ASSET PURCHASE AGREEMENT

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EXHIBIT 10.1

ASSET PURCHASE AGREEMENT

by and among

LENOX GROUP INC.,

LENOX, INCORPORATED

and

LIFETIME BRANDS, INC.

DATED: July 19, 2007

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EXHIBITS

Exhibit A – Definitions

Exhibit 2.3 – Form of Escrow Agreement

Exhibit 3.3(b)(i) – Form of Bill of Sale

Exhibit 3.3(b)(ii) – Form of IP Assignment Agreement

Exhibit 3.3(b)(iii) – Form of Whiting/Durgin License

Exhibit 3.3(b)(iv) – Form of License Agreement (Gorham)

Exhibit 3.3(b)(v) – Form of License Agreement (Kirk Stieff)

Exhibit 3.3(b)(vi) – Form of Transition Services Agreement

Exhibit 3.3(b)(viii) – Form of License-Back Agreement

Exhibit 3.3(b)(ix) – Form of UPC Code Agreement

SCHEDULES

Schedule 1.1(i)

Schedule 1.1(ii)

Schedule 1.1(iii)(a)

Schedule 1.1(iii)(b)

Schedule 1.1(v)

Schedule 1.1(vi)

Schedule 1.1(vii)

Schedule 1.2

Schedule 4.3

Schedule 4.5

Schedule 4.7

Schedule 4.8

Schedule 4.11

Schedule 4.14

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ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT (“Agreement”) is entered into as of July 19, 2007, by and among Lenox Group, Inc., a Delaware corporation (“Parent”), Lenox, Incorporated, a New Jersey corporation (“Seller”), and Lifetime Brands, Inc., a Delaware corporation (“Buyer”).

WHEREAS, Seller owns and operates a business engaged in, among other things, the manufacturing and sale of sterling silver products consisting of sterling silver flatware and sterling silver giftware which is conducted under the Gorham and Kirk Stieff brand names and, on a limited made-to-order basis only, under the Whiting and Durgin trademarks (the “Business”). For the avoidance of doubt, the Business does not include any silver plated products of any kind, including but not limited to, silver plated flatware and silver plated giftware.

WHEREAS, Seller wishes to sell to Buyer, and Buyer wishes to purchase from Seller, certain assets of the Business as set forth in this Agreement, including (i) sterling silver finished goods inventory and work in process inventory, (ii) raw materials and samples used in the sale or manufacture of sterling silver products, (iii) pattern names, designs and copyrights of sterling silver products, (iv) books and records exclusively relating to the Business, and (v) certain fixed assets utilized at Seller’s factory in Pomona, New Jersey (the “Facility”) for production of sterling products.

WHEREAS, concurrently with the execution of this Agreement, Buyer and Seller are entering into three license agreements whereby Seller will grant Buyer an exclusive license to use each of the Gorham and Kirk Stieff brand names and whatever rights, if any, that may be owned by Seller in the Whiting and Durgin trademarks in connection with the manufacture, sale, distribution and marketing of sterling silver products by Buyer, for a term of 199 years and in exchange for certain royalty payments.

WHEREAS, concurrently with the execution of this Agreement, Buyer and Seller are entering into a separate license agreement whereby Buyer will grant Seller a royalty free, non-exclusive license to use certain trademarks and intellectual property rights being purchased by Buyer under this Agreement, so that Seller may continue to market and sell certain of Seller’s existing, non-sterling silver products that utilize such trademarks and intellectual property rights.

WHEREAS, concurrently with the execution of this Agreement, Buyer and Seller are entering into a transition services agreement (the “Transition Services Agreement”) whereby Seller will agree to continue to distribute sterling silver products from the Facility and to provide certain transition services to Buyer including accounting and order entry and processing services during the term of the Transition Services Agreement.

NOW, THEREFORE, in consideration of the mutual agreements contained herein, the parties agree as follows:

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ARTICLE I: SALE OF ASSETS

1.1         Purchase and Sale of Assets . Upon the terms and subject to the conditions set forth in this Agreement, on the Closing Date (as defined below), Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, the following assets (collectively, the “Purchased Assets”), free and clear of all liens, claims and encumbrances:

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1.2         Excluded Assets . Notwithstanding anything to the contrary in this Agreement, (a) any and all assets of Seller that are not referred to or listed in Section 1.1, or on a Schedule thereto, including without limitation Seller’s lease with respect to the Facility, and (b) the assets listed on Schedule 1.2 are excluded from the Purchased Assets and will be retained by Seller following the Closing (such assets, the “Excluded Assets”).

