STOCK PURCHASE AGREEMENT

Exhibit 10.22

STOCK PURCHASE AGREEMENT

 

By and Among

 

SYMMETRY MEDICAL USA INC.
(the Purchaser)

and

EDWARD D. RILEY and RUSSELL P. HOLMES

(collectively, the Seller)

 

DATED: MAY 1, 2006

 

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (this “ Agreement ”) is made and entered into effective as of 12:01 a.m. on the 1st day of May, 2006, by and between SYMMETRY MEDICAL USA INC. , a duly organized Delaware Corporation with a principal place of business in Warsaw, Indiana (“Purchaser”), Edward D. Riley, of Portland, Maine, and Russell P. Holmes, of Dover, Massachusetts (hereinafter Riley and Holmes are referred to collectively as the “ Seller ”).

RECITALS

A.            The Seller owns all of the issued and outstanding Class A and Class B shares of capital stock (the “ Stock ”) of RILEY MEDICAL, INC. , a Massachusetts corporation with a principal place of business in Auburn, Maine (the “ Company ”).

B.            The Company, Edward D. Riley and Dr. Hans-Rudolf Staiger and Dr. Michael Hamm own all of the issued and outstanding shares of capital stock of its subsidiary corporation, RILEY MEDICAL EUROPE SA , a Société anonyme organized under the laws of Switzerland with a registered place of business in Grand-Rue 34, CH-2606 Corgémont, Switzerland (the “ Subsidiary ”).

C.            The Seller owns all of the equity of RILEY REAL ESTATE, LLC a duly organized Maine limited liability company ( “Affiliate” ), which owns all the real property from which the Company conducts its business (“ Owned Real Estate ”), (except for a certain leased warehouse facility in Auburn, Maine (“Leased Real Estate”).

D.            The Purchaser desires to purchase the Stock and Owned Real Estate held by the Seller and the Seller desires to sell the Stock and Owned Real Estate to the Purchaser on the terms and subject to the conditions set forth in this Agreement and the Real Estate Purchase and Sale Agreement attached as Exhibit A (“Real Estate Purchase Agreement”).

E.             Upon consummation of the purchase and sale of the Stock pursuant to this Agreement, the Purchaser will own all of the issued and outstanding capital stock of the Company, all of the Owned Real Estate and the Company will own 97 of the 100 issued and outstanding shares of the capital stock of the Subsidiary.

AGREEMENT

In consideration of the foregoing Recitals and the mutual promises contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and intending to be legally bound, the Purchaser and the Seller agree as follows:

ARTICLE 1

DEFINITIONS

For purposes of this Agreement, the following terms have the meanings specified:

“ Affiliate ” when used in reference to a specified Person, means any Person that, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with the specified Person. With respect to the Seller, expressly it shall mean Riley Real Estate, LLC, the Owned Real Estate of which shall be sold herewith to the Purchaser in accordance with the separate Real Estate Purchase Agreement.

“ Agreement ” has the meaning set forth in the introductory paragraph of this Agreement.

“ Ancillary Documents ” are all documents, instruments and agreements to be executed and delivered by the Purchaser, Seller, Company, Subsidiary and Affiliate pursuant to this Agreement including the Exhibits.

“ Applicable Laws ” means any and all laws, ordinances, constitutions, regulations, statutes, treaties, rules, codes, licenses, certificates, franchises, Permits, requirements and Injunctions adopted, enacted, implemented, promulgated, issued, entered or deemed applicable by or under the authority of any Governmental Body having jurisdiction over a specified Person or any of such Person’s properties or assets. Applicable Laws include any laws, regulations, ordinances, constitutions, regulations, statutes, treaties, rules, codes, licenses, certificates, franchises, Permits, or other legal requirements governing the Subsidiary, its properties, assets and operations.

“ Balance Sheets ” has the meaning set forth in Section 3.11(a) of this Agreement.

“ Balance Sheet Date ” has the meaning set forth in Section 3.11(a) of this Agreement.

“ Benefit Plan ” means any and all bonus, stock option, restricted stock, stock purchase, stock appreciation, phantom stock, profit participation, profit-sharing, deferred compensation, severance, retention, pension, retirement, health, disability, life or other insurance, death

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benefit, incentive compensation, welfare, or any other employee benefit plan, policy or arrangement maintained, sponsored or contributed to by the Company or Subsidiary for the benefit of any Employee.

“ Business ” means the ownership and/or operation of facilities which formulate and manufacture high-quality engineering plastics and metal trays and packaging for medical devices.

“ Cash Adjustment ” has the meaning set forth in Section 2.2(c) of this Agreement.

“ Cash ” means all cash (in United States currency) and prepaid taxes deposited with the IRS in order to maintain an S Corporation non-permitted year-end, as shown on the Balance Sheets of the Company, Subsidiary and Affiliate as either in-hand or accrued as of the Closing Date, expressly including, without limitation, the United States currency equivalent of the Swiss francs carried on the Subsidiary’s Balance Sheet, as determined in accordance with the exchange rate as of April 29, 2006, as published by the Wall Street Journal.

“ Cash-Free ” means that all Cash shall be added, as an addition, to the Interim Purchase Price and Final Purchase Price payable to the Seller, as applicable, unless withdrawn by Seller from the accounts of the Company, Subsidiary, or Affiliate prior to Closing.

“ CERCLA ” means the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601 et seq .).

“ Closing ” has the meaning set forth in Section 2.5(a) of this Agreement.

“ Closing Date ” has the meaning set forth in Section 2.5(a) of this Agreement.

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

“ Company ” has the meaning set forth in the Recitals to this Agreement.

“ Company and Subsidiary Welfare Plans ” has the meaning set forth in Section 8.2(c) of this Agreement.

