfully completing a sale of Enesco’s business, operations and assets under Chapter 11 of the U.S. Bankruptcy Code. Additional information regarding forward-looking statement risk factors is contained in the Company’s reports and filings with the Securities and Exchange Commission. In light of these risks and uncertainties, the forward-looking statements contained herein may not occur and actual results could differ materially from those set forth herein. You should consider these risks and factors, and the impact they may have when you evaluate these forward-looking statements. The statements are based only on the Company’s knowledge and expectations on the date of this press release.

# # #

Exhibit 99.2

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

(EASTERN DIVISION)


—x

In re	: :	Chapter 11
ENESCO GROUP, INC., et al.¹,	: :	Case No. 07-00565 Hon. A. Benjamin Goldgar

	:
Debtors.	: :	(Jointly Administered)

—x

ORDER (A) APPROVING THE BIDDING PROCEDURES AND TERMINATION FEE PURSUANT TO ASSET PURCHASE
AGREEMENT, (B) SCHEDULING A HEARING TO CONSIDER APPROVAL OF SALE OF SUBSTANTIALLY ALL OF
SELLERS’ ASSETS, (C) APPROVING FORM AND MANNER OF NOTICE OF AUCTION AND SALE HEARING, (D)
APPROVING FORM AND MANNER OF ASSUMPTION AND ASSIGNMENT OF CERTAIN EXECUTORY CONTRACTS
AND UNEXPIRED LEASES, AND (E) GRANTING RELATED RELIEF

Upon the motion, dated January 18, 2007 (the “Motion”),² of the above-captioned debtors and debtors-in-possession (collectively, the “Debtors”), requesting entry of, among other things, an order (the “Bidding Procedures Order”) under 11 U.S.C. §§ 105, 363, 365, 503, 507 and 1146(a) and Fed. R. Bankr. P. 6004(f) (A) approving the bidding procedures, substantially in the form attached to the Motion as Exhibit A, (the “Bidding Procedures”) to be employed in connection with the proposed sale (the “Sale”) of substantially all of the assets of Debtors Enesco Group, Inc. and Gregg Gift Manufacturing, Inc. (collectively, the “Sellers”), including the stock of certain non-debtor subsidiaries (collectively, the “Acquired Assets”), including, without limitation, the Termination Fee (as defined below) in connection with an Asset Purchase Agreement (the “Agreement”), dated as of January 21, 2007, by and among the Sellers and EGI Acquisition LLC (the “Purchaser”), attached to the Motion as Exhibit B; (B) scheduling a hearing to consider approval of the Sale (the “Sale Hearing”); (C) approving the form and manner of the notice of the auction (the “Auction”) and Sale Hearing substantially in the form attached to the Agreement as Exhibit F (the “Auction and Sale Notice”); (D) approving the form and manner of the notice of the assumption and assignment of the Assumed Contracts, substantially in the form attached to the Agreement as Exhibit E (the “Assumption and Assignment Notice”); and, (E) granting related relief;

And the Court having determined at the hearing held on January 22, 2007 (the “Hearing”) that the relief requested in the Motion is in the best interests of the Debtors, their estates, their creditors and other parties-in-interest;

And upon the record of the Hearing; and the Court having considered all of the evidence presented, testimony adduced, and arguments of counsel made at the Hearing; and after due deliberation thereon, and good cause appearing therefor, it is hereby

FOUND, CONCLUDED AND DECLARED THAT:

A. This Court has jurisdiction over this matter and over the property of the Sellers and their respective bankruptcy estates pursuant to 28 U.S.C. §§ 157(a) and 1334;

B. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A), (M) and (O);

C. Good and sufficient notice of the relief sought in the Motion has been given in accordance with Fed. R. Bankr. P. 2002(a)(2), (c)(1), (i) and (k) and 6004(a), and no other or further notice is or shall be required. A reasonable opportunity to object or be heard regarding the relief requested in the Motion (including, without limitation, with respect to the proposed Bidding Procedures, the Termination Fee and the other relief sought by the Motion) has been afforded to all parties-in-interest;

D. The Sellers’ (i) Bidding Procedures, (ii) proposed notice of the Bidding Procedures, the Auction and the Sale, and (iii) proposed procedures with respect to assumption and assignment of the Assumed Contracts, as described or referred to in the Agreement, are appropriate and reasonably calculated to provide all interested parties with timely and proper notice thereof;

E. The Bidding Procedures in the form as annexed hereto as Exhibit A are fair, reasonable and appropriate and are designed to maximize the recovery on the Sellers’ businesses, the Acquired Assets and the Assumed Contracts;

F. The Sellers have demonstrated a sound business justification for authorizing the payment of the Termination Fee to the Purchaser under the circumstances, timing and procedures set forth in the Motion. The Termination Fee was negotiated by the parties in good faith and at arms’ length and payment of the Termination Fee, in accordance with the terms set forth in the Agreement, is fair and reasonable;

G. The Sellers’ payment of the Termination Fee to the Purchaser, in accordance with the terms set forth in the Agreement, and as described in open Court at the Hearing, is (a) an actual and necessary cost and expense of preserving the Sellers’ estates within the meaning of Bankruptcy Code section 503(b), (b) of substantial benefit to the Sellers’ estates, (c) reasonable and appropriate, including in light of the size and nature of the Sale and the efforts that have been and will be expended by the Purchaser notwithstanding that the proposed Sale is subject to higher or better offers, and (d) necessary to ensure that the Purchaser will continue to pursue its proposed acquisition of the Acquired Assets;

H. The Sellers agreed to pay the Termination Fee, in accordance with the conditions set forth in the Agreement, in order to induce the Purchaser to hold open its offer to enter into the Agreement and purchase the Acquired Assets. The Purchaser is unwilling to hold open its offer to purchase the Acquired Assets in accordance with the Agreement, unless it is assured payment of the Termination Fee in accordance with the conditions set forth in the Agreement. Such assurance to the Purchaser has had the effect of promoting and not chilling competitive bidding, inducing the Purchaser’s bid that otherwise would not have been made, and without which bidding would have been and would continue to be limited. Further, assuring the Purchaser that it will receive the Termination Fee if certain conditions set forth in the Agreement are met has induced the Purchaser to research the Sellers’ businesses and submit a bid which will serve as a minimum or floor bid for all of the Acquired Assets on which all other bidders may rely, thus increasing the likelihood of receiving the maximum value of the Acquired Assets;

I. Absent authorization of the payment of the Termination Fee in accordance with the terms of the Agreement, the Sellers may be unable to receive the maximum value of the Acquired Assets. In light of the benefits to the Sellers’ estates realized by having a fully negotiated Agreement, the expense and risk incurred by the Purchaser in reaching such Agreement, and the size of the Termination Fee in relation to the value of the transaction, ample support exists for this Court to authorize the Sellers to pay the Termination Fee; and

J. The entry of this Order is in the best interests of the Sellers, their estates, their creditors and other parties-in-interest; and it is therefore

1 The Debtors are the following entities: Enesco Group Inc., Enesco International Limited, and Gregg Gift Manufacturing, Inc.

2Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Agreement (as hereinafter defined) or in the Bidding Procedures (as hereinafter defined), as applicable.

ORDERED, ADJUDGED AND DECREED THAT:

General Provisions

1. This Bidding Procedures Order constitutes the Bankruptcy Court’s finding of facts and conclusions of law pursuant to Bankruptcy Rule 7052.

2. The relief requested in the Motion is granted, as set forth herein.

3. All objections to entry of this Bidding Procedures Order or to the relief provided herein and in the Motion that have not been withdrawn, waived, resolved or settled, and all reservations of rights included therein, are hereby overruled on the merits, with the exception of the reservation of rights of the Creditors’ Committee made on the record at the hearing.

Bidding Procedures

4. The Bidding Procedures, substantially in conformity with those attached hereto as Exhibit A, are hereby approved and shall be binding upon all parties-in-interest in this case.

5. Any Qualified Bidder desiring to submit a Bid for the Acquired Assets shall submit it in accordance with the Bidding Procedures not later than 11:00 a.m. (Central time) on February 12, 2007 (the “Bid Deadline”). The Auction, if necessary, shall be held on February 14, 2007, at the time and place provided for, and in accordance with, the Bidding Procedures.

6. Payment of the Breakup Fee shall be made by Sellers prior to or contemporaneously with the consummation of an Alternative Transaction and payment of the Expense Reimbursement shall be made by Sellers in accordance with the Agreement; provided that Section 4.6(b) and (d) of the Agreement are hereby modified to provide that the Termination Fee shall constitute a superpriority administrative expense obligation of each of the Sellers’ estates, subject only to the Retained Professionals Carveout (as defined in the DIP Financing Agreement); further provided that Section 4.6(c) of the Agreement is hereby modified to provide that the Breakup Fee is 2.5% of the Aggregate Consideration.

Sale Hearing

7. The Sale Hearing shall be held before this Court on February 15, 2007 at 9:30 a.m. (Central time), or as soon thereafter as counsel and interested parties may be heard.

8. The Sale Hearing may, subject to the consent of the Purchaser (which consent shall not be unreasonably withheld), and with notice to the Creditors’ Committee, be adjourned, from time to time, without further notice to creditors or parties-in-interest other than by announcement of said adjournment before this Court or on this Court’s calendar on the date scheduled for said hearing.

Objections

9. Objections, if any, to the Sale, including objections with respect to the proposed Cure Amount (defined below), if any, and adequate assurance of future performance of obligations to counterparties to executory contracts and unexpired leases to be assumed and assigned to the Purchasers must (a) be in writing; (b) set forth the nature of the objector’s claims against or interests in the Sellers’ estates, and the basis for the objection and the specific grounds therefor; (c) comply with the Bankruptcy Rules and the Local Bankruptcy Rules and Orders of this Court; (d) be filed with the Bankruptcy Court for the Northern District of Illinois and be served upon the Sellers, the Purchaser, any statutory committee appointed in the Sellers’ bankruptcy cases, and the United States Trustee for the Northern District of Illinois, so as to be RECEIVED no later than 4:00 p.m. (Central time) on February 12, 2007 (the “Objection Deadline”). Only timely filed and served responses, objections, or other pleadings will be considered by this Court at the Sale Hearing. The failure of any person or entity to timely file its objection shall be a bar to the assertion, at the Sale Hearing or thereafter, of any objection to the Motion, the Sale or the consummation and performance of the Agreement.

Notice

10. Both (i) the Auction and Sale Notice, and (ii) the Assumption and Assignment Notice are hereby approved in all respects.

11. Notice of the Bidding Procedures, the Auction, the Sale Hearing and the remainder of the relief requested in the Motion, as described in the Motion, shall be good and sufficient notice thereof, and any requirements for other or further notice shall be waived and dispensed with pursuant to Bankruptcy Rules 2002, 6004, 6006 and 9007 and pursuant to this Court’s powers under Bankruptcy Code section 105, if, within one (1) day of the entry of this Bidding Procedures Order, or as soon thereafter as is practicable, the Sellers shall have caused a copy of the Motion, this Bidding Procedures Order, the Bidding Procedures, and the Agreement (without Schedules and Exhibits) to be served on the following persons by first class mail with postage prepaid or by hand delivery: (i) any statutory committee appointed in the Sellers’ chapter 11 bankruptcy cases; (ii) all federal, state and local regulatory or taxing authorities or recording offices which have a reasonably known interest in the relief requested by the Motion, including but not limited to all such taxing authorities or recording offices in the jurisdictions in which the Sellers have offices or other facilities or in which any of the Acquired Assets are located; (iii) all parties having expressed within the past six (6) months a bona fide interest in acquiring the Acquired Assets; (iv) all entities (or counsel therefor) known to have asserted any lien, claim, encumbrance, right of refusal, or other interest in or upon the Sellers or the Acquired Assets; (v) the United States Attorney’s Office; (vi) the Internal Revenue Service; (vii) the Securities and Exchange Commission; (viii) the United States Trustee for the Northern District of Illinois; and (vii) all entities who have filed a notice of appearance and request for service of papers in the Cases pursuant to Bankruptcy Rule 2002. Parties can obtain copies of the non-confidential Schedules and Exhibits to the Agreement by contacting Vedder Price Kaufman & Kammholz, P. C., (312) 609-5005, jmcenroe@vedderprice.com.

12. As soon as practicable after entry of this Bidding Procedures Order, the Sellers shall cause the Auction and Sale Notice to be published once each in The New York Times (national edition) and The Chicago Tribune pursuant to Bankruptcy Rules 2002(l) and 9008. Such notice, together with the notice prescribed in paragraph 11 above, is good and proper notice to all interested parties, including those whose identities are unknown to the Sellers.

Assumption and Assignment of Executory Contracts and Unexpired Leases

13. Within one (1) day of the entry of this Bidding Procedures Order, or as soon as thereafter as is practicable, the Sellers shall serve the Assumption and Assignment Notice on the counterparties to the Assumed Contracts, any statutory committee appointed in the Sellers’ bankruptcy cases, and the United States Trustee. The Assumption and Assignment Notice shall contain the following information: (a) the Sellers’ intent to assume and assign the Assumed Contracts to the Purchaser or the party whose bid for the Acquired Assets is approved by the Court effective as of the closing; (b) the amount necessary to satisfy the cure requirements of section 365 of the Bankruptcy Code (the “Cure Amount”); (c) that the counterparties to the Assumed Contracts shall have until the Objection Deadline to object to the assumption and assignment of the Assumed Contracts or the Cure Amount; (d) that any objection must comply with the objection procedures set forth in the Assumption and Assignment Notice.

14. Any counterparty to an Assumed Contract who does not file an objection to the assumption and assignment of such Assumed Contract, after having received actual or constructive notice of such assumption and assignment, shall be deemed to have waived and released any right to assert an objection to the assumption and assignment of any Assumed Contract and to have otherwise consented to such assumption and assignment and such Cure Amount and shall be forever barred and estopped from asserting or claiming against the Sellers, the Purchaser or the Successful Bidder or any other assignee of the relevant Assumed Contract that any additional amounts are due or conditions to assumption and assignment must be satisfied (other than unperformed year-end adjustments or audits) under such Assumed Contract for the period prior to the date of the Sale Hearing and, absent any subsequent defaults by the Purchaser.