1.3         Retained Liabilities . Notwithstanding anything to the contrary in this Agreement, Buyer and Seller agree that (i) Buyer is not assuming any Liabilities of Seller including any liabilities of Seller related to or arising out of Seller’s ownership, use or operation of the Purchased Assets or conduct of the Business prior to the Closing Date, including but not limited to, any employee liabilities or obligations or any liability for chargebacks, returns, return authorizations, allowances or promotional agreements regarding sales made prior to Closing and (ii) any such Liabilities will be retained by Seller and remain the sole responsibility of Seller following the Closing.

ARTICLE II: PURCHASE PRICE

2.1         Purchase Price . The aggregate purchase price (the “Purchase Price”) to be paid by Buyer to Seller for the Purchased Assets shall be Eight Million Seven Hundred Seventy-Five Thousand United States Dollars ($8,775,000), subject to adjustment in accordance with Section 2.4 (as adjusted, the “Final Purchase Price”).

2.2         Payment of Purchase Price . At the Closing, Buyer shall pay to Seller, by wire transfer of immediately available funds to an account designated by Seller not later than three (3) Business Days prior to the Closing, Eight Million Five Hundred Twenty-Five Thousand United States Dollars ($8,525,000) (the “Initial Payment”).

2.3         Escrow . At the Closing, Buyer and Seller shall execute and deliver an escrow agreement substantially in the form of Exhibit 2.3 hereto (the “Escrow Agreement”) with Wells Fargo Bank, National Association (the “Escrow Agent”), and Buyer shall deposit, by wire transfer of immediately available funds to an account designated by the Escrow Agent, Two Hundred Fifty Thousand United States Dollars ($250,000) (the “Escrow Amount”), to be held by the Escrow Agent in an escrow account, all in accordance with the terms of the Escrow Agreement. Subject to the terms of the Escrow Agreement, any portion of the Escrow Amount not paid (other than any portion subject to pending claims in accordance with the Escrow Agreement) to Buyer pursuant to the terms of this Agreement shall be released to Seller on the six-month anniversary of the Closing Date.

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(a)             Within ten (10) Business Days after the Closing Date, Seller will prepare and deliver to Buyer its calculation (“Seller’s Inventory Valuation”), of the amount (the “Inventory Value”) equal to (i) the number of Sterling Ounces included in the Purchased Assets multiplied by 0.927 (to arrive at the number of Silver Ounces) and (ii) further multiplied by the price per Silver Ounce as recorded at closing of the London Fix Market on the last trading day of such market prior to the Closing Date.

(b)             Within ten (10) Business Days after the Closing Date, Buyer shall perform a physical inventory of the Purchased Assets. Seller shall have the right to be present for such physical inventory. Buyer shall then, within ten (10) Business Days after the Closing Date, prepare and deliver to Seller its calculation (“Buyer’s Inventory Valuation”), of the Inventory Value.

(c)             On or prior to the fifteenth (15 ^th ) Business Day after Buyer’s delivery of Buyer’s Inventory Valuation, Seller may give Buyer a written notice stating Seller’s objections (an “Objection Notice”) to Buyer’s Inventory Valuation. Any Objection Notice shall specify in reasonable detail the dollar amount of any objection and the basis therefor. If Seller does not give Buyer an Objection Notice within such 15 Business Day period, then Buyer’s Inventory Valuation will be conclusive and binding upon the parties for purposes of calculating the Final Purchase Price under this Agreement.

(d)             Following Buyer’s receipt of any Objection Notice, Buyer and Seller shall attempt to negotiate in good faith to resolve such dispute. In the event that Buyer and Seller fail to agree on any of Seller’s proposed adjustments set forth in the Objection Notice within thirty (30) days after Buyer receives the Objection Notice, Buyer and Seller agree that WithumSmith + Brown (the “Independent Auditors”) shall, within the 30-day period immediately following referral of the Objection Notice to the Independent Auditors, make the final determination of the Inventory Value in accordance with the terms of this Agreement. Buyer and Seller each shall provide the Independent Auditors with their respective calculations of Seller’s Inventory Valuation and Buyer’s Inventory Valuation subject to the Objection Notice. The Independent Auditors shall make an independent determination of the Inventory Value that shall be final and binding on Buyer and Seller and shall constitute the “Final Inventory Value” for purposes of calculating the Final Purchase Price hereunder. The fees, costs and expenses of the Independent Auditors shall be borne equally by Buyer, on the one hand, and Seller, on the other hand.