“ Confidential Information ” means any information or compilation of information not generally known to the public or the industry or which the Company or the Subsidiary have not disclosed to third parties without a written obligation of confidentiality, which is proprietary to the Company or the Subsidiary, relating to the Company’s or the Subsidiary’s procedures, techniques, methods, concepts, ideas, affairs, products, processes and services, including, but not limited to, information relating to marketing, merchandising, selling, research, development, manufacturing, purchasing, accounting, engineering, financing, costs, customers, plans, pricing, billing, needs of customers and products and services used by customers, all lists of customers and their addresses, prospects, sales calls, products, services, prices and the like as well as any specifications, formulas, plans, drawings, accounts or sales records, sales brochures, code books, manuals, trade secrets, knowledge, know-how, pricing strategies, operating costs, sales margins, methods of operations, invoices or statements and the like. Confidential Information shall not include information which (i) becomes generally available to the public other than as a result of a disclosure by a party to this Agreement, (ii) was available on a non-confidential basis prior to its disclosure, or (iii) is independently developed as evidenced by written records without making use of the Confidential Information.

“ Contract ” means any agreement, lease of personal or mixed property, license, contract, obligation, promise, commitment, arrangement, understanding or undertaking, instrument, document (whether written or oral and whether express or implied) of any type, nature or description, but excluding leases of Leased Real Estate. As used herein, the word “Contract” shall be limited in scope if modified by an adjective specifying the type of contract to which this Agreement or a Section hereof refers.

“ Damages ” has the meaning set forth in Section 6.1(e) of this Agreement.

“Debt ” means: (i) any long-term or short-term interest-bearing indebtedness of the Company, the Subsidiary, or the Affiliate, owed to third parties; (ii) any inter-company indebtedness; (iii) any Seller guarantees outstanding, issued to secure obligations of the Company, Subsidiary, or Affiliate; (iv) any capital leases; and (v) any letters of credit.

“ Debt Adjustment ” has the meaning set forth in Section 2.2(c) of this Agreement.

“Debt-Free” means that all Debt (excluding the current portion of the long-term debt), shall be deducted from the Interim Purchase Price and Final Purchase Price payable to Seller determined as due as of the Closing Date.

“ Director Indemnified Party ” or “ Director Indemnified Parties ” has the meaning set forth in Section 8.3(a) of this Agreement.

“ Disclose ” means to reveal, deliver, divulge, disclose, publish, copy, communicate, show or otherwise make known or available to any other Person, or in any way to copy, any of the Confidential Information of the Company, the Subsidiary or the Affiliate.

“ Employees ” has the meaning set forth in Section 3.20(a) of this Agreement.

“ Encumbrance ” means and includes:

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(i)            with respect to any personal property, any intangible property or any property other than real property, any security or other property interest or right, claim, lien, pledge, option, charge, security interest, contingent or conditional sale, or other title claim or retention agreement or lease or use agreement in the nature thereof whether voluntarily incurred or arising by operation of law, and including any agreement to grant or submit to any of the foregoing in the future; and

(ii)           with respect to any real property (whether and including Owned Real Estate or Leased Real Estate), any mortgage, lien, easement, interest, right-of-way, condemnation or eminent domain proceeding, encroachment, any building, use or other form of restriction, encumbrance or other claim (including adverse or prescriptive) or right of third parties (including any Governmental Body), any lease or sublease, boundary dispute, and agreements with respect to any real property including: purchase, sale, right of first refusal, option, construction, building or property service, maintenance, property management, conditional or contingent sale, use or occupancy, franchise or concession, whether voluntarily incurred or arising by operation of law, and including any agreement to grant or submit to any of the foregoing in the future.

“ Environmental Laws ” means any and all Applicable Laws, all court orders, decrees, arbitration awards, and applicable common law which pertain to environmental matters or contamination of any type whatsoever, including, but not limited to, those (i) regulating the manufacturing process, use, treatment, generation, transportation, storage, control, management, recycling or disposal of any Hazardous Material, including, but not limited to, CERCLA, SARA, the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq .), the Hazardous Materials Transportation Act (49 U.S.C. § 1801 et seq .), the Federal Water Pollution Control Act (33 U.S.C. § 1251 et seq .), the Clean Water Act (33 U.S.C. § 1251 et seq .), the Clean Air Act (42 U.S.C. § 7401 et seq .), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq .), the Safe Drinking Water Act (42 U.S.C. § 300F et seq .), and/or (ii) relating to the protection, preservation or conservation of the environment, or protection of wildlife, endangered species, wetlands or national resources.

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

“ Escrowed Funds ” has the meaning set forth in Section 2.3(e) of this Agreement.

“Facility” means any facility as defined in CERCLA.

“ Final Closing Statement ” has the meaning set forth in Section 2.3(c) of this Agreement.

“ Final Purchase Price ” has the meaning set forth in Section 2.3(b) of this Agreement.

“ GAAP ” means generally accepted accounting principles in the United States.

“ Governmental Body ” means any:

(i)            nation, state, county, city, town, village, district or other jurisdiction of any nature;

(ii)           federal, state, local, municipal, foreign or other government;

(iii)          governmental or quasi-governmental authority of any nature (including any governmental agency, branch, board, commission, department, instrumentality, office or other entity, and any court or other tribunal);

(iv)          multinational organization or body; and/or

(v)           body exercising, or entitled or purporting to exercise, any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power of any nature.

“ Hazardous Materials ” means any and all (i) dangerous, toxic or hazardous pollutants, contaminants, chemicals, wastes, materials or substances listed or identified in, or directly or indirectly regulated by, any Environmental Laws, and (ii) any of the following, whether or not included in the foregoing: polychlorinated biphenyls, asbestos in any form or condition, urea-formaldehyde, petroleum (including crude oil or any fraction thereof), natural gas, natural gas liquids, liquefied natural gas, synthetic gas usable for fuel or mixtures thereof, nuclear fuels or materials, chemical wastes, man-made radioactive materials, explosives and known possible carcinogens.

