Exhibit 2.1

STOCK PURCHASE AGREEMENT

among

BLOUNT INTERNATIONAL INC. ,

BLOUNT, INC.,

CARLTON HOLDINGS, INC. ,

THE SHAREHOLDERS OF CARLTON HOLDINGS, INC .

and

Jerry A. Parsons and Richard L. Hawkins, as the Shareholders’ Representative

dated as of May 2, 2008

CONTENTS

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EXHIBITS

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STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT, dated as of May 2, 2008 (this “ Agreement ”), is entered into among BLOUNT INTERNATIONAL INC., a Delaware corporation (“ Parent ”), BLOUNT, INC., a Delaware corporation and wholly owned subsidiary of Parent (the “ Purchaser ”), CARLTON HOLDINGS, INC., an Oregon corporation (“ Company ”), the individuals named on Schedule 2.1 (each a “Shareholder” and collectively, the “ Shareholders ”) and Jerry A Parsons and Richard L. Hawkins, as the representatives of the Shareholders (collectively, the “ Shareholders’ Representatives ”).

RECITALS

A.             The Shareholders collectively own all the authorized, issued and outstanding shares of capital stock of Company, consisting of shares (the “ Shares ”) of Company’s voting Class A common stock, $0.01 par value per share (“ Class A Common Stock ”) and non-voting Class B common stock, $0.01 par value per share (“ Class B Common Stock ” and, together with the Class A Common Stock, collectively the “ Common Stock ”).

B.             The Shareholders desire to sell to the Purchaser, and the Purchaser desires to purchase from the Shareholders, the Shares on the terms and subject to the conditions set forth herein.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants hereinafter set forth, the Purchaser, Company and the Shareholders hereby agree as follows:

ARTICLE I.                    DEFINITIONS

Defined terms used herein shall have the meanings given them in Exhibit A or in the Sections of this Agreement referenced in Exhibit A .

ARTICLE II.                  PURCHASE AND SALE

SECTION 2.1.                    Purchase and Sale

On the terms and subject to the conditions set forth in this Agreement, each Shareholder shall sell, transfer and deliver to the Purchaser, and the Purchaser shall purchase from such Shareholder, the Shares free and clear of all Liens. The shares of each Shareholder are set forth opposite the name of such Shareholder on Schedule 2.1 .

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SECTION 2.2.                    Purchase Price; Adjustments to Purchase Price

(a)            The aggregate purchase price for the Shares is (i) $64,000,000 less (ii) the sum of, without duplication, (A) Company’s Net Debt, (B) the DISC Amount and (C) the Company Transaction Expenses (the “ Purchase Price ”). Prior to the date hereof, Company has provided a written statement to the Purchaser, certified by an officer of Company, setting forth the Company’s Net Debt and the Company Transaction Expenses, in each case, as of the Closing (the “ Closing Certificate ”), for purposes of calculating the Purchase Price, which shall include a list of the amount and the Person to whom any such Company Transaction Expense is owed and each lender of Indebtedness that is included in the determination of Net Debt. The Purchase Price is payable as provided in Section 2.3(c). Parent agrees that following the Closing, it will promptly pay (or cause to be paid) any Company Transaction Expenses listed on the Closing Certificate under the heading “Company Transaction Expenses”.

(b)            On the Closing Date, in consideration for the Shares sold by each Shareholder hereunder, such Shareholder shall be entitled to such Shareholder’s Pro Rata Portion of (i) the Purchase Price less (ii) the Holdback Amount.

SECTION 2.3.                    Closing

(a)            Subject to the terms and conditions of this Agreement, the sale and purchase of the Shares contemplated hereby shall take place at a closing (the “ Closing ”) at the offices of Perkins Coie LLP, 1120 NW Couch Street, Tenth Floor, Portland, Oregon, which shall occur simultaneously with the execution and delivery of this Agreement by the parties hereto (the date on which the Closing takes place being the “ Closing Date ”).

(b)            Simultaneously with the execution and delivery of this Agreement, the Shareholders or the Shareholders’ Representative shall deliver or cause to be delivered to the Purchaser:

(i)             stock certificates evidencing the Shares, duly executed in blank or accompanied by stock powers duly executed in blank, in proper form for transfer;

(ii)            copies of all material consents, authorizations and approvals, if any, required to be obtained by Company, the Shareholders or their affiliates and necessary for the consummation of the transactions contemplated by this Agreement and the Transaction Documents;

(iii)           resignations from each director of Company, dated effective as of or prior to the Closing Date;

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(iv)           the opinion of Perkins Coie LLP, counsel for Company, dated the Closing Date, in substantially the form attached as Exhibit B ;

(v)            a certificate, in form and substance satisfactory to the Purchaser, certifying that the purchase of the Common Stock is exempt from withholding pursuant to the Foreign Investment in Real Property Tax Act; and

(vi)           such certified copies of such corporate actions and proceedings and such other instruments and documents as shall have been reasonably requested by the Purchaser’s counsel.

(c)            Simultaneously with the execution and delivery of this Agreement, the Purchaser shall deliver to the Shareholders’ Representative, on behalf of the Shareholders, or other parties as set forth in this Agreement:

(i)             the Purchase Price (including the Holdback Amount), by wire transfer in immediately available funds to an account designated in writing by the Shareholders’ Representative prior to the date hereof;

(ii)            copies of all material consents, authorizations and approvals, if any, required to be obtained by Parent or the Purchaser and necessary for the consummation of the transactions contemplated by this Agreement and the Transaction Documents; and

(iii)           such certified copies of such corporate actions and proceedings and such other instruments and documents as shall have been reasonably requested by Company’s counsel.

