Document:

Exhibit
10.1

June 29, 2007

 

 

 

ATS Corporation

7915 Jones Branch Drive

McLean, Virginia  22102

 

Re:                               Amendment No. 1
to Credit Agreement

 

Ladies and Gentlemen:

 

Reference is hereby made to
that certain Credit Agreement (the “Agreement”) dated as of June 4, 2007
among ATS Corporation (the “Borrower”), Bank of America, N.A., as
administrative agent (the “Agent”) and the other lenders party thereto
(the “Lenders”).  The Borrower has
requested that the definition of “Interest Rate Change Date” be added to the
definition of “LIBOR Monthly Floating Base Rate” in Section 1.01 of the
Agreement as set forth below. 
Capitalized terms not otherwise defined herein shall have the meanings
ascribed to such terms in the Agreement.

 

Each of the Borrower, the
Guarantors, the Agent and the Lenders, hereby agrees that the definition of “LIBOR
Monthly Floating Base Rate” in Section 1.01 of the Agreement is hereby
amended and restated in its entirety to read as follows:

 

“LIBOR
Monthly Floating Base Rate” means, for all Loans, on each day any such Loan
is outstanding, the fluctuating rate of interest (rounded upwards, as
necessary, to the nearest 1/100 of 1%) equal to the British Bankers Association
LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other commercially
available source providing quotations of BBA LIBOR as designated by the
Administrative Agent from time to time) at approximately 11:00 a.m., London
time, two (2) Business Days prior to the most recent Interest Rate Change Date,
for Dollar deposits (for delivery on such Interest Rate Change Date) with a
term of one month, as adjusted from time to time in the Administrative Agent’s
sole discretion for changes in deposit insurance requirements  and other regulatory costs.  If such rate is not available at such time
for any reason, then the “LIBOR Monthly Floating Base Rate” shall be the rate
per annum determined by the Administrative Agent to be the rate at which
deposits in Dollars for delivery in same day funds in the approximate amount of
the Loans outstanding with a term equivalent to a one-month would be offered by
Bank of America’s London Branch to major banks in the London interbank
eurodollar market at their request at approximately 11:00 a.m. (London time),
on each day any such Loan is outstanding. 
As used in this definition, “Interest Rate Change Date” means the
first day of each month; provided, however, that if such date is
not a Business Day, then the “Interest Rate Change Date” shall be the next
succeeding Business Day.

 

Except as otherwise
specifically set forth herein, the Agreement and all other Loan Documents are
hereby confirmed and ratified in all respects and shall remain in full force
and effect according to their respective terms.

 

[Signature pages follow.]

 

 

1

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  BANK OF AMERICA, N.A., as
  Administrative Agent

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By: 

  	
  /s/ Michael D. Brannan

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name: Michael D. Brannan

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:   Senior Vice President 

  

 

 

 

 

 

2

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   BANK OF AMERICA, N.A., as
  a Lender, L/C Issuer and Swing Line Lender

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Michael D. Brannan

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name: Michael D. Brannan

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:  Senior Vice President

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
								

 

 

3

 

Accepted and Agreed to this 29th
day of June, 2007.

 

	
  ATS Corporation

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Edward H. Bersoff

  	
   

  
	
  Name: Edward H. Bersoff

  
	
  Title: President and Chief
  Executive Officer

  

 

 

	
  ADVANCED TECHNOLOGY
  SYSTEMS, INC.

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Edward H. Bersoff

  	
   

  
	
  Name: Edward H. Bersoff

  
	
  Title: President and Chief
  Executive Officer

  
				

 

 

	
  RELIABLE INTEGRATION
  SERVICES, INC.

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Edward H. Bersoff

  	
   

  
	
  Name: Edward H. Bersoff

  
	
  Title: President and Chief
  Executive Officer

  

 

 

	
  APPIX, INC.

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Edward H. Bersoff

  	
   

  
	
  Name: Edward H. Bersoff

  
	
  Title: President and Chief
  Executive Officer

  

 

 

4

 

 

	
  CITIZENS BANK OF
  PENNSYLVANIA

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Leslie Grizzard

  	
   

  
	
  Name:

  	
  Leslie Grizzard

  
	
  Title: 

  	
  Senior Vice President

  
				

 

 

 

 

5Exhibit 10.1

 

SPECIALTY SURGICAL INSTRUMENTATION, INC.

 

UCA, LLC

 

PURCHASE AGREEMENT

 

By and Among

 

SYMMETRY MEDICAL USA INC.

(Purchaser)

 

and

 

LOUIS C. WALLACE

CHARLES O. MANN, JR.

(Sellers)

 

DATED: 
August 29, 2007

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 1 -
  DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2 -
  PURCHASE OF EQUITY INTERESTS; PURCHASE PRICE

  	
   

  	
  9

  
	
   

  	
   

  	
   

  
	
  2.1. Purchase and Sale of Equity Interests

  	
   

  	
  9

  
	
   

  	
   

  	
   

  
	
  2.2. Purchase Price

  	
   

  	
  9

  
	
   

  	
   

  	
   

  
	
  2.3. Working Capital Adjustment

  	
   

  	
  10

  
	
   

  	
   

  	
   

  
	
  2.4. Escrow Agreement

  	
   

  	
  11

  
	
   

  	
   

  	
   

  
	
  2.5. Closing and Closing Deliveries

  	
   

  	
  12

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3 -
  REPRESENTATIONS AND WARRANTIES OF SELLERS

  	
   

  	
  14

  
	
   

  	
   

  	
   

  
	
  3.1. Organization and Good Standing

  	
   

  	
  14

  
	
   

  	
   

  	
   

  
	
  3.2. Authority; No Conflict

  	
   

  	
  14

  
	
   

  	
   

  	
   

  
	
  3.3. Capitalization

  	
   

  	
  15

  
	
   

  	
   

  	
   

  
	
  3.4. Clear Title

  	
   

  	
  16

  
	
   

  	
   

  	
   

  
	
  3.5. Condition of Assets

  	
   

  	
  16

  
	
   

  	
   

  	
   

  
	
  3.6. Legal Proceedings

  	
   

  	
  16

  
	
   

  	
   

  	
   

  
	
  3.7. Labor Matters

  	
   

  	
  16

  
	
   

  	
   

  	
   

  
	
  3.8. Tax Matters

  	
   

  	
  17

  
	
   

  	
   

  	
   

  
	
  3.9. Employee Benefits

  	
   

  	
  18

  
	
   

  	
   

  	
   

  
	
  3.10. Guarantees

  	
   

  	
  20

  
	
   

  	
   

  	
   

  
	
  3.11. Financial Statements

  	
   

  	
  20

  
	
   

  	
   

  	
   

  
	
  3.12. Absence of Certain Developments

  	
   

  	
  21

  
	
   

  	
   

  	
   

  
	
  3.13. Intellectual Property

  	
   

  	
  23

  
	
   

  	
   

  	
   

  
	
  3.14. Compliance with Laws

  	
   

  	
  24

  
	
   

  	
   

  	
   

  
	
  3.15. Contracts

  	
   

  	
  24

  
	
   

  	
   

  	
   

  
	
  3.16. Contracts; Compliance

  	
   

  	
  26

  
	
   

  	
   

  	
   

  
	
  3.17. Real Estate

  	
   

  	
  26

  
	
   

  	
   

  	
   

  
	
  3.18. Accounts Receivable

  	
   

  	
  27

  
	
   

  	
   

  	
   

  
	
  3.19. Books and Records; Bank Accounts

  	
   

  	
  27

  
	
   

  	
   

  	
   

  
	
  3.20. Employees

  	
   

  	
  28

  
	
   

  	
   

  	
   

  
	
  3.21. Investments

  	
   

  	
  28

  

 

 

	
  3.22. Insurance

  	
   

  	
  29

  
	
   

  	
   

  	
   

  
	
  3.23. Brokers

  	
   

  	
  29

  
	
   

  	
   

  	
   

  
	
  3.24. Environmental Matters

  	
   

  	
  30

  
	
   

  	
   

  	
   

  
	
  3.25. Debt

  	
   

  	
  30

  
	
   

  	
   

  	
   

  
	
  3.26. Customers and Suppliers

  	
   

  	
  31

  
	
   

  	
   

  	
   

  
	
  3.27. Sellers Loans

  	
   

  	
  31

  
	
   

  	
   

  	
   

  
	
  3.28. Adequacy of Properties

  	
   

  	
  31

  
	
   

  	
   

  	
   

  
	
  3.29. Related Party Transactions

  	
   

  	
  31

  
	
   

  	
   

  	
   

  
	
  3.30. Permits

  	
   

  	
  31

  
	
   

  	
   

  	
   

  
	
  3.31. Warranty and Product Liability Claims

  	
   

  	
  32

  
	
   

  	
   

  	
   

  
	
  3.32. Defective Products

  	
   

  	
  32

  
	
   

  	
   

  	
   

  
	
  3.33. Absence of Undisclosed Liabilities

  	
   

  	
  32

  
	
   

  	
   

  	
   

  
	
  3.34. Closing Date

  	
   

  	
  32

  
	
   

  	
   

  	
   

  
	
  3.35. Health Regulations

  	
   

  	
  33

  
	
   

  	
   

  	
   

  
	
  3.36. Additional Contract Representations

  	
   

  	
  34

  
	
   

  	
   

  	
   

  
	
  3.37. Representations and Warranties

  	
   

  	
  34

  
	
   

  	
   

  	
   

  
	
  3.38. Assignability of Representations and Warranties

  	
   

  	
  34

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4 -
  COVENANTS OF SELLERS

  	
   

  	
  34

  
	
   

  	
   

  	
   

  
	
  4.1. Further Assurances

  	
   

  	
  34

  
	
   

  	
   

  	
   

  
	
  4.2. Non-Disclosure and Non-Competition

  	
   

  	
  34

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5 -
  REPRESENTATIONS AND WARRANTIES OF PURCHASER

  	
   

  	
  34

  
	
   

  	
   

  	
   

  
	
  5.1. Organization

  	
   

  	
  34

  
	
   

  	
   

  	
   

  
	
  5.2. Due Authorization

  	
   

  	
  34

  
	
   

  	
   

  	
   

  
	
  5.3. No Breach

  	
   

  	
  35

  
	
   

  	
   

  	
   

  
	
  5.4. Investment Representations

  	
   

  	
  35

  
	
   

  	
   

  	
   

  
	
  5.5. Brokers

  	
   

  	
  35

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6 –
  CONDITIONS PRECEDENT TO CLOSING

  	
   

  	
  35

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7 -
  INDEMNIFICATION

  	
   

  	
  36

  
	
   

  	
   

  	
   

  
	
  7.1. Survival of Representations and Warranties

  	
   

  	
  36

  
	
   

  	
   

  	
   

  
	
  7.2. Indemnification by Sellers

  	
   

  	
  37

  
	
   

  	
   

  	
   

  
	
  7.3. Escrow, Time Limits and Insurance

  	
   

  	
  38

  
	
   

  	
   

  	
   

  
	
  7.4. Indemnification by Purchaser

  	
   

  	
  39

  
	
   

  	
   

  	
   

  
	
  7.5. Procedure for Indemnification

  	
   

  	
  39

  

 

 

	
  ARTICLE 8 -
  TAX MATTERS

  	
   

  	
  41

  
	
   

  	
   

  	
   

  
	
  8.1. Tax Returns

  	
   

  	
  41

  
	
   

  	
   

  	
   

  
	