15. A properly filed and served objection to an Assumption and Assignment Notice shall reserve such objecting party’s rights against the Sellers with respect to the relevant cure objection, but shall not constitute an objection to the remaining relief requested in the Sale Motion.

Miscellaneous

16. The Sellers are hereby authorized and empowered to take such steps, expend such sums of money and do such other things as may be necessary to implement and effect the terms and requirements established by this Bidding Procedures Order.

17. This Bidding Procedures Order shall be binding upon, and inure to the benefit of the Sellers, the Purchaser and their respective successors and assigns, including any chapter 7 or 11 Trustee or other fiduciary appointed for any of the Sellers’ estates whether in the above-captioned cases, subsequent bankruptcy cases or upon dismissal of any of the Sellers’ bankruptcy cases.

18. As provided by Bankruptcy Rules 6004(g) and 6006(d), this Bidding Procedures Order shall not be stayed for ten (10) days after the entry thereof and shall be effective and enforceable immediately upon the entry thereof.

19. This Court shall retain jurisdiction over any matters related to or arising from the implementation of this Bidding Procedures Order, including, but not limited to the right to amend this Bidding Procedures Order.


Dated:	Chicago, Illinois January 22, 2007

		/s/ Honorable Benjamin A. Goldgar

Honorable A. Benjamin Goldgar

United States Bankruptcy Judge

Bidding Procedures

Set forth below are the bidding procedures (the “Bidding Procedures”) to be employed with respect to the Asset Purchase Agreement, dated as of January 21, 2007 (the “Agreement”), by and among Enesco Group, Inc. and Gregg Gift Manufacturing, Inc., as sellers (collectively, the “Sellers”), and EGI Acquisition LLC (the “Purchaser”), concerning, among other things, the sale, conveyance, assignment and transfer of the Acquired Assets.3 The following Bidding Procedures and related bid protections are designed to reimburse the Purchaser for its efforts and agreements to date and to facilitate a full and fair process designed to maximize the value of the Acquired Assets for the benefit of the Sellers’ estates and creditors.

The Sale Hearing

The sale of the Acquired Assets of the Sellers under the Agreement and the other transactions contemplated thereby (collectively, the “Sale”) are subject to competitive bidding as set forth herein and to approval by the United States Bankruptcy Court for the Northern District of Illinois (the “Bankruptcy Court”) at a hearing (the “Sale Hearing”) pursuant to Bankruptcy Code sections 105, 363 and 365. Unless the Agreement has been terminated, at the Sale Hearing the Sellers shall seek entry of an order, among other things, authorizing and approving the Sale to the Purchaser or the Successful Bidder (as hereinafter defined) pursuant to the terms and conditions of the Agreement (the “Sale Approval Order”). The Sale Hearing may, subject to the prior consent of the Purchaser (which consent shall not be unreasonably withheld) and with notice to the official committee of unsecured creditors (the “Creditors’ Committee”), be adjourned or rescheduled without notice, other than by an announcement of the adjourned date at the Sale Hearing.

Determination of the Sellers

The Sellers shall (i) in consultation with the Creditors’ Committee, determine whether any person, other than the Purchaser, is a Qualified Bidder (as hereinafter defined), (ii) coordinate the efforts of Qualified Bidders, if any, in conducting their respective due diligence investigations regarding the Sellers, their businesses or the Acquired Assets generally, (iii) receive Bids (as hereinafter defined) from Qualified Bidders, if any, and (iv) negotiate any Bid made to purchase the Acquired Assets (collectively, the “Bidding Process”). Any person who wishes to participate in the Bidding Process must be a Qualified Bidder. Neither the Sellers nor their representatives shall be obligated to furnish any information of any kind whatsoever relating to the Sellers, their business or the Acquired Assets to any person who is not a Qualified Bidder.

The Sellers shall, in consultation with the Creditors’ Committee, and subject to the prior consent of the Purchaser (which consent shall not be unreasonably withheld), have the right to amend the rules set forth herein for the Bidding Process or adopt such other written rules for the Bidding Process, which are not inconsistent with the terms of the Agreement or any Bankruptcy Court order, including the Bidding Procedures Order which, in the Sellers’ reasonable judgment, will better promote the goals of the Bidding Process; provided, however, that no material amendment to these Bidding Procedures shall be made without either (i) consent of the Creditors’ Committee or (ii) an order from the Bankruptcy Court.

The Sellers may, in consultation with the Creditors’ Committee, (a) determine, in their business judgment, which Qualified Bid (defined below), if any, is the highest or otherwise best offer for the Acquired Assets and (b) reject, at any time before entry of an order of the Bankruptcy Court approving a Qualified Bid, any Bid that is (i) inadequate or insufficient, (ii) not in conformity with the requirements of the Bankruptcy Code, these Bidding Procedures, the Bidding Procedures Order, or the terms and conditions of the Agreement, or (iii) contrary to the best interests of the Sellers, their estates, their creditors and other parties-in-interest; provided, however, that if the Purchaser makes the only Qualified Bid or the Purchaser makes the Successful Bid (defined below), the foregoing provisions of this sentence shall be inoperative.

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If the Sellers do not receive any Bid, or if after the Auction the Purchaser is declared the Successful Bidder, the Sellers shall report the same to the Bankruptcy Court, and shall proceed with the Sale Hearing and request entry of the Sale Approval Order and the sale and assignment of the Acquired Assets to the Purchaser as provided by the Agreement.

Participation Requirements

In order to participate in the Bidding Process, each person (each, a “Potential Bidder”) other than the Purchaser, which is deemed to be a Qualified Bidder for all purposes, must deliver (unless previously delivered) to the Sellers:

20. An executed confidentiality agreement provided by the Sellers, which shall be no more favorable in the aggregate to the Potential Bidder than that delivered by the Purchaser;

21. Current audited financial statements of (A) the Potential Bidder, or (B) if the Potential Bidder is an entity formed for the purpose of acquiring the Acquired Assets of the Sellers, current audited financial statements of the equity holder(s) of the Potential Bidder who shall either guarantee the obligations of the Potential Bidder or provide such other form of financial disclosure and credit-quality support information or enhancement reasonably acceptable to the Sellers and their advisors; and

22. A preliminary (non-binding) proposal regarding (a) the purchase price range, (b) any assets expected to be excluded, (c) the structure and financing of the transaction (including the amount of equity to be committed and sources of financing), (d) any anticipated regulatory approvals required to close the transaction, the anticipated time frame and any anticipated impediments for obtaining such approvals, (e) any conditions to closing that it may wish to impose in addition to those set forth in the Agreement, and (f) the nature and extent of additional due diligence it may wish to conduct.

