ASSET PURCHASE AGREEMENT by and among

Exhibit 2.1

ASSET PURCHASE AGREEMENT

by and among

Barry Holding Co.
(as Buyer)

and

baggallini, Inc.
(as Seller)

and

Dixie B. Powers
(Individually and in her capacity as
Trustee of the Dixie Balch Powers Revocable Living Trust)

and

Elizabeth Ann Simmons

Dated March 15, 2011

TABLE OF CONTENTS

EXHIBITS

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT, entered into on March 15, 2011, by and among Barry Holding Co. , an Ohio corporation (“ Buyer ”), baggallini, Inc. an Oregon corporation, (“ Seller ”), Dixie B. Powers , a resident of the State of Washington (“ Ms. Powers ”), both individually and in her capacity as Trustee of the Dixie Balch Powers Revocable Living Trust (the “ Trust ”) , and Elizabeth Ann Simmons , a resident of the State of Texas, (“ Ms. Simmons ”);

WITNESSETH THAT:

WHEREAS, Seller is engaged in the business of designing, sourcing, marketing and selling, both inside and outside the United States, handbags, tote bags, and travel accessories (such business, along with any and all other business operations and planned business operations of Seller, the “ Business ”); and

WHEREAS, Ms. Powers, in her capacity as Trustee of the Trust, and Ms. Simmons collectively own 100% of the voting capital stock of Seller;

WHEREAS, Ms. Powers and Ms. Simmons are the founders and senior executive officers of Seller and have been actively involved in the development, marketing and sale of Seller’s products;

WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, substantially all of the assets used or held for use in the operation of the Business, all on the terms and subject to the conditions set forth herein;

WHEREAS, the beneficiaries of the Trust, including Ms. Powers and/or her family members, will benefit from the transactions contemplated by this Agreement; and

WHEREAS, in order to induce Buyer to enter into this Agreement, Ms. Powers has agreed to join as a party to this Agreement in her individual capacity;

NOW THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereto agree as follows:

ARTICLE 1
Definitions; Construction

1.1 Definitions . All capitalized terms used in this Agreement shall have the meanings given to such terms in this Section 1.1 below:

“ Accounts Receivable ” means customer trade accounts receivable set forth on Exhibit A , as the same may be updated pursuant to Section 2.6(a) , that were incurred in Seller’s Ordinary Course of Business.

“ Acquired Assets ” means all of the assets of Seller, wherever located, used or held for use by Seller in or for the operation of the Business, other than the Excluded Assets. Without limiting the generality of the foregoing, the Acquired Assets include:

(i) all tangible personal property of Seller used or held for use in or for the operation of the Business (such as tools, dies, equipment, packaging materials, displays, advertising materials, raw materials, supplies, fixtures, leasehold improvements and furniture);

(ii) all Accounts Receivable of Seller as of the Closing Date;

(iii) all Intellectual Property Assets, the goodwill associated therewith, all licenses and sublicenses granted and obtained with respect thereto, all rights thereunder, all remedies against infringement thereof, and all rights to protection of interests therein under the Laws of all jurisdictions;

(iv) all of the Software;

(v) all of Seller’s right, title and interest in, to and under the Assumed Contracts;

(vi) all claims, customer deposits and other deposits, prepayments, refunds, causes of action, chooses in action, rights of recovery, rights of set off, and rights of recoupment (including any such item relating to the recovery of insurance proceeds) of Seller;

(vii) all franchises, approvals, permits, licenses, Orders, registrations, certificates, variances and similar rights of Seller obtained from Governmental Authorities, including, the Permits listed in Schedule 3.12 ;

(viii) all books, records, ledgers, files, documents, correspondence, lists (including customer lists), drawings and specifications, creative materials, advertising and promotional materials, studies, reports and other printed or written materials of Seller relating to the Business; provided, that Seller will keep originals and provide to Buyer copies of Seller’s organizational documents and tax records;

(ix) all Inventory;

(x) all of Seller’s rights under the Purchase Orders; and

(xi) all of the intangible rights and property of Seller, including its going concern value, goodwill, telephone (except the cell phone numbers of Ms. Powers and Ms. Simmons) and telecopy numbers and listings and electronic mail addresses.

“ Active Employee ” means any employee employed on the Closing Date by Seller, including employees on temporary leave of absence, including family medical leave, military leave, temporary disability or sick leave.

“ Actions ” has the meaning given to such term in Section 10.5(g)(i) .

“ Adjustment Amount ” means an amount (which may be a positive or negative number) equal to the amount determined by subtracting (i) the Estimated Closing Date Working Capital Amount from (ii) the Closing Date Working Capital Amount.

“ Adjustment Amount Calculation ” means a written statement and detailed computation of the Adjustment Amount prepared by Buyer.

“ Affiliate ” means, with respect to any Person, any other Person that controls, is controlled by, or is under common control with, such Person. For purposes of making such determination, a Person will be deemed to have control of another Person if such Person possesses the power, directly or indirectly, to influence the actions, behavior, management or policies of such other Person, whether as an officer, director, shareholder, member, manager, partner or employee of such other Person, through voting control, agreement or otherwise.

“ Agreement ” means this Asset Purchase Agreement, executed by and among Buyer, Seller, Ms. Powers and Ms. Simmons on the date first set forth above.

“ Allocation ” has the meaning given to such term in Section 2.5 .

“ Ancillary Documents ” means all certificates, documents, instruments, contracts and agreements, other than this Agreement, executed or delivered by any Person in connection with the consummation of transactions contemplated hereby including, without limitation, the Bill of Sale, the Assignment and Assumption Agreement and the Escrow Agreement.

“ Assignment and Assumption Agreement ” has the meaning given to such term in Section 2.8(a)(ii) .

“ Assumed Contracts ” means the Contracts listed on Exhibit B .

“ Assumed Liabilities ” means (i) the liabilities and obligations of Seller with respect to the Assumed Contracts, other than for any act or action occurring prior to the Closing that resulted or results in a breach or default, (ii) the liabilities and obligations of Seller with respect to the Customer Orders, (iii) the Current Liabilities and (iv) the liabilities and obligations of Seller with respect to the Purchase Orders.

“ Balance Sheet ” has the meaning given to such term in Section 3.5 (a)(i) .

“ Best Efforts ” means the efforts that a prudent Person desirous of achieving a result would use in similar circumstances to achieve that result as expeditiously as possible; provided , however , that a Person required to use Best Efforts under this Agreement will not be thereby required to take actions that would result in a material adverse change in the benefits to such Person of this Agreement or to dispose of or make any material change to its business, expend any material funds or incur any other material burden.

“ Bill of Sale ” has the meaning given to such term in Section 2.8(a)(i) .

“ Bulk Sales Law ” means the bulk sales provisions of the Uniform Commercial Code, any state Laws regarding bulk sales or bulk transfers or any similar Law.

“ Business ” has the meaning given to such term in the first recital of this Agreement.

“ Business Day ” means any day other than Saturday, Sunday or a Federal holiday.

“ Buyer ” has the meaning given to such term in the introductory paragraph of this Agreement.

“ Buyer Adjustment Amount ” means the amount of the Adjustment Amount if the Adjustment Amount is a negative number.

“ Buyer Indemnified Persons ” has the meaning given to such term in Section 11.1 .

“ Cap Amount ” has the meaning given to such term in Section 11.4(a) .