  8.2. Controversies

  	
   

  	
  42

  
	
   

  	
   

  	
   

  
	
  8.3. Transfer Taxes

  	
   

  	
  43

  
	
   

  	
   

  	
   

  
	
  8.4. Post-Closing Access and Cooperation

  	
   

  	
  43

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9 -
  PERFORMANCE FOLLOWING THE CLOSING DATE

  	
   

  	
  43

  
	
   

  	
   

  	
   

  
	
  9.1. Further Acts and Assurances

  	
   

  	
  43

  
	
   

  	
   

  	
   

  
	
  9.2. Employee Matters

  	
   

  	
  43

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10 -
  MISCELLANEOUS

  	
   

  	
  44

  
	
   

  	
   

  	
   

  
	
  10.1. Preservation of and Access to Records

  	
   

  	
  44

  
	
   

  	
   

  	
   

  
	
  10.2. Specific Performance

  	
   

  	
  44

  
	
   

  	
   

  	
   

  
	
  10.3. Public and Private Announcements

  	
   

  	
  45

  
	
   

  	
   

  	
   

  
	
  10.4. Notices

  	
   

  	
  46

  
	
   

  	
   

  	
   

  
	
  10.5. Entire Agreement

  	
   

  	
  46

  
	
   

  	
   

  	
   

  
	
  10.6. Amendments

  	
   

  	
  46

  
	
   

  	
   

  	
   

  
	
  10.7. Successors and Assigns

  	
   

  	
  46

  
	
   

  	
   

  	
   

  
	
  10.8. Fees and Expenses

  	
   

  	
  46

  
	
   

  	
   

  	
   

  
	
  10.9. Counterparts and Facsimile Signature

  	
   

  	
  47

  
	
   

  	
   

  	
   

  
	
  10.10. Headings

  	
   

  	
  47

  
	
   

  	
   

  	
   

  
	
  10.11. Number and Gender

  	
   

  	
  47

  
	
   

  	
   

  	
   

  
	
  10.12. Severability

  	
   

  	
  47

  
	
   

  	
   

  	
   

  
	
  10.13. Parties in Interest

  	
   

  	
  47

  
	
   

  	
   

  	
   

  
	
  10.14. Waiver

  	
   

  	
  47

  
	
   

  	
   

  	
   

  
	
  10.15. Construction

  	
   

  	
  48

  
	
   

  	
   

  	
   

  
	
  10.16. Dispute Resolution

  	
   

  	
  48

  

 

 

PURCHASE AGREEMENT

 

THIS PURCHASE AGREEMENT
(this “Agreement”) is made and entered into on the 29th day of
August, 2007, by and between Symmetry Medical USA Inc.,
a duly organized Delaware Corporation with a principal place of business in
Warsaw, Indiana (“Purchaser”) and Louis C. Wallace (“Wallace”)
of Nashville, Tennessee and Charles O. Mann, Jr.,
(“Mann”) of Maury County, Tennessee (collectively “Sellers”).

 

RECITALS

 

A.            Sellers own (i) all
of the issued and outstanding shares of capital stock of Specialty Surgical
Instrumentation, Inc., a Tennessee corporation with a principal place of
business in Nashville, Tennessee, (the “Shares”); and (ii) all of the
membership interests in UCA, LLC, a Tennessee member-managed limited liability
company, (the “Membership Interests”). Collectively Specialty Surgical
Instrumentation, Inc (“SSI”) and UCA, LLC (“UCA”) are referred to herein as the
“Companies” and individually as a “Company.” 
The Shares and the Membership Interests shall collectively be referred
to herein as the “Equity Interests”).

 

B.            SSI owns 100% of the
Specialty Surgical Instrumentation Distribution and SSI Ultra Instrument
Business, these being divisions of SSI not separately incorporated.

 

C.            Purchaser desires to
purchase the Equity Interests held by Sellers and Sellers desire to sell the
Equity Interests to Purchaser on the terms and subject to the conditions set
forth in this Agreement. Purchaser’s wholly-owned subsidiary will purchase the
real estate used by SSI and UCA and owned by MFW Investments under a separate
Real Property Sale and Purchase Agreement.

 

D.            Upon consummation of
the purchase and sale of the Equity Interests pursuant to this Agreement,
Purchaser will own all of the issued and outstanding equity of the Companies.

 

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, Purchaser and Sellers 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.

 

“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 Purchaser, Sellers
or the Companies pursuant to this Agreement including the Schedules and
Exhibits and including, but not limited to, the Earn-Out Agreement and the Real
Property Sale and Purchase Agreement.

 

“Applicable Laws” means any and all laws,
ordinances, constitutions, regulations, statutes, treaties, rules, codes,
licenses, certificates, franchises, Permits, legal requirements and Injunctions
adopted, enacted, implemented, promulgated, issued or entered 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 Companies, their properties, assets and operations.

 

“Arbitration” has the meaning set forth
in Section 10.16 of this Agreement.

 

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

 

“Balance Sheet Dates” 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 benefit, incentive compensation, welfare, or any other employee benefit
plan, policy or arrangement maintained, sponsored or contributed to by either
of the Companies for the benefit of any Employee.

 

“Business” means the business operations
of SSI and UCA, including Specialty Surgical Instrumentation Distribution and
SSI Ultra Instrument.

 

“Cash” means all cash as shown on the
Balance Sheets of the Companies as either in-hand or accrued as of the Closing
Date.

 

“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.

 

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

 

“Companies Welfare Plans” has the meaning
set forth in Section 9.2(c) of this Agreement.

 

2

 

“Confidential Information” means any
information or compilation of information not generally known to the public or
the industry in which the Companies are engaged and which the Companies have
not disclosed to third parties without a written obligation of confidentiality,
which is proprietary to the Companies, relating to the Companies’ procedures,
techniques, methods, concepts, ideas, affairs, products, processes and
services, including, but not limited to, information, to the extent proprietary
to the Companies, 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 7.1(f) of this Agreement.

 

“Debt” means: (i) any long-term or
short-term interest-bearing indebtedness of the Companies owed to third
parties; (ii) any inter-company indebtedness; (iii) Sellers’ guarantees
outstanding, issued to secure obligations of the Companies; (iv) any capital
leases; and (v) any letters of credit (whether drawn against or not).

 

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

 

“Debt-Free” means that all Debt shall be
deducted from the Interim Purchase Price and Final Purchase Price payable to
Sellers determined as due as of the Closing Date.

 

“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 Companies.

 

“Earn-Out Agreement”
has the meaning set forth in Section 2.2(c) of this Agreement.

 

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

 

“Encumbrance” means and includes:

 

(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,

 

3

 

lien, pledge, option, 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, 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 environmental
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.

 

“Environmental Permits” means every
license, permit, registration, governmental approval, agreement and consent
applied for, pending by, issued or given to either of the Companies in
connection with the operation of the Business, and every agreement with a
Governmental Body entered into by either of the Companies in connection with
the operation of the Business, which is in effect or has been applied for or is
pending in each case which is required under or is issued pursuant to
Environmental Laws.

 

“Environmental Representations” has the
meaning set forth in Section 3.24 of this Agreement.

 

“Equity Interests”
means 100% of the Shares and 100% of the Membership Interests.

 

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

 

“Escrowed Funds” has the meaning set
forth in Section 2.4(a) 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.

 

4

 

“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 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.

 

“Indemnified Party” has the meaning set
forth in Section 7.5(a) of this Agreement.

 

“Indemnifying Party” has the meaning set
forth in Section 7.5(a) of this Agreement.

 

“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
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 re-examinations
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,

 

5

 

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 products); (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.

 

“IRS” means the United States Internal
Revenue Service.

 

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

 

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

 

“Letter of Credit”  has
the meaning set forth in Section 2.4(c).

 

“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
Companies 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. 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 Companies shall be evaluated on the basis of the
Companies individually or taken as a whole (in the aggregate).

 

“Membership Interests” means
100% of the outstanding membership interests of UCA.

 

“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, is in compliance
with all Applicable Laws 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 8.2(a) of this Agreement.

 

6

 

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

 

“Permits” means all permits, licenses,
consents,  franchises, orders,
certifications, registrations, certificates of authority, variances, approvals,
local siting approvals and other authorizations obtained from, or filed with
any Governmental Body or other Person, or other similar rights, including,
without limitation, those listed on Schedule 3.30 of the Schedules.

 

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

 

“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) 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 2.4(a) of this Agreement.

 

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

 

“Purchaser Indemnities” has the meaning
set forth in Section 7.1(f) of this Agreement.

 

“Purchaser Welfare Plans” has the meaning
set forth in Section 9.2(c) of this Agreement.

 

“Real Estate” means the Owned Real Estate
and the Leased Real Estate.

 

“Real Property Sale and Purchase Agreement”
means the agreement between Sellers’ Affiliate, MFW Investments, and Purchaser’s
wholly owned subsidiary, Symmetry Medical SSI Real Estate, LLC, for the sale of
the real estate commonly known as 200 River Hills Drive, Nashville, Davidson
County, Tennessee.

 

“Release” means any spill, discharge,
leak, emission, escape, leaching, disposing, emptying, pouring, pumping,
injection, dumping, or other 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 (with or without notice or passage of time or both) one or both of
the Companies to issue or dispose of any of its or their (as opposed to third
party) securities.

 

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

 

7

 

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

 

“Sellers Indemnities” has the meaning set
forth in Section 7.1(f) of this Agreement.

 

“Sellers’ Knowledge” means the actual
knowledge after a reasonable investigation of Louis C. Wallace and
Charles O. Mann, Jr. or of any officer, member, director or Senior
Management Employees of Companies.

 

“Senior Management Employees” means
Steven L. Tanner, Financial Manager, Barbara Briley, Controller, Judy Burchett,
Instrument Administrator, Mickey Wormsley, Contract Manager, Keith Sweeney,
Sales Manager of Surgical Instruments, and Amy Roberts, Purchasing Manager, and
the chief executive officer, president, any vice president or director, of the
Companies.

 

“Shares” means 100% of the outstanding stock of SSI.

 

“Survival Period” has the meaning set
forth in Section 7.1(a) of this Agreement.

 

“Target Working Capital” means the amount
of $2,946,205

 

“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 Matter” has the meaning set forth in
Section 8.2(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.

 

“Threatened” means a claim, Proceeding,
dispute, action, or other matter for which any written 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 Companies for the benefit of oneself or any
other Person other than the Companies.

 

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

 

“Working Capital” means “Current Assets”
less “Current Liabilities.”  “Current
Assets” means the sum of accounts receivable (net of allowances), prepaid
expenses, inventory (net of reserves), cash and cash equivalents, and other
current assets of the Companies as determined in accordance with GAAP
consistently applied. “Current Liabilities” means the sum of accounts

 

8

 

payable and accrued expenses of the Companies, excluding Debt and
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 of this Agreement.

 

ARTICLE 2

 

PURCHASE OF EQUITY INTERESTS; PURCHASE PRICE

 

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

 

2.2.         Purchase
Price.

 

(a)           The purchase price
to be paid to Sellers by Purchaser for the Equity Interests shall be
$14,050,000 as may be adjusted at the Closing Date, and post Closing as
provided by this Agreement. The cash purchase price will be allocated among the
Shares and the Membership Interests in accordance with Schedule 2.2. The cash
purchase price for the Equity Interests 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 shall be
paid on the Closing Date to Wallace and Mann by wire transfer of immediately
available funds to an account (or accounts) designated by Sellers at least two
(2) calendar days prior to the Closing.

