EXECUTION VERSION ASSET PURCHASE AGREEMENT

Exhibit 2.1

EXECUTION VERSION

ASSET PURCHASE AGREEMENT

by and among

EL LEATHER ACQUISITION LLC

TEDDY & ARTHUR EDELMAN, LIMITED

JOHN EDELMAN

EDELMAN FAMILY GRANTOR RETAINED ANNUITY TRUST and

JOHN MCPHEE

September 13, 2007

TABLE OF CONTENTS

Exhibits

Schedules

Schedule 2.1.1(c)- Seller’s Tangible Property

Schedule 2.1.1(l)- Assigned Benefits Contracts

Schedule 2.1.2(g)- Personal Effects of Shareholders and Families

Schedule 2.1.2(l) Other Excluded Assets

Schedule 2.1.3(d)- Accounts Payable and Customer Deposits

Schedule 3.3.1- Allocation Schedule

Schedule 3.4.- Estimated Working Capital

Schedule 4.1.- Corporate Organization

Schedule 4.2- Subsidiaries

Schedule 4.5.1- Consents and Approvals

Schedule 4.6- Customers and Suppliers

Schedule 4.7- Litigation

Schedule 4.8- Intellectual Property

Schedule 4.10.1- Agreements between Seller and Officers, Directors or Affiliates

Schedule 4.10.2- Specified Contracts

Schedule 4.13(j)- Capital Expenditures or Commitments

Schedule 4.14.6- Taxes

Schedule 4.15- Permits

Schedule 4.16- Environmental Matters

Schedule 4.18- Obligations

Schedule 4.19- Accounts Receivable

Schedule 4.22- Specified Assets

Schedule 4.23(a)- Products of Seller and Written Warranties

Schedule 4.24- Insurance

Schedule 4.25.1- Seller Employee Benefit Plans

Schedule 4.25.2- ERISA Obligations

Schedule 4.26- Employees

Schedule 4.26.8- Employee Claims

Schedule 4.28- Marketing Rights

Schedule 4.29.1.- Real Property

Schedule 4.29.2.- Real Property

Schedule 4.29.3- Lease Information

Schedule 4.29.6- Subleases

Schedule 9.1- List of Employees Associated with Business

ASSET PURCHASE AGREEMENT

Background

Seller is engaged in the business of manufacturing, finishing, marketing, promoting, selling and distributing leather, leather related products and furniture throughout the world (collectively, the “ Business ”). Edelman, Trust and McPhee are the only equity owners of Seller and are referred to herein individually as a “ Shareholder ” and collectively as the “ Shareholders .” The Parties desire that Seller sell and Buyer acquire substantially all of Seller’s assets and assume certain liabilities of Seller, all on the terms and subject to the conditions set forth in this Asset Purchase Agreement (the “ Agreement ”). Buyer, Seller and the Shareholders are sometimes individually referred to herein as a “Party” and sometimes collectively referred to herein as the “Parties”.

Intending to be legally bound, incorporating the foregoing herein, in consideration of the mutual agreements contained herein and subject to the satisfaction of the terms and conditions set forth herein, the Parties hereto agree as follows:

Certain defined terms used in this Agreement and not specifically defined in context are defined in this Section 1 as follows:

1.1. “ Accounting Firm ” shall have the meaning set forth in Section 3.2.6

1.2. “ Accounts Receivable ” means (a) any right to payment for goods sold, leased or licensed or for services rendered, whether or not it has been earned by performance, whether billed or unbilled, and whether or not it is evidenced by any Contract; (b) any note receivable; or (c) any other receivable or right to payment of any nature.

1.3. “ Acquisition Proposal ” shall have the meaning set forth in Section 6.1.4.

1.4. “ Affiliate Conveyance Documents ” shall have the meaning set forth in Section 8.1.25.

1.5. “ Affiliate Specified Assets ” shall have the meaning set forth in Section 4.22.2.

1.6. “ Agreed Claim ” shall have the meaning set forth in Section 11.5.

1.7. “ Agreement ” shall have the meaning set forth in the preamble.

1.8. “ Allocation Schedule ” shall have the meaning set forth in Section 3.3.1.

1.9. “ Asset ” means any real, personal, mixed, tangible or intangible property of any nature including Cash Assets, prepayments, deposits, escrows, Accounts Receivable, Tangible Property, Real Property, software, Contract Rights, Intellectual Property Rights, Permits, and claims, causes of action and other legal rights and remedies.

1.10. “ Assigned Benefits Contracts ” shall have the meaning set forth in Section 2.1.1(l).

1.11. “ Assumed Employee Amounts ” shall have the meaning specified in Section 6.1.9(a).

1.12. “ Business ” shall have the meaning set forth in the preamble.

1.13. “ Buyer ” shall have the meaning set forth in the preamble.

1.14. “ Buyer Damages ” shall have the meaning set forth in Section 11.1.

1.15. “ Buyer Indemnitees” shall have the meaning set forth in Section 11.1(a).

1.16. “ Calculations ” have the meaning set forth in Section 3.4.3.

1.17. “ Carve-outs ” shall have the meaning specified in Section 11.8.1.

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1.18. “ Cash Asset ” means any cash on hand, cash in bank or other accounts, readily marketable securities, and other cash-equivalent liquid assets of Sellers.

1.19. “ Certificate ” shall have the meaning set forth in Section 4.1.4.

1.20. “ Change of Control ” shall have the meaning given in Section 3.2.7.

1.21. “ Closing ” shall have the meaning given in Section 7.

1.22. “ Closing Date ” shall have the meaning given in Section 7.

1.23. “ Closing Date Payment ” shall have the meaning set forth in Section 3.1.1.

1.24. “ Code ” means the Internal Revenue Code of 1986, as amended.

1.25. “ Competing Business ” shall have the meaning set forth in Section 10.3.

1.26. “ Consent ” means any consent, approval, order or authorization of, or any declaration, filing or registration with, or any application, notice or report to, or any waiver by, or any other action (whether similar or dissimilar to any of the foregoing) of, by or with, any Person which is necessary in order to take a specified action or actions in a specified manner and/or to achieve a specified result.

1.27. “ Contingent Payments ” shall have the meaning set forth in Section 3.2.2.

1.28. “ Contingent Payment Year ” shall have the meaning set forth in Section 3.2.2.

1.29. “ Contingent Statements ” shall have the meaning set forth in Section 3.2.3.

1.30. “ Contribution Obligations ” shall have the meaning set forth in Section 6.1.9(b).

1.31. “ Contract ” means any written or oral contract, agreement, instrument, order, arrangement, commitment or understanding of any nature including sales orders, purchase orders, leases, subleases, data processing agreements, maintenance agreements, license agreements, sublicense agreements, loan agreements, promissory notes, security agreements, pledge agreements, deeds, mortgages, guaranties, indemnities, warranties, employment agreements, consulting agreements, sales representative agreements, joint venture agreements, buy-sell agreements, options or warrants.

1.32. “ Contract Right ” means any right, power or remedy of any nature under any Contract including rights to receive property or services or otherwise derive benefits from the payment, satisfaction or performance of another party’s Obligations, rights to demand that another party accept property or services or take any other actions, and rights to pursue or exercise remedies or options.

1.33. “ Covenants ” shall have the meaning set forth in Section 10.1(c).

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1.34. “ Current Assets ” means, to the extent included within the Specified Assets, the aggregate dollar value of the Accounts Receivable, prepaid expenses, Cash Assets and Inventory of Seller in each case as determined in accordance with GAAP.