“ IRS ” means the United States Internal Revenue Service.

“Indemnification Threshold” has the meaning set forth in Section 6.3(a) of this Agreement.

“ Indemnified Party ” has the meaning set forth in Section 6.5 of this Agreement.

“ Indemnifying Party ” has the meaning set forth in Section 6.5 of this Agreement.

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“ Injunction ” means any and all writs, rulings, awards, directives, injunctions (whether temporary, preliminary or permanent), judgments, decrees or orders (whether executive, judicial or otherwise) adopted, enacted, implemented, promulgated, issued, entered or deemed applicable by or under the authority of any Governmental Body.

“ Intellectual Property ” means any and all: (i) inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications and patent disclosures, together with all reissuances, continuations, continuations in part, revisions, extensions and reexaminations thereof; (ii) trademarks, service marks, trade dress, logos, trade names, assumed names and corporate names, together with all translations, adaptations, derivations and combinations thereof and including all goodwill associated therewith, and all applications, registrations and renewals in connection therewith; (iii) copyrightable works, all copyrights and all applications, registrations and renewals in connection therewith; (iv) mask works and all applications, registrations and renewals in connection therewith; (v) trade secrets and confidential business information (including ideas, research and development, know-how, technology, formulas, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information and business and marketing plans and proposals); (vi) computer software and all related and necessary licenses (including data and related software program documentation in computer-readable and hard-copy forms other than for so-called off-the-shelf product); (vii) other intellectual property and proprietary rights of any kind, nature or description, including web sites, web site domain names and other e-commerce assets and resources of any kind or nature; and (viii) copies of tangible embodiments thereof (in whatever form or medium).

“ Interim Purchase Price ” has the meaning set forth in Section 2.2(a) of this Agreement.

“ Leased Real Estate ” has the meaning set forth in the Recitals and in Section 3.17 of this Agreement.

“ Leases ” has the meaning set forth in Section 3.17(a) of this Agreement.

“ Liability ” or “ Liabilities ” means any and all debts, liabilities and/or obligations of any type, nature or description (whether known or unknown, asserted or unasserted, secured or unsecured, absolute or contingent, accrued or unaccrued, liquidated or unliquidated and whether due or to become due).

“ Material Adverse Effect ” or “ Material Adverse Change ” means, in connection with the Company, the Subsidiary, and the Affiliate with due consideration to the size and complexity of the Business and transactions contemplated by this Agreement, any event, change or effect that is materially adverse, individually or in the aggregate, to the condition (financial or otherwise), properties, assets, Liabilities, revenues, income, Business, operations, results of operations of such Persons, taken as a whole; provided , however , that in no event shall any of the following constitute a Material Adverse Change, or be deemed to have a Material Adverse Effect, in the Business, operations, assets, results of operations or condition of the Company, the Subsidiary or Affiliate: (i) any change or effect resulting from conditions affecting the industry in which the Company or Subsidiary operate or from changes in general business or economic conditions, (ii) any change or effect resulting from the announcement or pendency of any of the transactions contemplated by this Agreement, (iii) any change or effect resulting from compliance by the Company and/or the Subsidiary with the terms of, or the taking of any action contemplated or permitted by, this Agreement and any Ancillary Document, or (iv) any change or effect resulting from any change in Applicable Law. In furtherance of the foregoing, and notwithstanding anything to the contrary set forth in this Agreement, any Material Adverse Effect or any Material Adverse Change with respect to the Company and/or the Subsidiary shall be evaluated on the basis of the Company and the Subsidiary individually or taken as a whole (in the aggregate).

“Offsite Facility” means any Facility which is not presently, and has not heretofore been, owned, leased or occupied by the Seller, Company, Subsidiary or Affiliate.

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

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

(ii)           such action is not required to be authorized by the board of directors of such Person (or by any Person or group of Persons constituting a governing body of a Person exercising similar authority).

“ Overlap Period ” has the meaning set forth in Section 7.2(a) of this Agreement.

“ Owned Real Estate ” has the meaning set forth in Section 3.17 of this Agreement.

“ PBGC ” means the Pension Benefit Guaranty Corporation.

“ Permits ” means all permits, licenses, consents, declarations, franchises, orders, certifications, registrations, certificates of authority, variances, approvals, local sitting approvals, qualifications and other authorizations obtained from, or filing with any Governmental Body or other Person, or other similar rights, including, without limitation, those listed on Schedule 3.31 of the Schedules.

“ Permitted Encumbrances ” has the meaning set forth in Section 3.17(c) of this Agreement.

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“ Person ” means any individual, corporation (including any non-profit corporation), general, limited or limited liability partnership, limited liability company, joint venture, estate, trust, association, organization, or other entity or Governmental Body.

“ Pre-Closing Period ” has the meaning set forth in Section 3.8(b) of this Agreement.

“ Proceeding ” means any suit, litigation, arbitration, hearing, audit, investigation, order, or other action (whether civil, criminal, administrative or investigative) noticed, commenced, brought, conducted, or heard by or before, or otherwise involving, any Governmental Body or arbitrator.

“ Purchase Price Escrow Agreement ” has the meaning set forth in Section 2.3(e) of this Agreement.

“ Purchaser ” has the meaning set forth in the introductory paragraph of this Agreement.

“ Purchaser Welfare Plans ” has the meaning set forth in Section 8.2(c) of this Agreement.

“ Real Estate ” has the meaning set forth in Section 3.17 of this Agreement.

“Release” means any spill, discharge, leak, emission, escape, leaching, disposing, emptying, pouring, pumping, injection, dumping, or other release or threatened release of any Hazardous Materials into the environment, whether or not notification or reporting to any governmental agency was or is required, including any Release which is subject to CERCLA.