“ CERCLA ” means the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §§ 9601-9657.

“ Closing ” means the consummation of the transactions contemplated by this Agreement.

“ Closing Date ” means 5:00 p.m., Columbus, Ohio time on the date on which the Closing actually takes place.

“ Closing Date Balance Sheet ” means a balance sheet of the Business prepared as of the close of business on the Closing Date in accordance with GAAP, but without giving effect to the consummation of the transactions contemplated hereby, and in a manner consistent with the form attached hereto as Exhibit C and the assumptions and methodologies contained therein; provided that, in the event of any inconsistency between GAAP and the methodology by which the balance sheet attached hereto as Exhibit C was prepared, the methodology in Exhibit C shall control and be used in the preparation of the Closing Date Balance Sheet.

“ Closing Date Working Capital Amount ” means an amount determined as of the close of business on the Closing Date, but without giving effect to the consummation of the transactions contemplated hereby, equal to the result obtained by subtracting (i) the Current Liabilities from (ii) the Current Assets.

“ COBRA ” has the meaning given to such term in Section 3.10(g) .

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

“ Competing Business ” means any business that is competitive with the Business on the Closing Date or the business of the Buyer after the Closing Date, including any business that involves the design, production or wholesale distribution of handbags, tote bags or travel accessories. For purposes of this Agreement, a business which has a written license agreement with the Buyer or an affiliate of Buyer to use the name “baggallini” shall not be a competing business.

“ Confidential Information ” means:

(i) all information of Seller, the Shareholders or Ms. Powers relating to Seller or the Business that is a trade secret under applicable trade secret or other Law;

(ii) all information of Seller, either of the Shareholders or Ms. Powers relating to the Business, concerning product specifications, data, know-how, formulae, compositions, processes, designs, sketches, photographs, graphs, drawings, samples, inventions and ideas, past, current and planned research and development, current and planned manufacturing or distribution methods and processes, current and anticipated customer requirements, price lists, market studies, business plans, computer hardware, Software and database technologies, systems, structures and architectures; and

(iii) all information concerning the business and affairs of Seller or the Business (including historical and current financial statements, financial projections and budgets, Tax returns and accountants’ materials, historical, current and projected sales, financial forecasts, pricing, cost of goods, capital spending budgets and plans, business plans, strategic plans, marketing and advertising plans, publications, client and customer lists and files, contracts, the names and backgrounds of key personnel and personnel training techniques and materials, however documented) and whether in written, electronic or other form.

“ Consent ” means any approval, consent, ratification, waiver or other authorization by any Person including any Governmental Authority.

“ Confidentiality Agreement ” means the letter agreement between R. G. Barry Corporation and Seller dated May 24, 2010.

“ Contracts ” has the meaning given to such term in Section 3.14(a) .

“ Copyrights ” means all registered, unregistered or unregistrable works of authorship and copyrights (including, but not limited to drawings and designs) in both published works and unpublished works of Seller relating to the Business (whether United States or foreign).

“ Current Assets ” means (i) Seller’s Accounts Receivable (net of the Receivables Reserve), (ii) Seller’s Finished Goods Inventory (net of reserves) and (iii) prepaid expenses to the extent (and only to the extent) reflected on the Closing Date Balance Sheet as finally agreed to or determined in accordance with Section 2.4 below. Current Assets do not include Seller’s cash, cash equivalents, investment accounts, any Tax assets or any Excluded Assets.

“ Current Liabilities ” means the liabilities and obligations of Seller for current liabilities, including Trade Payables, to the extent (and only to the extent) reflected on the Closing Date Balance Sheet as finally agreed to or determined in accordance with Section 2.4 below. Current Liabilities do not include any Excluded Liabilities.

“ Customer Claims ” means any and all demands for replacement, refunds, returns or allowances pertaining to products sold or distributed by Seller on or prior to the Closing Date (other than claims by Buyer against Seller regarding products sold by Seller to Buyer pursuant to this Agreement).

“ Customer Orders ” means all outstanding, unfilled, nondelinquent orders of customers to purchase products of the Business as of the Closing Date, which are listed on Exhibit D , as the same may be updated pursuant to Section 2.6(b) .

“ Damages ” has the meaning given to such term in Section 11.1 .

“ Defined Benefit Plan ” means an Employee Pension Benefit Plan of Seller which is subject to the minimum funding requirements of Title IV of ERISA or the Code.

“ Dispute Notice ” has the meaning given to such term in Section 2.4(b) .

“ Dispute Period ” has the meaning given to such term in Section 2.4(b) .

“ EGTRRA ” means amendments to an Employee Pension Benefit Plan required by the Economic Growth and Tax Relief Reconciliation Act of 2001, and all other amendments required prior to the end of the initial remedial amendment period cycle set forth in Rev. Proc. 2005-66, as superseded by Rev. Proc. 2007-44.

“ Employee Benefit Plan ” has the meaning given to such term in Section 3(3) of ERISA.

“ Employee Pension Benefit Plan ” has the meaning given to such term in Section 3(2) of ERISA.

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

“ Employee Welfare Benefit Plan ” has the meaning given to such term in Section 3(1) of ERISA.

“ Environment ” means all soil, land, surface or subsurface strata, surface waters (including navigable waters and ocean waters), ground waters, drinking water supply, stream sediments, ambient air (including indoor air), plant and animal life and any other environmental medium or natural resource.

“ Environmental, Health and Safety Liabilities ” means any cost, damage, expense, liability, obligation or other responsibility arising from or under any Environmental Law or Occupational Safety and Health Law, including those consisting of or relating to:

(i) any environmental, health or safety matter or condition (including on-site contamination, occupational safety and health and regulation of any chemical substance or product);

(ii) any fine, penalty, judgment, award, settlement, legal or administrative proceeding, damage, loss, claim, demand or response, remedial or inspection cost or expense arising under any Environmental Law or Occupational Safety and Health Law;

(iii) financial responsibility under any Environmental Law or Occupational Safety and Health Law for cleanup costs or corrective action, including any cleanup, removal, containment or other remediation or response actions (“ Cleanup ”) required by any Environmental Law or Occupational Safety and Health Law; or

(iv) any other compliance, corrective or remedial measure required under any Environmental Law or Occupational Safety and Health Law.

The terms “removal,” “remedial” and “response action” include the types of activities covered by CERCLA.

“ Environmental Law ” means any Law that regulates or relates to:

(i) advising appropriate authorities, employees or the public of intended or actual Releases of pollutants or hazardous substances or materials, violations of discharge limits or other prohibitions and the commencement of activities, such as construction, that could impact the Environment;

(ii) preventing or reducing to acceptable levels the Release of Hazardous Material into the Environment;

(iii) reducing the concentrations or volume, or preventing the Release or minimizing the hazardous characteristics, of wastes that are generated, emitted or disposed of, and ensuring that wastes, including Hazardous Material, are disposed of properly;

(iv) assuring that products are designed, formulated, packaged and used so that they do not present unreasonable risks to human health or the Environment when used or disposed of;

(v) protecting resources, species or ecological amenities;

(vi) reducing to acceptable levels the risks inherent in the transportation of Hazardous Material or other potentially harmful substances;

(vii) cleaning up pollutants that have been Released, preventing the Threat of Release or paying the costs of such clean up or prevention;

(viii) making responsible parties pay private parties, or groups of them, for damages done to their health or the Environment or permitting self-appointed representatives of the public interest to recover for injuries done to public assets; or

(ix) Permits for the treatment, storage, disposal, emission or discharge of Hazardous Material, including Permits required for the construction or operation of equipment or processes that have the potential to emit or generate Hazardous Material.