(e)             Within ten (10) days following the determination of the Final Inventory Value in accordance with Section 2.4, the parties or the Independent Auditors (if applicable) shall calculate the Final Purchase Price as follows: (i) if the Final Inventory Value exceeds the sum of Four Million Five Hundred Ten Thousand One Hundred Twenty-Nine United States Dollars ($4,510,129) (the “Target Inventory Value”), the Final Purchase Price shall equal the Purchase Price plus the amount of such excess or (ii) if the Target Inventory Value exceeds the Final Inventory Value, the Final Purchase Price shall equal the Purchase Price reduced by the amount of such excess.

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(f)              If the Final Purchase Price differs from the Purchase Price, one of the following payments will be made:

For the avoidance of doubt, no amount due as a result of the determination of the Final Purchase Price shall be deducted from or paid out of the funds available, if any, in the Escrow Account.

2.5         Allocation of Purchase Price . Subsequent to the Closing, the parties will use their commercially reasonable efforts to agree to an allocation of the Purchase Price among the Purchased Assets, which allocation will be in accordance with the Code and conclusive and binding for all purposes. Each party will file all income and other tax returns in a manner consistent with such allocation.

2.6         Transfer Taxes . All transfer, documentary, sales, use, stamp, registration and other such taxes incurred in connection with the consummation of the transactions contemplated by this Agreement (including any state transfer tax and any similar tax imposed in any state or subdivision) (collectively, the “Transfer Taxes”) shall be paid by Buyer. In addition, Buyer shall file all necessary returns and other documentation with respect to the Transfer Taxes, and, if required by applicable Law, Buyer and Seller will join in the execution of any such returns and other documentation.

ARTICLE III: CLOSING

3.1         Time and Place . The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place on the date hereof, or on such other date on which the parties mutually agree, at a place and time to be mutually agreed upon by the parties. The date on which the Closing actually occurs is herein referred to as the “Closing Date.” The Closing shall be effective as of 12:01 a.m. on the Closing Date.

3.2         Simultaneous Actions . All proceedings to be taken and all documents to be executed and delivered by the parties at the Closing shall be deemed to have been taken and executed simultaneously and no proceedings shall be deemed taken nor any documents executed or delivered until all have been taken, executed and delivered.

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3.3         Deliveries by Seller . On or before the Closing Date, Seller will deliver to Buyer the following:

(a)              Closing Certificates .

A certificate of an appropriate officer of Seller or Parent, dated as of the Closing Date, certifying that:

A certificate of the Secretary of Seller or Parent, dated as of the Closing Date, certifying:

(b)              Instruments of Transfer and Agreements . Signed originals of the following documents:

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(c)              Consents . Signed originals of any approvals, consents or waivers required to be obtained by Seller or Parent in order to effectuate the transactions contemplated hereby, reasonably satisfactory in form and substance to Buyer. Seller will not be required to pay any material amount to obtain any such consent, unless such payment is required by the terms of the applicable agreement.

(d)              Release of Encumbrances . A letter from Seller’s lender releasing all liens and security interests with respect to the Purchased Assets and authorizing Buyer to file UCC-3 termination statements with respect to such liens and security interests.

(e)              Good Standing Certificate . A certificate dated within 30 days before the Closing Date certifying that Seller is in good standing under the laws of the State of New Jersey.

3.4         Deliveries by Buyer . On or before the Closing Date, Buyer will deliver to Seller the following:

(a)              Payment . The Initial Payment in the manner set forth in Section 2.2.

(b)              Closing Certificates .

A certificate of an appropriate officer of Buyer, dated as of the Closing Date, certifying that:

A certificate of the Secretary of Buyer, dated as of the Closing Date, certifying:

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(c)              Instruments of Transfer and Agreements . Signed originals of the following documents:

(d)              Consents . Signed originals of any consents which are required for the consummation by Buyer of the transactions contemplated by this Agreement, each of which shall be in full force and effect on the Closing Date.

(e)              Re-Sale Certificate . Signed original of an appropriate re-sale certificate pertaining to Transfer Taxes on any finished goods inventory purchased by Buyer under this Agreement.

(f)               Good Standing Certificate . A Certificate dated within 30 days before the Closing Date certifying that Buyer is in good standing under the laws of the State of Delaware.

ARTICLE IV: REPRESENTATIONS AND WARRANTIES

CONCERNING SELLER AND THE BUSINESS

Seller and Parent, jointly and severally, represent and warrant to Buyer, as of the date of this Agreement and except as described in a Disclosure Schedule, as follows:

4.1         Organization . Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of New Jersey and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Seller is duly qualified and in good standing to do business in every jurisdiction in which such qualification is necessary because of the nature of the property owned, leased or operated by it or the nature of the business conducted by it.