As promptly as practicable after a Potential Bidder delivers all of the materials required by subparagraphs (i), (ii), and (iii) above, the Sellers, in consultation with the Creditors’ Committee, shall determine whether the Potential Bidder is a Qualified Bidder, and shall notify the Potential Bidder, and the Purchaser in writing. The Sellers will endeavor to make such determination within 24 hours of receiving the materials set forth in subparagraphs (i)-(iii) above. The Sellers will provide all information received pursuant to the above subparagraphs to the Creditors’ Committee regardless of whether the Sellers determine that the Potential Purchaser providing such information is a Qualified Bidder.

At the same time that the Sellers notify the Potential Bidder that it is a Qualified Bidder, the Seller shall provide to the Qualified Bidder (i) access to the same confidential evaluation materials provided by the Sellers to the Purchaser containing financial information and other data relative to the Acquired Assets sought to be acquired and/or such other information as the Qualified Bidder may reasonably request (provided, that all such additional information shall also be provided to the Purchaser), and (ii) a copy of the Agreement, marked to delete references to the Termination Fee (as defined below), which is payable only to the Purchaser; provided, however, that notwithstanding clause (i) of this sentence, the Sellers shall not be required to provide confidential or proprietary information to a Potential Bidder or a Qualified Bidder who is a competitor of the Sellers if the Sellers and their advisors, in consultation with the Creditors’ Committee, reasonably believe that disclosure of such information would be detrimental to the interests and operations of the Sellers or the Purchaser as the proposed acquirer of the Acquired Assets. Notwithstanding the foregoing, the Sellers shall attempt to consensually resolve disclosure disputes with Qualified Bidders using the protocols that are customary and usual for transactions such as those contemplated by the Agreement.

Due Diligence

Only Qualified Bidders may conduct due diligence. Due Diligence access may include management presentations as may be scheduled by the Sellers, access to physical and online data rooms, on-site inspections and such other matters which a Qualified Bidder may request and as to which the Sellers, in their reasonable exercise of discretion, may agree. The Sellers will designate employee(s) or other representative(s) to coordinate all reasonable requests for additional information and due diligence access from a Qualified Bidder. If any Qualified Bidder receives any information related to the Acquired Assets from the Sellers not previously given to the Purchaser, the Sellers shall immediately provide the Purchaser with such information. The Debtors will endeavor to provide all Qualified Bidders with the same information related to the Acquired Assets. The Sellers may, in their discretion, coordinate due diligence efforts such that multiple Qualified Bidders have simultaneous access to due diligence materials and/or simultaneous attendance at management presentations or on-site inspections. Neither the Sellers nor any of their affiliates (or any of their respective representatives) are or shall be obligated to furnish any information relating to the Business to any person other than to Qualified Bidders. Qualified Bidders are advised to exercise their own discretion before relying on any information regarding the Business provided by anyone other than the Sellers or their representatives.

Bid Deadline

A Qualified Bidder that desires to make a Bid shall deliver written copies of its Bid (defined below) to (i) Vedder Price Kaufman & Kammholz, P. C., 222 N. LaSalle Street, Suite 2600, Chicago, Illinois 60601, Attention: John McEnroe, Esq.; (ii) Shaw Gussis Fishman Glantz Wolfson & Towbin LLC, 321 North Clark Street, Suite 800, Chicago, IL 60610, Attention: Brian L. Shaw, Esq., (iii) Skadden, Arps, Slate, Meagher & Flom LLP, 333 W. Wacker Drive, Chicago, IL 60606, Attention: George Panagakis, Esq.; and (iv) Enesco Group Inc., 225 Windsor Drive, Itasca, IL 60143, Attention: Marie Graul, not later than 11:00 a.m. (Central time) on February 12, 2007 (the “Bid Deadline”). Upon receipt for each Bid, counsel for the Sellers shall distribute a copy of the Bid by facsimile transmission, personal delivery or reliable overnight courier service in accordance with the Agreement to counsel for (i) the Purchaser, (ii) counsel for any statutory committees appointed in the Sellers’ Chapter 11 cases, and (iii) the office of the United States Trustee.

Bid Requirements

“Bid” shall mean one or more letters from one or more Persons whom the Sellers, in consultation with the Creditors’ Committee, have determined, in the exercise of their fiduciary duties, are financially and otherwise able to consummate the purchase of the Acquired Assets (a “Qualified Bidder”) stating that (i) such Qualified Bidder offers to purchase all of the Acquired Assets upon the terms and conditions set forth in a copy of the Agreement, together with all Exhibits and Schedules hereto (the “Definitive Sale Documentation”), marked to show those amendments and modifications to the Definitive Sale Documentation, including, but not limited to, price and the time of closing, that such Qualified Bidder proposes, (ii) such Qualified Bidder is prepared to enter into and consummate the transaction not later than 45 days from the date of execution of the Agreement, and (iii) each such Qualified Bidder’s offer is binding until 48 hours after the earlier of (X) the closing of a purchase and sale of the Acquired Assets, and (Y) the date that is 90 days after submission of the Qualified Bid to the Sellers (or such later date specified in the Qualified Bid). A Qualified Bidder (other than the Purchaser) shall accompany its Bid with written evidence of a commitment for financing or other evidence of financial ability to consummate the transaction satisfactory to the Sellers and a deposit in an amount equal to or greater than 5.0% of the purchase price proposed in such Bid in the form of a bank check (which may be substituted by a wire transfer pursuant to instructions to be issued by the Sellers upon request) (the “Good Faith Deposit”).

The Sellers, in consultation with the Creditors’ Committee, will consider a Bid as a higher or better offer (“Qualified Bid”) only if in the Sellers’ business judgment the Bid meets the following requirements:

it complies in all material respects with these Bidding Procedures;

23. it is a proposal which the Sellers determine, in their good faith opinion, is not materially more burdensome or conditional than the terms of the Agreement and has a value greater than or equal to the sum of (x) the value, as reasonably determined by the Sellers and/or their advisors, of Purchaser’s offer4 plus (y) the amount of the Termination Fee (as described in Section 4.6 of the Agreement) plus (z) in the case of the initial Qualified Bid, $500,000;

24. it is not conditioned upon the Qualified Bidder obtaining financing or on unperformed due diligence;

25. it proposes an all cash purchase price, but may include the assumption of the Sellers’ liabilities;

26. it is accompanied by satisfactory evidence of committed financing or other ability to perform; and

27. it is accompanied by a deposit (by means of a certified bank check from a U.S. bank or by wire transfer) equal to or greater than 5.0% of the proposed purchase price.

Only Qualified Bids will qualify for consideration at the Auction (as defined below). If the Sellers do not receive any Qualified Bids, the Sellers will report the same to the Bankruptcy Court and will proceed with a sale and assignment of the Acquired Assets to Purchaser pursuant to the terms of the Agreement. The Agreement executed by the Purchaser shall constitute a Qualified Bid for all purposes.