“ Rights ” means any and all outstanding subscriptions, warrants, options, or other arrangements or commitments obligating or which may obligate (with or without notice or passage of time or both) the Company or the Subsidiary to issue or dispose of any of their respective (as opposed to third party) securities.

“§ 338(h)(10) Election ” has the meaning set forth in Section 7.5 of this Agreement.

“ SARA ” means the Superfund Amendments and Reauthorization Act (42 U.S.C. § 9601 et seq .).

“ Seller ” has the meaning set forth in the introductory paragraph of this Agreement.

“Seller’s Knowledge” means the actual knowledge of Edward D. Riley or Russell P. Holmes or of any officer, director or Senior Management Employees of the Company, Subsidiary or Affiliate.

“ Senior Management Employees ” means the chief executive officer, president, any vice president, the chief financial officer, treasurer, controller, secretary, director, general manager, manager, environmental manager, or health and safety manager of the Company, Subsidiary or Affiliate.

“ Stock ” has the meaning set forth in the Recitals to this Agreement.

“ Subsidiary ” has the meaning set forth in the Recitals to this Agreement.

“ Survival Period ” has the meaning set forth in Section 6.1(a) of this Agreement.

“Swiss Tax Agreement” means that certain decision of the Government of the Canton of Bern, Switzerland, dated March 22, 2000, providing income and capital Tax relief to Subsidiary.

“ Target Working Capital ” means Working Capital equal to the average of the month-end Net Working Capital for the following six month-ends February 2006; January 2006; December 2005; November 2005; October 2005; and September 2005 . The Target Working Capital is $4,456,858.

“ Tax ” or “ Taxes ” means any and all net income, gross income, gross revenue, gross receipts, net receipts, ad valorem, franchise, profits, deferred, transfer, sales, use, social security, employment, unemployment, disability, license, withholding, payroll, privilege, excise, value-added, severance, stamp, occupation, property, customs, duties, real estate and/or other taxes, assessments, levies, fees or charges of any kind whatsoever imposed by any Governmental Body, together with any interest or penalty relating thereto.

“ Tax Adjustment” has the meaning set forth in Section 2.4 of this Agreement.

“ Tax Matter ” has the meaning set forth in Section 7.2(a) of this Agreement.

“ Tax Return ” or “ Tax Returns ” means any return, declaration, report, claim for refund or information return or statement relating to Taxes, including, without limitation, any schedule or attachment thereto, any amendment thereof, and any estimated report or statement.

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“ Threatened ” means a claim, Proceeding, dispute, action, or other matter for which any demand or statement has been made, orally or in writing, or any oral or written notice has been given, that would lead a reasonably prudent Person to conclude that such a claim, Proceeding, dispute, action, or other matter may be asserted, commenced, taken or otherwise pursued in the future.

“ Use ” means to appropriate any of the Confidential Information of the Company and/or the Subsidiary for the benefit of oneself or any other Person other than the Company.

“ WARN Acts ” has the meaning set forth in Section 3.9(k) of this Agreement.

“Working Capital” means “Current Assets” less “Current Liabilities”. “Current Assets” means the sum of accounts receivable (net of allowances), prepaid expenses, and other current assets of Company (excluding any cash, tax refunds, and refund of the monies deposited in escrow with the IRS as required in connection with Subchapter S corporations having a non-conforming fiscal year) as determined in accordance with GAAP consistently applied. “Current Liabilities” means the sum of accounts payable and accrued expenses of Company, excluding accrued interest defined as Debt and as determined in accordance with GAAP consistently applied.

“Working Capital Adjustment” has the meaning set forth in Section 2.3(b) of this Agreement.

ARTICLE 2

PURCHASE OF STOCK; PURCHASE PRICE

2.1.         Purchase and Sale of Stock. In reliance upon the representations, warranties and covenants contained in this Agreement as of the date hereof and on the Closing Date, the Purchaser agrees to purchase the Stock from the Seller, and the Seller agrees to sell, transfer, convey, assign and deliver the Stock to the Purchaser on the terms and conditions set forth in this Agreement. Such sale, transfer, conveyance, assignment and delivery of the Stock shall convey good and marketable title to the Stock, free and clear of any and all Rights and Encumbrances, and at such time the Stock will be fully paid and non-assessable. At the Closing the Seller will deliver to the Purchaser certificate(s) evidencing the Stock duly endorsed in blank or with stock powers duly executed by the Seller.

2.2.         Purchase Price.

(a)           The purchase price to be paid to the Seller by the Purchaser for the Stock and Owned Real Estate shall be Forty-Five Million United States Dollars ($45,000,000.00) of which the purchase price for the Stock shall be Forty Three Million United States Dollars ($43,000,000.00) and the purchase price for the Owned Real Estate shall be Two Million United States Dollars ($2,000,000.00), each as may be adjusted at the Closing Date, and post-closing as provided by this Agreement. The purchase price for the Owned Real Estate shall be due and payable in full at Closing, subject only to such adjustments, if any, contained in the Real Estate Purchase Agreement. The purchase price solely for the Stock shall be referred to as the “ Interim Purchase Price ”. The Interim Purchase Price shall be adjusted to determine the Final Purchase Price, as provided in this Section 2.2 and Sections 2.3 and 2.4. The Interim Purchase Price and the purchase price for the Owned Real Estate shall be paid on the Closing Date by wire transfer of immediately available funds to an account (or accounts) designated by the Seller at least two (2) calendar days prior to the Closing.

(b)           The Interim Purchase Price has been based on the assumption that the Company and the Subsidiary shall be Cash-Free (including any Subsidiary or Affiliate Cash) as of the Closing Date. To the extent that the (i) Company has Cash on its books as of the Closing Date, the Interim Purchase Price shall be increased on the Closing Date by a corresponding amount, and (ii) Subsidiary has Cash on its books as of the Closing Date, the Interim Purchase Price shall be increased on the Closing Date by 92.5% of such amount of Cash (the “ Cash Adjustment ”).