1.35. “ Current Liabilities ” means the aggregate dollar value of the accounts payable, accrued payroll, bonuses and other compensation, accrued vacation and sick time, customer deposits, accrued taxes and expenses and other payables of Seller as determined in accordance with GAAP (including the Assumed Employee Amounts listed on Schedule 6.1.9(a) and not paid by Seller); provided, however, that (i) such figure shall specifically exclude the liabilities of Seller contemplated by the line item on Seller’s balance sheet titled “Current Portion of Notes Payable” and (ii) such figure shall only include such liabilities and Obligations that constitute Specified Liabilities.

1.36. “ Dispute Notice ” shall have the meaning set forth in Section 3.4.3.

1.37. “ EBITDA ” shall mean earnings before interest, taxes, depreciation and amortization, all in accordance with GAAP (and giving no effect to allocations from Knoll, Inc. and its affiliates not related to the operation of the Business, including: (i) management fees, (ii) inter-company expenses, (iii) amortization of goodwill, (iv) overhead and (v) amortization of the purchase price (push down accounting)).

1.38. “ Employee Benefit Plan ” means any employee benefit plan as defined in Section 3(3) of ERISA, any “voluntary employees’ beneficiary association” within the meaning of Section 501(c)(9) of the Code, “welfare benefit fund” within the meaning of Section 419 of the Code, or “qualified asset account” within the meaning of Section 419A of the Code, and any other plan, program, policy or arrangement for or regarding bonuses, commissions, incentive compensation, severance, vacation, deferred compensation, pensions, profit sharing, retirement, payroll savings, stock options, stock purchases, stock awards, stock ownership, phantom stock, stock appreciation rights, equity compensation, medical/dental expense payment or reimbursement, disability income or protection, sick pay, group insurance, self insurance, death benefits, employee welfare or fringe benefits of any nature, including those benefiting retirees or former employees.

1.39. “ Employees ” shall have the meaning set forth in Section 4.26.1.

1.40. “ Encumbrance ” means any interest, consensual or otherwise, in property securing a monetary obligation owed to, or a claim by, a Person other than the owners of the subject property, whether such interest is based on the common law, statute or Contract, or any lien, superlien, security interest, pledge, right of first refusal, mortgage, covenant, easement, restriction, reservation, conditional sale, prior assignment or other encumbrance, claim or burden.

1.41. “ Entity ” means any corporation (including any non-profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company, firm, society or other enterprise, association, organization or entity.

1.42. “ Environmental Laws ” means all applicable local, state and federal Laws, including consent decrees, administrative orders, and common laws relating to the protection of human health or the environment, including those Laws governing the use, generation, handling, storage and disposal or cleanup of Hazardous Materials, all as amended.

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1.43. “ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended, and all rulings and regulations promulgated thereunder.

1.44. “ ERISA Affiliate ” means any entity, trade or business (whether or not incorporated) that is part of the same controlled group with, common control with, part of an affiliated service group with, or part of another arrangement that includes, the Seller or any ERISA Affiliate within the meaning of Code Section 414(b) or (c) and, for the purpose of Section 302 of ERISA and for Section 412, 4991, 4977 and/or each applicable Section under Section 414(f)(2) of the Code of the Seller.

1.45. “ Escrow Agreement ” shall have the meaning set forth in Section 8.1.12.

1.46. “ Escrow Payment ” shall have the meaning set forth in Section 3.1.2.

1.47. “ Estimated Working Capital ” shall have the meaning set forth in Section 3.4.

1.48. “ Excluded Assets ” shall have the meaning set forth in Section 2.1.2.

1.49. “ Final Working Capital ” shall have the meaning set forth in Section 3.4.6.

1.50. “ First Calculation Period ” shall have the meaning set forth in Section 3.2.1.

1.51. “ First Contingent Payment ” shall have the meaning set forth in Section 3.2.1.

1.52. Intentionally Omitted.

1.53. “ GAAP ” means generally accepted accounting principles under United States accounting rules and regulations, consistently applied, and currently in effect on the date of application.

1.54. “ Edelman ” shall have the meaning set forth in the preamble.

1.55. “ Equitable Limitations ” shall have the meaning set forth in Section 4.3.

1.56. “ Financial Statements ” shall have the meaning set forth in Section 4.12.1.

1.57. “ Governmental Body ” means any: (a) nation, principality, republic, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature; (b) federal, state, local, municipal, foreign or other government; (c) governmental or quasi-governmental authority of any nature (including any governmental division, subdivision, department, agency, bureau, branch, office, commission, council, board, instrumentality, officer, official, representative, organization, unit, body or Entity and any court or other tribunal); (d) multi-national organization or body; or (e) individual, Entity or body exercising, or entitled to exercise, any executive, legislative, judicial, administrative, regulatory, police, military or taxing authority or power of any nature.

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1.58. “ Hazardous Materials ” means any substance, waste, contaminant, pollutant or material that is prohibited, limited, or regulated by any applicable Environmental Law, including (a) all substances, wastes, contaminants, pollutants and materials defined, designated or regulated as hazardous, dangerous or toxic pursuant to any Environmental Law, and (b) asbestos, polychlorinated biphenyls (“ PCBs ”), petroleum, petroleum products and urea formaldehyde.

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

1.60. “ including ” means including but not limited to.

1.61. “ Indebtedness ” shall mean with respect to any Person, without duplication (a) any indebtedness for borrowed money or issued in substitution for or exchange of indebtedness for borrowed money, (b) any indebtedness evidenced by any note, bond, debenture or other debt security, (c) any indebtedness of a deferred purchase price of property or services with respect to which a Person is liable, contingently or otherwise, as obligor or otherwise, (d) any commitment by which a Person assures a creditor against loss (including contingent reimbursement obligations with respect to letters of credit), (e) any obligations under capitalized leases with respect to which a Person is liable, contingently or otherwise, as obligor, guarantor or otherwise, or with respect to which obligations a Person assures a creditor against loss, (f) any indebtedness secured by an Encumbrance, (g) the maximum amount available to be drawn under letters of credit, (h) all obligations of such Person to pay a specified purchase price for goods or services, whether or not delivered or accepted, i.e. , take-or-pay or similar obligations, (i) all amounts which would be owing with respect thereto upon the termination of any interest rate protection hedging agreements, currency hedging agreements or commodity hedging agreements, (j) accrued interest on all of the foregoing enumerated obligations and all premiums, penalties, charges, fees, expenses and other amounts due in connection with the payment and satisfaction in full of such obligations, and (k) any guaranty by such Person of any of the foregoing.

1.62. “ Indemnified Party ” shall have the meaning set forth in Section 11.4.

1.63. “ Indemnifying Party ” shall have the meaning set forth in Section 11.4.

1.64. “ Indemnitee ” shall have the meaning set forth in Section 11.3.

1.65. “ Insurance Policy ” means any public liability, product liability, general liability, comprehensive, property damage, vehicle, life, hospital, medical, dental, disability, worker’s compensation, key man, fidelity bond, theft, forgery, errors and omissions, directors’ and officers’ liability, or other insurance policy of any nature.

1.66. Intentionally Omitted.

1.67. “ Intellectual Property Rights ” means all inventions, methods, discoveries, processes, patents, registered designs, Trademarks, domain names, unregistered designs and rights in designs, copyrights, rights in computer software, written works, visual works, audio works, multimedia works, information or data created or maintained in any database, design,

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formula, mask works, moral rights, performers rights, and confidential and proprietary know-how and trade secrets subsisting under the laws of each and every jurisdiction throughout the world whether registered or not, whether in use, operational, active, under development or design, non-operative, or inactive, and all divisions, continuations, continuations-in-part, substitutes, reversions, renewals and extensions of any of the foregoing, pending applications for registrations of any of the foregoing, and all rights under orders, statutes or otherwise in relation to any of the foregoing, as well as the rights to sue for past, present, and future infringement of any and all such intellectual property rights.