SECTION 2.4.                    Shareholders’ Representative

(a)            Each Shareholder irrevocably authorizes and appoints each of Jerry A. Parsons and Richard L. Hawkins as the Shareholders’ Representative (and by execution of this Agreement, each of such individuals hereby accepts such appointment), with full power of substitution and resubstitution, as such Shareholder’s representative and true and lawful attorney-in-fact and agent to act in such Shareholder’s name, place and stead as set forth in this Agreement and to execute in the name and on behalf of such Shareholder any documents to be delivered by the Shareholders in connection with this Agreement. The Shareholders’ Representative shall not have any duties or responsibilities except those expressly set forth in this Agreement, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or shall otherwise exist against the Shareholders’ Representative. Each individual serving as the Shareholders’ Representative may act independently of the other on behalf of all Shareholders.

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(b)            Each of the Shareholders agrees that the Shareholders’ Representative shall have the full power, authority and right to perform, do and take any and all actions he deems necessary or advisable to carry out the purposes of this Agreement. In particular, but not by way of limitation, the Shareholders’ Representative has the power to (i) make and carry out decisions and exercise any and all rights of the Shareholders under this Agreement and any Transaction Document on behalf of each Shareholder and to sign documents and make filings on behalf of each Shareholder as if such Shareholder had itself signed or filed such document, (ii) consummate the transactions contemplated by this Agreement and the Transaction Documents, (iii) receive and deliver to the Purchaser surrendered certificates representing the Shares, (iv) communicate to, and receive all communications and notices from, the Purchaser, (v) sign documents and make filings on behalf of each Shareholder as if such Shareholder had itself signed or filed such document, (vi) subject to the limitations set forth in Article VII, negotiate, settle, compromise, make payments in respect of and otherwise handle all claims for indemnification made by the Purchaser hereunder, (vii) agree to, negotiate, enter into settlements and compromises of, and commence, prosecute, participate in, settle, dismiss or otherwise terminate, as applicable, any litigation, action, proceeding or investigation relating to Company, the Shares, the Shareholders, this Agreement, the Transaction Documents or any of the transactions contemplated by this Agreement or the Transaction Documents, and comply with orders of courts and awards of courts, mediators and arbitrators with respect to such litigation, action, proceeding or investigation, (viii) retain attorneys, accountants and other professional service providers to assist and advise him with respect to his duties hereunder, (ix) make, execute, acknowledge and deliver all such other agreements, guarantees, orders, receipts, endorsements, notices, requests, instructions, certificates, stock powers, letters and other writings relating to the foregoing, and, in general and (x) do any and all things and take any and all actions that the Shareholders’ Representative, in its sole discretion, may consider necessary, proper or convenient in connection with, or to carry out on behalf of the Shareholders, the transactions contemplated by this Agreement and the Transaction Documents. The Shareholders’ Representative shall establish an account for receipt of the Purchase Price and any other amounts due to the Shareholders from the Purchaser pursuant to the terms of this Agreement, and shall authorize any payments due to any or all of the Shareholders pursuant to this Agreement to be paid from such account by wire transfer in immediately available funds to the accounts designated by each Shareholder, promptly after delivery of any payments from the Purchaser to the account established by the Shareholders’ Representative. If specifically requested by Shareholders who hold at least 75% of the Shares prior to the Closing (the “ Required Shareholders ”), the Shareholders’ Representative shall also have the power to amend, modify or waive any agreement (including this Agreement) in the name of each Shareholder as if such Shareholder had itself amended, modified or waived such agreement (and regardless of whether the particular Shareholder in fact requested that the Shareholders’ Representative enter into such amendment, modification or waiver); provided , however , that,

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notwithstanding anything to the contrary, the Shareholders’ Representative shall have no power to amend any term of this Agreement which would change (i) the consideration to be received by the Shareholders or (ii) the relative indemnification obligations of the Shareholders. The Shareholders’ Representative shall have all of the rights and powers which Shareholders would otherwise have, and Shareholders agree that the Purchaser shall be entitled to rely exclusively upon all actions taken or omitted to be taken by the Shareholders’ Representative (acting either jointly or individually) pursuant to this Agreement and any of the foregoing matters. The Shareholders’ Representative shall for all purposes hereunder be deemed the sole authorized agent of the Shareholders until such time as the agency is terminated pursuant to the terms of Section 2.4(g).

(c)            The Shareholders’ Representative shall be entitled to rely, and shall be fully protected in relying, on any statements furnished to him by any Shareholder or the Purchaser, or on any other evidence deemed by the Shareholders’ Representative to be reliable. The Shareholders’ Representative shall be fully justified in failing or refusing to take any action under this Agreement unless he shall have received such advice or concurrence of the Shareholders as he deems appropriate or unless he shall have been expressly indemnified to his satisfaction by the Shareholders severally and on a Pro Rata Portion basis against any and all liability and expense that it may incur by reason of taking or continuing to take any such action. The Shareholders’ Representative shall in all cases be fully protected in acting, or refraining from acting, under this Agreement in accordance with a request of the Required Shareholders, subject to Section 2.4(b), and such request, and any such action taken or failure to act pursuant thereto, shall be binding on all the Shareholders. For the avoidance of doubt, neither the Purchaser nor any of its affiliates shall be under any obligation: (i) to indemnify and hold the Shareholders’ Representative, in his capacity as such, harmless against any damages incurred by the Shareholders’ Representative, in such capacity, arising out of or in connection with the acceptance or administration of the duties of the Shareholders’ Representative hereunder or under any other Transaction Documents; or (ii) to cover any out-of-pocket costs and expenses incurred by the Shareholders’ Representative, in such capacity, in connection with actions taken by the Shareholders’ Representative, in such capacity, pursuant to the terms of this Agreement or any other Transaction Documents; provided , however , that the foregoing shall in no way affect or limit any of the provisions of Article VII, including Parent’s and the Purchaser’s obligations to indemnify the Shareholders for any and all Losses, including any indemnifiable costs and expenses of the Shareholders’ Representative pursuant to Article VII.