(c)           The Interim Purchase Price has been based on the assumption that the Company and the Subsidiary shall be Debt-Free (including any Subsidiary or Affiliate Debt) as of the Closing Date. To the extent that the Company, Subsidiary or Affiliate have Debt, exclusive of the current portion of long-term debt, as of the Closing Date, the Interim Purchase Price shall be reduced on the Closing Date by a corresponding amount (the “ Debt Adjustment ”) and such Debt Adjustment shall be paid directly by the Purchaser to such creditor or creditors, but may be paid from Closing proceeds.

2.3.         Working Capital Adjustment.

(a)           The Interim Purchase Price shall also be adjusted after the Closing Date by an amount of dollars, positive or negative, as the case may be, equal to the difference between the Target Working Capital and the Working Capital as shown on the audited Balance Sheets, which will be used to determine the Final Purchase Price.

(b)           If the Working Capital on the audited Balance Sheets is:

(i)            less than the Target Working Capital, an amount equal to the deficit shall be payable from the Seller to the Purchaser;

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(ii)           greater than the amount shown on the Target Working Capital, an amount equal to the surplus shall be payable from the Purchaser to the Seller;

(iii)          equal to the amount shown on the Target Working Capital, no amount shall be due to either party.

The adjustment provided for in this Section 2.3(a) shall be known as the “Working Capital Adjustment ”. The Interim Purchase Price, after application of the Working Capital Adjustment, shall constitute the “ Final Purchase Price ”.

(c)           Within seventy-five (75) calendar days following the Closing Date, the Seller and Purchaser, as applicable, shall cause the Company and its auditor to prepare and deliver to the Purchaser and Seller, in good faith, an audited final balance sheet and closing statement setting forth the Working Capital Adjustment in accordance with this Section 2.3 (the “ Final Closing Statement ”). This audited final balance sheet and Final Closing Statement shall be prepared by the Seller’s Auditors, Berry, Dunn, McNeill & Parker, the cost of which shall be a Company expense, not chargeable back to Seller and the statutory auditors of the Subsidiary Acton Revisions AG. Within thirty (30) calendar days following the Purchaser’s and Seller’s receipt of the Final Closing Statement, the Purchaser or Seller may object in good faith to the Working Capital Adjustment in writing. In the event of any such objection, the Purchaser and the Seller shall attempt to resolve their differences by negotiation. If such parties are unable to do so within thirty (30) calendar days following receipt of the objecting party’s objection, the Seller and the Purchaser shall appoint a nationally recognized accounting firm mutually acceptable to each of the Seller and the Purchaser, which shall, at the Seller’s and the Purchaser’s joint expense, review the Final Closing Statement and determine the Working Capital Adjustment, if any, within thirty (30) calendar days of such appointment. The Seller and the Purchaser agree to cooperate with such accounting firm and provide it with such information as it reasonably requests to enable it to make such determination. The finding of such accounting firm shall be binding on the parties hereto.

(d)           Any amounts owed hereunder shall be paid to the party owed the same by the party owing the same by wire transfer of immediately available funds to an account designated by the party owed the same no later than five (5) business days following the determination by agreement of the Seller and the Purchaser or by binding determination of said accounting firm of the Working Capital Adjustment, and such payment shall be accompanied by an additional payment of interest, calculated with a 4% annual interest rate from the Closing Date to the date of payment pursuant to this Section 2.3.

(e)           The Seller agrees and authorizes the Purchaser to retain from the Interim Purchase Price and deposit in escrow, with Sovereign Bank (“ Escrow Agent ”) acting as an independent authorized escrow agent in an interest bearing account, the sum of Three Million United States Dollars ($3,000,000.00) (the “ Escrowed Funds ”) as collateral security and to be used as the initial source of funds for any breach of the representations, warranties, covenants and obligations of the Seller under this Agreement, in accordance with an escrow agreement in substantially the form set forth in Exhibit B attached hereto (the “ Purchase Price Escrow Agreement ”). The Escrowed Funds shall not be used in any way for purposes of the Working Capital Adjustment.

(f)            The term of the Purchase Price Escrow Agreement shall be two (2) years. After one year, the Escrowed Funds shall be reduced from $3,000,000, plus any accrued interest, to $1,500,000.

(g)           In accordance with the terms of the Purchase Price Escrow Agreement and Article 6 of this Agreement, the Purchaser shall promptly notify the Seller of the amount of any Damages sustained by the Purchaser for which the Seller is obligated to indemnify the Purchaser under Article 6 hereof (and which have not theretofore been fully satisfied by the Seller), including Damages sustained as a result of any breach of any representation or warranty by the Seller as provided under said Article 6. In the event the Seller fails to direct the Escrow Agent to reimburse the Purchaser the full amount of the Damages suffered by the Purchaser within thirty (30) calendar days of the receipt of the Purchaser’s notice, the provisions of Article 6 and the Purchase Price Escrow Agreement shall apply.

2.4.         Tax Adjustment. The Interim Purchase Price shall also be increased after the Closing Date by the amount necessary to cause Seller’s after-Tax net proceeds from the sale of Stock hereunder with the §338(h)(10) Election or any other election under Code §338 (collectively, the “§338 Elections”) in effect to be equal to the after-Tax net proceeds that Seller would have received had the §338 Elections not been made, taking into account all appropriate state, federal, local and foreign Tax implications (the “ Tax Adjustment” ). Seller shall provide Purchaser with a schedule computing the amount of the Tax Adjustment within 20 days after the Allocation Schedule (required under Section 7.6 hereof) is completed. The amount of each Seller’s pro-rata portion of the Tax Adjustment shall be paid to each Seller at the time each Seller signs Form 8023 to make the federal §338(h)(10) Election, or promptly and timely upon any other §338 Election being made.

