Item 1.01 Entry into a Material Definitive Agreement

On February 14, 2009, Lenox Group Inc. (the “Company”), Lenox, Incorporated, a New Jersey corporation (“LI”), Lenox Worldwide, LLC, a Delaware limited liability company (“LW”), Lenox Retail, Inc., a Minnesota corporation (“LRI”), Lenox Sales, Inc., a Minnesota corporation (“LSI”), FL 56 Intermediate, Corp., a Delaware corporation (“FL”), and D 56, Inc., a Minnesota corporation (“D56” and collectively with the Company, LI, LW, LRI, LSI and FL, the “Sellers”), entered into an Asset Purchase Agreement (“Asset Purchase Agreement”) with Upstairs Acquisition Corp., a Delaware corporation (the “Purchaser”).

Under the terms of the Asset Purchase Agreement, the Purchaser agrees to purchase substantially all of the assets of the Sellers, including all of the Sellers’ assets, rights and claims in relation to the dinnerware, stemware, fine crystal, beverageware, flatware, giftware, other tableware and related decorative and collectible products that are manufactured, designed, distributed and sold by the Sellers under the Lenox, Gorham, Dansk and other related brands (the “Lenox Business”), but excluding substantially all of the assets primarily or exclusively relating to the holiday, seasonal, decorative, figurine and collectible products that are manufactured, designed, distributed and sold under the Department 56 brands by or on behalf of D56 (the “Purchased Assets”). As consideration for the sale and purchase of the Purchased Assets, Purchaser agrees to pay to Sellers an amount in cash equal to $42,500,000.00, subject to certain adjustments as provided in the Asset Purchase Agreement (including a working capital adjustment), minus certain determined cure costs that Purchaser agrees to pay, and plus the assumption by the Purchaser of certain assumed liabilities as specified in the Asset Purchase Agreement. Purchaser also agrees to offer employment to each of the Sellers’ employees who remain employed by the Lenox Business immediately prior to the closing of the sale by Sellers or their subsidiaries. Those employees who accept such offers of employment shall, for a period of 1 year following the closing of the sale or such longer period as required by law, receive compensation and benefits that are, in the aggregate, substantially equivalent to those provided to such employees prior to the closing of the sale, provided that the Purchaser shall not be required to provide equity-based benefits, defined benefit pension benefits, retiree medical or life insurance benefits, incentive or bonus plans or certain other benefits.

The consummation of the transactions contemplated by the Asset Purchase Agreement is subject to (i) the approval of the United States Bankruptcy Court for the Southern District of New York (the “Court”), and (ii) other customary closing conditions, including the consent of certain third parties to the assumption and assignment of certain specified contracts from the Sellers to the Purchaser.

The Asset Purchase Agreement was executed following the completion of an auction that was conducted on February 11, 2009 (the “Auction”) in accordance with the bidding procedures that were approved by the Court on December 16, 2008 (the “Bidding Procedures”). At the conclusion of the Auction, in accordance with the Bidding Procedures and in an exercise of the Sellers’ business judgment, the Sellers declared the bid submitted by the Purchaser as the highest qualified bid with the greatest certainty of closing quickly and winner of the Auction.

There is no material relationship between the Company and the Purchaser other than in respect of the Asset Purchase Agreement. The hearing to approve the sale of the Purchased Assets pursuant to the terms of the Asset Purchase Agreement is scheduled to take place on February 23, 2009. A copy of the press release regarding the Auction is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

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