(d)            The Shareholders’ Representative shall not be liable to the Shareholders for any error of judgment, or any action taken or omitted to be taken hereunder, except in the case of his bad faith, gross negligence or willful misconduct, as determined by a court of competent jurisdiction. The Shareholders’ Representative shall be entitled to consult with counsel of his choosing and shall be fully protected against

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liability to any Shareholder in any act taken, suffered or permitted by him in good faith in accordance with the advice of counsel.

(e)            The Shareholders’ Representative shall not be paid any fee for services to be rendered hereunder. All reasonable out-of-pocket fees and expenses incurred by the Shareholders’ Representative in performing his duties hereunder shall be reimbursed severally and on a Pro Rata Portion basis by the Shareholders; provided , however , that, to the extent practical and permitted under this Section 2.4(e), the Shareholders’ Representative shall deduct such fees and expenses from the amounts otherwise distributable to the Shareholders under this Agreement. In particular, the Shareholders’ Representative shall hold back the sum of $100,000 from amounts otherwise distributable to the Shareholders under this Agreement (the “ Holdback Amount ”) for a period of 90 days from the date of this Agreement, to be used (i) first, to satisfy any obligations for Transaction Expenses or Indebtedness, in each case not listed on the Closing Certificate, and (ii) thereafter, to satisfy any administrative expenses the Shareholders’ Representative may incur in such capacity. Following the date that is 90 days from the date of this Agreement, the Shareholders’ Representative may continue to hold any remaining funds from the Holdback Amount until such time as the Shareholders’ Representative determines, in the Shareholders’ Representative’s sole discretion, that no such additional administrative expenses will be incurred by the Shareholders’ Representative in connection with the performance of its obligation hereunder and, at the time of such determination and after subtracting any administrative expenses from the Holdback Amount, the Shareholders’ Representative shall deliver any remaining funds from the Holdback Amount to the Shareholders on a Pro Rata Portion basis.

(f)             The Shareholders agree, severally and on a Pro Rata Portion basis, to indemnify and hold the Shareholders’ Representative harmless against any and all losses, claims, damages, liabilities and expenses (including reasonable costs of investigation, attorneys’ fees and disbursements) that may be imposed on the Shareholders’ Representative or incurred by the Shareholders’ Representative in connection with the performance of his duties under this Agreement, including any litigation arising from this Agreement or involving its subject matter, unless such loss, liability, claim or expense shall have been determined by a court of competent jurisdiction to be a result of the Shareholders’ Representative’s bad faith, gross negligence or willful misconduct. Anything in this Agreement to the contrary notwithstanding, in no event shall the Shareholders’ Representative be liable to the Shareholders for special, indirect or consequential loss or damage of any kind whatsoever, even if the Shareholders’ Representative has been advised of the likelihood of such damages and regardless of the form of action.

(g)            The Shareholders’ Representative may resign at any time. The Shareholders’ Representative may be removed at any time by a writing signed by the

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Required Shareholders. If the Shareholders’ Representative or any successor shall resign, be so removed, or become unable to act as the Shareholders’ Representative, a replacement Shareholders’ Representative shall promptly be appointed by a writing signed by the Required Shareholders. Upon the acceptance of any appointment as the Shareholders’ Representative hereunder, such successor Shareholders’ Representative shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Shareholders’ Representative, and the retiring Shareholders’ Representative shall be discharged from its duties and obligations hereunder (but shall retain all rights under this Section 2.4 with respect to the retiring Shareholders’ Representative’s service as Shareholders’ Representative prior to such resignation or removal).

(h)            Notwithstanding anything to the contrary herein, the Purchaser shall be notified in writing at least five days prior to any such resignation, removal or appointment. Each of the Shareholders agrees that the Purchaser shall be entitled to rely exclusively on the actions taken or omitted to be taken by the resigning or removed Shareholders’ Representative until the receipt of such notice.

(i)             Each Shareholder agrees that this agency and power of attorney are coupled with an interest, are therefore irrevocable without the consent of the Shareholders’ Representative and shall survive the death, incapacity, bankruptcy, dissolution or liquidation of any Shareholder or trust through which any Shareholder owns their respective Shares.

(j)             The provisions of this Section 2.4 shall apply separately to each individual serving as the Shareholders’ Representative, and each of such individuals may act in such capacity independently of any other individual simultaneously acting in such capacity, on behalf of all Shareholders.

ARTICLE III.                 REPRESENTATIONS AND WARRANTIES OF COMPANY

Except as set forth in the corresponding sections or subsections of the Schedule of Exceptions delivered to the Purchaser on date hereof (the “ Schedule of Exceptions ”) (it being understood that items set forth in one particular section or subsection of the Schedule of Exceptions may apply to and/or qualify disclosures made in one or more other sections or subsection to the extent that it is reasonably apparent on its face that such disclosures apply to or qualify other disclosures, and that the Schedule of Exceptions may include specific cross-references to particular items in other sections or subsections of the Schedule of Exceptions), Company makes the following representations and warranties to the Purchaser:

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SECTION 3.1.                    Incorporation and Qualification of Company and its Subsidiaries; Authority

Company is a corporation duly incorporated and validly existing under the laws of the State of Oregon and has all necessary corporate power and authority (i) to execute and deliver this Agreement and the Transaction Documents to which it is or will be a party, (ii) to consummate the transactions contemplated hereby and thereby, (iii) to own, operate, lease or otherwise hold its properties and assets and (iv) to carry on its business as it is now being conducted. Company is duly qualified as a foreign corporation to do business, and is in good standing, in each jurisdiction where the character of its properties owned, operated or leased or the nature of its activities makes such qualification necessary, except where the failure to so qualify, individually or in the aggregate, does not have or could not reasonably be expected to have a Material Adverse Effect. Each Subsidiary is a corporation duly incorporated, validly existing and, if applicable, in good standing under the laws of the applicable State set forth in Schedule 3.3 and has the corporate power and authority to own, operate, lease or otherwise hold its properties and assets and to carry on its business as it is now being conducted. Each Subsidiary is duly qualified as a foreign corporation to do business, and is in good standing, in each jurisdiction where the character of its properties owned, operated or leased or the nature of its activities makes such qualification necessary, except where the failure to so qualify, individually or in the aggregate, does not have or could not reasonably be expected to have a Material Adverse Effect. The execution and delivery by Company of this Agreement and the Transaction Documents to which it is or will be a party, the performance of its obligations hereunder and thereunder and the consummation by Company of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of Company. Each Transaction Document to which it is a party has been duly executed and delivered by Company, and (assuming due authorization, execution and delivery by the other parties) constitutes a legal, valid and binding obligation of Company, enforceable against Company in accordance with its terms. Company has delivered or made available to the Purchaser true and complete copies of (i) its Articles of Incorporation and Bylaws, each as amended to date and (ii) the comparable governing instruments, each as amended to date, of each Subsidiary. The stock certificates, transfer books and the minute books of Company and each Subsidiary that have been made available for inspection by the Purchaser prior to the date hereof are true and complete copies thereof and reflect all transactions relating to the Company’s capital stock.