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

“ ERISA Affiliate ” means (i) any Person included with Seller in a controlled group within the meaning of Section 414(b) of the Code, (ii) any trade or business (whether or not incorporated) which is under common control with Seller within the meaning of Section 414(c) of the Code, (iii) any member of any affiliated service group of which Seller is a member within the meaning of Section 414(m) of the Code, or (iv) any other Person treated as an affiliate of Seller under Section 414(o) of the Code.

“ Escrow Agent ” means the escrow agent designated in the Escrow Agreement.

“ Escrow Agreement ” has the meaning given to such term in Section 2.8(a)(ix) .

“ Escrow Fund ” means the fund organized by the Escrow Agent in accordance with the terms of the Escrow Agreement.

“ Estimated Closing Date Working Capital Amount ” means $4,600,000.

“ Excess Benefit Plan ” has the meaning given to such term in Section 3(36) of ERISA.

“ Excluded Assets ” means (i) Seller’s cash and cash equivalents, (ii) Seller’s corporate record book and corporate seal, (iii) Seller’s rights under this Agreement (or under any Ancillary Documents executed or delivered by Seller), (iii) accounts receivable that are listed on Exhibit A , as the same may be updated pursuant to Section 2.6(a) , and (iv) any asset listed on Exhibit E hereto.

“ Excluded Liability ” means any liability or obligation of Seller, direct or indirect, known or unknown, absolute or contingent, not expressly defined in this Agreement as an Assumed Liability. Without limiting the generality of the foregoing, an “ Excluded Liability ” includes any liability or obligation of Seller:

(i) except as otherwise provided for by Section 10.5(d) , any Taxes or other obligation and expense of any kind or nature relating to Taxes, including without limitation, any liabilities, obligations and expenses pursuant to any tax sharing agreement, tax indemnification or similar arrangement (and all penalties, interest and additions with respect thereto) (A) payable with respect to any of the Seller, either of the Shareholders, Ms. Powers, the Business, the Acquired Assets or any other assets or properties of the Seller, or (B) incident to or arising as a consequence of the negotiation or consummation of this Agreement and the transactions contemplated hereby by Seller, the Shareholders and Ms. Powers;

(ii) for costs, fees and expenses incurred in connection with this Agreement and the transactions contemplated hereby including any claims for brokerage or finder’s fees or commissions or similar payments in connection with the transactions contemplated hereby, including any fees owing to D.A. Davidson & Co.;

(iii) resulting from, arising out of, relating to, in the nature of, or caused by any (A) breach of contract, (B) tort, (C) infringement or violation of Law or of any Order, or (D) environmental matter, including, those arising under Environmental, Health and Safety Liabilities;

(iv) which relates to any Excluded Asset or to the operation of the Business prior to the Closing, unless an Assumed Liability, including all trade accounts payable of Seller other than the Trade Payables;

(v) for unpaid remuneration and/or compensation due to Seller’s employees through the close of business on the Closing Date, such as accrued but unpaid salary, wages, bonuses, commissions, and vacation pay;

(vi) under any employment, severance, retention, bonus or termination agreement with any employee of Seller or under any Employee Welfare Benefit Plan;

(vii) arising out of or relating to any employee grievance, the facts or circumstances of which occurred prior to the Closing, whether or not the affected employees are hired by Buyer at or after the Closing;

(viii) arising out of any Litigation or workers’ compensation claim pending or settled as of the Closing (and any Litigation relating in any way to any workers’ compensation claim, the facts and circumstances of which occurred prior to the Closing);

(ix) arising out of any Litigation or workers’ compensation claim commenced after the Closing Date relating to any occurrence or event happening prior to or on the Closing Date;

(x) under this Agreement (or under any Ancillary Document);

(xi) any amount owing to either of the Shareholders, Ms. Powers or any of their respective family members or beneficiaries;

(xii) all long-term liabilities and Indebtedness;

(xiii) under or arising from any contract or agreement other than the Assumed Contracts;

(xiv) arising under or related to any Product Liability Claim;

(xv) arising under or related to any Customer Claim; and

(xvi) arising out of any Proceeding involving the Business, the Seller or either Shareholder pending as of the Closing Date or arising out of or relating to any occurrence or event happening prior to the Closing Date.

“ Facilities ” or “ Facility ” means any real property currently or formerly owned, leased, occupied or operated by Seller, including the tangible personal property used, leased or operated by Seller at the respective locations of such real property.

“ Financial Statements ” has the meaning given to such term in Section 3.5(a)(i) .

“ Finished Goods Inventory ” means packaged, saleable products.

“ GAAP ” means generally accepted accounting principles for financial reporting in the United States of America, consistently applied.

“ Governmental Authority ” means any (i) nation, state, county, city, town, borough, village, district or other jurisdiction, (ii) federal, state, local, municipal, foreign or other government, (iii) governmental or quasi-governmental authority of any nature, (iv) multinational organization or body, (v) body exercising or entitled or purporting to exercise, any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power, or (vi) official of any of the foregoing.

“ Hazardous Activity ” means the distribution, generation, handling, importing, management, manufacturing, processing, production, refinement, Release, storage, transfer, transportation, treatment or use (including any withdrawal or other use of groundwater) of Hazardous Material in, on, under, about or from any of the Facilities or any part thereof and any other act, business, operation or thing that violates any Environmental Law, or increases the danger, or risk of danger, or poses an unreasonable risk of harm, to Persons or property on or off the Facilities.

“ Hazardous Material ” means any substance, material or waste which is regulated by any Governmental Authority, including any material, substance or waste which is defined as a “air pollutant,” “hazardous waste,” “hazardous material,” “hazardous substance,” “extremely hazardous waste,” “restricted hazardous waste,” “contaminant,” “toxic waste” or “toxic substance” under any provision of Law, including lead paint, petroleum, petroleum products, asbestos, presumed asbestos-containing material or asbestos-containing material, urea formaldehyde and polychlorinated biphenyls.

“ Hired Active Employee ” has the meaning given to such term in Section 10.3(a)(i) .

“ Indebtedness ” means, with respect to a Person, without duplication, all of the following, including accrued and unpaid interest, fees and expenses of such Person with respect to the following: (i) indebtedness for borrowed money, (ii) obligations evidenced by bonds, debentures, notes or other similar instruments, (iii) obligations or liabilities under or in connection with letters of credit or bankers’ acceptances or similar items, (iv) obligations to pay the deferred purchase price of property or services other than trade payables incurred in the Ordinary Course of Business, (v) obligations under capitalized leases, (vi) obligations arising out of interest rate and currency swap arrangements and any other arrangements designed to provide protection against fluctuations in interest or currency rates, (vii) deferred purchase price obligations related to past asset or equity acquisitions by such Person, (viii) all indebtedness of other Persons guaranteed or secured by such Person, and (ix) any and all amounts due from such Person to any Affiliate of such Person.

“ Indemnified Person ” has the meaning given to such term in Section 11.5(a) .

“ Indemnifying Person ” has the meaning given to such term in Section 11.5(a) .

“ Indemnity Escrow Amount ” means $3,375,000.