1.68. “ Interim Financial Statements ” shall have the meaning set forth in Section 4.12.1.

1.69. “ Inventory ” shall mean all inventory of Seller, wherever located, including all finished goods, work in progress, raw materials, spare parts and all other materials and supplies to be used or consumed by Seller in the production of finished goods, in each case whether held at a location of Seller or in transit to or from Seller.

1.70. “ Judgment ” means any order, writ, injunction, citation, award, decree or other judgment of any nature of any Governmental Body.

1.71. “ Latest Balance Sheet ” shall have the meaning set forth in Section 4.18.1.

1.72. “ Law ” means any provision of any foreign, federal, state or local law, statute, ordinance, charter, constitution, treaty, code, rule, or regulation.

1.73. “ Leases ” shall have the meaning set forth in Section 4.29.2.

1.74. “ Material Adverse Change ” shall mean any circumstance, change or effect that has a material adverse effect on the financial condition or results of operations of the Business, other than any adverse circumstance, change or effect arising out of (i) changes, events or developments affecting generally the industries or markets in which the Business operates not disproportionately impacting the Business of Seller, (ii) changes in general economic or political conditions or the financing, currency or capital markets in general or changes in currency exchange rates or currency fluctuations not disproportionately impacting the Business of Seller, (iii) this Agreement or the consummation of the transactions contemplated hereby, or the announcement hereof or thereof or any action taken by a Person in accordance with this Agreement, (iv) the enactment, repeal or change in any Law, or any change in GAAP or any interpretation of any of the foregoing, (v) the announcement by the Buyer or any of its Affiliates of its plans or intentions (including in respect of employees) with respect to the Business, (vi) any natural disaster or any acts of terrorism, sabotage, military action or war (whether or not declared) or any escalation or worsening thereof, or (vii) any action required to be taken under any Law or order or any existing Specified Contract by which the Business or any of the Specified Assets is bound. For purposes of this definition, “the enactment, repeal or change in any Law” shall mean the adoption, implementation, promulgation, repeal, modification, reinterpretation or proposal of any Law, order, protocol, practice or measure or any other requirement of Law of or by any Governmental Body which occurs subsequent to the date hereof.

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1.75. “ McPhee ” shall have the meaning set forth in the preamble.

1.76. “ Negative Working Capital Balance ” shall have the meaning set forth in Section 3.4.6.

1.77. Intentionally Omitted.

1.78. “ Non-Assigned Contracts ” shall have the meaning set forth in Section 2.1.1(d).

1.79. “ Notice of Claim ” shall have the meaning set forth in Section 11.5.

1.80. “ Obligation ” means any debt, liability or obligation of any nature, whether secured, unsecured, recourse, nonrecourse, liquidated, unliquidated, accrued, absolute, fixed, contingent, ascertained, unascertained, known, unknown or otherwise.

1.81. “ Permit ” means any license, permit, approval, waiver, order, authorization, right or privilege of any nature, granted, issued, approved or allowed by any Governmental Body.

1.82. “ Person ” means any individual, Entity or Governmental Body.

1.83. “ Positive Working Capital Balance ” shall have the meaning set forth in Section 3.4.6.

1.84. “ Post-Closing Tax Period ” means any taxable period (or portion thereof) beginning after the Closing Date.

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

1.86. “ Proceeding ” means any demand, claim, suit, action, litigation, investigation, arbitration, administrative hearing or other proceeding of any nature.

1.87. “ Property Taxes ” shall have the meaning specified in Section 3.5.1.

1.88. “ Purchase Price ” shall have the meaning set forth in Section 3.1.

1.89. “ Real Property ” means any real estate, land, building, condominium, town house, structure or other real property of any nature, all shares of stock or other ownership interests in cooperative or condominium associations or other forms of ownership interest through which interests in real estate may be held, and all appurtenant and ancillary rights thereto including easements, covenants, water rights, sewer rights and utility rights.

1.90. “ Second Calculation Period ” shall have the meaning set forth in Section 3.2.2.

1.91. “ Second Contingent Payment ” shall have the meaning set forth in Section 3.2.2.

1.92. “ Seller ” shall have the meaning set forth in the preamble.

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1.93. “ Seller Damages ” shall have the meaning set forth in Section 11.2.

1.94. “ Seller Employee Benefit Plan ” has the meaning set forth in Section 4.25.1

1.95. “ Seller Indemnitees ” shall have the meaning set forth in Section 11.2.

1.96. “ Seller’s Intangibles ” shall mean all Intellectual Property Rights owned by Seller, or in which Seller otherwise has any interest, in any part of the world.

1.97. “ Seller’s knowledge ” or “ to the knowledge of Seller ” shall mean that actual knowledge of Edelman, McPhee, Matthew J. Buckley, Roger W. Chapman and Sharon Baumann.

1.98. “ Seller’s Real Property ” shall have the meaning set forth in Section 4.29.2.

1.99. “ Shareholder ” or the “ Shareholders ” shall have the meaning set forth in the preamble.

1.100. “ Specified Assets ” shall have the meaning set forth in Section 2.1.1.

1.101. “ Specified Contracts ” shall have the meaning set forth in Section 4.10.2.

1.102. “ Specified Liabilities ” shall have the meaning set forth in Section 2.1.3.

1.103. “ Tangible Property ” means any furniture, fixtures, leasehold improvements, vehicles, Inventory, office equipment, computer equipment, other equipment, machinery, tools, forms, supplies or other tangible personal property of any nature.

1.104. “ Target Working Capital ” shall mean an amount equal to Two Million Forty Thousand Dollars ($2,040,000).

1.105. “ Tax ” means (a) any foreign, federal, state or local income, earnings, profits, gross receipts, franchise, capital stock, net worth, sales, use, value added, occupancy, general property, real property, personal property, intangible property, transfer, fuel, excise, payroll, withholding, unemployment compensation, social security, retirement or other tax of any nature; and (b) any deficiency, interest or penalty imposed with respect to any of the foregoing.

1.106. “ Tax Return ” means any return (including any information return), report, statement, schedule, notice, form, declaration, claim for refund or other document or information filed with or submitted to, or required to be filed with or submitted to, any Governmental Body in connection with the determination, assessment, reassessment, collection or payment of any Tax or any exemption therefrom, or in connection with the administration, implementation or enforcement of or compliance with any law relating to any Tax, including any amendment thereto.

1.107. “ Teddy New York ” shall have the meaning specified in the introduction to Section 4 of this Agreement.

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1.108. “ Threshold Amount ” shall have the meaning set forth in Section 11.8.

1.109. “ to the knowledge of ” or “ knowledge ” and similar phrases mean (a) in the case of an individual, knowledge of a particular fact or matter, actually known.

1.110. “ Trademarks ” means any corporate name, domain name, fictitious name, trademark, trademark application, service mark, service mark application, trade name, brand name, product name, symbol, logo, slogan, or trade dress.

1.111. “ Transferred Contract ” shall have the meaning set forth in Section 9.6.

1.112. “ Transferred Employee ” shall have the meaning set forth in Section 9.1.1.

1.113. “ Working Capital ” means Current Assets minus Current Liabilities determined in accordance with GAAP as of the Closing Date.

2.1. Sale and Purchase of Specified Assets . Subject to the terms and conditions of this Agreement, at the Closing, (i) Seller shall sell, transfer, assign and convey to Buyer, and Buyer shall purchase all right, title and interest in and to the Specified Assets, in each case free and clear of any and all Encumbrances, and Seller shall assign to Buyer, and Buyer shall assume, the Specified Liabilities of Seller and (ii) Seller shall cause Teddy New York to transfer, assign and convey to Buyer all right, title and interest in and to the Affiliate Specified Assets.