SECTION 3.2.                    Capital Stock of Company; Ownership of the Shares

(a)            The authorized capital stock of Company consists of 10,000 shares of voting Class A Common Stock, par value $0.01 per share, 137 shares of which are outstanding as of the date hereof, and 100,000 shares of non-voting Class B Common Stock, par value $0.01 per share, 13,070 shares of which are outstanding as of the date

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hereof. Except for the Shares, there are no shares of capital stock or other equity securities of Company issued, reserved for issuance or outstanding and no shares of capital stock of Company are subject to vesting or restrictions on transfer. The Shares have been duly authorized and validly issued, are fully paid and nonassessable and were not issued in violation of any preemptive rights, purchase options, call options, rights of first refusal, subscription rights or any similar rights under any provision of the Oregon Business Corporation Act, the Articles of Incorporation or Bylaws of Company or any contract to which Company is a party or otherwise bound. Schedule 2.1 is a true, complete and accurate list (the “ Shareholder List ”) that sets forth the name of each record holder of the Shares, exactly as such record holder’s name is set forth on the share certificates. The Shareholders List also sets forth with respect to each such record holder the share certificate numbers held by such holder and the number of Shares evidenced by each such share certificate. The authorized and outstanding capital stock of each Subsidiary is set forth in Schedule 3.3 and except as set forth in Schedule 3.3 , there are no shares of capital stock or other equity securities of any Subsidiary issued, reserved for issuance or outstanding. The outstanding shares of capital stock of each Subsidiary have been duly authorized and validly issued, are fully paid and nonassessable and were not issued in violation of any preemptive rights, purchase options, call options, rights of first refusal, subscription rights or any similar rights under any provision of the Oregon Business Corporation Act, the General Corporation Law of the State of Delaware (as applicable), the governing instruments of any Subsidiary or any contract to which any Subsidiary is a party or otherwise bound. No bonds, debentures, notes or other Indebtedness of Company has the right to vote (or is convertible into, or is exchangeable for, securities that have the right to vote) on any matters on which holders of Shares may vote (“ Voting Company Debt” ). There are no outstanding rights of first refusal, preemptive rights, options, rights, “phantom” stock rights, stock appreciation rights, stock-based performance units, commitments, warrants, convertible or exchangeable securities, contracts, arrangements or other agreements or undertakings of any kind to which Company or any Subsidiary is a party or by which any of them is bound (i) obligating Company or any Subsidiary to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other equity interests in, or any security convertible or exercisable for or exchangeable into any capital stock of or other equity interest in, Company or of any Subsidiary or any Voting Company Debt, (ii) obligating Company or any Subsidiary to issue, grant, extend or enter into any such option, warrant, call, right, security, commitment, contract, arrangement or undertaking or (iii) that give any Person the right to receive any economic benefit or right similar to or derived from the economic benefits and rights accruing to holders of any shares of capital stock or other securities of Company or any Subsidiary. There are not any outstanding contractual obligations of Company or any Subsidiary to repurchase, redeem or otherwise acquire any shares of their respective capital stock or other securities thereof. Neither Company nor any Subsidiary is a party or subject to any agreement or understanding, and to Company’s knowledge, there is no agreement or understanding between any Persons

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that affects or relates to the voting or giving of written consents with respect to any securities of Company or any Subsidiary or the voting by any director of Company or any Subsidiary.

(b)            The only outstanding Indebtedness of Company and its Subsidiaries is the Indebtedness set forth on the Closing Certificate.

SECTION 3.3.                    Subsidiaries

Company does not beneficially own or control, directly or indirectly, any capital stock, membership interest, partnership interest, joint venture interest or other equity interest of any corporation or have any other direct or indirect equity or ownership interest in any Person, other than Company’s 100% ownership of each Subsidiary. All of the outstanding capital stock of, or other voting securities or ownership interests in, each Subsidiary of Company is owned by Company, directly or indirectly, free and clear of any Lien and free of any other limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of such capital stock or other voting securities or ownership interests).

SECTION 3.4.                    No Conflict

The execution, delivery and performance by Company of this Agreement and the Transaction Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby, do not (a) conflict with or violate any provision of the Articles of Incorporation or Bylaws of Company, (b) conflict with or violate in any material respect any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award applicable to Company or any Subsidiary or by which any of their respective assets or properties are bound, or (c) result in any material breach of, or constitute a material default (or event which with the giving of notice or lapse of time, or both, would become such a default) under, or give rise to any rights of termination, amendment, acceleration or cancellation of or any material obligation or to loss of a material benefit under, or to increased, additional, accelerated or guaranteed material rights or entitlements of any Person under, or result in the creation of any lien, mortgage, deed of trust, pledge, security interest, charges, easements, leases, subleases, covenants, rights of way, options, claims or other encumbrance or restriction of any kind (“ Lien ”) (other than any Permitted Liens) on any of the assets or properties of Company or any Subsidiary pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, sublease, license, permit, franchise loan, instrument, understanding, deed of trust, purchase order, sales order, joint venture or other instrument or agreement of any kind (written or oral) relating to such assets or properties to which Company or any Subsidiary is a party or by which any of such assets or properties is bound or affected.