“ Independent Accountants ” has the meaning given to such term in Section 2.4(g) .

“ Intellectual Property Assets ” means all intellectual property (owned or licensed) by Seller in connection with the operation of the Business, including, but not limited to, the Marks, the Patents, the Copyrights, the Trade Secrets, the Net Names, and all rights in mask works, and the goodwill associated with all of the foregoing.

“ Intellectual Property Assignments ” has the meaning given to such term in Section 2.8(e) .

“ Inventory ” means all inventories of Seller, wherever located, including all Finished Goods Inventory, work in process, raw materials, spare parts and all other materials and supplies to be used or consumed by Seller in the production or final assembly of finished goods.

“ IRS ” means the United States Internal Revenue Service and, to the extent relevant, the United States Department of the Treasury.

“ Knowledge ” means that a Person has knowledge of a particular fact or matter contained in a representation or warranty set forth in this Agreement. Seller will be deemed to have Knowledge of a particular fact or other matter if Ms. Powers, Ms. Simmons or Dennis Eckols has, or at any time had, knowledge of that fact or other matter. An individual shall be deemed to have knowledge of a particular fact or other matter if (a) such individual is actually aware of such fact or other matter or (b) a prudent individual would be expected to discover or otherwise become aware of such fact or other matter during the performance of such individual’s duties for his employer.

“ Lease Agreement ” has the meaning given to such term in Section 2.8(a)(xiii) .

“ Leased Property ” has the meaning given to such term in Section 3.8 .

“ Law ” means any federal, state, local, municipal, foreign, international, multinational or other constitution, law, ordinance, principle of common law, code, regulation, rule, ruling, statute or treaty (or other proclamation having the force of law).

“ Letter of Intent ” means the letter of intent dated January 26, 2011, by and between Seller and R. G. Barry Corporation, relating to the transactions contemplated hereby.

“ Liens ” means any and all charges, liens, mortgages, deeds of trust, encumbrances, claims, community or other marital property interests, conditions, equitable interests, options, pledges, security interests, rights-of-way, easements, encroachments, servitudes, rights of first option, rights of first refusal, rights of first offer, restrictions on transfer or similar restrictions, conditional sales contracts or other similar conflicting ownership interests.

“ Litigation ” means any and all actions, arbitrations, audits, Proceedings, hearings, investigations, litigation (including appeals thereof) or suits (whether civil, criminal, administrative, judicial or investigative, whether formal or informal, whether public or private) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Authority or arbitrator.

“ Marks ” means all assumed and fictitious business names, trade names, trade dress, registered and unregistered trademarks, service marks and applications owned by or licensed to Seller (whether United States or foreign). Marks shall include the name “baggallini” and all derivations thereof and the rights to use the same names alone or in combination with other words, along with all related goodwill.

“ Material Adverse Effect ” means any event, fact, occurrence or circumstance that (i) has or is reasonably likely to have a material and adverse effect on the financial condition, business, operations, assets, properties, or prospects of Seller or the Business, (ii) does or would prevent or materially impair the ability of Seller, either of the Shareholders or Ms. Powers to carry out its, her or their respective obligations under this Agreement and any Ancillary Documents or (iii) would threaten or impede the consummation of the transactions contemplated by this Agreement.

“ Material Consents ” has the meaning given to such term in Section 7.3 .

“ Ms. Powers ” has the meaning given to such term in the introductory paragraph of this Agreement. All references in this Agreement to Ms. Powers include Ms. Powers in her individual capacity.

“ Ms. Simmons ” has the meaning given to such term in the introductory paragraph of this Agreement.

“ Multiemployer Plan ” has the meaning given to such term in Section 3(37) of ERISA.

“ Net Names ” means internet web site names, internet domain names, social media site names and the like used or held for use in connection with the Business.

“ No Material Adverse Change ” means that between the date of the Balance Sheet and the Closing, the business, operations, assets, properties and prospects of Seller and the Business shall have not been, or be threatened to be, materially and adversely affected in any way as a result of any event, occurrence, act or omission.

“ Noncompetition Period ” means the period of time commencing on the Closing Date, and expiring at 11:50 p.m. (EDT) on the third anniversary of the Closing Date.

“ Occupational Safety and Health Law ” means any Law designed to provide safe and healthy working conditions and to reduce occupational safety and health hazards, including the Occupational Safety and Health Act.

“ Opposition Filing ” has the meaning given to such term in Section 10.9 .

“ Order ” means any order, injunction, judgment, decree, ruling, assessment or award of any Governmental Authority or arbitrator.

“ Ordinary Course of Business ” means an action taken by a Person only if such action:

(i) is consistent in nature, scope and magnitude with the past practices of such Person and is taken in the ordinary course of the normal, day-to-day operations of such Person;

(ii) does not require authorization by the board of directors or shareholders of such Person (or by any Person or group of Persons exercising similar or delegated authority, such as managers or members of a limited liability company or general partners of a limited partnership) and does not require any other separate or special authorization of any nature; and

(iii) is similar in nature, scope and magnitude to actions customarily taken, without any separate or special authorization, in the ordinary course of the normal, day-to-day operations of other Persons that are in the same line of business as such Person.

“ Parties Accountants ” has the meaning given to such term in Section 2.4(f) .

“ Parties Accountants Resolution Period ” has the meaning given to such term in Section 2.4(f) .

“ Parties Resolution Period ” has the meaning given to such term in Section 2.4(e) .

“ Patents ” means all patents, patent applications, inventions and discoveries that may or may not be patentable or patented which are owned by or licensed to Seller (whether United States or foreign).

“ PBGC ” means the Pension Benefit Guaranty Corporation.

“ Permit ” means any consent, approval, ratification, waiver or other authorization, license, registration (not including, any patent, trademark or copyright applications or registrations) or permit issued, granted, given or otherwise made available by or under the authority of any Governmental Authority or pursuant to any Law.

“ Person ” means an individual, partnership, corporation, business trust, limited liability company, limited liability partnership, joint stock company, trust, unincorporated association, joint venture or other entity or a Governmental Authority.

“ Position Statement ” has the meaning given to such term in Section 2.4(g) .

“ Post-Closing Delivery ” has the meaning given to such term in Section 2.4(a) .

“ Proceeding ” means any action, arbitration, audit, hearing, investigation, litigation or suit (whether civil, criminal, administrative, judicial or investigative, whether formal or informal, whether public or private) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Authority or arbitrator.

“ Product Liability Claims ” means any and all product liability claims or other claims for injury to person or property relating to products manufactured, distributed or sold by Seller, whether based on theories of tort, contract, strict liability, express or implied warranty or otherwise.

“ Purchase Orders ” means all orders placed by Seller with Seller’s sourcing agent in China for the manufacture of products outstanding as of the Closing Date, which are listed on Exhibit F , as the same may be updated pursuant to Section 2.6(c).

“ Purchase Price ” has the meaning given to such term in Section 2.3(a) .

“ Receivable Reserves ” means the reserves for Accounts Receivable set forth on the Closing Date Balance Sheet.

“ Release ” means any release, spill, emission, leaking, pumping, pouring, dumping, emptying, injection, deposit, disposal, discharge, dispersal, leaching or migration on or into the Environment or into or out of any property.