2.1.1. Specified Assets . The “ Specified Assets ” means all Assets of Seller as of the Closing Date, of every kind and character, personal tangible, intangible, mixed, used or useful in connection with, or otherwise relating to, the Business, wherever located and whether or not reflected on Seller’s books and records, excluding the Excluded Assets and the other assets expressly excluded in this Section 2.1.1, and including the following Assets:

(a) All Seller’s Intangibles as of the Closing Date;

(b) All of Seller’s Current Assets including prepaid expenses, security deposits, rent escrows, and other prepayments, deposits and escrows;

(c) All of Seller’s Tangible Property (including Inventory), all of which is set forth on Schedule 2.1.1(c) ;

(d) All of Seller’ Contract Rights under any Contracts related to the Business to which Seller is a party or Seller is bound, including the Specified Contracts, but excluding Contract Rights under (i) this Agreement and any other Contracts entered into by Seller with Buyer in connection with the transactions contemplated by this Agreement; (ii) all Contract Rights under any Specified Contracts requiring a Consent that is not obtained on or before the Closing Date (“ Non-Assigned Contracts ”); provided that, once such Consent is obtained, the Contract Rights under such Specified Contract shall be deemed, automatically and without further action by the Parties, to be included in the Specified Assets as of the date such material Consent is delivered to Buyer, and (iii) other than the Assigned Benefits Contracts, Contracts that constitute or evidence Employee Benefit Plans of Seller.

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(e) All rights under all Insurance Policies owned, held or maintained by Seller, but excluding (1) all rights under Insurance Policies that constitute Employee Benefit Plans of Seller other than with respect to the Assigned Benefits Contracts, and (2) the rights of Seller under its Insurance Policies pertaining exclusively to actual or potential claims or losses that remain Seller’s responsibility after the date hereof.

(f) All rights under all Permits granted or issued to Seller or otherwise held by Seller.

(g) All of Seller’s rights with respect to telephone numbers, telephone directory listings and advertisements, and all of Seller’s goodwill.

(h) All customer lists, prospect lists, supplier lists, referral sources, data bases, computer media and financial and accounting data used by the Seller in the conduct of its Business, but excluding (i) Seller’s corporate minute books, stock books and related organizational documents; and (ii) Seller’s files, books and records relating exclusively to the Excluded Assets or to Seller’s Obligations not included in the Specified Liabilities;

(i) All sales, advertising and marketing materials, invoices, correspondence, files, and books and records in Seller’s rightful possession, but excluding (i) Seller’s corporate minute books, stock books and related organizational documents; and (ii) Seller’s files, books and records relating exclusively to the Excluded Assets or to Seller’s Obligations not included in the Specified Liabilities;

(j) All of Seller’s claims, causes of action and other legal rights and remedies, whether or not known as of the date hereof, relating to Seller’s ownership of the Specified Assets and/or the operation of Seller’s Business, but excluding causes of action and other legal rights and remedies of Seller (i) against Buyer with respect to the transactions contemplated by this Agreement; or (ii) relating exclusively to the Excluded Assets or to Seller’s liabilities not included in the Specified Liabilities;

(k) Without limiting Section 2.1.1(a) above, all of Seller’s trademark rights (whether registered, common law or otherwise) to the “Edelman” name;

(l) All of the Contract Rights pursuant to the Contracts of Seller that fund or pay benefits under Seller’s Employee Benefit Plans and that are listed on Schedule 2.1.1(l) (“Assigned Benefits Contracts”); provided, however, that in no event shall the Assigned Benefits Contracts include any of Seller’s Employee Benefit Plans; and

(m) All of Seller’s right, title and interest in and to Seller’s Real Property, all of which is set forth on Schedule 4.29.2 .

(n) That certain Subaru and those certain two Ryder trucks.

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2.1.2. Excluded Assets . Notwithstanding anything to the contrary contained in Section 2.1.1 or elsewhere in this Agreement, the following Assets of Seller (collectively, the “ Excluded Assets ”) are not part of the sale and purchase contemplated hereunder, are excluded from the Specified Assets and shall remain the property of Seller after the Closing:

(a) (i) Seller’s corporate minute books, stock books and related organizational documents; and (ii) Seller’s files, books and records relating exclusively to the Excluded Assets or to Seller’s Obligations not included in the Specified Liabilities;

(b) the shares of capital stock of Seller held in treasury;

(c) all personnel records and other records that Seller is required by Law to retain (however Buyer will be entitled to copies of all such records at Buyer’s expense);

(d) all claims for refund of Taxes and other Governmental Body charges of whatever nature;

(e) all vehicles owned by Seller, except for the Subaru and two Ryder trucks leased under the lease agreements identified on Schedule 4.10.2 ;

(f) Contract Rights pursuant to Seller’s Employee Benefit Plans other than with respect to the Assigned Benefits Contracts;

(g) Personal effects of the Shareholders and their respective families, in each case as listed on Schedule 2.1.2(g);

(h) all rights of Seller under this Agreement and all agreements contemplated hereby;

(i) all rights of the Seller in connection with the lease of aircraft from Netjets, Inc. and assets of Seller related thereto as well as all rights of Seller in connection with the purchase of assets from Honda Aircraft Company, Inc.;

(j) all shares of capital stock of Teddy New York or any other subsidiary of Seller;

(k) all rights to the “Edelman” name not expressly contemplated by Section 2.1.2(k) hereof;

(l) any Assets set forth on Schedule 2.1.2(l) attached hereto; and

(m) causes of action and other legal rights and remedies of Seller (whether or not known as of the Closing Date) (i) against Buyer with respect to the transactions contemplated by this Agreement; or (ii) relating exclusively to the Excluded Assets or to Seller’s liabilities not included in the Specified Liabilities.

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2.1.3. Specified Liabilities of Seller . The “ Specified Liabilities of Seller ” means the following specifically described liabilities of Seller as of the Closing Date:

(a) Amounts payable to Bank of America, N.A. pursuant to that certain Loan Agreement dated November 30, 2006 in an amount not in excess of $3,725,442, which shall be paid by Buyer at Closing.

(b) Accrued Taxes and expenses incurred in the ordinary course of business, to the extent included in the calculation of Working Capital;

(c) Assumed Employee Amounts; provided, however, that, for the avoidance of doubt, amounts assumed pursuant to this Section 2.1.3(c) shall not include obligations of Seller to make contributions on behalf of the Transferred Employees pursuant to Seller’s 401(k) and profit sharing plans (including those contemplated by Section 6.1.10(b) hereof);

(d) The accounts payable of Seller incurred in the normal and ordinary course of Seller’s Business and the customer deposits received by Seller in the ordinary course of Seller’s Business, in each case only to the extent specified on Schedule 2.1.3(d) and included in the Calculation of Working Capital, but only to the extent that (i) the incurrence or existence of any such liability does not constitute a breach or failure of, or a default under, any representation, warranty, covenant or other provision of this Agreement, and (ii) such liability does not relate to an Excluded Asset.

(e) All Obligations of Seller under the Specified Contracts (including the Assigned Benefits Contracts) (all of which Contracts are listed in Schedule 4.10.2 ) to the extent relating to the period after the Closing Date (other than those Obligations relating to the Excluded Assets, those Obligations constituting Obligations other than the Specified Liabilities and any Obligations under Specified Contracts to pay warranty claims in connection with sales of products or services by Seller before the Closing Date) provided that: (x) the incurrence or existence of any such Obligation does not constitute a breach or failure of, or a default under, any representation, warranty, covenant or other provision of this Agreement, and (y) such Obligations are not due to any breach or default by Seller under any such Specified Contract, in each case with respect to which Seller has received written notice or otherwise has Knowledge (as defined in Section 1 hereof).