 

(b)           The Interim Purchase
Price has been based on the assumption that the Companies shall be Debt-Free as
of the Closing Date. To the extent that the Companies have Debt as of the
Closing Date, the Interim Purchase Price shall be reduced on the Closing Date
by the aggregate amount of the Debt (the “Debt Adjustment”) and such Debt
Adjustment shall be paid directly by Purchaser to such creditor or creditors,
but may be paid from Closing proceeds.

 

(c)           In addition to the
cash consideration set forth in 2.2(a), the Purchaser will enter into an
Earn-Out Agreement with Sellers in substantially the form set forth in Exhibit A
attached hereto. The Earn-Out Agreement includes a separate earn-out formula
for SSI and for UCA. In addition, Purchaser’s wholly-owned subsidiary will
enter into the Real Property Sale and Purchase Agreement with Sellers’
Affiliate MFW Investments in substantially the form set forth in Exhibit B
attached hereto.

 

9

 

2.3.         Working
Capital Adjustment.

 

(a)           The Working Capital
Adjustment will be estimated and made at Closing based upon the average monthly
Working Capital for the six (6) calendar months ending immediately preceding
the month that includes the Closing Date, as reported on the Companies’
financial statement and the Interim Purchase Price shall then be further
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 Final Closing Statement, which will be
used to determine the Final Purchase Price.

 

(b)           If the Working
Capital on the Final Closing Statement is:

 

(i)            less
than the Target Working Capital, an amount equal to the deficit shall be
payable from Sellers to Purchaser (such amount may not be paid out of the
Escrowed Funds);

 

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

 

(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 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, Sellers and Purchaser, as
applicable, shall cause the Companies to prepare and deliver to Purchaser and
Sellers, in good faith, a final balance sheet and closing statement setting
forth the Working Capital Adjustment in accordance with this Section 2.3 (the “Final
Closing Statement”). This Final Closing Statement shall be prepared by
Purchaser’s auditors, Ernst & Young LLP at Purchaser’s cost. Within
thirty (30) calendar days following Purchaser’s and Sellers’ receipt of the
Final Closing Statement, Purchaser or Sellers may object in good faith to the
Working Capital Adjustment in writing. In the event of any such objection,
Purchaser and Sellers 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, Sellers and Purchaser shall appoint
another nationally recognized accounting firm mutually acceptable to each of
Sellers and Purchaser, which shall, at Sellers’ and 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. Sellers
and 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 findings of such accounting firm shall be binding on the
parties hereto. If Purchaser decides to establish a new accrual for
environmental liabilities on the Final Closing Statement, this new accrual will
be excluded from calculation of the Working Capital Adjustment.

 

10

 

(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 Sellers and 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 based on an
8.25% annual interest rate from the Closing Date to the date of payment
pursuant to this Section 2.3.

 

2.4.         Escrow
Agreement.

 

(a)           Sellers agree and
authorize Purchaser to retain from the Interim Purchase Price and deposit in an
interest bearing escrow account (the “Escrow Account”) with First Tennessee
Bank National Association, Nashville, Tennessee (“Escrow Agent”) the sum of Two
Million Seventy Thousand and 00/100 Dollars ($2,070,000.00) (the “Escrowed
Funds”) as collateral security to be used as the initial source of funds for
any indemnification obligation of Sellers arising under Section 7.2, in
accordance with an escrow agreement in substantially the form set forth in Exhibit C
attached hereto (the “Purchase Price Escrow Agreement”). The Escrowed Funds
shall not be used for purposes of the Working Capital Adjustment.

 

(b)           The term of the
Purchase Price Escrow Agreement shall be two (2) years; provided, however, that
on the first anniversary of the Closing Date, $1,035,000 of the Escrowed Funds,
reduced by a reserve equal to the aggregate amount of any claims previously
asserted by Purchaser pursuant to Section 7.5 that are unresolved or
unpaid as of the first anniversary of the Closing Date, shall be released to
Sellers (but in no event shall this release of funds reduce the balance of the
Escrowed Funds to less than $1,035,000). On the second anniversary of the
Closing Date all remaining Escrowed Funds, reduced by a reserve equal to the
aggregate amount of any claims previously asserted by Purchaser pursuant to
Section 7.5 that are unresolved or unpaid as of the second anniversary of
the Closing Date, shall be released to Sellers. All escrow fees shall be shared
equally by the parties and, to the extent known, paid in advance; additional
fees incurred during the term of the Escrow Account shall be paid from income
earned on the Escrowed Funds, or, if such income is insufficient, paid from the
Escrowed Funds.

 

(c)           As an alternative to
establishing the Escrow Account, Sellers may elect to provide to Purchaser at
Closing a standby letter of credit in the original amount of Two Million
Seventy Thousand and 00/100 Dollars ($2,070,000.00), issued in a form and by a
financial institution satisfactory to Purchaser (the “Letter of Credit”). Such
Letter of Credit shall be irrevocable and shall remain in place for a period of
twenty-four (24) months and thereafter if pending indemnification claims exist
at the third anniversary of the Closing Date, provided, however, that the face
amount of the Letter of Credit may be reduced on the first anniversary of the
Closing Date on the same conditions as and consistent with the schedule of
reductions described in Section 2.4(b). On the second anniversary of the
Closing Date, if no indemnification claim(s) by Purchaser is then pending, the
Letter of Credit may be terminated. If not terminated on the second anniversary
of the Closing Date, the Letter of Credit shall be terminated following
resolution of any indemnification claims pending on such date. All fees
associated with the Letter of Credit shall be paid by Sellers.

 

11

 

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 August 31, 2007 (or as
soon as all conditions in Article 6 are satisfied). The date on which the
Closing occurs is referred to in this Agreement as the “Closing Date.”

 

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

 

(i)            The
certificates, free of all Encumbrances, evidencing the Shares duly endorsed by
Sellers in blank or accompanied by stock powers duly executed by Sellers and
one or more assignments of the Membership Interests duly executed by Sellers in
favor of Purchaser or its nominee;

 

(ii)           The
corporate minute books, the corporate seals, and stock books, if any, for the
Companies;

 

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

 

(iv)          Duly
executed resignations of (A) the officers of SSI and UCA who are
designated by Purchaser, and (B) the directors, limited liability company
managers and/or members of SSI and UCA, all effective as of the Closing Date;

 

(v)           Certificates
of Existence for SSI and UCA issued by the Tennessee Secretary of State;

 

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

 

(vii)         Employment
Agreements for Louis C. Wallace, Charles O. Mann, Jr. and Steve
Tanner in substantially the form set forth in Exhibit D attached
hereto;

 

(viii)        Non
Competition Agreements for Louis C. Wallace, Charles O. Mann, Jr. and
Steven Tanner in the form set forth in Exhibit E;

 

(ix)           the
Purchase Price Escrow Agreement executed by Sellers or Letter of Credit;

 

(x)            a
statement executed by the Companies pursuant to Treas. Reg. §1.897-2(h), dated
no more than thirty (30) days prior to Closing, certifying that (i) the Equity
Interests do not constitute a U.S. real property interest, or (ii) none of the
owners of the Companies are foreign persons;

 

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

 

(xii)          Waiver
and Release executed by Sellers and each director, limited liability company
manager and/or member of SSI and UCA;

 

12

 

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

 

(xiv)        Non-Disclosure
and Non-Competition Agreement for Sellers, as required by Section 4.2 of this
Agreement and in the form set forth as Exhibit F;

 

(xv)         Real
Property Sale and Purchase Agreement executed by Sellers’ Affiliate,
MFW Investments;

 

(xvii)       Earn-Out
Agreement executed by Sellers; and

 

(xviii)      All
third-party consents necessary for Purchaser to consummate the transactions
contemplated by this Agreement and as set forth in Article 6.

 

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

 

(i)            Payment
of the Interim Purchase Price in the manner set forth in Section 2.2 of
this Agreement;

 

(ii)           A
copy certified by the Secretary of Purchaser of the duly adopted resolutions of
the Board of Directors of 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.

 

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

 

(iv)          A
Certificate of Good Standing of Purchaser issued by the Secretary of State of
Purchaser’s state of incorporation or the equivalent;

 

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

 

(vi)          Real
Property Sale and Purchase Agreement executed by Symmetry Medical SSI Real
Estate, LLC;

 

(vii)         Earn-Out
Agreement executed by Purchaser;

 

(viii)        Employment
Agreements for Louis C. Wallace, Charles O. Mann, Jr. and Steve
Tanner in substantially the form set forth in Exhibit D attached
hereto;

 

(ix)           Non
Competition Agreements for Louis C. Wallace, Charles O. Mann, Jr. and
Steven Tanner in the form set forth in Exhibit E; and

 

(x)            The
Purchase Price Escrow Agreement executed by Purchaser.

 

13

 

ARTICLE 3

 

REPRESENTATIONS AND WARRANTIES OF SELLERS

 

As an inducement for Purchaser to enter into this Agreement and to
consummate the transactions contemplated hereby, Sellers represents and
warrants to 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 SSI and UCA of their jurisdiction of
incorporation (or other formation). Each of SSI and UCA is duly incorporated or
organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation, with full power and authority to conduct its
respective businesses as same are now being conducted, to own or use the
properties and assets that it purports to own, lease, operate or use in the
conduct of the Business, and to perform all its obligations under any Contracts.
Each of SSI and UCA is licensed or qualified to transact business and is in
good standing as a foreign corporation in each jurisdiction in which, because
of its business conducted there or the nature of its assets or properties
there, it is required to be so licensed or qualified. Each such foreign
jurisdiction is set forth in Schedule 3.1.

 

(b)           Sellers have
delivered to Purchaser copies of the organizational documents of SSI and UCA,
as currently in effect.

 

3.2.         Authority;
No Conflict.

 

(a)           This Agreement
constitutes the legal, valid, and binding obligation of Sellers, enforceable
against Sellers in accordance with its terms. The Ancillary Documents to be
delivered by Sellers at Closing will constitute the legal, valid, and binding
obligations of Sellers, enforceable against Sellers in accordance with their
respective terms. Each of the Sellers 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 the Sellers are or shall be a party have been duly
authorized by all necessary action on the part of Sellers. This Agreement and
the Ancillary Documents have been duly executed and delivered by each of the
Sellers who 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 Companies, or (B) any resolution adopted by the
board of directors, the shareholders or members of the Companies;

 

14

 

(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, would
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 Sellers or the Companies are a party or by which Sellers or the
Companies (or any of their respective assets or properties) is subject or
bound;

 

(iii)          result
in the creation of, or give any third party the right to create, any
Encumbrance upon the Equity Interests or any assets or properties of Sellers or
the Companies;

 

(iv)          conflict
with any Applicable Laws to which Sellers or the Companies or any assets or
properties of any of the foregoing are subject;

 

(v)           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 Sellers or the
Companies are a party or by which Sellers or the Companies, (or any of their
respective assets or properties) is subject or bound;

 

(vi)          require
Sellers or the Companies to obtain any consent; or

 

(vii)         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 Sellers or the Companies are a party or by which any of their
respective assets or properties is subject or bound.

 

3.3.         Capitalization.

 

(a)           The
authorized capital stock of SSI consists solely of 20,000 shares of common voting
stock, no par value, of which 11,559 shares are issued and outstanding on the
date hereof, and are all owned beneficially and of record by Sellers, free and
clear of all Rights and Encumbrances. The Equity Interests are validly issued,
fully paid and nonassessable and were issued in compliance with Applicable Laws.
None of the Equity Interests have 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 Sellers to vote or dispose of the shares except as set forth on Schedule
3.3(a), all of which shall be released or terminated on or before Closing.