“ Remedial Action ” means all actions required or voluntarily undertaken (i) to clean up, remove, treat or in any other way address any Hazardous Material or other substance, (ii) to prevent the Release or Threat of Release or to minimize the further Release of any Hazardous Material or other substance so it does not migrate or endanger or threaten to endanger public health or welfare or the Environment, (iii) to perform pre-remedial studies and investigations or post-remedial monitoring and care, or (iv) to bring all Facilities and the operations conducted thereon into compliance with Environmental Laws and environmental Permits.

“ Representative ” means, with respect to a particular Person, any director, officer, manager, employee, agent, consultant, advisor, accountant, financial advisor, legal counsel or other representative of that Person.

“ Rules ” shall have the meaning given to such term in Section 11.8(a) .

“ SBDC ” has the meaning given to such term in Section 2.8(d) .

“ Securities Act ” means the Securities Act of 1933, as amended.

“ Seller ” has the meaning given such term in the introductory paragraph of this Agreement.

“ Seller Adjustment Amount ” means the amount of the Adjustment Amount if the Adjustment Amount is a positive number.

“ Seller Indemnified Persons ” has the meaning given to such term in Section 11.2 .

“ Seller’s Basket ” has the meaning given to such term in Section 11.4(a) .

“ Shareholders ” means Ms. Simmons and Ms. Powers in her capacity as Trustee of the Trust, each of whom is a “ Shareholder ”.

“ Software ” means all of Seller’s computer software and subsequent versions and releases thereof, including source code, object, executable or binary code, objects, comments, screens, user interfaces, report formats, templates, menus, buttons and icons and all files, data, materials, manuals, design notes and other items and documentation related thereto or associated therewith.

“ Sourcing Agreement ” has the meaning given to such term in Section 2.8(d) .

“ Tax ” or “ Taxes ” shall mean all (a) taxes, charges, withholdings, fees, levies, imposts, duties and governmental fees or other like assessments or charges of any kind whatsoever in the nature of taxes imposed by any United States federal, state, or local or any foreign or other Governmental Authority (including but not limited to those related to income, net income, gross income, receipts, capital, windfall profit, severance, property (real and personal), production, sales, goods and services, use, business and occupation, license, excise, registration, franchise, employment, payroll (including social security contributions), deductions at source, withholding, alternative or add-on minimum, intangibles, ad valorem, transfer, gains, stamp, customs, duties, estimated, transaction, title, paid-up capital, profits, premium, value added, recording, inventory and merchandise, business privilege, federal highway use, commercial rent or environmental tax, and any liability under unclaimed property, escheat, or similar regulations), (b) interest, penalties, fines, additions to tax or additional amounts imposed by any Governmental Authority in connection with (i) any item described in clause (a) or (ii) the failure to comply with any requirement imposed with respect to any Tax Return, and (c) liability in respect of any items described in clause (a) and/or (b) payable by reason of any contract (including any tax indemnity agreement, tax sharing agreement, tax allocation agreement or similar contract or arrangement, whether written or unwritten), assumption, transferee, successor or similar liability, operation of law (including pursuant to Treasury Regulations Section 1.1502-6 (or any predecessor or successor thereof or any analogous or similar state, local, or foreign Regulations)) or otherwise.

“ Tax Returns ” means federal, state, local and foreign tax returns, reports, declarations, information returns, statements and other similar filings relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

“ Territory ” means the United States and each state thereof and every other country in the world in which (i) the Seller is marketing and selling the products of the Business on the Closing Date or (ii) the Buyer markets and sells products after the Closing Date.

“ Third-Party Claim ” means any claim against any Indemnified Person by a Person not a party to this Agreement, whether or not involving Litigation.

“ Third-Party Software ” has the meaning given to such term in Section 3.19(h) .

“ Threat of Release ” means a reasonable likelihood of a Release that may require action in order to prevent or mitigate damage to the Environment that may result from such Release.

“ Trade Payables ” means the trade accounts payable of Seller to the extent (and only to the extent) reflected on the Closing Date Balance Sheet as finally agreed to in accordance with Section 2.4 .

“ Trade Secrets ” means all of Seller’s know-how, trade secrets, confidential or proprietary information, customer lists, Software, technical information, data, process technology, plans, drawings and blue prints.

“ Treasury Regulations ” means those regulations promulgated under the Code, as currently in effect, and as modified and clarified by amendment or successor regulation.

“ Trust ” has the meaning given to such term in the introductory paragraph of this Agreement.

“ WARN Act ” means the Worker Adjustment and Retraining Notification Act.

“ Working Capital Calculation ” means a written statement and detailed computation of the Closing Date Working Capital Amount as prepared by Buyer.

“ Y & S Litigation ” has the meaning given to such term in Section 10.8 .

1.2 Construction .

(a) The meanings of terms defined herein are equally applicable to the singular and plural of such defined terms.

(b) Except as otherwise specifically provided, the words “hereof,” “herein,” “hereto,” “hereunder” and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement. Any references herein to “Section,” “subsection,” “paragraph,” “subparagraph,” “Article,” “Exhibit” or “Schedule” refer to the sections, subsections, paragraphs, subparagraphs, articles, exhibits and schedules to this Agreement, as appropriate.

(c) The headings of articles and sections to this Agreement are provided for convenience only and will not affect the construction or interpretation hereof.

(d) This Agreement and all Exhibits and Schedules hereto are a result of negotiations among the parties hereto. Accordingly, neither this Agreement nor any Exhibit or Schedule hereto shall be construed against any party because of such party’s or its counsel’s involvement in its preparation.

(e) Reference to any Law means such Law as amended, modified, codified, replaced or reenacted, in whole or in part, and in effect from time to time, including rules and regulations promulgated thereunder, and reference to any section or other provision of any Law means that provision of such Law from time to time in effect and constituting the substantive amendment, modification, codification, replacement or reenactment of such section or other provision.

(f) “Including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding such term.

(g) Except as otherwise specifically set forth herein, all references to dollars or other monetary values or currency herein or the symbol “$” shall be deemed to be references to currency of the United States of America.

ARTICLE 2
The Acquisition and the Closing

2.1 Asset Purchase Transaction . On the Closing Date, but subject to the terms and conditions set forth in this Agreement, Seller shall sell, convey, transfer and assign the Acquired Assets to Buyer, free and clear of all Liens, and Buyer shall purchase and acquire the Acquired Assets and assume the Assumed Liabilities from Seller.

2.2 Liabilities Assumed and Excluded . On the terms and subject to the conditions set forth in this Agreement, at the Closing, Buyer shall assume the Assumed Liabilities. Buyer expressly does not assume and does not agree to and shall not assume any Excluded Liabilities. Seller shall promptly pay, discharge and perform in full all Excluded Liabilities when and as the same become due.

2.3 Purchase Price . The consideration for the Acquired Assets will be (a) $33,750,000 plus or minus the Adjustment Amount (the “ Purchase Price ”) and (b) the assumption of the Assumed Liabilities. At the Closing, the Purchase Price, prior to adjustment on account of the Adjustment Amount pursuant to Section 2.4 , shall be delivered by Buyer to Seller as follows: (a) $30,375,000 by wire transfer to a bank account designated by Seller; (b) $3,375,000 (which is the amount of the Indemnity Escrow Amount) to the Escrow Agent pursuant to the Escrow Agreement. Buyer shall also deliver to Seller the Assignment and Assumption Agreement. The Adjustment Amount shall be paid in accordance with Section 2.4 .