Auction

If Sellers receive any Qualified Bids, other than that of the Purchaser, Sellers will conduct an auction (the “Auction”) at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, on February 14, 2007, beginning at 11:00 a.m. (Central time) or such later time or other place as Sellers shall notify all Qualified Bidders who have submitted Qualified Bids. Only the Purchaser, any statutory committees appointed in the Sellers’ Chapter 11 cases, and those Qualified Bidders who have timely submitted Qualified Bids, and each of their respective advisors, shall be entitled to attend the Auction, and only the Purchaser and the Qualified Bidders shall be entitled to make any subsequent Qualified Bids at the Auction. Bidding at the Auction will continue until such time as the highest and best Qualified Bid is determined.

At least one Business Day prior to the Auction, the Sellers will give the Purchaser and all other Qualified Bidders a copy of the highest and best Qualified Bid received (the “Initial Successful Bid”) and copies of all other Qualified Bids. In addition, Sellers will inform the Purchaser, each Qualified Bidder who has expressed its intent to participate in the Auction and the Creditors’ Committee of the identity of all Qualified Bidders entitled to participate in the Auction.

Based upon the terms of the Bids received, the number of Qualified Bidders participating in the Auction, and such other information as the Sellers determine is relevant, the Sellers, in their reasonable judgment, and in consultation with the Creditors’ Committee, may conduct the Auction in the manner they determine will achieve the maximum value for the Acquired Assets, subject to and consistent with these Bidding Procedures and the Bidding Procedures Order.

At the Auction, Qualified Bidders will be permitted to increase their Bids, and all Bids shall be made and received in one room on an open basis. All participating Qualified Bidders shall be entitled to be present for all bidding with the understanding that the true identity of each participating Qualified Bidder shall be fully disclosed to all other Qualified Bidders and that all material terms of each Bid will be fully disclosed to all other participating Qualified Bidders throughout the entire Auction. The bidding shall be in increments of not less than $100,000 greater than the value proposed in the immediately preceding Qualified Bid that the Sellers have determined to be the highest and/or best Qualified Bid.

Upon conclusion of the Auction, the Sellers, in consultation with the Creditors’ Committee, shall identify the Qualified Bid that in their business judgment is the highest or best Qualified Bid (the “Successful Bid”). The Sellers shall notify all Qualified Bidders at the Auction, prior to its adjournment, of the name of the Qualified Bidder having made the Successful Bid (the “Successful Bidder”). At the Sale Hearing, the Sellers shall present the Successful Bid to the Bankruptcy Court for approval.

If the Sellers do not receive any Qualified Bids other than that of the Purchaser by the Bid Deadline, then the Purchaser shall be deemed the Successful Bidder and the Sellers shall not hold the Auction.

Acceptance of Qualified Bids

Subject to Bankruptcy Court approval, the Sellers shall effect the Sale with the Successful Bidder. If the Successful Bidder fails to consummate an approved Sale because of a breach or a failure to perform on the part of such Successful Bidder, the otherwise best Qualified Bid shall be deemed to be the Successful Bid and the Sellers shall be authorized to effect the Sale to such bidder without further order of the Bankruptcy Court. The Sellers’ presentation to the Bankruptcy Court for approval of the Successful Bid does not constitute the Sellers’ acceptance thereof, except with respect to the Bid of the Purchaser as reflected in the Agreement (subject to higher or otherwise better Qualified Bids and subject to Bankruptcy Court approval). The Sellers have accepted other Qualified Bids only when such Qualified Bids have been approved by the Bankruptcy Court at the Sale Hearing.

The Sale Hearing

The Sale Hearing is presently scheduled to take place on February 15, 2007 at 9:30 a.m. (Central time) before the Honorable A. Benjamin Goldgar United States Bankruptcy Judge for the Northern District of Illinois. At the Sale Hearing, the Sellers will seek entry the Sale Approval Order, among other things, authorizing and approving the Sale (i) if no other Qualified Bid is received and accepted as the Successful Bid, to the Purchaser pursuant to the terms and conditions set forth in the Agreement, or (ii) if a Qualified Bid is received by the Sellers, to the Successful Bidder, as determined by the Sellers in accordance with the Bidding Procedures, pursuant to the terms and conditions set forth in the bid submitted by the Successful Bidder. The Sale Hearing, subject to the consent of the Purchaser (which consent shall not be unreasonably withheld), and with notice to the Creditors’ Committee, may be adjourned or rescheduled without notice other than by an announcement of the adjourned date at the Sale Hearing.

Failure to Consummate Purchase

If the Successful Bidder (other than the Purchaser) fails to consummate the Sale, and such failure is the result of a breach by the Successful Bidder, such Successful Bidder’s Good Faith Deposit shall be forfeited to the Sellers and, except to the extent provided such bidders’ marked agreement, the Sellers specifically reserve the right to seek all available damages from such person.

Return of Good Faith Deposit

The Good Faith Deposits of all Qualified Bidders shall be retained by the Sellers and held in escrow in an interest bearing account and all Qualified Bids will remain open, notwithstanding Bankruptcy Court approval of a sale pursuant to the terms of a Successful Bid by a Qualified Bidder, until 48 hours after the earlier of (X) the closing of the sale of the Acquired Assets, and (Y) the date that is 90 days after submission of the Qualified Bid to the Sellers (or such later date specified in the Qualified Bid) (the “Return Date”). On the Return Date, the Sellers shall return the Good Faith Deposits of all Qualified Bidders, except the Successful Bidder, with the accrued interest.

3 Capitalized terms not defined herein shall have the same meanings ascribed to them in the Agreement.

4 The Aggregate Consideration provided by the Purchaser in the Agreement is based on the amount outstanding under the Postpetition Loan Agreement . As of the date of the Sale Notice, the Aggregate Consideration would be $71,000,000.

Exhibit 99.3

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

(EASTERN DIVISION)


—x

In re	: :	Chapter 11
ENESCO GROUP, INC., et al.¹,	: :	Case No. 07-00565 Hon. A. Benjamin Goldgar

	:
Debtors.	: :	(Jointly Administered)

—x

NOTICE OF (i) PROPOSED SALE OF SUBSTANTIALLY ALL OF

SELLERS’ ASSETS; (ii) ASSUMPTION AND ASSIGNMENT OF CERTAIN CONTRACTS AND LEASES; (iii) ASSUMPTION
OF LIABILITIES;

AND (iv) OPPORTUNITY TO SUBMIT COMPETITIVE BIDS

PLEASE TAKE NOTICE THAT:

A. Pursuant to an order entered by the United States Bankruptcy Court for the Northern District of Illinois (the “Court”) on January 22, 2007 (the “Bidding Procedures Order”), a hearing (the “Sale Hearing”) will be held before the Honorable A. Benjamin Goldgar, United States Bankruptcy Judge, on February 15, 2007 at 9:30 a.m. (Central time) (the "Hearing Date”) in the United States Bankruptcy Court, Courtroom 613, 219 S. Dearborn, Chicago, Illinois 60604, to consider the motion (the “Motion”)² of the above-captioned debtors and debtors-in-possession (collectively, the “Debtors” ), for, among other things, an order (the “Sale Order”) authorizing (A) the sale (the "Sale”) of substantially all of the assets of Debtors Enesco Group, Inc. and Gregg Gift Manufacturing, Inc. (collectively, the “Sellers”), including the stock of certain non-debtor subsidiaries (collectively, the “Acquired Assets”) free and clear of all liens, claims, interests and encumbrances (collectively, “Interests”), except for the Assumed Liabilities and Permitted Exceptions, pursuant to an Asset Purchase Agreement by and among the Sellers and EGI Acquisition LLC (the “Purchaser”), dated as of January 21, 2007 (the "Agreement”), or such higher or better offer as is received by the Sellers, (B) the Sellers’ assumption and assignment to the Purchaser of certain executory contracts and unexpired leases, pursuant to and as described in the Agreement (collectively, the “Assumed Contracts”), free and clear of all Interests, and (c) the assumption by the Purchaser of certain liabilities of the Sellers (the “Assumed Liabilities”), pursuant to and as described in the Agreement, in connection with the Sale. The Sale Hearing may be adjourned from time to time without further notice other than by announcement of said adjourned date at the Sale Hearing.