 

(b)           All
of the Membership Interests of UCA are owned beneficially and of record by
Sellers, free and clear of all Rights and Encumbrances. The Membership
Interests are validly issued, fully paid and nonassessable and were issued in
compliance with Applicable Laws. None of the Membership Interests have 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 Sellers to
vote or dispose of the Membership Interests except as set forth on Schedule
3.3(b),.

 

15

 

3.4.         Clear
Title. Except as set forth in Schedule 3.4
or the leased property disclosed in Schedule 3.15(d) hereto, on the
Closing Date, (i) the Companies hold good title (or valid and enforceable
leasehold interests) to their  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. Except as set forth on Schedule 3.5,
all of the properties and assets of the Companies are the assets used to
operate the Business as currently conducted, (i) such properties and assets
have been adequately maintained, consistent with past practices, and are in
operating condition, normal wear and tear excepted, and (ii) all leased
property is in the condition received by the Companies at the time of the
lease, normal wear and tear excepted.

 

3.6.         Legal
Proceedings. Except as set forth on Schedule 3.6,
there is not now pending nor have been in the thirty-six (36) months prior to
the date hereof, any Proceedings 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,
there are no Proceedings of any kind or nature whatsoever, at law or in equity,
by or before any court or Governmental Body, or to Sellers’ Knowledge,
Threatened against:

 

(a)           the
Companies, their 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 Sellers pursuant to this Agreement, the
Ancillary Document or in connection with the contemplated transactions; and, to
Sellers’ Knowledge, there is no valid basis for any such claim, action, suit,
inquiry, proceeding or investigation;

 

(b)           Sellers,
which would adversely affect the consummation of the contemplated transactions;
or

 

(c)           the
Companies are not subject to any judgment, order or decree. The Companies have
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 Companies have never been a party to any collective bargaining
agreement or other labor Contract and there is not presently pending or
existing, and to Sellers’ Knowledge or the Companies’, 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 Companies, and no application for certification of a collective
bargaining agreement is pending or, to Sellers’ Knowledge, is Threatened. There
is no lockout of any employees by the Companies and no such action is
contemplated by the Companies. Except as set forth in Schedule 3.7
hereto, there is no Proceeding pending or, to Sellers’ Knowledge, Threatened by
any Person against the Companies

 

16

 

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 Companies, and to Sellers’ Knowledge there is no basis for
any such claim.

 

3.8.         Tax
Matters.

 

(a)           Tax
Returns. The Companies 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 Companies on or prior to the
Closing Date. The Tax Returns have accurately reflected and will accurately
reflect all Liability for Taxes of the Companies for the periods covered
thereby. Schedule 3.8(a) lists all income Tax Returns filed with
any Governmental Body with respect to the Companies for the taxable periods
ended on or after December 31, 2002.

 

(b)           Payment
of Taxes. All Taxes and Tax Liabilities of the Companies 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
Companies 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 Companies received any notices from any such taxing authority.

 

(ii)           Sellers
and the Companies 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 Companies, or
(B) contested the Tax Liability of the Companies before any Governmental
Body.

 

(iii)          The
Companies 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.

 

(iv)          All
Taxes which the Companies 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 Companies or any predecessor thereof and any other party
(including Sellers and any predecessors) under which Purchaser or the Companies
would be liable for any Taxes or other claims of any Person.

 

17

 

(vi)          Within
the past ten (10) years, the Companies have not (A) acquired assets from
another corporation in a transaction in which Companies’ tax basis for the
acquired assets was determined, in whole or in part, by reference to the Tax
basis of the acquired assets (or any other property) in the hands of the
transferor or (B) acquired the stock of any corporation that is or was a
qualified subchapter S subsidiary.

 

(vii)         There
is no action, suit, taxing authority proceeding, audit or investigation now in
progress, pending or, to Sellers’ Knowledge, Threatened against or with respect
to the Companies with respect to any Tax.

 

(viii)        The
Companies do not reasonably expect any taxing authority to claim or assess any
additional Tax against them for any period ending on or prior to the Closing
Date, and to Sellers’ Knowledge, there is no basis for any such claim or
assessment.

 

(ix)           The
Companies have not distributed stock of another Person, nor had its stock
distributed by another Person, in a transaction that purported or was intended
to be governed in whole or in part by IRC Section 355 or Section 361.

 

(x)            The
Companies have not been a member of an affiliated or similar group filing a
consolidated, combined, unitary or similar income tax return or has any liability
for the Taxes of any Person under Treas. Reg. §1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or successor, by
agreement, or otherwise.

 

3.9.         Employee
Benefits.

 

(a)           Schedule 3.9
(a) is a complete list of each “Benefit Plan” (within the meaning of Section
3(3) of ERISA) and each other employee benefit plan, agreement, policy, trust
fund or arrangement (whether written or unwritten, insured or self-insured)
maintained or contributed to (or with respect to which any obligation to
contribute has been undertaken) by the Companies on behalf of any employee or
other service provider of the Companies (whether current, former, or retired)
or their beneficiaries or with respect to which the Companies have any
obligation or liability (contingent or otherwise) (each “Benefit Plan”). With
respect to each Benefit Plan, Sellers has delivered to Purchaser (1) current,
accurate and complete copies of each such Benefit Plan and all contracts
relating thereto (including without limitation all trust agreements, insurance
or annuity contracts, investment management agreements, record keeping
agreements and other material documents or instruments relating thereto), and
in the case of any Benefit Plan that is not in written form, an accurate
description of all material aspects of that Benefit Plan; (2) copies of the
most recent Internal Revenue Service determination letter (including copies of
any outstanding requests for determination letters) or opinion letter with
respect to each such Benefit Plan which is an “employee pension benefit plan”
(within the meaning of Section 3(2) of ERISA) intended to qualify under Section
401(a) of the IRC; and (3) copies of the most recent Forms 5500 annual report
and accompanying schedules, and the most recent summary plan descriptions.

 

(b)           Except as set forth
on Schedule 3.9(b), all Benefit Plans are fully funded and administered
in accordance with Applicable Law, and comply in form and in operation in all
material respects with the requirements of Applicable Law.

 

18

 

(c)           Each Benefit Plan
has been maintained, funded and administered in accordance with the terms of
such Benefit Plan and complies in form and in operation in all material
respects with the requirements of Applicable Law, including ERISA and the IRC.

 

(d)           All contributions
(including employer contributions and employee salary reduction contributions)
that are due have been made to each Benefit Plan that is an “employee pension
benefit plan” (within the meaning of Section 3(2) of ERISA). All premiums or
other payments that are due have been paid with respect to each such Benefit
Plan that is an “employee welfare benefit plan” (within the meaning of Section
3(1) of ERISA).

 

(e)           Each Benefit Plan
that is intended to meet the requirements of a “qualified plan” under Section
401(a) of the IRC has received a determination letter from the IRS to the
effect that it meets the requirements of Section 401(a) of the IRC.

 

(f)            Neither the
Companies or any of their predecessors has ever contributed to, contributes to,
has ever been required to contribute to, or otherwise participated in or
maintains sponsors or in any way, directly or indirectly, has any liability
with respect to any plan subject to Section 412 of the IRC, Section 302 of
ERISA or Title IV of ERISA, including, without limitation, any employee pension
benefit plan that is a “defined benefit plan” (as defined in ERISA §3(35), any “multiemployer
plan” (within the meaning of Sections 3(37) or 4001(a)(3) of ERISA or Section
414(f) of the IRC) or any single employer pension plan (within the meaning of
Section 4001(a)(15) of ERISA) which is subject to Sections 4063, 4064 or 4069
of ERISA.

 

(g)           No non-exempt “prohibited
transaction,” within the meaning of Section 4975 of the IRC and Section
406 of ERISA, has occurred or is reasonably expected to occur with respect to
the Employee Benefit Plans.

 

(h)           No Benefit Plan is
under, and neither Sellers nor the Companies have received any notice of, an
audit or investigation by the IRS, Department of Labor or any other
Governmental Body and no such completed audit, if any, has resulted in the
imposition of any tax or penalty.

 

(i)            The Companies have
no unfunded liabilities pursuant to any Benefit Plan that is not intended to be
qualified under Section 401(a) of the IRC and is an employee pension benefit
plan within the meaning of Section 3(2) of ERISA, a nonqualified deferred
compensation plan or an excess benefit plan. Schedule 3.9(i) of the
Disclosure Schedule sets forth a true, correct and complete list of each
Benefit Plan which is a nonqualified deferred compensation plan. Each such nonqualified compensation
plan, whether deferred or otherwise, is not subject to IRC 409A.

 

(j)            The consummation of
the contemplated transactions alone, or in combination with a termination of
any employee, officer, director, or other service provider or shareholder of
the Companies (whether current, former or retired): (i) will not give rise to
any liability under any Benefit Plan, including, without limitation, liability
for severance pay, unemployment compensation, termination pay or withdrawal
liability, or accelerate the time of payment or vesting or increase the amount
of compensation or benefits due to any employee, officer, director, other
service provider or shareholder of the Companies (whether current, former or
retired) or their beneficiaries; and (ii) will not cause any Benefit Plan or
contract of insurance or

 

19

 

other ancillary agreement to become void or voidable or cause any
increase in cost, other than cost increases or decreases attributable to annual
renewal. No amount that can be received (whether in cash or property or the
vesting of property), as a result of the consummation of the contemplated
transactions, by any employee, shareholder or other service provider of the
Companies who is a “disqualified individual” (as such term is defined in Treas.
Reg. §1.280G–1) under any Benefit Plan or otherwise can be characterized as an “excess
parachute payment” (as defined in Sections 280G(b)(1) and 280G(b)(5) of the
IRC).

 

(k)           Any individual who
performs services for the Companies and who is not treated as an employee for
federal income tax purposes by the Companies is not an employee under
applicable law or for any purpose including, without limitation, for tax
withholding purposes or employee Benefit Plan purposes.

 

(l)            WARN Compliance. The
Companies have complied in all respects with the Worker Adjustment and
Retraining Notification Act, 29 U.S.C. § 2101 et seq., and its corresponding
regulations, and Tennessee Code Annotated § 50-1-601 et seq., and its
corresponding regulations, in each case in effect as of the date hereof,
providing for notification to employees affected by closing, relocation, sale
of business, mass layoff or similar event (collectively, the “WARN Acts”) on
account of closings, relocations, sales of businesses, mass layoffs or similar
events occurring prior to the Closing and all related notices, payments, fines
or assessments due to any Governmental Body pursuant to such WARN Acts.

 

3.10.       Guarantees.
Except as set forth in Schedule 3.10,
(i) none of the obligations of the Companies are guaranteed by, or subject
to a similar contingent Liability to, any Person, and (ii)  the Companies
have not guaranteed, or otherwise become contingently liable for, any Liability
of any Person.