Notwithstanding the foregoing, the Specified Liabilities of Seller shall not include the liabilities of Seller under (i) this Agreement or any other Contracts entered into by Seller with Buyer in connection with the transactions contemplated by this Agreement; (ii) any Contracts relating to the formation or acquisition of Seller or any of Seller’s predecessors and (iii) the Seller’s Employee Benefit Plans other than Obligations assumed in connection with the Assigned Benefits Contracts pursuant to Section 2.1.3(e).

2.2. No Other Liabilities . Notwithstanding any other provisions of this Agreement, Buyer shall not purchase the Specified Assets subject to, and Buyer shall not in any manner assume or be liable or responsible for any Obligations of Seller other than the Specified Liabilities, and all Obligations of Seller other than the Specified Liabilities shall remain the

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sole responsibility of Seller. Without limiting the generality of the foregoing, and in addition to the liabilities excluded from the Specified Liabilities under Section 2.1.3, Buyer shall not in any manner assume or be liable or responsible for, or acquire any Assets of Seller subject to, any of the following Obligations of Seller:

2.2.1. Affiliates . Any Obligation of Seller that exists at or prior to the Closing Date to any shareholder or any current or former shareholder, member, partner, director or controlling Person of Seller, or to any other Person affiliated with Seller, their affiliates and predecessors including Obligations for dividends declared but not paid or Obligations for guarantees or similar arrangements (“ Affiliate Obligations ”).

2.2.2. Taxes . Other than the liabilities contemplated by Sections 2.1.3(b) and 9.5.1 of this Agreement, any Obligation for any Tax of Seller including, (a) any Tax payable by Seller not relating to the Business or Specified Assets and (b) any Tax payable by Seller with respect to the Specified Assets or the Business for a Pre-Closing Tax Period.

2.2.3. Contracts . (i) Any Obligation under any Contract assumed by Buyer pursuant to Section 2.1.1 that arises after the Closing Date but that arises out of or relates to any breach that occurred prior to the Closing Date and (ii) all Obligations pursuant to any Contracts set forth on Schedule 2.1.2(l).

2.2.4. Employees . Other than the Assumed Employee Amounts and/or obligations expressly assumed by Buyer pursuant to Section 9.1, any Obligation to any or all Employees of Seller arising or relating to periods prior to the Closing Date including Obligations under Seller’s Employee Benefit Plans or Obligations for severance pay, bonuses (retention or otherwise) and other termination benefits; any Obligation arising out of or relating to any Employee claim relating to periods prior to the Closing Date whether or not the affected Employees are hired by Buyer.

2.2.5. Infringement . Any Obligation arising in connection with or related to Seller’s (or any of Seller’s predecessors’) actual or alleged infringement, violation, or misappropriation of or interference with any Intellectual Property Right of any Person.

2.2.6. Environmental . Any environmental, health and safety Obligations arising out of or relating to the operation of the Business of Seller or its predecessors or the Seller’s leasing, ownership, use or operating of Seller’s Real Property by Seller or its predecessors that existed on or prior to the Closing Date, although the Obligations may not have become known until after the Closing Date, including, without limitation, those Obligations that arise under or relate to Environmental Laws.

2.2.7. Undisclosed Obligations . Any Obligation that either (i) relates to the period prior to the Closing Date or (ii) is not included within the Specified Liabilities.

2.2.8. Compliance . Any Obligation arising out of or resulting from Seller’s non-compliance prior to the Closing Date with any legal requirement or order of any Governmental Body.

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2.2.9. Warranty Obligations . Any warranty obligations of Seller related to products or services sold by Seller prior to the Closing Date including, without limitation any Obligations relating to (i) that certain “Dreamcow” leather for the McCormick place convention center in Chicago and (ii) that certain Garrett Aviation quality claim related to Edelman Royal Hide.

3.1. Purchase Price . Subject to the adjustments set forth in Section 3.4, the total purchase price for the Specified Assets (“ Purchase Price ”) shall consist of (a) cash consideration paid at Closing in an aggregate amount equal to Sixty Seven Million Dollars ($67,000,000.00), which shall be paid by Buyer to Seller as set forth in Sections 3.1.1 and 3.1.2 below, (b) the Contingent Payments, if earned, payable in accordance with Section 3.2 and (c) the assumption of the Specified Liabilities by Buyer.

3.1.1. Buyer shall pay to Seller, by wire transfer on the Closing Date (the “Closing Date Payment”), the amount of Sixty-Seven Million Dollars ($67,000,000), less the Escrow Payment.

3.1.2. Buyer shall pay, by wire transfer on the Closing Date, Three Million Dollars ($3,000,000) (the “ Escrow Payment ”) to a mutually acceptable escrow agent; such Escrow Payment to be treated in accordance with the terms of the Escrow Agreement (as defined in Section 8.1.12).

3.2. Contingent Payments .

3.2.1. Buyer shall pay to Seller the applicable amount specified below under the column titled “Earnout Payment Amount. (the “ First Contingent Payment ”), based upon the extent to which the EBITDA of the Business for the twelve month period ending on December 31, 2008 (the “ First Calculation Period ”) meets or exceeds the thresholds specified under the Column titled “EBITDA Thresholds”:

3.2.2. Buyer shall pay to Seller the applicable amount specified below under the column titled “Earnout Payment Amount. (the “ Second Contingent Payment ” and together with the First Contingent Payment, the “ Contingent Payments ”) based upon the extent to which the EBITDA of the Business for the twelve month period ending on December 31,

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2009 (the “ Second Calculation Period ”), meets or exceeds the thresholds specified under the Column titled “EBITDA Thresholds”:

Each of the First Calculation Period and the Second Calculation Period shall be referred to individually as a “Contingent Payment Year” and collectively as the “Contingent Payment Years”.

3.2.3. Within seventy-five (75) days of the end of each of the First Calculation Period and the Second Calculation Period, Buyer shall prepare and deliver to Seller statements reflecting Buyer’s calculation of the EBITDA for the applicable Contingent Payment Year just ended together with a calculation of the Contingent Payment earned, if any (collectively the “Contingent Statements”). Seller shall have a thirty (30) day period to review Buyer’s Contingent Statements and during such period Buyer shall share its work papers with Seller or its professional advisors.

3.2.4. If Seller disputes the Contingent Statements, it shall deliver a notice to Buyer no later than thirty (30) days after its receipt of such Contingent Statements from Buyer (“Contingent Dispute Notice”). Seller shall set forth in detail in the Contingent Dispute Notice the basis for its disagreement with the Contingent Statements provided by Buyer. If Seller fails to deliver the Contingent Dispute Notice within the allotted time period, Seller shall have been deemed to have agreed to the Contingent Statements prepared by Buyer, which shall be final, conclusive and binding upon the Parties.

3.2.5. If Seller disputes the Contingent Statements within the allotted time period, the Parties in good faith will attempt to jointly resolve any dispute during the thirty (30) day period following the delivery of the Contingent Dispute Notice. If Buyer and Seller can resolve their dispute, they shall memorialize their agreement in writing and such mutually agreed upon figure(s) shall be final, conclusive and binding upon all of the Parties.

3.2.6. If Buyer and Seller cannot resolve the dispute to their mutual satisfaction, Buyer and Seller shall engage a mutually agreeable independent, qualified, nationally recognized and respected accounting firm having offices in the United States (the “ Accounting Firm ”), to resolve the dispute and determine the EBITDA for the applicable Contingent Payment Year. The costs and expenses of the Accounting Firm shall be borne equally, but severally, by Buyer, on the one hand, and Seller, on the other hand. To the extent that the Accounting Firm desires the Parties to meet in person, the Parties shall choose a

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mutually acceptable location for such meeting. Each of Buyer and Seller shall cause their accounting professional advisors to provide the Accounting Firm their respective work papers as may be requested by the Accounting Firm. The Accounting Firm shall be requested to complete their engagement within forty-five (45) days of being retained by Buyer and Seller. The determination of the Accounting Firm shall be final, binding and conclusive upon the Parties. The Contingent Payment, if earned, shall be made by Buyer by wire transfer within three business days of its final determination hereunder.