B. Upon the terms and subject to the conditions of the Agreement, at the Closing, the Sellers will sell, assign, transfer, convey and deliver to Purchaser, free and clear of all Interests (other than Permitted Exceptions), and Purchaser will purchase, acquire and accept from the Sellers, all of the Sellers’ legal and beneficial right, title and interest in and to all of the Acquired Assets. Summaries of certain material terms and conditions of the Agreement are generally described in paragraphs C.1 through C.3 below. The summaries are intended to give general notice of the transactions contemplated by the Agreement and the Motion and do not contain complete information. Those interested in more complete information should review the Agreement and the Motion in their entirety.

PLEASE TAKE FURTHER NOTICE THAT:

C. The following is a summary of certain material terms and conditions of the Agreement (unless noted otherwise, all section references are to the Agreement):³

1. Consideration. The Purchaser will acquire the Acquired Assets for the Aggregate Consideration of: (a) an amount in cash equal to the principal amount plus interest, fees and any other expenses of the DIP Note outstanding as of the Closing Date (the “Purchase Price”), (b) the assumption of the Assumed Liabilities, (c) forgiveness of any and all Pre-Petition Liabilities of the Sellers owed to Affiliates of the Purchaser, including without limitation a certain deposit in the amount of $100,000 funded by an Affiliate of the Purchaser for the benefit of Parent prior to the date hereof and (d) $600,000 in respect of administration expenses incurred by Sellers in the Bankruptcy Case (the “Wind-down Fund”). The Aggregate Consideration provided by the Purchaser is based, in part, on the amount outstanding under the DIP Note. As of the date of this Sale Notice, the Aggregate Consideration would be approximately $71,000,000.

2. Sale is “Free and Clear.” Upon the terms and subject to the conditions of the Agreement, at the Closing, the Sellers will sell, assign, transfer, convey and deliver to Purchaser, free and clear of all Interests (other than Permitted Exceptions), and Purchaser will purchase, acquire and accept from the Sellers, all of the Sellers’ legal and beneficial right, title and interest in and to all of the Acquired Assets.

3. Termination Fee. The Sellers have been authorized and directed to pay to the Purchaser:

(i) in the event the Agreement is terminated pursuant to Section 4.4(a), 4.4(c), 4.4(e), 4.4(h), 4.4(i)(ii) or 4.4(i)(iii) thereof, to the extent not previously reimbursed, an amount equal to the reasonable, out-of-pocket documented costs and expenses (including, without limitation, the fees and expenses of outside counsels, financial advisors and other consultants, including employees, agents and representatives of Tinicum Incorporated, and the HSR Act filing fee or other fees paid in connection with any notices or filings made pursuant to other Antitrust Laws) incurred by the Purchaser and/or its Affiliates in connection with its due diligence investigation of the Business and the negotiation and execution of the Agreement and furtherance of the transactions contemplated hereby, up to a maximum amount of costs and expenses equal to 0.5% of the Aggregate Consideration (the “Expense Reimbursement”); and

(ii) in the event that: (A) the Agreement is terminated pursuant to Section 4.4(h) or 4.4(i)(iii)(a) thereof, and (B) within 12 months following the date of such termination, one or more Sellers or their respective Subsidiaries sells, transfers, leases or otherwise disposes, directly or indirectly, including through an asset sale, stock sale, merger, reorganization or other similar transaction (by any Seller or any of their Subsidiaries or otherwise), all or a any portion of the Equity Securities of any Seller or any of their Subsidiaries engaged in the Business or all or a any portion of the Purchased Assets or the assets of the Foreign Subsidiaries (or agrees to do any of the foregoing) in a transaction or series of transactions to or with any party or parties other than Purchaser or any of its Affiliates (an “Alternative Transaction”), an amount equal to 2.5% of the Aggregate Consideration (the “Breakup Fee” and, together with the Expense Reimbursement, the “Termination Fee”).

PLEASE TAKE FURTHER NOTICE THAT:

D. Objections (if any) to the Sale Order must (a) be in writing; (b) set forth the nature of the objector’s claims against or interests in the Sellers’ estates, and the basis for the objection and the specific grounds therefor; (c) comply with the Bankruptcy Rules and the Local Bankruptcy Rules and Orders of this Court; (d) be filed with the Clerk of the Bankruptcy Court for the Northern District of Illinois (Eastern Division) and served upon the Sellers, the Purchaser, any statutory committee appointed in the Sellers’ bankruptcy cases, and the United States Trustee for the Northern District of Illinois, so as to be actually RECEIVED not later than 4:00 p.m. (Central Time) on February 12, 2007 (the “Sale Objection Deadline”). Only timely filed and served responses, objections, or other pleadings will be considered by the Court at the Sale Hearing. The failure of any person or entity to timely file its objection shall be a bar to the assertion, at the Sale Hearing or thereafter, of any objection to the Motion, the Sale or the consummation and performance of the Agreement (including, without limitation, the assumption and assignment of the Assumed Contracts).

BIDDING PROCEDURES

E. The Sellers will only consider Qualified Bids from Qualified Bidders. To be a “Qualified Bid,” the Bid must, among other things:

(a) comply in all material respects with the Bidding Procedures;

(b) be a proposal which the Sellers determine, in their good faith opinion, is not materially more burdensome or conditional than the terms of the Agreement and has a value greater than or equal to the sum of (x) the value, as reasonably determined by the Sellers and/or their advisors, in consultation with the Creditors’ Committee, of Purchaser’s offer plus (y) the amount of the Termination Fee (as described in Section 4.6 of the Agreement) plus (z) in the case of the initial Qualified Bid, $500,000;

(d) propose an all cash purchase price, but may include the assumption of the Sellers’ liabilities;

(e) be accompanied by satisfactory evidence of committed financing or other ability to perform;

(f) be accompanied by a deposit (by means of a certified bank check from a U.S. bank or by wire transfer) equal to or greater than 5.0% of the proposed purchase price;

(g) be accompanied by such other information reasonably requested by the Sellers; and

(h) be submitted on or before 11:00 a.m. (Central Time) on February 12, 2007 (the “Bid Deadline”). The Sellers will immediately distribute by facsimile transmission, personal delivery or reliable overnight courier service in accordance with the current form of the Agreement, a copy of each Bid upon receipt to counsel to Purchaser.