 

3.11.       Financial
Statements.

 

(a)           Sellers have caused
the Companies to furnish true and correct copies of SSI’s financial statements audited
by the independent accounting firm of Crowe Chizek & Co., LLC and UCA’s
internally-prepared financial statements (not prepared or reviewed by the
Companies’ accountants) identified in Schedule 3.11 hereto to
Purchaser. All of said financial statements, including any notes thereto,
fairly present the consolidated financial position and condition of the
Companies as of the date thereof and the results of its operations for the
periods covered in accordance with GAAP applied by the Companies on a consistent
basis throughout the periods covered thereby and on a basis consistent with
that of prior years and periods. Except for Liabilities (i) reflected or
reserved against in the balance sheet of SSI as of April 30, 2007 or the
balance sheet of UCA as of December 31, 2006, as the case may be (the “Balance
Sheet Dates”) or in the notes thereto (the “Balance Sheets”), (ii) incurred in
the Ordinary Course of Business since the respective Balance Sheet Dates (none
of which resulted from, arose out of, is related to, or was caused by any
breach of Contract), and/or (iii) set forth in Schedule 3.11
hereto (collectively the “Permitted Liabilities”), the Companies do not have
any Liabilities.

 

(b)           As of their
respective Balance Sheet Dates, and except as set forth in Schedule 3.11
hereto, the Companies have no material Liabilities or obligations secured or

 

20

 

unsecured (whether accrued, absolute, contingent) of which, under GAAP,
should have been, but which were not reflected or reserved against in the
Balance Sheets.

 

(c)           Since their
respective Balance Sheet Dates, the Companies have not incurred any Liabilities
or obligations not included in the Permitted Liabilities.

 

(d)           Except as set forth
in Schedule 3.11(d) hereto the prepaid expenses on the Balance
Sheets have been incurred solely for the benefit of the Companies and the
Companies will retain the benefits of such prepaid expenses after the Closing
Date.

 

(e)           Except as set forth
in Schedule 3.11(e) hereto the inventories of the Companies
(including, without limitation, raw materials, supplies, manufactured and
processed parts, containers, work in process and finished goods) are not
obsolete, damaged, or defective, and consist of items which are usable or
salable in the Ordinary Course of Business, and, if salable, are salable at
values no less than the book value amounts, subject only to the reserve for
inventory write-down set forth on the face of the Balance Sheets in accordance
with past custom and practice of the Companies, provided such customs and
practices were consistent with GAAP.

 

3.12.       Absence
of Certain Developments. Except for the transactions
contemplated by this Agreement or as otherwise set forth on Schedule 3.12
hereto, since the respective Balance Sheet Dates, (i) there has not been
any development or combination of developments affecting the Companies which,
to Sellers’ Knowledge, has had, or is likely to have, a Material Adverse
Effect, and (ii) the Companies have conducted the Business in the Ordinary
Course of Business and (iii) since their respective Balance Sheet Dates there
has not been:

 

(a)           a
change in the Companies’ authorized or issued capital; grant of any stock
option or right to purchase shares of capital stock or other securities of the
Companies; issuance of any security convertible into such capital stock or
other securities; grant of any registration rights; purchase, redemption,
retirement, or other acquisition by the Companies of any shares of any such
capital stock or other securities; or declaration or payment of any dividend or
other distribution or payment in respect of shares of capital stock or other
securities;

 

(b)           payment
or increase by the Companies of any bonuses, salaries, or other compensation to
any stockholder, member, partner, director, limited liability company manager,
officer, or employee, except payments or increases granted or agreed to be made
in the Ordinary Course of Business consistent with past practices;

 

(c)           adoption
of, or increase in the payments to or benefits under, any profit sharing,
bonus, deferred compensation, savings, insurance, pension, retirement, or other
employee Benefit Plan for or with any employees of the Companies;

 

(d)           loss
of the employment, services or benefits of any officers or management level
employees, excepting the resignation of the Companies’ current board of
directors;

 

21

 

(e)           a
loan to, or entering into any other transaction with, any of the directors,
officers, and employees of the Companies except in the Ordinary Course of
Business consistent with past practice;

 

(f)            damage
to, destruction or other loss of, condemnation, taking or other proceeding
against, any asset or property of the Companies, whether or not covered by
insurance;

 

(g)           incurrence
of any indebtedness or other liability (whether known or unknown, absolute,
accrued, fixed, contingent, liquidated, unliquidated or otherwise, and whether
due or to become due), except for liabilities included in the Permitted
Liabilities;

 

(h)           disposal
of, abandonment or permitted lapse of any rights to the use of any Intellectual
Property, or disposal of or disclosure, or permitted disclosure (except as
necessary in the conduct of its business), to any Person other than
representatives of Purchaser, any trade secret, formula, or similar information
not theretofore a matter of public knowledge;

 

(i)            cancellation
of any debts or waiver of any claims or rights other than in the Ordinary
Course of Business consistent with past practice;

 

(j)            payment,
discharge or satisfaction of any claim, Liability or obligation other than the
payment, discharge or satisfaction of claims, Liabilities and obligations
incurred in the Ordinary Course of Business and consistent with past practice;

 

(k)           (i)
prepayment of any obligation having a fixed maturity of more than ninety (90)
days from the date such obligation was issued or incurred, or (ii) failure to
pay when due, any account payable, or sought the extension of the payment date
of any account payable;

 

(l)            a
writing off as uncollectible any notes or accounts receivable;

 

(m)          entry
into, termination of, amendment of, or receipt of notice of termination of any
Contract or transaction involving a total commitment by or to the Companies of
at least $25,000;

 

(n)           a
sale, lease, or other disposition of any asset or property of the Companies
(except the sale of inventory in the Ordinary Course of Business consistent
with past practice);

 

(o)           creation
of an Encumbrance on any asset or property of the Companies;

 

(p)           execution
of any agreement that materially limits or restricts the Companies from
engaging or competing in any line of business or in any geographic area or
location;

 

22

 

(q)           execution
of any employment contract or collective bargaining agreement, written or oral,
or modified the terms of any existing employment contract or agreement or
adopted, amended, modified or terminated any Benefit Plan;

 

(r)            any
change or amendment in its articles of incorporation or bylaws;

 

(s)           an
issuance or sale of any securities; acquired, directly or indirectly, by
redemption or otherwise; or a grant or arrangement regarding any options,
warrants, calls or commitments of any kind with respect thereto;

 

(t)            any
capital expenditure exceeding $25,000;

 

(u)           any
Liabilities, except Liabilities included in the Permitted Liabilities, to which
the Companies have incurred or become subject to, or have agreed to incur or
become subject to,

 

(v)           a
sale, assignment, transfer, conveyance, lease or other disposition of any
material assets or properties of the Companies, except in the Ordinary Course
of Business;

 

(w)          execution
of any other material transaction, contract or commitment outside of the
Ordinary Course of Business, except with respect to the transactions
contemplated by this Agreement;

 

(x)            any
work stoppage with respect to the Business or obtained knowledge of any
threatened or anticipated work stoppage;

 

(y)           any
material damage or loss to its Business that would have a Material Adverse
Effect;

 

(z)            any
change in its method of accounting;

 

(aa)         any
Proceedings instituted or settled; or

 

(bb)         either
directly or indirectly, a performance, or failure to perform, any act which
would result in the creation or imposition of any Encumbrance on any of the
properties or assets of the Companies, or otherwise adversely affect the
marketability of the Companies’  title to
any of its properties or assets, outside of the Ordinary Course of Business.

 

3.13.       Intellectual
Property. Schedule 3.13 hereto contains a
list and description of all Intellectual Property owned or licensed by the
Companies or used by the Companies in the operation of the Business. Except as
set forth in Schedule 3.13, the Companies have all rights necessary
to use such Intellectual Property, and Sellers has no Knowledge of any asserted
or Threatened claim to the effect that the operation of the Business (or the
possession or use in the Business of any of the Intellectual Property listed
and set forth in Schedule 3.13 hereto) infringes the Intellectual
Property rights of any other Person or that such Intellectual Property rights
have been terminated. Except as set forth in Schedule 3.13, Sellers
has no Knowledge of any claim

 

23

 

that any of the Intellectual Property set forth in Schedule 3.13
is invalid; and, except as set forth in Schedule 3.13 hereto, the
Companies are not obligated under any Contract or otherwise to pay royalties,
fees or other payments with respect to any of the Intellectual Property listed
and set forth in Schedule 3.13 hereto. Except as set forth in Schedule 3.13,
the consummation of the transactions contemplated by this Agreement will not
adversely affect the use by the Companies of any of the Intellectual Property
set forth in Schedule 3.13 hereto.

 

3.14.       Compliance
with Laws. Except as disclosed on Schedule 3.14,
the Business (i) has been operated and the Companies, are in compliance in all
material respects with the requirements of Applicable Laws to which the
Business is subject, and (ii) the Companies have not received any notice of,
and Sellers have no knowledge of, any violation of any Applicable Laws
respecting the Companies. The Companies have obtained and complied, in all
material respects, with all Permits set forth in Schedule 3.30 and
other approvals necessary to conduct the Business and be in compliance with
Applicable Laws, including, but not limited to, all permits and other approvals
required to treat, transport, store, dispose of and otherwise handle Hazardous
Materials.

 

3.15.       Contracts.
Except for Benefit Plans which are set forth on Schedule 3.9,
Schedule 3.15 contains a complete and accurate list of all material
Contracts to which either of the Companies is a party or is bound, and the
Companies have delivered to Purchaser true, correct and complete copies of all
such material Contracts including:

 

(a)           each
Contract that involves performance of services or delivery of goods or
materials by the Companies of an amount or value in excess of $25,000 after the
Closing Date;

 

(b)           each
Contract that involves performance of services or delivery of goods or
materials to the Companies of an amount or value in excess of $25,000 after the
Closing Date;

 

(c)           each
Contract that involves expenditures or receipts of the Companies in excess of
$25,000;

 

(d)           each
lease, rental or occupancy agreement, license, installment and conditional sale
agreement, and other material Contract affecting the ownership of, leasing of,
title to, use of, or any leasehold or other interest in, any real or personal
property (except personal property leases and installment and conditional sales
agreements having a value per item or aggregate payments of less than $25,000
and with terms of less than one (1) year);

 

(e)           each
Contract containing covenants that purport to restrict the business activity of
the Companies or limit the freedom of the Companies to engage in any line of
business or to compete with any Person;

 

(f)            each
partnership or joint venture agreement between the Companies and a third party
whether or not a separate legal entity is created thereby;

 

24

 

(g)           each
Contract with an employee, independent contractor or subcontractor of the
Companies, including contracts for employment, severance, consulting, deferred
compensation or benefit plans or agreements.

 

(h)           each
collective bargaining agreement or union agreement, with respect to employees
of the Companies;

 

(i)            each
bonus, profit sharing, retirement or other form of deferred compensation plan
of the Companies;

 

(j)            each
equity purchase, option or similar plan;

 

(k)           each
Contract pertaining to any Intellectual Property (other than off-the-shelf
software);

 

(l)            each
Contract pursuant to which the Companies have guaranteed any obligations of
other Persons or made any agreements to acquire or guarantee any obligations of
or indemnify or hold harmless other Persons;

 

(m)          each
Contract relating to the lease or similar arrangement of any machinery,
equipment, motor vehicles, furniture, fixture or similar property of an amount
or value in excess of $25,000 and;

 

(n)           each
Contract to which any Governmental Body is a party;

 

(o)           each
Contract relating to the sale or other disposition of any of assets or property
or other rights of the Companies, other than with respect to obsolete
equipment;

 

(p)           each
Contract that obligates the Companies to repair, replace, accept the return of
or make any refund in respect of any service performed by the Companies;

 

(q)           each
Contract pursuant to which the Companies are obligated to make payments,
contingent or otherwise, on account of or arising out of prior acquisitions or
sales of businesses, assets or stock of other Persons;

 

(r)            each
Contract which provides for contingent payments or earn-outs;

 

(s)           each
Contract which provides for termination, acceleration or other similar rights
with respect to any direct or indirect change of control of the Companies;

 

(t)            each
Contract with a related person;

 

(u)           each
Contract that involves any outstanding loan or advance to any Person; and

 

(v)           each
other Contract not made in the Ordinary Course of Business of the Companies.