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SECTION 3.5.                                                         Consents and Approvals

The execution, delivery and performance by Company of this Agreement and the Transaction Documents to which it is a party do not require any consent, approval, exemption, authorization or other action by, or registration, declaration or filing with or notification to, any Federal, state, local or foreign government or any court, administrative agency or other governmental or regulatory authority or instrumentality, domestic or foreign or any third party, except (a) for any consent, approval, exemption, authorization, action, filing or notification that is immaterial to Company’s business, and (b) as may be necessary as a result of any facts or circumstances relating solely to Parent’s or the Purchaser’s (as opposed to any third party’s) participation in the transactions contemplated hereby and by the other Transaction Documents.

SECTION 3.6.                                                         Financial Information; Absence of Undisclosed Liabilities

Company has provided to the Purchaser true and complete copies of (a) the audited consolidated balance sheet of Company as of December 31, 2005, 2006 and 2007 and the audited consolidated income statement and statement of cash flow for Company for the years ended December 31, 2005, 2006 and 2007 (collectively, the “ Audited Financial Statements ”) and (b) the unaudited consolidated balance sheet of Company as of March 31, 2008 (the “ Latest Balance Sheet ”) (a copy of which is attached hereto as Exhibit C ) and an unaudited consolidated income statement and unaudited consolidated statement of cash flow for Company as of and for the month ended March 31, 2008 (the “ Unaudited Financial Statements ” and, together with the Audited Financial Statements, being referred to herein, collectively, as the “ Financial Statements ”). The Financial Statements present fairly the consolidated financial condition and results of operations and cash flows of Company as of the dates thereof and for the periods covered thereby, and the Financial Statements have been prepared in accordance with GAAP, consistently applied, throughout the periods covered thereby, except as described in the notes thereto and except that the Unaudited Financial Statements do not contain the footnotes required by GAAP and the Unaudited Financial Statements are subject to year-end and other normal, recurring year-end audit adjustments that are not material. Company and each Subsidiary have no material liabilities or obligations of any nature (absolute, accrued or contingent, unasserted or otherwise) that are required to be reflected or reserved against on Company’s balance sheet by GAAP which are not, on an aggregate basis, reflected or reserved against in the Latest Balance Sheet, except for liabilities or obligations incurred since the date of the Latest Balance Sheet in the ordinary course of business and consistent with past practice. Neither Company nor any Subsidiary is a guarantor, indemnitor, surety or other obligor of any Indebtedness of any other Person.

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SECTION 3.7.                                                         Litigation

No claim, suit, proceeding, investigation or other action is pending or, to Company’s knowledge, threatened against, relating to or affecting Company or any Subsidiary, and neither Company nor any Subsidiary is subject to any order, writ, judgment, injunction, decree, determination or award. No claim, suit, proceeding, investigation or other action is pending or, to Company’s knowledge, threatened, which questions the validity of this Agreement or any of the Transaction Documents or prohibits or restricts any action taken or to be taken by Company hereunder or thereunder (and Company is not aware of any basis for any such suit, proceeding, investigation or other action).

SECTION 3.8.                                                         Compliance With Laws; Licenses and Permits

Neither Company nor any Subsidiary is in violation of or in default under, any law, rule, regulation, ordinance, order, judgment or decree applicable to Company or any Subsidiary or by which any of their respective assets or properties are bound or affected, including those relating to occupational health and safety (except for any violations that have been remedied or cured) and except for violations that are immaterial to Company’s business. Neither Company nor any of the Subsidiaries has received any written or oral notice since December 31, 2006 from any Person that alleges that Company or any Subsidiary is not in compliance in all material respects with any law, rule, regulation, ordinance, order, judgment or decree applicable to Company or any Subsidiary or by which any of their respective assets or properties are bound or affected. To Company’s knowledge, the current use by Company and the Subsidiaries of the improvements located on any parcel of Real Property owned, leased or occupied thereby does not violate any local zoning or similar land use or government regulations in any material respect. Company and each Subsidiary (i) validly hold, and are in compliance in all material respects with, all governmental licenses, franchises, permits, filings, approvals, authorizations, exemptions, certificates and registrations (“ Permits ”) necessary to own, lease or operate its assets and carry on their respective businesses as they are now being conducted, (ii) has complied in all material respects with all terms and conditions thereof and (iii) has not received any notice of any suit, action or proceeding relating to the revocation or modification of any such Permits. To Company’s knowledge, none of the Permits will be subject to suspension, modification, revocation or nonrenewal as a result of the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby. All Permits held by Company and each Subsidiary are listed on Schedule 3.8 .

SECTION 3.9.                                                         Environmental Matters

(a)           Company and each Subsidiary is and has been in compliance in all material respects with all applicable Environmental Laws, and, since December 31, 2003,

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neither Company nor any of the Subsidiaries has received any (A) communication that alleges that Company or any of the Subsidiaries is in violation of, or has liability under, any Environmental Law or (B) written request for information from any governmental entity pursuant to any Environmental Law.

(b)           (i) Company and each of the Subsidiaries have obtained and are in compliance in all material respects with all permits, licenses and governmental authorizations pursuant to Environmental Law (collectively “ Environmental Permits ”) necessary for their operations as currently conducted, (ii) all such Environmental Permits are valid and in good standing, and (iii) neither Company nor any of the Subsidiaries has been advised by any governmental entity of any actual or potential change in the status or terms and conditions of any existing Environmental Permit.

(c)           There are no Environmental Claims pending or, to the knowledge of Company, threatened, against Company or any of the Subsidiaries.

(d)           Neither Company nor any Subsidiary is subject to any material order (including consent orders), judgment or Lien under or pursuant to any Environmental Laws.