F. Bid Deadline; Place of Delivery. Any Qualified Bidder desiring to submit a Bid for the Acquired Assets shall submit it to (i) Vedder Price Kaufman & Kammholz, P. C., 222 N. LaSalle Street, Suite 2600, Chicago, IL 60601, Attention: John McEnroe, Esq., (ii) Shaw Gussis Fishman Glantz Wolfson & Towbin LLC, 321 North Clark Street, Suite 800, Chicago, IL 60610, Attention: Brian L. Shaw, Esq. (iii) Skadden, Arps, Slate, Meagher & Flom LLP, 333 W. Wacker Drive, Suite 2100, Chicago, IL 60606, Attention: George N. Panagakis, Esq.; and (iv) Enesco Group Inc., 225 Windsor Drive, Itasca, IL 60143, Attention: Marie Meisenbach Graul, prior to the Bid Deadline.

AUCTION: SUBMISSION OF BID TO COURT; SALE HEARING; REVIEW OF

DOCUMENTS

G. If the Sellers receive at least one Qualified Bid other than the Purchaser’s Qualified Bid, the Sellers will conduct an Auction of the Acquired Assets. The Sellers and the Purchaser propose that the Auction take place at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 333 W. Wacker Drive, Suite 2100, Chicago, Illinois 60606, or such other place as the Sellers may select, on February 14, 2007, beginning at 11:00 a.m. (Central time) or such later time or other place as Sellers shall notify all Qualified Bidders who have submitted Qualified Bids (the “Auction Date”). Only the Purchaser, any statutory committees appointed in the Sellers’ chapter 11 bankruptcy cases, and those Qualified Bidders who have timely submitted Qualified Bids, and each of their respective advisors, shall be entitled to attend the Auction, and only the Purchaser and the Qualified Bidders shall be entitled to make any subsequent Qualified Bids at the Auction. Bidding at the Auction will continue until such time as the highest or best Qualified Bid is determined.

At least one Business Day prior to the Auction Date, the Sellers shall deliver to the Purchaser and all other Qualified Bidders a copy of the highest and best Qualified Bid received, as determined in the Sellers’ business judgment, consistent with the Bidding Procedures (the “Initial Successful Bid”) and copies of all other Qualified Bids. In addition, the Sellers will inform the Purchaser and each Qualified Bidder who has expressed an intent to participate in the Auction of the identity of all Qualified Bidders entitled to participate in the Auction.

Bidding at the Auction will commence with the Initial Successful Bid. The bidding will proceed in increments of not less than $100,000 greater than the value proposed in the Initial Successful Bid or the immediately preceding Qualified Bid that the Sellers have determined to be the highest and/or best Qualified Bid, as applicable. All participating Qualified Bidders will be entitled to be present for all bidding with the understanding that the true identity of each participating Qualified Bidder will be fully disclosed to all other bidders and that all material terms of each Qualified Bid will be fully disclosed to all other participating Qualified Bidders throughout the entire Auction. Bidding will continue until such time as the highest or best offer for the purchase of the Acquired Assets is determined by the Sellers in their business judgment based on the factors set forth in the Bidding Procedures (the “Successful Bidder”). If the Successful Bidder fails to consummate an approved Sale because of a breach or a failure to perform on the part of such Successful Bidder, the otherwise best Qualified Bid shall be deemed to be the Successful Bid and the Sellers shall be authorized to effect the Sale to such bidder without further order of the Bankruptcy Court.

In the event that the Sellers fail to receive a Qualified Bid (other than the Purchaser’s Qualified Bid) by the Bid Deadline, the Sellers will not conduct the Auction and will proceed with the Sale to the Purchaser pursuant to the terms of the Agreement, subject to the approval of the Bankruptcy Court at the Sale Hearing.

ANYONE INTERESTED IN BIDDING ON THE ACQUIRED ASSETS SHOULD CONTACT THE UNDERSIGNED COUNSEL FOR THE SELLERS AS SOON AS POSSIBLE TO OBTAIN COPIES OF THE BID PROCEDURES ORDER (INCLUDING THE BIDDING PROCEDURES) AND THE AGREEMENT.

H. Document Review. Copies of the Agreement (as filed with the Court), the Bidding Procedures Order and the Motion are (a) publicly available, free of charge and without a password, online in electronic format at www.enescodocket.com, and (b) available from the undersigned counsel for the Sellers. All pleadings and orders of the Court are available online for a fee, on the Court’s website, http://www.ilnb.uscourts.gov, with a PACER password (to obtain a PACER password, go to the PACER website, http://pacer.psc.uscourts.gov). Those who are interested in reviewing the Exhibits and/or Disclosure Schedules to the Agreement, which constitute an integral parts of the Agreement and contain important information concerning, among other things, the Acquired Assets and Assumed Contracts, should contact the undersigned counsel for the Sellers to arrange for inspection of such Exhibits and/or Schedules. Certain Exhibits or Schedules may contain confidential and/or proprietary information and consequently may not be available for inspection.

I. This notice is qualified in its entirety by the Agreement and the Bidding Procedures Order. All persons and entities are urged to read carefully the Agreement and the Bidding Procedures Order and the provisions thereof, and the exhibits annexed thereto. To the extent this notice is inconsistent with the Agreement or the Bidding Procedures Order, the terms of the Agreement and the Bidding Procedures Order govern.

Dated:

Chicago, Illinois

January 22, 2007

VEDDER PRICE KAUFMAN

& KAMMHOLZ, P.C.

John McEnroe (No. 1835009)

222 North LaSalle Street, Suite 2600

Chicago, Illinois 60601

Phone:

312-609-7885

Fax:

312-609-5005

- and -


SKADDEN, ARPS, SLATE, MEAGHER,
& FLOM LLP
George N. Panagakis (No. 06205271)
333 W. Wacker Drive, Suite 2100
Chicago, Illinois 60606 Phone:			312-407-0700
Fax:			312-407-0411

Co-Counsel for Debtors and Debtors-in-Possession

¹ The Debtors are the following entities: Enesco Group Inc. (EIN: 04-1864170); Enesco International Limited (EIN: 04-2840664); and Gregg Gift Manufacturing, Inc. (EIN: 95-3762436).

² Capitalized terms used herein and not otherwise defined shall have the same meanings ascribed to them in the Motion or Agreement (as defined below), as applicable.

³ This summary is qualified in its entirety by reference to the Agreement. To the extent that there are any inconsistencies, the terms of the Agreement shall control.


Illinois	001-09267	04-1864170
_____________________ (State or other jurisdiction	_____________ (Commission	______________ (I.R.S. Employer
of incorporation)	File Number)	Identification No.)

225 Windsor Drive, Itasca, Illinois		60143
_________________________________ (Address of principal executive offices)		___________ (Zip Code)


	Enesco Group, Inc.