 

25

 

3.16.       Contracts;
Compliance.

 

(a)           Except as set forth
in Schedule 3.16(a) hereto, the Companies are not in breach or
default, and to Sellers’ Knowledge, no Person has Threatened to assert any
claim that the Companies are in breach or default, under any Contract (whether
written or oral) to which the Companies are a party or by which the Companies
or any of their assets or properties are bound and, to Sellers’ Knowledge there
exists no event or condition which (whether with or without notice, lapse of
time, or both) would constitute a default thereunder, give rise to a right to
accelerate, modify or terminate any provision thereof or give rise to any
Encumbrance on its property or assets or a right to any additional or
guaranteed payments; and to Sellers’ Knowledge, no other party to any such
Contract is in breach or default thereof.

 

(b)           Each Contract listed
on Schedule 3.15 is valid and in full force and effect and
constitutes a legal, valid and binding obligation of the Companies and, to
Sellers’ Knowledge, the other parties thereto, enforceable in accordance with
its terms, and except as set forth in Schedule 3.16(b) hereto, will
not cease to be valid and in full force and effect after the Closing Date;
accurate and complete copies thereof, together with all amendments thereto,
have been heretofore delivered to Purchaser.

 

(c)           Sellers have provided
to Purchaser a form of vendor agreement denominated a “Purchasing Agreement” by
HealthTrust Purchasing Group, the parties to which are intended to be
HealthTrust Purchasing Group, L.P. and a vendor of products and services as
described therein (the “HealthTrust Agreement”). The form of HealthTrust
Agreement provided to Purchaser is unexecuted and incomplete with respect to
terms. In addition, Sellers have provided to Purchaser executed copies of the
following amendments:  (i) “Amendment to
Purchasing Agreement, Agreement Number: 000293”, effective January 1, 2004;
(ii) “Amendment to Purchasing Agreement, Agreement Number: 293” effective June
1, 2004; and (iii) “Amendment to Purchasing Agreement, Agreement No.: 293”,
effective June 14, 2007 (collectively, the “Amendments”).

 

Sellers represent that for the period of time from January 1, 2004
through August 31, 2007, SSI has been party to an agreement substantially
similar in form to the HealthTrust Agreement, as amended by the Amendments, and
that such agreement is currently in full force and effect on the date hereof. To
the extent the HealthTrust Agreement sets forth terms and conditions governing
the relationship between HealthTrust Purchasing Group, L.P. and its vendor,
except to the extent such terms and conditions are modified by the Amendments,
Sellers represent that those terms and conditions govern the agreement in
existence between SSI and HealthTrust Purchasing Group, L.P.

 

3.17.       Real
Estate. Neither of the Companies owns any real estate
(the “Owned Real Estate”). With respect to the Leased Real Estate:

 

(a)           Schedule 3.17(a)
contains a listing and description (including the parties, term, expiration
date(s), address, and the general use description of the leased premises) of
each written or oral lease regarding any real estate that either of the
Companies leases or subleases from third parties (the “Leased Real Estate”)
(the leases of Leased Real Estate described in Schedule 3.17(a) are
collectively, the “Leases”);

 

26

 

(b)           Except
as set forth in Schedule 3.17(b) hereto, there are no deferred
property Taxes or assessments with respect to the Leased Real Estate which will
become due and payable as a result of the consummation of the transaction
contemplated hereby;

 

(c)           Except
as set forth in Schedule 3.17(c) hereto, to Sellers’ Knowledge the
improvements located on each parcel of Leased Real Estate and the present uses
thereof by the Companies do not infringe upon the rights of any other Person;

 

(d)           Except
as set forth in Schedule 3.17(d) hereto, to Sellers’ Knowledge no
buildings, fences, driveways or other structures of any adjoining owner
encroach, in any material respect which interferes with the operation of the
Business, upon any part of the Leased Real Estate; and

 

(e)           The
Companies are not in default in the performance of any material obligation
under the Leases, and, to Sellers’ Knowledge, none of the other parties to the
Leases is in default in performance of their material obligations thereunder,
the Leases are in full force and effect, and the Companies have not assigned
their rights under the Leases.

 

3.18.       Accounts
Receivable.

 

(a)           Schedule 3.18(a)
sets forth a list of aged accounts receivable which is true, correct and
complete as of the indicated date thereon.

 

(b)           Except as set forth
in Schedule 3.18(b) hereto, all of the accounts, notes and other
receivables of the Companies represent sales actually made in the Ordinary
Course of Business consistent with past practice for goods or services
delivered or rendered in bona fide arm’s-length transactions, constitute only
valid, undisputed claims, have not been extended or rolled over in order to
make them current and collectible at their recorded amounts net of reserves for
non-collectibility reflected on the financial statements in accordance with
GAAP. Except as set forth in Schedule 3.18(b), no such account,
note or other receivable has been assigned or pledged to any Person or is
subject to counterclaims or setoffs or any other defenses.

 

3.19.       Books
and Records; Bank Accounts. All of the books of
account and other financial and corporate records of the Companies (including
minute books and stock records) have been made available to Purchaser and its
representatives (or will be so made available prior to the Closing Date). Such
books of account and records are current and complete in all material respects.
All such books and records are consistent with the financial statements set
forth in Schedule 3.11 hereto. All such books and records are kept
in a proper order and in the possession of the Companies.

 

3.20.       Employees.

 

(a)           Schedule 3.20(a)
sets forth a complete and accurate list of all the employees of SSI and UCA as
of the date hereof (the “Employees”), together with the following information
for each such Employee: name, position held, current salary, and bonus
entitlement/arrangement.

 

27

 

(b)           None of the
Employees has informed SSI or UCA that he/she intends to terminate employment
with the Companies. Schedule 3.20(b) sets forth a description of
any written Contract, other than the Benefit Plans set forth in Schedule 3.9
hereto, with respect to the conditions of employment of any of the Employees. Except
as set forth in Schedule 3.20(b), all Employees are employed on an “at-will”
basis.

 

(c)           None of the
Employees are working based upon a non-resident visa and the Companies have
complied with its obligations under the Immigration Reform Control Act.

 

3.21.       Investments.
Except as disclosed in Schedule 3.21 hereto,
the Companies do not own any shares of stock or other securities or equity or
debt interests, directly or indirectly, in any other Person. Except as
disclosed or otherwise described in this Agreement or as set forth in Schedule 3.21
hereto, the Companies are not subject to any obligation or requirement to
provide funds to, or invest in, any such Person.

 

3.22.       Insurance.

 

(a)           The Companies have
delivered to Purchaser:

 

(i)            true
and complete copies of all policies of insurance to which the Companies are a
party or under which the Companies or any officer or director of the Companies
have been covered at any time within the three (3) years preceding the date of
this Agreement; and

 

(ii)           true
and complete copies of all pending applications for policies of insurance;

 

(b)           Schedule 3.22(b)
contains a true and complete list and/or description of:

 

(i)            any
self-insurance arrangement by or affecting the Companies including any reserves
established thereunder;

 

(ii)           all
insurance policies (including, but not limited to, liability, property and
casualty, workers compensation, directors and officers liability, surety bonds,
key man or corporate owned life insurance, vehicular and other insurance
policies and contracts) covering the Companies or otherwise held by or on
behalf of it, or any aspect of its assets or business, indicating the type of
coverage, name of insured, the insurer, the amount of coverage, the
deductibles, the premium, the expiration date, and other material terms thereof
and the aggregate amounts paid thereunder; and

 

(iii)          all
obligations of the Companies to third parties with respect to insurance
(including such obligations under leases and service agreements) and identifies
the policy under which such coverage is provided.

 

(c)           Except as set forth
on Schedule 3.22(c), to Sellers’ Knowledge, there are no pending
claims under any of the foregoing insurance policies or Contracts described on Schedule 3.22(b).
To Sellers’ Knowledge there is no reason why any of such insurance policies or
Contracts will be terminated, suspended, modified or amended, or not renewed
(other than life

 

28

 

insurance policies insuring the lives of Sellers that will be
terminated or transferred to Sellers on or before the Closing Date) on
substantially identical terms (including, without limitation, premium costs),
or will require alteration of any equipment or any improvements to any Leased
Real Estate, or the purchase of additional equipment, or the modification of
any of the methods of doing business. Neither the Companies nor, to Sellers’
Knowledge, any third party to such insurance policy or Contract is in default
with respect thereto, nor to Sellers’ Knowledge does any condition exist that
with notice or lapse of time or both would constitute such a default by any
party thereunder. The Companies have not failed to give any notice or present
any claim under any such insurance policy or Contract in due or timely fashion
or as required thereby in a manner which will jeopardize full recovery
thereunder. All such insurance policies or Contracts provide coverage in
amounts and upon terms that are reasonable and adequate for Persons having
similar businesses, operation, assets and properties. Complete and accurate
copies of all such policies, Contracts and related documentation have
previously been delivered to Purchaser.

 

(d)           Sellers and the
Companies, as applicable, have individually or jointly maintained, and will
continue to maintain until the Closing Date, the insurance set forth in Schedule 3.22(b)
that covers the tangible real and personal property and assets of the
Companies, whether owned or leased, against loss or damage by fire or other
casualty. The Companies also carry product liability insurance. All such
insurance is in full force on the date of this Agreement and is carried with
insurers licensed in the states affected by such policies.

 

(e)           The Companies are
presently insured and will continue to be insured through Closing for general
liability and worker’s compensation risks through a third party insurance
company, which insurance covers claims made against the Companies.

 

(f)            The Companies have
promptly and adequately notified the insurance carriers of any and all claims
known with respect to the operations, products or services of the Companies for
which the Companies are insured and no insurance carrier has denied coverage or
reserved its rights with respect to such claims. The Companies have not been
refused any insurance coverage by any insurance carrier to which they,
individually or collectively, have applied for insurance during the past three
(3) years.

 

3.23.       Brokers.
The Companies have not otherwise employed or engaged
any broker, finder, agent, banker or third party, nor has it otherwise dealt
with anyone purporting to act in the capacity of a finder or broker in
connection with the transactions contemplated hereby. No commissions, finder’s
fees or like charges have been or will be incurred by the Companies in
connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby. Any such commissions,
finders’ fees or like charges shall be directly chargeable to and will be paid
by Sellers as contemplated by the terms of this Agreement.