3.2.7. Until the amount of any Contingent Payment is finally determined pursuant to this Section 3.2., Buyer will not have any obligation to Seller under this Section 3.2 with respect to a given Contingent Payment; provided, however, that in the event of the consummation of a Change of Control (as defined below) prior to the final determination of the EBITDA for the Second Calculation Period, any unpaid Contingent Payment (not to exceed $1,500,000 per Contingent Payment and $3,000,000 in the aggregate) as of the effective date of such Change of Control shall be accelerated and become due and payable to Seller upon the date that the Change of Control becomes effective. For the avoidance of doubt, (i) should a Change of Control occur prior to a final determination in accordance with the terms and provisions of the terms of this Section 3.2 that any one or more Contingent Payments was earned, such Contingent Payments shall be payable and accelerated as a result of such Change of Control, and (ii) should a Change of Control occur after a final determination has been made in accordance with the terms of this Section 3.2 that no Contingent Payment is earned with respect to the First Calculation Period or the Second Calculation Period, as applicable, then only such Contingent Payment, if any, with respect to which no such final determination has been made shall be payable and accelerated as a result of such Change of Control.

For purposes of this Agreement, “ Change of Control ” shall mean the occurrence in one or any series of related transactions any of the following events:

(a) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than an affiliate of Knoll, Inc., is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of 50% or more of the total voting power of the capital stock of Knoll, Inc. or 50% or more of the total voting power of any subsidiary or affiliate whose assets consist of all or substantially all of the Specified Assets or the Business;

(b) any sale, lease, license, exchange or other transfer of (y) all, or substantially all, of the Specified Assets or (z) all or substantially all of the assets of Knoll, Inc. to any person or group of persons (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) (other than to an affiliate of Knoll, Inc.);

(c) Knoll, Inc. merges or consolidates with or into another Person or another Person merges with or into Knoll, Inc., and in any such case, the securities of Knoll, Inc. that are outstanding immediately prior to such transaction and that represent 100% of the voting power of the capital stock of Knoll, Inc. are changed into or exchanged for cash, securities or property, unless pursuant to such transaction such securities of Knoll, Inc. are changed into or exchanged for, in addition to any other consideration, securities of the

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surviving corporation that represent, immediately after such transaction, at least a majority of the aggregate voting power of the capital stock of the surviving Person or transferee; or

(d) the adoption of a plan of liquidation of Knoll, Inc. pursuant to the United State Federal Bankruptcy Code, the institution by Knoll, Inc. of proceedings to be adjudicated a bankrupt or insolvent, or the consent by Knoll, Inc. to the institution of bankruptcy or insolvency proceedings against it, or the filing by Knoll, Inc. of a petition or answer or consent seeking reorganization or relief under the Federal Bankruptcy Code or any other applicable Federal or State law, or the consent by Knoll, Inc. to the filing of any such petition or to the appointment of a receiver, liquidator, custodian, assignee, trustee, sequestrator (or other similar official) of Knoll, Inc., or of any substantial part of the respective properties of either, or the making by Knoll, Inc. of an assignment for the benefit of creditors, or the admission by Knoll, Inc. in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by Knoll, Inc. in furtherance of any such action.

3.3. Allocation of Purchase Price .

3.3.1. The parties agree that the Purchase Price and the Specified Liabilities (plus other relevant items) will be allocated to the Specified Assets in accordance with Schedule 3.3.1 and as required by Section 1060 of the Code and the regulations promulgated thereunder or other applicable law. Seller will complete a draft schedule (the “ Allocation Schedule ”) allocating the Purchase Price and Specified Liabilities to the Purchased Assets and provide a copy to the Buyer at least ten (10) business days prior to the Closing Date.

3.3.2. Except for changes due to post-Closing adjustments in the Purchase Price, which shall be allocated in accordance with Schedule 3.3.1 , the Buyer shall notify the Seller within three (3) business days after the receipt thereof if it considers the amount allocated to any assets to be inconsistent with Section 1060 of the Code and the regulations promulgated thereunder. The Seller and the Buyer shall attempt to resolve any disagreement in good faith. If the Seller and the Buyer fail to reach agreement as to an alternative allocation in the three (3) business days following such notice, the dispute with respect to the Allocation Schedule shall be presented on the next business day to a nationally recognized independent accounting firm mutually chosen by the Buyer and the Seller, and if the Buyer and the Seller cannot agree, mutually chosen by their respective independent accounting firms, for a decision that shall be rendered within five (5) business days thereafter. The independent accounting firm’s review shall be limited to whether a disputed item has been prepared in accordance with Section 1060 of the Code and the regulations promulgated thereunder, and shall be final and binding on all parties. The fees, costs and expenses incurred in connection therewith shall be shared in equal amounts by the Seller and Buyer.

3.3.3. The Buyer and the Seller shall file, and cause their respective affiliates to file, all Tax Returns and statements, forms and schedules in connection therewith in a manner consistent with the Allocation Schedule and shall take no position inconsistent therewith; provided, however, that Buyer may, for financial accounting purposes, allocate between Class VI and Class VII assets, the amounts reasonably determined by Buyer to be required to be allocated to the assets within such classes as long as such allocation is not

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inconsistent with Seller’s position that all gain with respect to Class VI and VII assets is capital gain for tax purposes. The Buyer and the Seller shall exchange completed and executed copies of IRS Form 8594, any required schedules thereto, and any similar state, local and foreign forms, not later than 30 days prior to the filing date.

3.4. Working Capital Adjustment . Not later than three (3) days prior to Closing, Seller will prepare an estimate of Seller’s Working Capital as of the Closing Date (the “ Estimated Working Capital ”) and such Estimated Working Capital shall be attached as Schedule 3.4 . The Closing Date Payment pursuant to Section 3.1.1 shall be adjusted as follows: (a) to the extent the Estimated Working Capital is less than the Target Working Capital, the Closing Date Payment shall be reduced, dollar for dollar, by such amount, and (b) to the extent the Estimated Working Capital is greater than the Target Working Capital, the Closing Date Payment shall be increased, dollar for dollar, by such amount.

3.4.1. Within sixty (60) days after the Closing Date, Buyer shall prepare a balance sheet reflecting Assets and liabilities of Seller as of the Closing Date and its calculation of the Working Capital at Closing. A physical inventory for such balance sheet shall be conducted by Buyer. Seller and its advisors may observe such physical inventory. Such balance sheet shall be prepared in accordance with GAAP and shall be consistent with past practice.

3.4.2. Seller shall have a thirty (30) day period to review Buyer’s balance sheet and during such period Buyer shall share its work papers with Seller or its professional advisors.

3.4.3. If Seller disputes any items on the balance sheet prepared by Buyer, on the one hand, or Buyer’s calculation of the Working Capital as of the Closing Date (collectively, the “Calculations”), on the other hand, it shall deliver a notice to Buyer no later than thirty (30) days after its receipt of such balance sheet from Buyer (the “ Dispute Notice ”). Seller shall set forth in detail in the Dispute Notice the basis for its disagreement with the balance sheet or Calculations provided by Buyer. If Seller fails to deliver the Dispute Notice within the allotted time period, Seller shall have been deemed to have agreed to the balance sheet and Calculations prepared by Buyer, which shall be final, conclusive and binding upon the Parties.