January 25, 2007	By:	/s/ Marie Meisenbach Graul

		Name: Marie Meisenbach Graul
		Title: Executive Vice President and Chief Financial Officer


Exhibit No.		Description

10.1		Asset Purchase Agreement, dated as January 21, 2007.
10.2		DIP Credit Agreement, dated as of January 23, 2007.
99.1		Press Release, dated January 23, 2007, announcing definitive asset sale and financing agreements with Tinicum Capital Partners II, L.P. and Wells Fargo Foothill, respectively.
99.2		Bankruptcy Court Order, dated January 22, 2007, establishing certain procedures governing the Company’s sale process.
99.3		Bankruptcy Court Notice, dated January 22, 2007, providing notice of the Company's sale and auction process.


With a copy to:

Schulte Roth & Zabel LLP

919 Third Avenue New York, NY 10022 Attn:		Marc Weingarten

Telephone:(212) 756-2000

Fax:		(212) 593-5955


Exhibit B-1 Exhibit C-1 Exhibit I-1 Exhibit L-1		Form of Budget Form of Compliance Certificate Form of Interim Financing Order Form of LIBOR Notice

Schedule A-1 Schedule C-1 Schedule D-1 Schedule P-1 Schedule R-1 Schedule 1.1 Schedule 2.7(a) Schedule 3.1 Schedule 4.5 Schedule 4.7(a) Schedule 4.7(b) Schedule 4.7(c) Schedule 4.7(d) Schedule 4.8(b) Schedule 4.8(c) Schedule 4.10 Schedule 4.13 Schedule 4.14 Schedule 4.15 Schedule 4.17 Schedule 4.19 Schedule 5.2 Schedule 5.3 Schedule 6.6		Agent’s Account Commitments Designated Account Permitted Liens Real Property Collateral Definitions Cash Management Banks Conditions Precedent Locations of Inventory and Equipment States of Organization Chief Executive Offices Organizational Identification Numbers Commercial Tort Claims Capitalization of Borrowers Capitalization of Borrowers’ Subsidiaries Litigation Benefit Plans Environmental Matters Intellectual Property Deposit Accounts and Securities Accounts Permitted Indebtedness Collateral Reporting Financial Statements, Reports, Certificates Nature of Business


Date of Report (Date of Earliest Event Reported):		January 21, 2007


Registrant’s telephone number, including area code:		630-875-5300


ARTICLE I DEFINITIONS
1.1 1.2		Certain Definitions. Other Definitional and Interpretive Matters.


ARTICLE II PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES
2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11		Purchase and Sale of Assets Excluded Assets Assumption of Liabilities Excluded Liabilities Transfer of the Foreign Shares Purchaser’s Election Right Further Conveyances and Assumptions Bulk Sales Laws Non-Assignability of Purchased Assets Purchaser Affiliate Acquisitions Insurance


ARTICLE III CONSIDERATION
3.1 3.2 3.3		Consideration. Payment of Purchase Price. Cure Costs.


ARTICLE IV CLOSING AND TERMINATION
4.1 4.2 4.3 4.4 4.5 4.6		Closing Date. Deliveries by Sellers. Deliveries by Purchaser. Termination of Agreement. Procedure Upon Termination. Effect of Termination.


ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLERS
5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 5.10 5.11 5.12 5.13 5.14 5.15 5.16 5.17 5.18 5.19 5.20 5.21 5.22 5.23 5.24 5.25		Organization and Good Standing. Foreign Subsidiaries Authorization of Agreement Conflicts; Consents of Third Parties Indebtedness; Surety Bonds. Title to Purchased Assets; Assets of Foreign Subsidiaries Real Property Intellectual Property Material Contracts Absence of Changes Suppliers and Customers Employee Benefits Foreign Employee Benefits Labor Relations. Litigation. Compliance with Laws. Financial Advisors. Environmental Matters. Inventory; Accounts Receivable Transactions with Related Parties Insurance Taxes Certain Business Practices Products Survival of Representations and Warranties


ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PURCHASER
6.1 6.2 6.3 6.4 6.5 6.6		Organization and Good Standing Authorization of Agreement. Conflicts; Consents of Third Parties. Financial Advisors. Adequate Assurance Regarding Executory Contracts. Survival of Representations and Warranties


ARTICLE VII BANKRUPTCY COURT MATTERS
7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8		Bankruptcy Actions. Actions of Sellers. Purchaser Actions. Adequate Assurance. Support of Sale Order. Assignment of Contracts. Cure Costs. Competing Transaction.


ARTICLE VIII COVENANTS
8.1 8.2 8.3 8.4 8.5 8.6 8.7 8.8 8.9 8.10 8.11 8.12 8.13 8.14 8.15 8.16 8.17 8.18 8.19		Access to Information and Investigation Conduct of the Business Pending the Closing Third-Party Consents Regulatory Approvals Assumed Liabilities. [Reserved]. Confidentiality. Preservation of Records Publicity [Reserved] Post-Closing Amounts Received and Paid Casualty and Condemnation Assistance in Transfer of Licenses, Permits and Registrations Interim Financial Statements Release. Notices of Certain Events Subsequent Events Reasonable Best Efforts D&O Insurance


ARTICLE IX EMPLOYEES AND EMPLOYEE BENEFITS
9.1		Employment.


ARTICLE X CONDITIONS TO CLOSING
10.1 10.2 10.3 ARTICLE XI TAXES 11.1 11.2		Conditions Precedent to Obligations of Purchaser. Conditions Precedent to Obligations of Sellers. Conditions Precedent to Obligations of Purchaser and Sellers. Transfer Taxes. Purchase Price Allocation.


ARTICLE XII MISCELLANEOUS
12.1 12.2 12.3 12.4 12.5 12.6 12.7 12.8 12.9 12.10		Expenses. Submission to Jurisdiction; Consent to Service of Process. Waiver of Right to Trial by Jury. Entire Agreement; Amendments and Waivers. Governing Law. Notices. Severability. Binding Effect; Assignment. Non-Recourse. Counterparts.


A B-1 B-2 C D E F G		Bill of Sale Assignment and Assumption Agreements Assignment of Leased Real Property Sale Motion Bidding Procedures Order Assumption and Assignment Notice Auction and Sale Agreement Sale Order


	ENESCO GROUP, INC.
	225 Windsor Drive
	Itasca, Illinois 60143
If to Administrative	Attn: Treasurer
Borrower:	Fax No.: (630) 875-5692
with copies to:	VEDDER, PRICE, KAUFMAN & KAMMHOLZ,
	P	.C.
	222 North LaSalle Street
	Chicago, Illinois 60601
	Attn: John T. McEnroe
	Fax No.: (312) 609-5005
If to Agent:	WELLS FARGO FOOTHILL, INC.
	One Boston Place
	Suite 1800
	Boston, Massachusetts 02108
	Attn: Enesco-Account Manager
	Fax No.: (617) 722-9485
with copies to:	GOLDBERG, KOHN, BELL, BLACK,
	ROSENBLOOM AND MORITZ, LTD.
	55 East Monroe Street
	Chicago, Illinois 60603
	Attn: Randall L. Klein
	Fax No.: (312) 332-2196