2.4 Post-Closing Adjustment .

(a) As promptly as reasonably practicable after the Closing Date, and in any event not later than 90 days after the Closing Date, Buyer shall prepare and deliver to Seller (i) the Closing Date Balance Sheet, (ii) the Working Capital Calculation, and (iii) the Adjustment Amount Calculation (such delivery, the “ Post-Closing Delivery ”).

(b) Seller shall have 30 days from the date Buyer makes the Post-Closing Delivery (such period, the “ Dispute Period ”) to notify Buyer, in writing, as to whether Seller agrees or disagrees with Buyer’s (i) preparation of the Closing Date Balance Sheet, (ii) Working Capital Calculation, and/or (iii) Adjustment Amount Calculation (such written notice, if any, the “ Dispute Notice ”). During the Dispute Period, Buyer shall timely provide copies of its working papers upon the request of Seller and its Representatives, and, where applicable, Buyer shall make commercially reasonable efforts to cause its accountants to provide copies of its working papers upon the request of Seller and its Representatives, in each case relating to the matters set forth in the Post-Closing Delivery.

(c) Seller may only object to Buyer’s (i) preparation of the Closing Date Balance Sheet, (ii) Working Capital Calculation and/or (iii) Adjustment Amount Calculation, by delivering a Dispute Notice to Buyer during the Dispute Period.

(d) If Seller fails to deliver a Dispute Notice to Buyer during the Dispute Period, (i) the Closing Date Balance Sheet as prepared by Buyer shall be deemed to have been correctly prepared, (ii) the Working Capital Calculation and Adjustment Amount Calculation prepared by Buyer shall be deemed to be correct and complete, and (iii) the calculation of the Closing Date Working Capital Amount and the Adjustment Amount by Buyer shall be deemed final and correct and shall each be binding upon each of the parties hereto.

(e) If Seller delivers a Dispute Notice to Buyer during the Dispute Period, Seller and Buyer shall, for a period of 45 days from the date the Dispute Notice is received by Buyer (such period, the “ Parties Resolution Period ”), use their respective Best Efforts to resolve the items in dispute. Any items so resolved by the parties shall be deemed to be final and correct as so resolved and shall be binding upon each of the parties hereto.

(f) If Seller and Buyer are unable to resolve all of the items in dispute during the Parties Resolution Period, then either Buyer or Seller may give the other party written notice that such party intends to refer the items remaining in dispute to the parties’ respective independent accounting firms for resolution. Buyer and Seller shall each, within ten days after delivery of such notice and at their own expense, appoint (and notify the other of such appointment) an accounting firm of their choice (collectively, the “ Parties Accountants ”) and notify the other party of that choice. The Parties Accountants shall, for a period of 45 days from the date of the last notice of the choice of the Parties’ Accountants (such period, the “ Parties Accountants Resolution Period ”), attempt to reach mutual agreement on the items in dispute. In the event the Parties Accountants reach mutual agreement on the items in dispute within the Parties Accountants Resolution Period, such items so resolved by the Parties Accountants shall be final and binding upon the parties hereto and shall not be subject to judicial review or other Proceeding.

(g) If the Parties Accountants are unable to resolve all of the items in dispute during the Parties Accountants Resolution Period, then the Parties Accountants shall, within 15 days after the end of the Parties Accountants Resolution Period, jointly appoint a disinterested, nationally or regionally-recognized accounting firm to serve as the independent accounting firm to resolve such disputed items (the “ Independent Accountants ”). The Independent Accountants selected by the Parties Accountants shall be final and binding. Upon the selection of the Independent Accountants, Buyer or Seller shall refer the items remaining in dispute to the Independent Accountants, which referral shall be made in writing, copies of which shall concurrently be delivered to the parties hereto. The referring party shall furnish the Independent Accountants, at the time of such referral, with the Post-Closing Delivery and the Dispute Notice. The parties shall also furnish the Independent Accountants with such other information and documents as the Independent Accountants may reasonably request in order for them to resolve the items in dispute. Buyer and Seller shall also, within ten days of the date the items in dispute are referred to the Independent Accountants, provide the Independent Accountants with a written notice (a “ Position Statement ”) describing in reasonable detail their respective positions on the items in dispute (copies of which will concurrently be delivered to the other parties hereto). If any party fails to timely deliver its Position Statement to the Independent Accountants, the Independent Accountants shall resolve the items in dispute solely upon the basis of the information otherwise provided to them. The Independent Accountants shall resolve all disputed items in a written determination to be delivered to each of the parties hereto within 45 days after such matter is referred to them; provided , however , that any delay in delivering such determination shall not invalidate such determination or deprive the Independent Accountants of jurisdiction to resolve the items in dispute. The decision of the Independent Accountants as to the items in dispute shall be final and binding upon the parties hereto and shall not be subject to judicial review or other Proceeding. The fees and expenses of the Independent Accountants incurred in the resolution of any items in dispute shall be determined by the Independent Accountants and set forth in their report and shall be allocated and paid by Buyer and Seller, in inverse proportion to the extent they prevailed on the items in dispute.

(h) Within five days after the final determination of the Adjustment Amount (whether through failure of Seller to timely deliver a Dispute Notice, agreement of the parties, a determination of the Parties Accountants or determination of the Independent Accountants) the Purchase Price shall be adjusted as follows:

(i) if the Adjustment Amount results in a Buyer Adjustment Amount, Seller shall pay to Buyer, within two Business Days from the date on which the Adjustment Amount is finally determined, by wire transfer of immediately available funds to an account specified by Buyer in writing, the Buyer Adjustment Amount.

(ii) if the Adjustment Amount results in a Seller Adjustment Amount, Buyer shall pay to Seller, within two Business Days from the date on which the Adjustment Amount is finally determined, by wire transfer of immediately available funds to an account specified by Seller in writing, the Seller Adjustment Amount.

2.5 Allocation of Purchase Price . The Purchase Price, as adjusted, shall be allocated among the Acquired Assets. Buyer shall retain, and pay the expenses of, a valuation firm to perform within 60 days following the Closing an allocation of the Purchase Price among the Acquired Assets (the “ Allocation ”), and such Allocation shall be used by all of the parties hereto. Neither Seller, Buyer, either of the Shareholders nor Ms. Powers shall take a position on any tax return (including, without limitation, IRS Form 8594, and any amendments thereto), before any Governmental Authority charged with the collection of any Tax, or in any Proceeding that is inconsistent with the Allocation (taking into account any subsequent amendments required by law) without the prior written consent of the other parties hereto. Seller, Buyer, the Shareholders and Ms. Powers shall make their respective IRS Forms 8594 (and any amendments thereto) filed or to be filed with the IRS available for inspection by the other party for the purpose of verifying compliance with this Section 2.5 and the Allocation.

2.6 Updating of Certain Exhibits Prior to the Closing .

(a) Within two Business Days of the Closing Date, Seller and Buyer shall update the list of Accounts Receivable included as Exhibit A to this Agreement to include all customer trade accounts receivable of Seller arising in the Ordinary Course of Business of Seller after the date of this Agreement; provided, however, that no such Accounts Receivable shall be added to Exhibit A if Buyer determines, in good faith and after consultation with Dennis Eckols, that such Accounts Receivable are reasonably unlikely to be fully collectible within 90 days following the Closing as a result of Seller’s providing extended payment terms to the customer, the customer’s financial condition or other factors known to Buyer.