 

3.24.       Environmental
Matters. Except as may be set forth in Schedule 3.24
and as set forth in the information contained in any site surveys and the
environmental reports listed in Schedule 3.24, copies of which have
been provided to Purchaser, and except as would not have a Material Adverse
Effect: (i) the Companies have transported, stored, and/or disposed of
Hazardous Materials handled by the Companies in a manner that is reasonably
necessary for the conduct of the Business and in material compliance with
Environmental Laws, (ii) to Sellers’

 

29

 

Knowledge, the Leased Real Estate, during its use by the Companies have
not been used, as a landfill, dump or other disposal, storage, transfer,
treating or handling area for any Hazardous Materials, except for such storage
or handling of Hazardous Materials as is reasonably necessary for the conduct
of the Business and in material compliance with Environmental Laws, (iii) to
Sellers’ Knowledge, no asbestos, lead paint, radio active materials,
polychlorinated biphenyls, or urea formaldehyde has been placed, stored,
located, or disposed on the Leased Real Estate, (iv) the Companies have not
agreed to assume and, to Sellers’ Knowledge, have not assumed by operation of
law, any environmental Liability of any other Person, including, but not
limited to, environmental Liabilities under CERCLA or SARA, and (v) the
Companies have obtained and complied in all material respects with, and is in
material compliance with, all Environmental Permits necessary or required for
the operation of the Business, said Environmental Permits are in full force and
effect, and to Sellers’ Knowledge there are no Proceedings pending or
Threatened to revoke or limit any thereof. Except as may be set forth in Schedule 3.24
hereto, the Leased Real Estate is not listed on the National Priorities List,
the Comprehensive Environmental Response Compensation and Liability Information
System, the Resource Conservation and Recovery Information System or any other
governmental list of potentially contaminated properties.

 

3.25.       Debt.
Schedule 3.25 is a true, correct and
complete list of all mortgages, indentures, notes, guarantees and other
obligations for or relating to borrowed money, or purchase money debt
(including conditional sales contracts, capital leases and all letters of
credit whether or not such letters of credit have been drawn against) for which
the Companies are primarily or secondarily obligated.

 

3.26.       Customers
and Suppliers.

 

(a)           Schedule 3.26(a)
contains a true and complete list of the fifteen (15) largest customers of both
SSI and UCA in order of dollar volume of services provided during its last full
fiscal year showing the total services provided in dollar volume to each such
customer during such period.

 

(b)           Schedule 3.26(b)
contains a true and complete list of the fifteen (15) largest suppliers of both
SSI and UCA in order of dollar volume of purchases during its last full fiscal
year showing the total of purchases in dollars to each such supplier during
such period.

 

(c)           Except as set forth
on Schedule 3.26(c):

 

(i)            There
has not been any Material Adverse Change and, to Sellers’ Knowledge, there are
no facts which can reasonably be expected to indicate that any Material Adverse
Change will occur in the business relationship of the Companies with any
customer or supplier listed on Schedule 3.26(a) or Schedule 3.26(b).

 

(ii)           The
Companies are not engaged in any material disputes with any customers or
suppliers listed or to be listed on Schedules 3.26(a) or 3.26(b)
and to Sellers’ Knowledge no such customer or supplier intends to discontinue
or adversely modify its relationship with the Companies after the Closing Date.
In addition, to Sellers’ Knowledge, no customer listed or to be listed on Schedule
3.26(a) of the

 

30

 

Disclosure Schedule has Threatened to discontinue or adversely modify
its relationship with the Companies after the Closing Date. During the two-year
period prior to the date hereof the Companies have not granted any rebate to
any customer listed or to be listed on Schedule 3.26(a) of the
Disclosure Schedule other than in the Ordinary Course of Business consistent
with past practice.

 

3.27.       Sellers
Loans. Except as set forth in Schedule 3.27,
there are no loans, advances or other obligations for borrowed money owing by
the Companies to Sellers.

 

3.28.       Adequacy
of Properties. The Companies own, lease or otherwise
have adequate rights to use the tangible and intangible personal property
necessary for the conduct of their Business in the manner in which such
Business is presently being conducted with no material conflict with or
infringement on the rights of others such that the absence of such ownership or
rights could not reasonably be expected to have a Material Adverse Effect.

 

3.29.       Related
Party Transactions. Except as disclosed in Schedule 3.29
hereto, no Person who is an officer, director or shareholder in the Companies,
or a member of any such officer’s, director’s or shareholder’s immediate
family, has, directly or indirectly:  (a)
any financial interest in any Contract with the Companies, except as an owner
of the Companies or for compensation for services as an officer, employee or
director of the Companies; (b) any interest in any real or personal property
used in the Companies’ business, except for the normal rights of a shareholder;
or (c) any interest in (i) any Person which purchases from or sells, licenses
or furnishes to the Companies any goods, property, technology or intellectual
or other property rights or services or (ii) any third-party Contract to which
the Companies are a party or by which the Companies are bound. There are no
loans, advances or other obligations for borrowed money (i) from Sellers, on
the one hand, to the Companies, on the other hand, or (ii) from the Companies,
on the one hand, to Sellers, on the other hand that will not be paid or
otherwise satisfied or discharged on or before the Closing Date.

 

3.30.       Permits.
Schedule 3.30 contains a complete listing and
summary description of all Permits held by the Companies. Except as set forth
on Schedule 3.30, the Companies hold all of the Permits that are
necessary or appropriate to own and operate its Business as presently
conducted, including, without limitation, all Permits required under any
Applicable Laws and each such Permit is, and after the Closing shall be, in
full force and effect. The Companies are in compliance with the terms and
conditions of the Permits set forth on Schedule 3.30, and the
Companies have not received any notices that the Companies are in violation of
any of the terms or conditions of such Permits. There are no proceedings
pending or, to Sellers’ Knowledge, Threatened which may result in the
revocation, cancellation, suspension or modification of the Permits set forth
on Schedule 3.30, and Sellers do not have any Knowledge of any
basis therefore; and the consummation of the contemplated transactions hereby
will not result in any such revocation, cancellation, suspension or
modification nor require the Companies, or Purchaser to make any filing or take
any action in order to maintain the validity of any item listed on Schedule 3.30.

 

3.31.       Warranty
and Product Liability Claims. Except as disclosed on Schedule 3.31:  (i) the Companies have not made any express
warranties and guaranties with respect to any products manufactured or sold or
services rendered in the operation of the

 

31

 

Business, and (ii) no claims have been asserted during the past three
(3) years that any product of the Companies was defective or caused any injury
or harm to any person or property, including all such claims relating to
returns, express or implied warranty violations, failure to warn or similar
matters.

 

3.32.       Defective
Products. Except as disclosed on Schedule 3.32,
and other than returns in the Ordinary Course of Business, the Companies have
not manufactured or sold any products which were at the time they were
manufactured or sold, faulty or defective or did not comply with warranties or
representations expressly made or implied by or on behalf of the Companies.

 

3.33.       Absence
of Undisclosed Liabilities. The Companies do not have
any liabilities, losses or obligations of any nature (whether absolute, known
or unknown, accrued, fixed, contingent, liquidated, unliquidated, due or to
become due, or otherwise), except for (i) Liabilities included or reflected in the
Companies’ financial statements and adequately reserved against therein in
accordance with GAAP consistently applied, (ii) Liabilities or performance
obligations arising subsequent to the date of the respective Balance Sheets in
the Ordinary Course of Business (and not as a result of a breach or default by
the Companies) out of or under agreements, Contracts, leases, arrangements or
commitments to which the Companies are a party or (iii) otherwise included in
the Permitted Liabilities.

 

3.34.       Closing
Date. All of the representations and warranties of
Sellers contained in this Article 3 and elsewhere in this Agreement and all
information delivered in any Schedule or in any certificate delivered by
Sellers to Purchaser are true and correct on the Closing Date.

 

3.35.       Health
Regulations.

 

(a)           The Companies have,
at all times, acted in compliance with the requirements of the Health Insurance
Portability and Accountability Act of 1996 (“HIPAA”), including, without
implied limitation, all business associate agreements, trading partner
agreements and/or other HIPAA-related agreements to which it is a party
relating to its obligations to protect the confidentiality and/or security of
patient-related information in its possession or under its control.

 

(b)           The Companies have,
at all times, acted in compliance with the requirements of all Applicable Laws
relating to its obligation to retain and provide access to certain information
and documentation to the Secretary of the Department of Health and Human
Services and the Comptroller General of the Unites States.

 

(c)           To Sellers’
Knowledge, neither of the Companies nor any of their
employees/agents/vendors/contractors/suppliers is now or has ever been
excluded, debarred, suspended or otherwise declared ineligible to participate
in any federal health care programs or federal procurement or non-procurement
programs; neither it nor any of its
employees/agents/vendors/contractors/suppliers has ever been convicted of a
criminal offense relating to the provision of federal healthcare items or
services; neither it nor any of its
employees/agents/vendors/contractors/suppliers is now under investigation which
may result in being excluded from participation in any federal health care
programs; and, it is not aware of any

 

32

 

other circumstances which may result in it and/or any of its
employees/agents/vendors/ contractors/suppliers being excluded from
participation in any federal health care programs.

 

(d)           The Companies have,
at all times, acted in compliance with all requirements of the federal fraud
and abuse laws, rules and regulations, including, without implied limitation,
the federal Stark Law (found at 42 USC 1395nn) and the federal Anti-Kickback
Statute (found at 42 U.S.C. 1320a).

 

(e)           The Companies have,
at all times, acted in compliance with all applicable state fraud and abuse
laws, rules and regulations, including, without implied limitation, any such
laws, rules and regulations relating to payments made by/to it to/from third
parties and/or discounts offered by it to third parties in connection with
items or services that may be paid for, in whole or in part, by any federal or
state health care program.

 

3.36.       Additional
Contract Representations.

 

(a)           Sellers represent
and warrant that the “group purchasing organization” contracts identified and
listed on its website as of the 29th day of August, 2007 are not
separate contracts to which it is a party and instead are organizations to whom
it sells products pursuant to its agreement with the HealthTrust Purchasing
Group.

 

(b)           Sellers represent
and warrant that the Companies are not a party to any Amendment #2 to the
Baptist Memorial Healthcare Agreement.

 

(c)           Sellers represent
and warrant that the Companies are not a party to any business associate
agreement, trading partner agreement and/or other HIPAA-related agreement
except as disclosed and identified in Schedule 3.15.

 

(d)           Sellers represent
and warrant that the Companies are not a party to any medical director,
consulting, advisory, clinical study or similar agreement with any physician,
group practice, health care provider or health care facility except as
disclosed and identified in Schedule 3.15.

 

(e)           Sellers represent
and warrant that it has, at all times, acted in compliance with all
requirements of the regulations issued by the Department of Health and Human
Services published at 42 CFR 1001 and which relate to the Companies’
obligations to keep records of, report and disclose discounts, rebates and
other reductions to group purchasing organizations and buyers in connection
with items or services that may be paid for, in whole or in part, by any
federal or state health care program.

 

(f)            Sellers represent
and warrant that it has, at all times, acted in compliance with all applicable
state fraud and abuse laws, rules and regulations, including, without implied
limitation, any such laws, rules and regulations relating to payments made
by/to it to/from third parties and/or discounts, rebates or other price
reductions offered by it to third parties in connection with items or services
that may be paid for, in whole or in part, by any federal or state health care
program.

 

33

 

3.37.       Representations
and Warranties. No representation or warranty by
Sellers included in this Agreement, to Sellers’ Knowledge, contains any untrue
statement of a material fact or omits any material fact necessary to make the
information contained herein not misleading.

 

3.38.       Assignability
of Representations and Warranties. In the event
Purchaser sells or otherwise transfers SSI or UCA, or both to another entity
owned or controlled by Purchaser within the Companies’ current fiscal year each
of the warranties and representations in this Article 3 of this Agreement
shall be deemed, as applicable, to be assigned to such transferee.