2.5          Closing and Closing Deliveries.

(a)           Closing and Closing Date . The closing of the transactions contemplated by this Agreement (the “ Closing ”) shall be held on May 2, 2006 at the offices of Burns & Levinson LLP, 125 Summer Street, 8th Floor, Boston, Massachusetts 02110.

(b)           Closing Deliveries by the Seller . At the Closing, each Seller shall execute, where necessary or appropriate, and deliver to the Purchaser each and all of the following:

(i)            The certificates evidencing the Stock duly endorsed by each Seller in blank or accompanied by stock powers duly executed by each Seller. With respect to the Subsidiary the same and/or such other documents as may be required under Swiss law to complete the transfer of control or ownership, as applicable;

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(ii)           The corporate minute books, the corporate seals, and stock books for the Company and Subsidiary;

(iii)          A duly executed written opinion letter by counsel for the Seller, dated as of the Closing Date, addressed to the Purchaser;

(iv)          Duly executed resignations of (A) the officers of the Company and the Subsidiary who are designated by the Purchaser, and (B) the directors of the Company and the Subsidiary who are the Seller, or who otherwise are designated by the Purchaser, all effective as of the Closing Date;

(v)           Certificates of good standing for the Company, Subsidiary and Affiliate issued by the Secretary of State (or the equivalent office) of their respective places of incorporation or organization;

(vi)          The non-foreign person affidavit required by Section 1445 of the Code;

(vii)         Non-Disclosure and Non-Competition Agreements for Edward D. Riley and Russell P. Holmes;

(viii)        Confidentiality and Non-Compete Agreements for Martin Moore, Harold Engberg, Jr., Richard Campbell, Pierre Louis-Beaud and Chris Melino; with executed agreement from Mr. Beaud.

(ix)           Retention Bonus Agreements for Martin Moore, Harold Engberg, Jr., Richard Campbell, Chris Melino and Pierre Louis-Beaud; with executed Employment Agreement from Mr. Beaud.

(x)            the Purchase Price Escrow Agreement executed by each Seller;

(xi)           a statement executed by the Company pursuant to Treas. Reg. §1.897-2(h), dated no more than thirty (30) days prior to Closing, certifying that (i) the Shares do not constitute a U.S. real property interest, or (ii) none of the holders of capital stock of the Company is a foreign person;

(xi)           all necessary third-party consents necessary to operate the Business;

(xi)           the Real Estate Purchase Agreement executed by Riley Real Estate, LLC;

(xii)          Such documentation as is required to convey all right, title and interest in and to the Owned Real Estate to the Purchaser or Purchaser’s nominee together with any additional deliveries related thereto as set forth in the Real Estate Purchase Agreement;

(xiii)         Waiver and Release executed by each Seller and each director of Company, Subsidiary and Affiliate;

(xiv)        Such other documents and items as are reasonably necessary or appropriate to effect the consummation of the transactions contemplated hereby; and

(xv)         Memorandum of Understanding between the Purchaser and Edward D. Riley regarding future employment with Purchaser.

(xvi)        Board of Directors’ Consents for the Company; Secretary’s Certificate; and Shareholder’s Consents for the Company.

(c)           Closing Deliveries by the Purchaser . At the Closing, the Purchaser shall execute, where necessary or appropriate, and deliver to the Seller each and all of the following:

(i)            Payment of the Interim Purchase Price and payment of the purchase price for the Affiliate’s Owned Real Estate in the manner set forth in Section 2.2 of this Agreement;

(ii)           the Real Estate Purchase Agreement executed by the Purchaser or an affiliate of Purchaser;

(iii)          A copy certified by the Secretary of the Purchaser of the duly adopted resolutions of the Board of Directors of the Purchaser approving this Agreement, including the Ancillary Documents, and authorizing the execution and delivery of this Agreement and the Ancillary Documents, and the consummation of the transactions contemplated hereby and thereby.

(iv)          A duly executed written opinion letter by counsel for the Purchaser, dated as of the Closing Date, addressed to the Seller;

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(v)           A certificate of good standing of the Purchaser issued by the Secretary of State of the Purchaser’s state of incorporation or the equivalent; and

(vi)          Such other documents and items as are reasonably necessary or appropriate to effect the consummation of the transactions contemplated hereby or which may be customary under local law.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF THE SELLER

As an inducement for the Purchaser to enter into this Agreement and to consummate the transactions contemplated hereby, each Seller jointly and severally represents and warrants to the Purchaser that each and all of the following representations and warranties are true and correct as of the date of this Agreement and at Closing. The Schedules shall be arranged in paragraphs corresponding to the sections and subsections contained in this Article 3.

3.1.         Organization and Good Standing.

(a)           Schedule 3.1 contains a complete and accurate list for the Company, Subsidiary and Affiliate of its jurisdiction of incorporation (or other formation). The Company, Subsidiary and Affiliate are duly organized, validly existing, and in good standing under the laws of its jurisdiction of incorporation (or other formation), with full power and authority to conduct their respective businesses as same are now being conducted, to own or use the properties and assets that each purports to own, lease, operate or use in the conduct of their respective businesses, and to perform all their respective obligations under any Contracts. The Company, Subsidiary and Affiliate are licensed or qualified to transact business and are in good standing as a foreign corporation in each jurisdiction (including European jurisdiction) in which, because of its business conducted there or the nature of its assets or properties there, it could be required to be so licensed or qualified, unless the lack of registration does not have a Material Adverse Effect on the Business. Each such foreign jurisdiction is set forth in Schedule 3.1 .

(b)           Seller has delivered to Purchaser copies of the organizational documents of the Company, Subsidiary and Affiliates, as currently in effect.