(b) Within two Business Days of the Closing Date, Seller and Buyer shall update the list of Customer Orders that is included as Exhibit D to this Agreement to include all outstanding, unfilled, non-delinquent orders of customers to purchase products of the Business as of the Closing Date that are not listed on said Exhibit D because such Customer Orders were entered into in the Ordinary Course of Business of Seller after the date of this Agreement.

(c) Within two Business Days of the Closing Date, Seller and Buyer shall update the list of Purchase Orders included as Exhibit F to this Agreement to include all orders placed by Seller with Seller’s sourcing agent in China after the date of this Agreement so long as such Purchase Orders have been entered into in the Ordinary Course of Business of Seller and are consistent with Seller’s past practice.

2.7 Closing . The Closing will take place at the offices of Buyer’s legal counsel, Vorys, Sater, Seymour and Pease, LLP, Columbus, Ohio, commencing at 10:00 a.m. (local time) on March 31, 2011, unless Buyer and Seller otherwise agree. To the extent reasonably practicable, the parties shall use Best Efforts to effect the Closing through electronic means of communication. Subject to the provisions of Article 9 , failure to consummate the purchase and sale provided for in this Agreement and at the place determined pursuant to this Section 2.6 will not result in the termination of this Agreement and will not relieve any party of any obligation under this Agreement. In such a situation, the Closing will occur as soon as practicable, subject to Article 9 .

2.8 Closing Deliveries . In addition to any other documents to be delivered under the provisions of this Agreement, at the Closing:

(a) Seller shall (and the Shareholders and Ms. Powers shall cause Seller to) deliver the following to Buyer, all of which shall be in form and substance reasonably satisfactory to Buyer and its counsel:

(i) One or more bills of sale for all of the Acquired Assets that are items of tangible personal property, substantially in the form attached hereto as Exhibit 2.8(a)(i) , duly executed by Seller (the “ Bill of Sale ”);

(ii) An assignment of all of the Acquired Assets that are items of intangible property (other than the Intellectual Property Assets), including the Assumed Contracts, substantially in the form attached hereto as Exhibit 2.8(a)(ii) , duly executed by Seller (the “ Assignment and Assumption Agreement ”);

(iii) Assignments by Seller of all Intellectual Property Assets, in proper form for recordation with respect to the registered Intellectual Property Assets with the United States Patent and Trademark Office, or other appropriate office, duly executed by Seller;

(iv) Such other deeds, bills of sale, assignments, certificates of title, documents, and other instruments of transfer and conveyance as may reasonably be requested by Buyer;

(v) Copies of Seller’s articles of incorporation and by-laws, each as amended to date, and certified as to accuracy by an officer of Seller;

(vi) A Certificate of Existence for Seller from the Oregon Secretary of State and from each jurisdiction in which it is qualified to do business, each dated no more than ten days prior to the Closing Date;

(vii) A certificate of a duly authorized officer of Seller, to be dated as of the Closing Date, certifying (A) the resolutions duly adopted by the board of directors and each of the Shareholders, authorizing and approving the execution, delivery and performance of this Agreement and the transactions contemplated hereby, (B) that such resolutions have not been rescinded or modified and remain in full force and effect as of the Closing, and (C) to the incumbency and signatures of the officers of Seller executing this Agreement and any other document executed on behalf of Seller in connection with this Agreement and the transactions contemplated hereby;

(viii) A certificate executed by Seller, each of the Shareholders and Ms. Powers as to the accuracy of their representations and warranties as of the date of this Agreement and as of the Closing Date in accordance with Section 7.1 and as to their compliance with and performance of their covenants and obligations to be performed or complied with at or before the Closing in accordance with Section 7.2 ;

(ix) An escrow agreement substantially in the form of Exhibit 2.8(a)(ix) , executed by Seller, each of the Shareholders and the Escrow Agent (the “ Escrow Agreement ”);

(x) An affidavit of Seller pursuant to Section 1445(b)(2) of the Code stating, under penalties of perjury, Seller’s United States taxpayer identification number and that Seller is not a foreign person, which affidavit complies with the requirements of Treasury Regulation Section 1.1445-2(b)(2).

(xi) An opinion of John Magliana, Esq., dated as of the Closing Date, in form and substance reasonably acceptable to Buyer;

(xii) Releases of all Liens on the Acquired Assets;

(xiii) A Lease Agreement between Buyer and Dixie-Ann, LLC in the form attached hereto as Exhibit 2.8(a)(xiii) (the “ Lease Agreement ”), duly executed; and

(xiv) Evidence of the termination by Seller of the employment of the Hired Active Employees effective as of the Closing;

(xv) Such other documents as Buyer or its counsel may reasonably require.

(b) Buyer shall deliver the following to Seller, all of which shall be in form and substance reasonably satisfactory to Seller and its counsel:

(i) $30,375,000 by wire transfer to an account specified by Seller in writing, prior to the Closing Date;

(ii) The Escrow Agreement, executed by Buyer and the Escrow Agent, together with the delivery of $3,375,000 to the Escrow Agent thereunder, by wire transfer to an account specified by the Escrow Agent;

(iii) The Assignment and Assumption Agreement, duly executed by Buyer;

(iv) A Certificate of Good Standing for Buyer from the Ohio Secretary of State dated no more than ten days prior to the Closing Date;

(v) A certificate of the Secretary or Assistant Secretary of Buyer, to be dated as of the Closing Date, certifying (A) the resolutions duly adopted by the board of directors of Buyer authorizing and approving the execution, delivery and performance of this Agreement and the transactions contemplated hereby, (B) that such resolutions have not been rescinded or modified and remain in full force and effect as of the Closing, and (C) to the incumbency and signatures of the officers of Buyer executing this Agreement and any other document executed on behalf of Buyer in connection with the transactions contemplated hereby;

(vi) A certificate executed by Buyer as to the accuracy of its representations and warranties as of the date of this Agreement and as of the Closing Date in accordance with Section 8.1 and as to its compliance with and performance of its covenants and obligations to be performed or complied with at or before the Closing in accordance with Section 8.2 ;

(viii) The Lease Agreement executed by Buyer.

(c) Buyer and Ms. Powers shall execute and deliver to the other a Consulting Agreement in the form attached hereto as Exhibit 2.8(c) .

(d) Buyer and Shenzhen Baggallini Distribution Company Limited (“ SBDC ”) shall enter into a sourcing and support agreement in a form satisfactory to Buyer (the “ Sourcing Agreement ”).

(e) Each of the Shareholders, Ms. Powers, Dennis Eckols and Terie Bradley shall execute and deliver to Seller prior to the Closing an Intellectual Property Assignment in the form attached hereto as Exhibit 2.8(e) (the “ Intellectual Property Assignments ”).

(f) Buyer and each of Dennis Eckols and Terie Bradley shall have entered into employment agreements in a form mutually agreed upon between Buyer and each such individual.

ARTICLE 3
Representations and Warranties of Seller, the Shareholders and Ms. Powers

Except as otherwise disclosed in the Schedules, Seller, each of the Shareholders and Ms. Powers, jointly and severally, represent and warrant the following to Buyer:

3.1 Organization and Good Standing; Capitalization .

(a) Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Oregon.

(b) Schedule 3.1(b) hereto contains a true, accurate and complete list of each jurisdiction in which Seller is authorized to conduct business.