(e)           Neither Company nor any Subsidiary is currently undertaking any investigatory, remedial, control or other responsive action (together “ Remedial Actions ”) relating to any disposal, Release or threatened Release of, or exposure  or potential exposure to, any Hazardous Substances, whether or not required by Environmental Laws.

(f)            There has been no Release of, or exposure to, any Hazardous Material that could reasonably be expected to form the basis of any material Environmental Claim against, or material liability under any Environmental Law of, Company or any Subsidiary.

(g)           Neither Company nor any Subsidiary owns, operates or leases any underground storage tanks, belowground-level liquids collection or storage sumps, or any treatment, storage or disposal facilities under the Resource Conservation and Recovery Act of 1976, as amended, or any solid waste disposal facility.

(h)           On, at, in or under the real property currently owned or leased by Company or any Subsidiary, there are no polychlorinated biphenyls in a form or condition prohibited by, or requiring abatement or other Remedial Action under, Environmental Laws or any asbestos in a friable or otherwise unencapsulated form.

(i)            Neither Company nor any of its Subsidiaries has retained or assumed, either contractually or by operation of law, any liabilities or obligations of any other Person that could reasonably be expected to form the basis of any Environmental Claim against Company or any of its Subsidiaries.

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(j)            Company has made available to the Purchaser all records and files (including any assessments, reports, studies, audits, analyses, tests and monitoring) in the possession of or reasonably available to Company pertaining to the existence of Hazardous Substances at facilities or properties currently owned, operated or leased by Company or any Subsidiary or concerning compliance with or liability under any Environmental Laws relating to any of such facilities or properties.

SECTION 3.10.                                                Intellectual Property Rights

(a)           Company and the Subsidiaries are the sole and exclusive owners of all Company Owned Intellectual Property, free and clear of all Liens. Neither Company nor any Subsidiary (i) has been or is a party to any litigation enforcing or defending its rights in, to or with respect to the Company Owned Intellectual Property or Company Licensed Intellectual Property, (ii) has knowledge of any claims or demands made or threatened by any third party involving the ownership, enforceability, effectiveness or validity of Company’s rights in, to or with respect to the Company Owned Intellectual Property or Company Licensed Intellectual Property or (iii) has knowledge of any infringement of Company Owned Intellectual Property or Company Licensed Intellectual Property, in each case, by any third party.

(b)           There is no pending or, to Company’s knowledge, threatened claim, action, suit, investigation, proceeding or cause of action challenging the use or ownership by Company or any Subsidiary of any Company Owned Intellectual Property, challenging or questioning the validity or effectiveness of Company Owned Intellectual Property, or alleging that Company or any Subsidiary is infringing upon, misappropriating or otherwise adversely affecting the rights of any Person. To Company’s knowledge, there is no pending or threatened claim, action, suit, investigation, proceeding or cause of action challenging the use by Company or any Subsidiary of any Company Licensed Intellectual Property or challenging or questioning the validity or effectiveness of Company Licensed Intellectual Property.

(c)           To Company’s knowledge, (i) the operations of Company and the Subsidiaries do not infringe upon any validly issued Intellectual Property of any Person, (ii) the consummation of the transactions contemplated by this Agreement and the other Transaction Documents will not conflict with, alter or impair the Company Owned Intellectual Property or Company Licensed Intellectual Property and (iii) there is no interference, infringement or misappropriation by any other Person of any Company Owned Intellectual Property or Company Licensed Intellectual Property.

(d)           To Company’s knowledge, the businesses of Company and the Subsidiaries do not involve the employment of any Person in a manner that violates any noncompetition or nondisclosure agreement that such Person entered into in connection

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with his or her employment or activities at any time prior to employment by Company or any Subsidiary.

(e)           Schedule 3.10(e) lists all Intellectual Property Registrations. To the Company’s knowledge, all Intellectual Property Registrations are currently valid and (except for applications) enforceable.

(f)            Schedule 3.10(f) lists each license or other agreement pursuant to which Company uses or otherwise exploits Company Licensed Intellectual Property, excluding off the shelf software programs that are licensed by Company pursuant to “shrink wrap,” “click through” or similar licenses, the total fees for which are less than $50,000. To the knowledge of Company, Company has a valid and enforceable right to use the Company Licensed Intellectual Property pursuant to the terms and conditions set forth in the license for such Company Licensed Intellectual Property.

SECTION 3.11.                                                  Real and Personal Property

(a)           Schedule 3.11(a) contains a complete and accurate list of all real property that is owned, leased, rented or used by Company or any Subsidiary (the “ Real Property ”), together with the manner in which each such Real Property is held and a description of its present use. Company has delivered or made available to the Purchaser true and complete copies of all leases, subleases, rental agreements, contracts of sale, tenancies or licenses relating to the Real Property, and all amendments and modifications thereto.

(b)           Schedule 3.11(b) contains a complete and accurate list of each item of personal property as of a date within two business days prior to the Closing having a book value in excess of $25,000, that is owned, leased, rented or used by Company or any Subsidiary (the “ Personal Property ”); provided , however , that such list need not describe Company’s or any Subsidiary’s rights to Intellectual Property. Company has delivered or made available to the Purchaser true and complete copies of all leases, subleases, rental agreements, contracts of sale, tenancies or licenses relating to the Personal Property, and all amendments and modifications thereto.

(c)           The Real Property and the Personal Property include all properties and assets (whether real, personal or mixed, tangible or intangible) (other than, in the case of the Personal Property, property rights with an individual book value of less than $25,000 and Company Intellectual Property) reflected in the Latest Balance Sheet and all the properties and assets purchased by Company or any Subsidiary since the date of the Latest Balance Sheet (except for such properties or assets sold since the date of the Latest Balance Sheet in the ordinary course of business and consistent with past practice). The Real Property and the Personal Property include all property used in the business of Company and the Subsidiaries (other than, in the case of the Personal Property, property

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rights with an individual book value of less than $25,000 and Intellectual Property Rights of Company and the Subsidiaries) and such Real Property and Personal Property are sufficient for the current conduct of Company and its Subsidiaries’ business.