3.4.4. If Seller disputes such balance sheet or Calculations within the allotted time period, the Parties in good faith will attempt to jointly resolve any dispute during the thirty (30) day period following the delivery of the Dispute Notice. If Buyer and Seller can resolve their dispute, they shall memorialize their agreement in writing and such mutually agreed upon figure(s) shall be final, conclusive and binding upon all of the Parties.

3.4.5. If Buyer and Seller cannot resolve the dispute to their mutual satisfaction, Buyer and Seller shall engage the Accounting Firm to resolve the dispute and determine the Working Capital of Seller as of the Closing Date. The costs and expenses of the Accounting Firm shall be borne equally, but severally, by Buyer, on the one hand, and Seller, on the other hand. To the extent that the Accounting Firm desires the Parties to meet in person, the Parties shall choose a mutually acceptable location for such meeting. Each of

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Buyer and Seller shall cause their accounting professional advisors to provide the Accounting Firm their respective work papers as may be requested by the Accounting Firm. The Accounting Firm shall be requested to complete their engagement within forty-five (45) days of being retained by Buyer and Seller. The determination of the Accounting Firm shall be final, binding and conclusive upon the Parties.

3.4.6. The final determination of the Working Capital of Seller as of the Closing Date pursuant to this Section 3.4 shall be referred to herein as the “ Final Working Capital .” If the Final Working Capital is less than the Estimated Working Capital (the “ Negative Working Capital Balance ”), such Negative Working Capital Balance shall be paid to Buyer by Seller and the Shareholders (as a joint and several obligation) in immediately available funds within three (3) days of such determination. If the Final Working Capital is in excess of the Estimated Working Capital (the “ Positive Working Capital Balance ”), such Positive Working Capital Balance shall be paid to Seller by Buyer in immediately available funds within three (3) business days of such determination.

3.4.7. Nothing contained in this Section 3.4 shall be interpreted to limit the indemnification provisions contained in Section 11 hereof.

3.5. Allocation of Expenses . The following expenses attributable to the Seller’s Business shall be allocated between and shall be assumed by Buyer and Seller as follows:

3.5.1. Except for Taxes described in Section 2.1.3(b), all state, county and local ad valorem Taxes on personal property (“ Property Taxes ”) shall be apportioned between the Pre-Closing Tax Period and Post-Closing Tax Period on a per diem basis. The Seller shall be liable for Property Taxes apportioned to the Pre-Closing Tax Period and Buyer shall be liable for Property Taxes apportioned to the Post-Closing Tax Period.

3.6. Currency and Method of Payment . All dollar amounts stated in this Agreement are stated in United States currency, and all payments required under this Agreement shall be paid in United States currency. All payments required under this Agreement shall be made by wire transfer of immediately available United States federal funds.

3.7. Original Issue Discount . For purposes of applying Sections 483 and 1272-1274 of the Code, to any portion of the Purchase Price (including Contingent Payments) paid after the Closing Date, each payment not otherwise bearing interest at a stated rate shall be deemed to include interest at the highest applicable federal rate for the month ending on the last day of the month in which the Closing Date occurs.

As a material inducement to Buyer to enter into this Agreement, knowing that Buyer is relying thereon, and to carry out the transactions contemplated hereunder, Seller and the Shareholders, jointly and severally, represent, warrant and covenant to Buyer that, except as specifically referenced in this Agreement and as set forth on Disclosure Schedules hereto furnished to Buyer prior to execution hereof and attached hereto, which exceptions shall be deemed to be representations and warranties as if made hereunder (it being agreed that, for

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purposes of this Section 4, except where expressly provided otherwise in this Section 4, each reference to Seller shall be deemed to include and refer to Teddy and Arthur Edelman Corp, a New York corporation (“Teddy New York”), and each reference to the Specified Assets shall be deemed to include the Affiliate Specified Assets):

4.1. Organization, Good Standing, Qualification and Capitalization .

4.1.1. Seller is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of organization as set forth on Schedule 4.1 . Seller is duly qualified to transact business and is in good standing in each jurisdiction in which such qualification is required. Seller has all required power and authority necessary to own and operate its properties, to carry on its business, including the Business, as now conducted, and to carry out the transactions contemplated by this Agreement.

4.1.2. Seller does not own any securities of any corporation or any other interest in any Person. Except as set forth on Schedule 4.1 , Seller has never acquired or succeeded to all or any portion of the Assets or businesses of any other Person, and there is no other Person that may be deemed to be a predecessor of Seller.

4.1.3. Schedule 4.1 sets forth, for Seller: (i) its exact legal name; (ii) its corporate business form and jurisdiction and date of formation; (iii) its federal employer identification number; (iv) its headquarters address, telephone number and facsimile number; (v) its directors and officers, indicating all current title(s) of each individual; (vi) its registered agent and/or office in its jurisdiction of formation (if applicable); (vii) all foreign jurisdictions in which it is qualified or registered to do business, the date it so qualified or registered, and its registered agent and/or office in each such jurisdiction (if applicable); (viii) all fictitious, assumed or other names of any type that are registered or used by it or under which it has done business at any time since Seller’s date of incorporation; and (ix) any name changes, recapitalizations, mergers, reorganizations or similar events since its date of formation.

4.1.4. Accurate and complete copies of each of Seller’s certificate of incorporation (the “ Certificate ”), bylaws and other organization and related documents, each as amended to date, and all Contracts relating to the acquisition or formation of Seller (or their predecessors), have been delivered to Buyer.

4.1.5. The authorized equity securities of Seller consist of 1,000 shares of common stock, of which 1,000 are issued and outstanding and 750 of which are owned by Edelman none of which are owned by the Trust and 250 of which are owned by McPhee, respectively, and 5,000 shares of Non-Voting Common Stock of which 4,000 are issued and outstanding and 1,500 of which are owned by Edelman, 1,500 of which are owned by the Trust and 1,000 of which are owned by McPhee, respectively. The Shareholders are and will be on the Closing Date the record and beneficial owners and holders of all equity securities of Seller, owned by them, free and clear of all Encumbrances. There are no other Contracts relating to the issuance, sale or transfer of any equity securities of Seller. There is no outstanding subscription, option, call, warrant (whether or not currently exercisable) or similar right to acquire any equity securities of Seller. There is no outstanding security, instrument or obligation that is or may become convertible into or exchangeable for any equity or debt securities.

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4.2. Subsidiaries . Except as set forth on Schedule 4.2, Seller does not presently own or control, directly or indirectly, or hold any rights to acquire, any interest in any other corporation, association or other business entity. Seller is not a participant in any joint venture, partnership or similar arrangement.

4.3. Authorization . All corporate action on the part of Seller (but not Teddy New York), their officers, directors and shareholders necessary for the due authorization, execution and delivery of this Agreement, and the performance of all obligations of Seller (but not Teddy New York) hereunder, has been taken or will be taken prior to the Closing Date. This Agreement constitutes a valid and legally binding obligation of Seller (but not Teddy New York) and the Shareholders, enforceable in accordance with its respective terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, and (b) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies (“Equitable Limitations”).

4.4. Compliance with Laws . (a) Seller is in compliance in all material respects with each material Judgment and with each material Law that is applicable to it or to the conduct of Seller’s Business or the ownership or use of any of its Assets; (b) Seller has at all times been in compliance in all material respects with each material Judgment or material Law that is or was applicable to it or to the conduct of Seller’s Business or use of any of its Assets; (c) no event has occurred and to the Knowledge of Seller no condition or circumstance exists, that might (with or without notice or lapse of time) constitute or result in a violation by Seller of, or a failure on the part of Seller to comply in all material respects with, any material Judgment or material Law. Seller has not received, at any time, any written notice or other written communication from any Governmental Body or any other Person regarding (i) any actual, alleged, possible or potential violation of, or failure to comply with, any Judgment or Law, or (ii) any actual, alleged, possible or potential obligation on the part of Seller to undertake, or to bear all or any portion of the cost of, any cleanup or any remedial, corrective or response action of any nature.