3.2.         Authority; No Conflict.

(a)           This Agreement constitutes the legal, valid, and binding obligation of the Seller, enforceable against each Seller in accordance with its terms. The documents delivered by the Seller will constitute the legal, valid, and binding obligations of each Seller, enforceable against each Seller in accordance with their respective terms. Each Seller has the right, power, authority, and capacity to execute and deliver this Agreement and the Ancillary Documents to which he is a party, and to perform his obligations hereunder and thereunder. The execution, delivery and performance of this Agreement and the Ancillary Documents to which any Seller is or shall be a party have been duly authorized by all necessary action on the part of such Seller. This Agreement and the Ancillary Documents have been duly executed and delivered by each Seller which is a party thereto.

(b)           Except as set forth on Schedule 3.2(b) , neither the execution nor delivery of this Agreement and the Ancillary Documents nor the consummation or performance of any of the contemplated transactions will, directly or indirectly:

(i)            contravene, conflict with, or result in a violation of (A) any provision of the organizational documents of the Company, Subsidiary or Affiliate, or (B) any resolution adopted by the board of directors, the shareholders, members of the Company, Subsidiary or Affiliate, as the case may be;

(ii)           contravene, conflict with, or result in a breach or violation of, or constitute a default under (or an event which, with or without notice, lapse of time or both, could constitute a default) or result in the invalidity of, or accelerate the performance required by or cause or give rise to any right of acceleration or termination of any right or obligation pursuant to any agreement or commitment to which any Seller, the Company, Subsidiary or Affiliate is a party or by which any Seller, the Company or Subsidiary (or any of their respective assets or properties) is subject or bound;

(iii)          contravene, conflict with, or result in a breach or violation of, or constitute a default under (or an event which, with or without notice, lapse of time or both, could constitute a default) or result in the invalidity of the Swiss Tax Agreement;

(iv)          result in the creation of, or give any third party the right to create, any Encumbrance upon the Stock or any assets or properties of any Seller, the Company, Subsidiary or Affiliate;

(v)           conflict with any Applicable Laws to which any Seller, the Company, Subsidiary or Affiliate or any assets or properties of any of the foregoing are subject;

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(vi)          terminate or modify, or give any third party the right to terminate or modify, the provisions or terms of any contract or agreement to which any Seller, the Company, Subsidiary or Affiliate is a party or by which any Seller, the Company, Subsidiary or Affiliate (or any of their respective assets or properties) is subject or bound;

(vii)         require any Seller, the Company, Subsidiary or Affiliate to obtain any Consent; or

(viii)        result in or give to any Person any additional rights or entitlement to increased, additional, accelerated or guaranteed payments under any contract or agreement to which any Seller, the Company, Subsidiary or Affiliate or any Subsidiary is a party or by which any of their respective assets or Properties is subject or bound.

3.3.         Capitalization.

The capitalization and identity of each shareholder or member of each of the Company, the Subsidiary and the Affiliate, is as follows:

(a)           The authorized capital stock of the Company consists solely of 300,000 shares of common voting stock, One Cent ($0.01) par value, of which 200,000 shares are issued and outstanding on the date hereof, and are owned beneficially and of record by the Seller, free and clear of all Rights and Encumbrances. Said shares are divided as follows: 102,000 designated as Class A are owned by Edward Riley and 98,000 designated as Class B are owned by Russell Holmes. The Stock is validly issued, fully paid and nonassessable and was issued in compliance with Applicable Laws. The Company is the sole legal, beneficial and equitable shareholder of 97 of the 100 issued and outstanding equity interests in and with respect to the Subsidiary. None of the Stock has been issued in violation of the rights of any Person. As of the date hereof, (i) there are no Rights outstanding, and (ii) there are no agreements, understandings or commitments relating to the Rights of the Seller to vote or dispose of the Stock.

(b)           The authorized share capital of the Subsidiary consists solely of One Hundred Thousand Swiss Francs (CHF 100,000.-), with one hundred (100) registered shares of stock, each having a nominal value of One Thousand Swiss Francs (CHF 1,000.-), with one hundred shares of stock issued and outstanding on the date hereof, and 97 of said 100 shares owned beneficially and of record by the Company, free and clear of all liens and Encumbrances. Of the remaining three shares, the three directors of the Subsidiary, Dr. Hans-Rudolf Staiger and Dr. Michael Hamm (each in a fiduciary capacity as trustee for the benefit of the Company pursuant to Trust Agreements with the Company dated April 12, 1999) and Edward Riley, each hold one share in trust on behalf of the Company in accordance with applicable Swiss law, which provides that each director of a Swiss company must also be a shareholder and that a majority of such directors must be Swiss or EU citizens, domiciled in Switzerland. The outstanding stock of the Subsidiary is validly issued, fully paid and nonassessable and was issued in compliance with Applicable Laws. None of the outstanding stock of the Subsidiary has been issued in violation of the rights of any Person. As of the date hereof, (i) there are no Rights outstanding, and (ii) there are no agreements, understandings or commitments relating to the rights of the Company to vote or dispose of the stock of the Subsidiary.

(c)           The Affiliate is a Maine Limited Liability Company and sole owner of the Owner Real Estate. The equity of the Affiliate is owned 51% by Edward Riley and 49% by Russell Holmes.

3.4.         Clear Title. Except as otherwise set forth in Schedule 3.4 or the leased property disclosed in Schedule 3.15(d) hereto, on the Closing Date, (i) the Company, Subsidiary and Affiliate hold good title (or valid and enforceable leasehold interests) to their respective personal property, and (ii) such personal property is and shall be free and clear of any and all Encumbrances of any kind, nature and description whatsoever, except for Encumbrances which are disclosed, reflected or reserved for or against in the Balance Sheets, or are being released by payment from Closing proceeds.

3.5.         Condition of Assets. All of the properties and assets of the Company, Subsidiary and Affiliate are the assets used to operate their respective businesses as currently conducted, (ii) such properties and assets have been properly maintained, consistent with past practices, and are in good operating condition, normal wear and tear excepted, and (iii) all leased property is in the condition received by the Company and Subsidiary at the time of the lease, normal wear and tear excepted.