(d)           Company or a Subsidiary has good and marketable fee title to all Real Property and Personal Property owned thereby (including any other personal property not listed on Schedule 3.11(b) that is owned thereby ), free and clear of all Liens other than Permitted Liens. Company or a Subsidiary has good and valid title to the leasehold estates in all Real Property and Personal Property leased thereby (including any other personal property not listed on Schedule 3.11(b) that is leased thereby ), free and clear of all Liens other than Permitted Liens.

(e)           Neither Company nor any Subsidiary has subleased or granted any right to use or occupy all or any portion of any Real Property or any Personal Property to a third party. Neither Company nor any Subsidiary has collaterally assigned or granted a security interest in any lease of Real Property or Personal Property.

(f)            With respect to each owned Real Property, (i) there are no outstanding options, rights of first offer or rights of first refusal to purchase any such Real Property or any portion thereof or interest therein, and (ii) there is no condemnation or other proceeding in eminent domain, pending or to Company’s knowledge, threatened, affecting such Real Property or any portion thereof or interest therein.

(g)           The Real Property and the Personal Property and any other personal property not listed on  Schedule 3.11(b) is in normal repair and operating condition, ordinary wear and tear excepted.

SECTION 3.12.                                                  Material Contracts

(a)           Schedule 3.12 lists, other than purchase and sale orders entered into in the ordinary course of business and contracts and agreements that are no longer in force, (i) each contract to which Company or any Subsidiary is a party that involves, in accordance with its terms, future payments or receipts by Company in excess of $25,000, (ii) each contract to which Company or any Subsidiary is a party that has not been fully performed and is not terminable by Company or such Subsidiary at will or by giving notice of 60 days or less (iii) each agreement for the sale, license or development of Intellectual Property, (iv) each credit agreement, security agreement and instrument relating to Indebtedness to which Company or any Subsidiary is a party or through which Company or any Subsidiary guarantees any Indebtedness, (v) each lease of any portion of the Real Property and each lease, license or contract of sale to which the Personal Property is subject, (vi) each employment or consulting agreement to which Company or any Subsidiary is a party, (vii) each contract involving a distributor, sales representative, broker or advertising arrangement which has aggregate future liability pursuant to its

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terms to any Person (other than Company or any Subsidiary) in excess of $25,000, (viii) each contract providing for the purchase by Company or any Subsidiary of materials, supplies, merchandise or equipment in excess of $25,000, (ix) each contract with a covenant not to compete, exclusive dealing or other covenant restricting the development, manufacture, line of business, marketing or distribution of the products and services of Company or any Subsidiary, (x) each confidentiality, standstill or similar agreement, (xi) each contract not made in the ordinary course of business, (xii) each collective bargaining arrangement or other contract with any labor organization, union or association, (xiii) each contract providing for indemnification of any Person with respect to material liabilities relating to any current or former business of Company, a Subsidiary or any predecessor Person, (xiv) each agreement (other than this Agreement) with (A) any Shareholder or any affiliate of any Shareholder (other than Company or any Subsidiary) or (B) any current or former officer, director or employee of Company, a Subsidiary, any Shareholder or any affiliate of any Shareholder (other than employment agreements covered in clause (vi)), including all severance, retention, change in control, termination, loan and indemnification agreements with any current or former officer, director, employee or shareholder, (xv) any contract for any joint venture, partnership or similar arrangements or agreements and (xvi) each other contract, and commitment (whether oral or in writing) that is material to Company and the Subsidiaries and their businesses (collectively, the “ Material Contracts ”).

(b)           With respect to the Material Contracts, (i) each Material Contract is valid, binding and in full force and effect and enforceable in accordance with its terms against Company and, to Company’s knowledge, the other contracting party (in each case subject to the effect, if any, of (x) bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or other similar laws relating to or affecting the rights or remedies of creditors or (y) general principles of equity, whether considered in a proceeding in equity or at law (including the possible unavailability of specific performance or injunctive relief)); (ii) neither Company nor any Subsidiary is in material default under or in material violation of any provision of any of the Material Contracts, and no event has occurred that with notice or lapse of time would constitute a material breach or default by Company; (iii) neither Company nor any Subsidiary has received notice of alleged nonperformance or other noncompliance with respect to its obligations under any of the Material Contracts which alleged nonperformance or other noncompliance is currently unresolved, nor any notice that is currently unresolved that any of the Material Contracts may be totally or partially terminated or suspended by any other party thereto; (iv) Company does not have knowledge of any material nonperformance, breach or other noncompliance by any other party to any of the Material Contracts and (v) neither Company nor any Subsidiary has received any notice of the intention of any party to terminate any Material Contract.

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(c)           Company has delivered or made available to the Purchaser true and complete copies of each Material Contract, together with all modifications and amendments thereto.

SECTION 3.13.                                                  Employee Benefit Matters

(a)           Schedule 3.13(a) contains a true and complete list of all employee benefit plans (within the meaning of Section 3(3) of ERISA) and all bonus, stock option, stock purchase, restricted stock, equity or equity-based, incentive, deferred compensation, retiree medical or life insurance, supplemental retirement, severance, change in control, retention, termination or other compensation or benefit plans, programs, policies or arrangements, and all employment, termination, severance, consulting, bonus, incentive, deferred compensation, equity or equity-based compensation, change in control, retention or other contracts or agreements, in each case with respect to which Company or any Subsidiary or any Person or entity that, together with Company, is treated as a single employer under Section 414 of the Internal Revenue Code (each, a “ Commonly Controlled Entity ”) has any obligation or which are maintained, contributed to or sponsored or required to be maintained or contributed to by Company or any Subsidiary or any Commonly Controlled Entity for the benefit of any current or former employee, independent contractor, officer or director of Company or any Subsidiary (the “ Plans ”). Company has previously made available to the Purchaser a true and complete copy of each Plan (or, in the case of any unwritten Plan, a description) as currently in effect, and a true and complete copy of each of the following documents, to the extent applicable, prepared in connection with each such Plan:  (i) a copy of each trust, insurance, annuity or other funding arrangement, (ii) the two most recent annual reports on Internal Revenue Service Form 5500 required to be filed, (iii) the most recently received Internal Revenue Service determination letter, and (iv) the most recently prepared actuarial or other valuation report and financial statement. Neither Company nor any Subsidiary has any express or implied commitment to modify, change or terminate any Plan, other than with respect to any modification, change or termination required by ERISA or the Internal Revenue Code.