4.5. Consents; Non-Contravention .

4.5.1. Except for the submission of the requisite filings under, and expiration or early termination of the waiting period under the HSR Act and as set forth on Schedule 4.5.1 , no Consent, approval, notification, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local Governmental Body or any other Person on the part of Seller or the Shareholders is required in connection with the consummation of the transactions contemplated by this Agreement.

4.5.2. The execution and delivery of this Agreement by Seller (but not Teddy New York) and the Shareholders does not, and the consummation of the transactions contemplated hereby will not, (a) conflict with, or result in any violation of, or default under (with or without notice or lapse of time, or both), or (b) give rise to a right of termination,

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cancellation or acceleration of any obligation or loss of any benefit or a right of indemnification under (i) any provision of the Certificate or bylaws of Seller, (ii) any Contract to which any of Seller or the Shareholders is bound, or (iii) any Permit, judgment, order, decree, ordinance or Law applicable to Seller, or its properties or Assets or (iv) any standard or requirement of any Governmental Body.

4.6. Customers, Prospects and Suppliers . The top fifteen (15) customers of Seller and the top fifteen (15) suppliers of Seller, in each case during the calendar year 2006 and the calendar year 2007 through June 30th, 2007, are listed on Schedule 4.6 . Except as set forth on Schedule 4.6 , since January 1, 2007, none of the customers or suppliers of Seller have given written notice to Seller that (a) it will or intends to terminate or not renew its Contract with Seller before the scheduled expiration date, (b) it will otherwise terminate, with Seller, or (c) it may otherwise materially modify or change its relationship, reduce the volume of business transacted with Seller below historical levels. The Seller has not experienced any problems with customers or suppliers since January 1, 2007 which would reasonably be expected to result in a Material Adverse Change. To the Knowledge of Seller, the transactions contemplated hereby will not reasonably be expected to materially and adversely affect the existing contractual relationships with any of Seller’s customers or suppliers.

4.7. Litigation . Except as set forth on Schedule 4.7 , there is no action, suit, proceeding or investigation pending or currently threatened against Seller or, to Seller’s or Shareholders’ knowledge, threatened against or affecting any of the officers, directors or employees of Seller with respect to Seller’s Business, including any such action, suit, proceeding or investigation (a) that questions the validity of this Agreement or the right of Seller to enter into this Agreement or to consummate the transactions contemplated hereby or thereby, (b) that might result, either individually or in the aggregate, in an adverse change in Seller’s Business, Assets or condition of Seller, financially or otherwise, or (c) that might result in any change in the current equity ownership of Seller. Seller and the Shareholders have no knowledge that there are any basis for the foregoing. The foregoing includes, without limitation, actions, suits, proceedings or investigations pending or threatened (or any basis therefore known to Seller or the Shareholders) involving the prior employment of any of Seller’s employees, their use in connection with Seller’s Business of any information or techniques or other Intellectual Property Rights allegedly proprietary to any of their former employers or their obligations under any agreements with prior employers. Seller is not a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality. Seller has not received any opinion or memorandum or legal advice from legal counsel to the effect that it is exposed, from a legal standpoint, to any liability or disadvantage which may be material to Seller’s Business. To the Knowledge of Seller, there is no action, suit, proceeding or investigation by Seller currently pending or that Seller intends to initiate.

4.8. Intellectual Property .

4.8.1. Schedule 4.8 sets forth a complete and accurate description and list of all patents, registered Trademarks, registered copyrights, and domain name registrations that are owned by the Seller and/or are necessary or material to the operation of the Business as currently conducted, setting forth as to each such item, as applicable, (i) the jurisdiction in

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which such item is issued, registered or pending, (ii) the application, registration or issuance number, and (iii) the owner of such item. Unless indicated otherwise on Schedule 4.8, Seller holds all rights, title, and interest in and to all Intellectual Property Rights set forth on Schedule 4.8.

4.8.2. Except as set forth on Schedule 4.8 , Seller owns, or has the full right to use, all Intellectual Property Rights necessary or material to the operation of the Business as currently conducted, free and clear of any Encumbrance.

4.8.3. Schedule 4.8 also contains a complete and accurate list of all licenses and other rights granted by Seller to any Person with respect to any Intellectual Property Rights and all licenses and other rights granted by any Person to Seller with respect to any Intellectual Property Rights, in each case identifying the subject Intellectual Property Rights. Except as set forth on Schedule 4.8, any and all licenses, sublicenses and other Contracts covering or relating to any of Seller’s Intangibles or under which Seller uses any Intellectual Property Rights are legal, valid, binding, enforceable and in full force and effect, and upon consummation of the transactions contemplated hereby, will continue to be legal, valid, binding, enforceable and in full force and effect on terms substantially the same as those in effect immediately prior to the consummation of the transactions contemplated hereby. To the knowledge of the Seller, Seller is not in any breach of or default under any of the foregoing licenses, sublicenses or other Contracts nor has Seller performed any act or omitted to perform any act which remains uncured, which with notice or lapse of time or both, will become or result in a material violation, breach or default or give rise to indemnification thereunder. No Proceeding is pending or, to the knowledge of Seller, is being or has been threatened, nor has any claim or demand been made, which challenges the legality, validity, enforceability or ownership of any such licenses, sublicenses or other Contracts. Except as set forth in Schedule 4.8, there are no outstanding payments either to or from Seller in respect of any such licenses, sublicenses or other Contracts.

4.8.4. Except as set forth on Schedule 4.8 , the operation of the Business as it is currently conducted does not violate, misappropriate, interfere with, or infringe upon any Intellectual Property Right or other proprietary right of any Person, and to Seller’s knowledge, the operation of the Business in the past twenty-four (24) month time period, did not violate, misappropriate, interfere with, or infringe upon any Intellectual Property Right or other proprietary right of any Person. Except as set forth in Schedule 4.8, none of Seller’s Intangibles are subject to any Judgment. No Proceeding is pending or, to the knowledge of Seller, is threatened, nor has any claim or demand been made or notice been given, which challenges or challenged the legality, validity, enforceability, use or exclusive ownership by Seller of any of Seller’s Intangibles. Seller has received no written notice in the past twenty-four (24) months that any Person has violated, misappropriated, interfered with, or infringed upon, any Intellectual Property Right used in the operation of the Business but not owned by Seller.

4.8.5. Except as set forth on Schedule 4.8 , all of Seller’s Intangibles were created as a work or invention for hire (as defined under U.S. copyright or patent law, as applicable, or such similar concept under any other Law in any applicable jurisdiction) for and of Seller by regular full time employees of Seller in the scope of such person’s employment

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with Seller. To the extent that any author, creator, contributor, or developer of Seller’s Intangibles was not a regular full-time employee of Seller at the time such person authored, created, contributed to, or developed such Seller’s Intangibles or such authoring, creation, contribution or development was not in the scope of such person’s employment with Seller, such author, creator, contributor, or developer has irrevocably assigned to Seller in writing all Intellectual Property Rights and other proprietary rights in such person’s work with respect to such Seller’s Intangibles.

4.8.6. Except as set forth on Schedule 4. 8, upon consummation of the transactions contemplated by this Agreement and on the Closing Date, Buyer will be entitled to continue to use all of Seller’s Intangibles, and all Intellectual Property Rights currently used by Seller in the conduct of Seller’s Business, on terms and conditions substantially the same as Sell