(c) The Shareholders are the only record and beneficial owners of the outstanding voting capital stock of Seller. The issued and outstanding shares of voting capital stock of Seller are owned, beneficially and of record, by the Shareholders and are owned free and clear of any and all Liens. Other than as described on Schedule 3.1(c) , there are no issued and/or outstanding shares or other equity securities of Seller, or securities convertible into or exchangeable or exercisable for equity securities or interests of Seller, and there are no outstanding options, warrants, rights, contracts, commitments, understandings or arrangements by which Seller or any other Person is bound to issue, repurchase or otherwise acquire or retire any equity securities or interests of Seller. There are no voting trusts, proxies or any other agreements or understandings with respect to the voting of any equity securities or interests of Seller. Seller does not own, or have any right, option or obligation to acquire, any equity securities or interests of any other Person.

3.2 Authorization . Each of Seller, the Shareholders and Ms. Powers has full power and authority to execute and deliver this Agreement and each Ancillary Document to which Seller or such Shareholder is a party and to perform its or her respective obligations hereunder and thereunder. The execution, delivery and performance of this Agreement and each Ancillary Document to which Seller is a party and consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action (including director and shareholder approval) on the part of Seller.

3.3 Validity; Binding Effect . This Agreement has been duly and validly executed and delivered by Seller, each of the Shareholders and Ms. Powers. This Agreement constitutes a valid and legally binding obligation of Seller, each of the Shareholders and Ms. Powers, enforceable against Seller, each of the Shareholders and Ms. Powers in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar Laws affecting the enforcement of creditors’ rights and remedies generally or by general equitable principles. Each of the Ancillary Documents, when executed and delivered, will constitute a valid legal obligation of Seller, each of the Shareholders and Ms. Powers (if Seller, such Shareholder or Ms. Powers is a party thereto), enforceable against Seller, each of the Shareholders and Ms. Powers (if a party thereto) in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar Laws affecting the enforcement of creditors’ rights and remedies generally or by general equitable principles.

3.4 Noncontravention .

(a) By Seller . The execution, delivery and performance of this Agreement and of each Ancillary Document to which Seller is a party, the consummation of the transactions contemplated hereby and thereby and the compliance with or fulfillment of the terms and provisions hereof and thereof or of any other agreement or instrument contemplated hereby or thereby, do not and will not (i) contravene, conflict with or result in a breach or violation of (A) any of the provisions of the articles of incorporation or by-laws of Seller, (B) any resolution adopted by the board of directors or shareholders of Seller or (C) any agreement or instrument to which Seller is a party or by which any of its assets are bound, (ii) contravene, conflict with or result in a breach or violation of, or to the Knowledge of Seller, give any Governmental Authority or other Person the right to challenge, this Agreement, any Ancillary Document, or the transactions contemplated hereby or thereby, or to exercise any remedy or obtain any relief under, any Law or Order which affects or binds Seller or any of its assets or properties, (iii) contravene, conflict with, or result in a breach or violation of, or give any Governmental Authority the right to revoke, withdraw, suspend, cancel, terminate or modify, any Permit that is held by Seller or that otherwise relates to the Business, (iv) result in the imposition or creation of any Lien upon or with respect to any of the assets owned or used by Seller, including the Acquired Assets, or (v) require Seller to obtain the approval, consent or authorization of, or to make any declaration, filing or registration with, any Governmental Authority which has not been obtained in writing prior to the date of this Agreement.

(b) By the Shareholders and Ms. Powers . The execution, delivery and performance of this Agreement by the Shareholders and Ms. Powers of each Ancillary Document to which either of the Shareholders or Ms. Powers is a party, the consummation of the transactions contemplated transactions contemplated hereby and thereby and the compliance with or fulfillment of the terms and provisions hereof and thereof or of any other agreement or instrument contemplated hereby or thereby, do not and will not (i) contravene, conflict with or result in a breach or violation by either of the Shareholders or Ms. Powers of any agreement or instrument to which such Shareholder is bound or by which such Shareholder’s assets are bound, (ii) contravene, conflict with, or result in a breach or violation of any Law or Order which affects or binds either of the Shareholders or Ms. Powers or (iii) require either of the Shareholders or Ms. Powers to obtain the approval, consent or authorization of, or to make any declaration, filing or registration with, any Governmental Authority which has not been obtained in writing prior to the date of this Agreement.

3.5 Financial Statements; Accounts Receivable; Inventory

(a) Financial Statements of Seller .

(i) Attached hereto as Schedule 3.5(a) are true, accurate and complete copies of the balance sheet of Seller as of December 31, 2010 (the “ Balance Sheet ”) and the related statements of income and cash flows for the fiscal year then ended (collectively, the “ Financial Statements ”).

(ii) The Financial Statements (A) fairly present, in all material respects, the operating results and the financial condition of Seller on the dates and for the periods indicated, (B) are correct and complete in all material respects, (C) are consistent, in all material respects, with the books and records of Seller (which books and records are correct and complete in all material respects), and (D) were prepared in accordance with GAAP. No financial statements of any Person other than Seller are required by GAAP to be included in the Financial Statements. Seller has no liabilities or obligations of any nature (whether absolute, accrued, contingent or otherwise), except for liabilities or obligations reflected or reserved against in the Balance Sheet, and non-material liabilities incurred in the Ordinary Course of Business since the date thereof in amounts consistent with past practice.

(b) No Changes . Except as disclosed in Schedule 3.5(b) , since the date of the Balance Sheet, (i) there has been No Material Adverse Change and no event has occurred or circumstance exists that may result in such a change or in a Material Adverse Effect, (ii) Seller has not sold, leased, transferred or assigned any of its assets, tangible or intangible, other than for a fair consideration in the Ordinary Course of Business, (iii) Seller has not entered into any agreement, contract, lease or license (or series of related agreements, contracts, leases and licenses) outside the Ordinary Course of Business, (iv) no party has accelerated, terminated, modified or cancelled any agreement, contract, lease or license to which Seller is a party or by which Seller or its assets are bound, or to Seller’s Knowledge has threatened, or is entitled under the terms of the applicable agreement, contract, lease or license, to do any of the foregoing, (v) Seller has not imposed or had a Lien imposed upon any of its assets, (vi) Seller has not made any capital expenditure outside of the Ordinary Course of Business, (vii) Seller has not made any capital investment in, any loan to, or any acquisition of the securities or assets of, any other Person (or series of related capital investments, loans and acquisitions), (viii) Seller has not delayed or postponed the payment of accounts payable or other liabilities outside the Ordinary Course of Business, (ix) Seller has not experienced any material damage, destruction or loss (whether or not covered by insurance) to any of its property, and (x) Seller has not entered into any employment contract or collective bargaining agreement, written or oral, or modified the terms of any such existing contract or agreement.

(c) Accounts Receivable . The Accounts Receivable of Seller as of the Closing Date will represent valid, current and collectible obligations (other than to the extent of the Receivables Reserve) arising from sales actually made or services actually performed by Seller in the Ordinary Course of Business. There will be no contest, claim, or right of set-off (other than to the extent of the Receivable Reserves) under any agreement with any obligor of any such Account Receivable relating to the amount or validity of such Account Receivable. Exhibit A sets forth a true, accurate and complete list of all Accounts Receivable as of the date hereof.

(d) Inventory . All items included in the Inventory as reflected on the Balance Sheet consisted, on the date of such Balance Sheet, of a quality and quantity usable and