(b)           None of the Plans (i) is a multiemployer plan, within the meaning of Section 3(37) or 4001(a)(3) of ERISA (a “ Multiemployer Plan ”), or a single-employer pension plan, within the meaning of Section 4001(a)(15) of ERISA, for which Company or any Subsidiary could incur liability under Section 4063 or 4064 of ERISA (a “ Multiple Employer Plan ”) or (ii) provides or promises to provide retiree, health, medical or life insurance benefits, other than to the extent required by Section 4980B(f) of the Internal Revenue Code and Sections 601 through 609 of ERISA. Neither Company nor any Subsidiary is a participant in or has ever contributed to a Multiple Employer Plan.

(c)           None of Company, any Subsidiary or any Commonly Controlled Entity has sponsored, maintained, contributed to or been required to maintain or

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contribute to, or has any actual or contingent liability under, any Plan that is subject to Section 302 or Title IV of ERISA or Section 412 of the Internal Revenue Code or is otherwise a defined benefit plan. With respect to each Plan, neither Company nor any Subsidiary is currently liable for any material Tax arising under Section 4971, 4972, 4975, 4979, 4980 or 4980B of the Internal Revenue Code, and no fact or event exists which could reasonably be expected to give rise to any such liability. Neither Company nor any Subsidiary has incurred any material liability under, arising out of or by operation of Title IV of ERISA (other than liability for premiums to the Pension Benefit Guaranty Corporation arising in the ordinary course), including any liability in connection with (i) termination or reorganization of any employee pension benefit plan subject to Title IV of ERISA or (ii) withdrawal from any Multiemployer Plan or Multiple Employer Plan. None of the assets of Company or any Subsidiary is the subject of any Lien arising under Section 302(f) of ERISA or Section 412(n) of the Internal Revenue Code and neither Company nor any Subsidiary has been required to post any security under Section 307 of ERISA or Section 401(a)(29) of the Internal Revenue Code with respect to any Plan, and to Company’s knowledge, no fact or event exists which could reasonably be expected to give rise to any such Lien or requirement to post any such security.

(d)           Each Plan (and any related trust or other funding vehicle) has been operated in all material respects in accordance with, and is in compliance in all material respects with, its terms and the requirements of applicable laws, including ERISA and the Internal Revenue Code. Each of Company and the Subsidiaries is in compliance in all material respects with all laws applicable to Plans, including ERISA and the Internal Revenue Code. No Plan has incurred an “accumulated funding deficiency” (within the meaning of Section 302 of ERISA or Section 412 of the Internal Revenue Code), whether or not waived.

(e)           None of the execution and delivery of this Agreement, the purchase of the Shares or the other transactions contemplated by this Agreement (alone or in conjunction with any other event, including any termination of employment on or following the Closing Date) will (i) entitle any current or former director, officer, employee or independent contractor of Company or any Subsidiary to any compensation or benefits, (ii) accelerate the time of payment or vesting, or trigger any payment or funding, of any compensation or benefits or trigger any other material obligation under any Plan or (iii) result in any breach or violation of or default under, or limit Company’s right to amend, modify or terminate, any Plan.

(f)            No amount or other entitlement that could be received as a result of the transactions contemplated hereby (alone or in conjunction with any other event) by any “disqualified individual” (as defined in Section 280G(c) of the Internal Revenue Code) with respect to Company will constitute an “excess parachute payment” (as defined in Section 280G(b)(1) of the Internal Revenue Code). No director, officer, employee or independent contractor of Company or any Subsidiary is entitled to receive any gross-up

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or additional payment by reason of the Tax required by Section 409A or 4999 of the Internal Revenue Code being imposed on such Person.

SECTION 3.14.                                                  Labor Matters

Schedule 3.14 sets forth a list of all employees employed by Company and the Subsidiaries as of the date hereof (the “ Employees ”). There are no labor controversies pending or, to Company’s knowledge, threatened, between Company or any Subsidiary, on the one hand, and any of the Employees or any former employee of Company or any Subsidiary, on the other hand. Neither Company nor any Subsidiary is engaged in any unfair labor practice and there are not any unfair labor practice charges or complaints against Company or any Subsidiary pending, or, to Company’s knowledge, threatened, before the National Labor Relations Board. There are not any pending, or, to Company’s knowledge, threatened, charges against Company or any Subsidiary or any of their current or former employees before the Equal Employment Opportunity Commission or any state or local agency responsible for the prevention of unlawful employment practices and none of Company nor any Subsidiary has received written or oral communication of the intent of any governmental entity responsible for the enforcement of labor or employment laws to conduct an investigation of or affecting Company or any Subsidiary and, to Company’s knowledge, no such investigation is in progress. Neither Company nor any Subsidiary is a party to or bound by any contract, collective bargaining agreement, works council agreement or other labor union contract with any labor or similar organization applicable to any of the Employees; and Company has no knowledge of any labor dispute, union organization attempts, strikes, slowdowns, work stoppages, lockouts or threats thereof, by or with respect to any of the Employees.

SECTION 3.15.                                                  Taxes

(a)           (i) Each of Company and the Subsidiaries has timely filed all Tax Returns required to be filed by it on or prior to the date hereof, taking into account any extension of time to file granted to or obtained on behalf thereof; (ii) all such Tax Returns were, at the time they were filed, correct and complete in all material respects; (iii) all Taxes, if any, shown to be payable