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4.2         Authority . The execution, delivery and performance of this Agreement, the Bill of Sale, the IP Assignment, the Licenses, the Transition Services Agreement, the Escrow Agreement and all other agreements, documents and instruments required to be executed by Seller pursuant hereto (collectively, the “Seller Agreements”) and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action on the part of Seller. Seller has the power, authority and capacity to enter into, and to consummate the sale and other transactions contemplated by, this Agreement and the other Seller Agreements. This Agreement and each of the other Seller Agreements has been duly and validly executed and delivered by Seller, and is a valid and binding obligation of Seller, enforceable in accordance with its terms. Neither the execution, delivery and performance of this Agreement or any of the other Seller Agreements by Seller, nor the consummation by Seller of the transactions contemplated hereby or thereby nor compliance by Seller with any of the provisions hereof or thereof will:

(a)             conflict with or result in a breach of any provision of Seller’s Certificate of Incorporation or Bylaws: or

(b)             cause a default (or give rise to any right of termination, cancellation, or acceleration) under any of the terms, conditions or provisions of any agreement, instrument or obligation to which Seller is a party, or by which Seller or any of its properties or assets is or may be bound (provided that any required consents have been obtained); or

(c)             violate any law, statute, rule or regulation or order, writ, judgment, injunction or decree applicable to Seller or any of its properties or assets.

4.3         Title to Assets . Seller has good and marketable title to all of the Purchased Assets, free and clear of all mortgages, liens, pledges, charges, security interests, rights of way, options, rights of first refusal, conditions, restrictions or encumbrances of any kind or character, whether or not relating to the extension of credit or the borrowing of money (collectively, “Encumbrances”), except for (a) the Encumbrances set forth on Schedule 4.3, and (b) liens for taxes and governmental charges not yet payable or which Seller is contesting in good faith by appropriate action (Encumbrances described in clauses (a) and (b) hereof being referred to herein as “Permitted Encumbrances”).

4.4         Litigation . There are no (a) audits, inspections, actions, suits, claims, investigations or legal, administrative or arbitration proceedings pending or, to the knowledge of Seller, threatened against Seller affecting the Business or the Purchased Assets; or (b) judgments, decrees, injunctions or orders of any court, governmental department, commission, agency, instrumentality or arbitrator against Seller with respect to the Business or the Purchased Assets.

4.5         Environmental Matters .

(a)             Except as described on Schedule 4.5 , with respect to Seller’s operation of the Business conducted at the Facility, including the Purchased Assets: (i) to the knowledge of Seller, Seller is in compliance, in all material respects, with all federal, state and local

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Environmental Laws and regulations relating to pollution or protection of human health or the environment, including laws and regulations relating to emissions, discharges, releases or threatened releases of pollutants, contaminants, or hazardous or toxic materials or wastes into ambient air, surface water, ground water, soil, sediment or land or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of pollutants, contaminants, or hazardous or toxic materials or wastes; (ii) to the knowledge of Seller, Seller has not violated any material local, state or federal laws, rules, regulations or ordinances applicable to the Business, including but not limited to ISRA and the Spill Act and rules and regulations promulgated thereunder; (iii) Seller has obtained all material permits, approvals, identification numbers, licenses or other authorizations required under any applicable Environmental Laws (the “Environmental Permits”) and is and has been in compliance, in all material respects, with their requirements; (iv) there are no underground or aboveground storage tanks or any surface impoundments, septic tanks, pits, sumps or lagoons in which Hazardous Materials are being or have been treated, stored or disposed of on any real property currently owned or leased by Seller other than in compliance with Environmental Laws; (v) Seller has not undertaken or completed any investigation or assessment or remedial or response action relating to any such release, discharge or disposal of or contamination with Hazardous Materials in connection with the Business conducted at the Facility, either voluntarily or pursuant to the order of any Governmental Entity or the requirements of any Environmental Law; and (vi) Seller is not aware of, nor has Seller received any written notice, summons, citation, directive, order, claim, letter or other communication, actual or threatened, from any federal, state or local Governmental Entity of any events, conditions, circumstances, activities, practices, incidents, actions or plans regarding the Business which may interfere with or prevent Seller from continued compliance with any Environmental Law, or which may give rise to any common law or legal liability, or otherwise form the basis of any claim, action, suit, proceeding, hearing or investigation, based on Seller’s purchasing, manufacturing, processing, distribution, sale, use, treatment, storage, disposal, transport, or handling, or the emission, discharge, release, or threatened release into the environment, of any pollutant, contaminant, or hazardous or toxic material or waste in connection with the Business.

(b)             For purposes of this Agreement:

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