3.6.         Legal Proceedings . Except as set forth on Schedule 3.6(a) , there has not been in the twenty-four (24) months prior to the date hereof any claims, actions, suits, inquiries, proceedings, orders or investigations of any kind or nature whatsoever, at law or in equity, by or before any court or Governmental Body. Except as set forth on Schedule 3.6(b) , there are no claims, actions, suits, inquiries, proceedings, orders or investigations of any kind or nature whatsoever, at law or in equity, by or before any court or Governmental Body, or to the Seller’s Knowledge, Threatened against or involving or potentially involving:

(a)           the Company, Subsidiary, Affiliate or Business, assets, properties, officers or directors, or which questions or challenges the validity of this Agreement, any Ancillary Document or any action taken or to be taken by Seller pursuant to this Agreement, the Ancillary Document or in connection with the contemplated transactions; and, to the Seller’s Knowledge, there is no valid basis for any such claim, action, suit, inquiry, proceeding or investigation; or

(b)           any Seller, which could adversely affect the consummation of the contemplated transactions.

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(c)           Neither the Company, Subsidiary nor Affiliate is subject to any judgment, order, decree or legal requirement which involves more than $25,000. The Company has delivered to Purchaser copies of all pleadings, correspondence, and other documents relating to any of the foregoing.

3.7.         Labor Matters. Except as set forth in Schedule 3.7 hereto, the Company and the Subsidiary, individually or collectively, have never been a party to any collective bargaining agreement or other labor Contract and there is not presently pending or existing, and to the Seller’s Knowledge, the Company or the Subsidiary, there is not Threatened (i) any strike, slowdown, walkout, picketing, work stoppage, labor arbitration or other Proceeding in respect of the grievance of any employee, (ii) any application or complaint filed by any employee or union with the National Labor Relations Board, the Equal Employment Opportunity Commission, the Occupational Safety and Health Administration or any comparable Governmental Body, (iii) any other employee claim under any Applicable Laws; or (iv) any organizational activity or other labor dispute against or affecting the Company or the Subsidiary, and no application for certification of a collective bargaining agreement is pending or, to the Seller’s Knowledge, the Company or the Subsidiary, is Threatened. There is no lockout of any employees by the Company or the Subsidiary and no such action is contemplated by either the Company or the Subsidiary. Except as set forth in Schedule 3.7 hereto, there is no Proceeding pending or, to the Seller’s Knowledge, the Company or the Subsidiary, Threatened by any Person against the Company or the Subsidiary or any of their current or former officers, directors or employees relating to employment, equal employment opportunity, discrimination, harassment, wrongful discharge, unfair labor practices, immigration, wages, hours, benefits, collective bargaining, the payment of social security or similar Taxes, occupational safety and health or plant closing. Except as disclosed in Schedule 3.7 , there are no worker’s compensation claims pending against the Company or Subsidiary, and the Seller have no Knowledge of any basis for any such claim.

3.8.         Tax Matters.

(a)           Tax Returns . The Company, Subsidiary and Affiliate have timely filed, or caused to be timely filed, with the appropriate taxing authorities, all Tax Returns that are required to be filed by, or with respect to, the Company, Subsidiary and Affiliate on or prior to the Closing Date. The Returns have accurately reflected and will accurately reflect all Liability for Taxes of the Company, Subsidiary and Affiliate for the periods covered thereby. Schedule 3.8(a) lists all income Tax Returns filed with any Governmental Body with respect to the Company, Subsidiary and Affiliate for the taxable periods ended on or after September 30, 2001.

(b)           Payment of Taxes . All Taxes and Tax Liabilities of the Company, Subsidiary and Affiliate for all taxable years or periods that end on or before the Closing Date and, with respect to any taxable year or period beginning before and ending after the Closing Date, the portion of such taxable year or period ending on the day immediately preceding the Closing Date (“ Pre-Closing Period ”) have been timely paid to the extent due and/or adequate provisions have been made for taxes which have accrued and/or become due or become due through the Closing Date and there are no further liabilities for any Taxes, except as reflected in Schedule 3.8(b) .

(c)           Other Tax Matters . Except as set forth in Schedule 3.8(c) :

(i)            the Company, Subsidiary and Affiliate have not been the subject of a dispute or claim or an audit or other examination of Taxes by the Tax authorities of any Governmental Body, nor have the Company, Subsidiary or Affiliate received any notices from any such taxing authority relating to any issue which could have a Material Adverse Effect.

(ii)           the Seller, the Company, Subsidiary and Affiliate have not (A) entered into an agreement or waiver or been requested to enter into an agreement or waiver extending any statute of limitations relating to the payment or collection of Taxes of the Company or the Subsidiary, or (B) contested the Tax Liability of the Company, Subsidiary or Affiliate before any Governmental Body.

(iii)          the Company, Subsidiary or Affiliate have not been included in any “consolidated,” “unitary” or “combined” Tax Return provided for under Applicable Law with respect to Taxes for any taxable period for which the statute of limitations has not expired other than the consolidated group the parent of which is the Company.

(iv)          all Taxes which the Company, Subsidiary and Affiliate are (or have been) required by law to withhold or collect have been duly withheld or collected, and have been timely paid over to the proper authorities to the extent due and payable.

(v)           there are no Tax sharing, allocation, indemnification or similar agreements in effect as between the Company and/or the Subsidiary or any predecessor or Affiliate thereof and any other party (including the Seller and any predecessors or Affiliates thereof) under which the Purchaser, the Company, Subsidiary or Affiliate could be liable for any Taxes or other claims of any Person.

(vi)          the Company is and has been a validly electing S Corporation within the meaning of Code §§1361 and 1362 at all times since September 11, 1992.

(vii)         the Subsidiary is not, and has never been treated as, a “qualified subchapter S subsidiary” within the meaning of Code §1361(b)(3)(B).

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