 

ARTICLE 4

 

COVENANTS OF SELLERS

 

4.1.         Further
Assurances. Sellers shall from time to time after the
Closing Date execute and deliver such additional instruments and documents, as
Purchaser may reasonably request. Without limiting the foregoing, Sellers
specifically agrees to take any and all actions necessary under applicable law
to ensure that the Companies have full use of and rights in the Intellectual
Property set forth on Schedule 3.13 following consummation of the
transactions contemplated by this Agreement. Sellers, but at Purchaser’s sole
cost and expense, also agrees to execute all papers and to give such testimony
and to perform such other acts as said Purchaser or affiliates may reasonably
require to enable it or them to procure any continuations, divisionals,
reissues or trademarks, in the United States of America and/or in any foreign
country, and/or to hold, enforce or convey said Intellectual Property.

 

4.2.         Non-Disclosure
and Non-Competition. Each Seller will enter into a
five (5) year Non-Disclosure and Non-Competition Agreement to be executed and
delivered at Closing (“Non-Competition Agreement”).

 

ARTICLE 5

 

REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

As an inducement for Sellers to enter into this Agreement and to
consummate the transactions contemplated hereby, Purchaser represents and
warrants to Sellers 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 5.

 

5.1.         Organization.
Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite power and authority, corporate and otherwise, to own, operate and
lease its properties and assets, to conduct its business as it is now being
conducted and to perform all of its obligations under this Agreement and the
Ancillary Documents.

 

5.2.         Due
Authorization. The execution, delivery and performance
of this Agreement and the Ancillary Documents to be executed and delivered by
Purchaser pursuant to this Agreement, and the consummation of the transactions
contemplated hereby and thereby have

 

34

 

been duly and validly authorized by all necessary corporate action on
the part of Purchaser. This Agreement constitutes the legal, valid, and binding
obligation of Purchaser, enforceable against Purchaser in accordance with its
terms. The Ancillary Documents have been, or will be on or before the Closing
Date, duly and validly executed and delivered by Purchaser and the obligations
of Purchaser thereunder are or will be, upon such execution and delivery,
valid, legally binding and enforceable against Purchaser in accordance with
their respective terms.

 

5.3.         No
Breach. Purchaser has full power and authority,
corporate and otherwise, to purchase the Equity Interests being purchased
hereunder and to otherwise perform its obligations under this Agreement and the
Ancillary Documents to be executed and delivered by Purchaser pursuant hereto. The
execution and delivery of this Agreement and the Ancillary Documents to be
executed and delivered by Purchaser pursuant to this Agreement, and the
consummation of the transactions contemplated hereby and thereby will not:  (i) violate any provision of the
Certificate of Incorporation or Bylaws (or comparable governing documents or
instruments) of Purchaser, (ii) violate any Applicable Laws or Injunction
applicable to Purchaser, (iii) other than filings and approvals required
to comply with Applicable Laws, including applicable requirements of any
Governmental Body, all of which shall be filed or obtained prior to the Closing
Date, require any filing with, authorization, consent or approval of, or the
giving of any notice to, any Person, (iv) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give another party any rights of termination, cancellation or
acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, franchise, lease or other Contract to which
Purchaser is a party, or by which it or any of its assets or properties are
bound.

 

5.4.         Investment
Representations. Purchaser understands that the Equity
Interests have not been registered under the Securities Act of 1933, as
amended, or under the securities laws of any jurisdiction, by reason of
reliance upon certain exemptions. Purchaser understands and acknowledges that
the Equity Interests may not be sold publicly unless they are subsequently
registered under the Securities Act of 1933, as amended, or unless an exemption
from such registration is available.

 

5.5.         Brokers.
Neither Purchaser nor its respective Affiliates has
employed or engaged any broker, finder, agent, banker or third party, nor have
they otherwise dealt with anyone purporting to act in the capacity of a finder
or broker in connection with the transactions contemplated hereby. Any such
commissions, finders’ fees or like charges so claimed shall be directly
chargeable to and will be paid by Purchaser, subject to Purchaser’s right to
contest any such claim.

 

ARTICLE 6

 

CONDITIONS PRECEDENT TO CLOSING

 

Purchaser’s and Sellers’ obligations to purchase and sell the Equity
Interests and to take the other actions required to be taken by the parties at
the Closing are subject to the satisfaction, at or prior to the Closing, of
each of the following conditions (any of which may be waived by Purchaser, in
whole or in part):

 

35

 

6.1.                            Purchaser shall have
received written consents, in form and substance satisfactory to Purchaser, by
which the contracting parties to the contracts identified on Schedule 3.2(b)
consent to the change of ownership of the Companies and commit to the further
performance of such contracts in accordance with their terms.

 

6.2.                            The Sales Representation
Agreement dated March 9, 2004, as identified in Schedule 3.15(e) shall
either have been amended in a manner acceptable to Purchaser or terminated
pursuant to a written termination in a form acceptable to Purchaser.

 

6.3.                            All of Sellers’
Representations and Warranties in this Agreement must have been accurate in all
material respects as of the Closing Date as if made on the Closing Date.

 

6.4.                            Each of the Closing
Deliveries set forth in Section 2.5(b) must have been delivered.

 

6.5.                            Since the date of the
Agreement, there must not have been commenced or Threatened against Purchaser,
or against any Affiliate of Purchaser, any Proceeding involving any challenge
to, or seeking Damages or other relief in connection with the transactions.

 

6.6.                            If any of the conditions in
Sections 6.1 through 6.5 are not satisfied or waived by October 15, 2007,
this Agreement shall terminate.

 

ARTICLE 7

 

INDEMNIFICATION

 

7.1.                            Survival
of Indemnification Obligations.

 

(a)                                  Representations and Warranties of Sellers.
Except as noted in Section 7.1(b) below each of the representations and
warranties of Sellers contained in this Agreement and in any Ancillary
Documents delivered by or on behalf of Sellers pursuant to this Agreement and
the transactions contemplated hereby shall survive the Closing of the
transactions contemplated hereby for a period of two (2) years after the
Closing Date, or longer as expressly specified below (such period, the “Survival
Period”).

 

(b)                                 Survival. The representations and
warranties in Sections 3.1 (Organization), 3.2 (Authority), and 3.3
(Capitalization) of this Agreement shall have no expiration; and the
representations and warranties in Section 3.8 (Tax Matters) and 3.24
(Environmental) of this Agreement shall survive until sixty (60) days after
expiration of the applicable statute of limitations.

 

(c)                                  Representations and Warranties of Purchaser.
Each of the representations and warranties of Purchaser contained in this
Agreement and in any Ancillary Documents delivered by or on behalf of Purchaser
pursuant to this Agreement and the transactions contemplated hereby shall
survive the Closing of the transactions contemplated hereby for a period of two
(2) years after the Closing Date, or longer as expressly specified in the
following sentence. The representations and warranties in Sections 5.1, 5.2,
and 5.4 of this Agreement shall have no expiration.

 

36

 

(d)                                 Covenants. All covenants of the
parties will survive until terminated in accordance with their respective
terms.

 

(e)                                  Certain Identified Liabilities. Notwithstanding
the limitation on survival above, the indemnification obligations set forth in
subsections 7.2(c) through 7.2(n) herein shall survive indefinitely.

 

(f)                                    Certain Definitions. The term “Damages”
means any and all damages (but excluding special, incidental, consequential or
punitive damages), losses, claims (including Taxes), expenses, costs, fines,
consultant, expert, attorney and professional fees, interest, and penalties,
and with respect to indemnification for breach of the representations and
warranties in Section 3.24 (Environmental Representations), “Damages” shall
mean such liabilities as referenced above arising out of or in connection with
investigation of site conditions or any cleanup, remedial, removal or
restoration work, or any diminution in value or natural resource damage caused
by: (i) the presence of Hazardous Materials or (ii) any violation of
Environmental Laws causing physical injury to persons or property. “Damages”
also shall include costs incurred arising from such claims, actions, suits,
demands, assessments, investigations, judgments, penalties, fines, awards,
arbitrations or other proceedings, together with reasonable attorneys’ fees and
expenses. The term “Purchaser Indemnitees” means Purchaser, Purchaser’s
successors and assigns. The term “Sellers Indemnitees” means Sellers and any
present or future heirs, personal representatives, successors and assigns of
the respective Sellers.

 

(g)                                 The
right to indemnification or payment of Damages will not be affected adversely
by any investigation by any party or any knowledge acquired at any time with
respect to the accuracy or inaccuracy of or compliance with, any
representation, warranty, covenant, or obligation, except for the Environmental
Representations, unless any such investigation was the result of a request or
directive by a Governmental Body or was reasonably required by a prospective
purchaser or lender.

 

7.2.                            Indemnification
by Sellers.

 

Sellers will indemnify and hold harmless Purchaser from and against any
and all Damages directly incurred, paid or accrued in connection with or
resulting from or and arising out of:

 

(a)                                  the breach or
inaccuracy of any representation or warranty of Sellers contained in this
Agreement or any Ancillary Document executed by Sellers pursuant hereto (or
thereto) or in any certificate delivered to Purchaser pursuant to Section 2.5
above;

 

(b)                                 the breach or
violation of any covenant or other obligation of Sellers under this Agreement
or any Ancillary Document executed by Sellers pursuant hereto (or thereto);

 

(c)                                  all Taxes not
properly paid or accrued for by the Companies as of the Closing Date;

 

37

 

(d)                                 (i) the
violation by the Sellers, the Companies or their predecessors (which shall
include any Person whose liabilities, including, without limitation,
liabilities arising under any Environmental Laws, have or may have been
retained or assumed by the Companies, either contractually or by operation of
law) of any Environmental Laws prior to the Closing Date or (ii) the
presence or Release of any Hazardous Materials on any property prior to the
Closing Date, including, without limitation, any property owned, leased or
operated by the Companies or their predecessors prior to the Closing Date, in
each case regardless of whether such violation of Environmental Laws or
presence or Release of Hazardous Materials is described or referenced on Schedule 3.24
hereto;

 

(e)                                  all
Damages arising from the matters identified on Schedule 3.6 hereto
(Legal Proceedings);

 

(f)                                    all
Damages arising from the matters identified on Schedule 3.7 hereto
(Labor Matters);

 

(g)                                 all
Damages relating to the items at Schedule 3.8(c)(iv); 3.8(c)(v) and
3.8(c)(vi);

 

(h)                                 all
Damages arising from the matters identified on Schedule 3.14;

 

(i)                                     all
Damages arising from the matter identified on Schedule 3.9(b),
including, without limitation, the costs of corrective action and restructuring
to comply with Applicable Laws post Closing;

 

(j)                                     all
indemnification claims arising under the contracts listed at 3.15(q);

 

(k)                                  all
Damages arising from Seller’s failure to fully disclose the terms and
conditions of the agreement described in Section 3.16(c);

 

(l)                                     all
Damages relating to termination of the Sales Representation Agreement
identified at Schedule 3.15(e).;

 

(m)                               all
Damages arising from the letter dated August 1, 2007 and set forth as part
of  Schedule 3.12(q); and

 

 (n)                              all Damages arising from
the early termination of distribution agreements prior to the date of this
Agreement.

 

Notwithstanding any other provision hereof,
the maximum aggregate indemnity obligations of the Sellers, collectively, shall
in no event exceed the Purchase Price under Section 2.2.

 

7.3.                            Escrow,
Time Limits and Insurance.

 

(a)                                  Escrowed Funds. The initial source
for Purchaser’s claims shall be the Escrowed Funds. The amount of any Damages
for which Purchaser is entitled to be indemnified under Section 7.2 of this
Agreement shall be released from the Escrowed Funds pursuant to the terms 

 

38

 

of the Purchase Price Escrow Agreement; provided, however, that if the
amount of Damages for which Purchaser is entitled to be indemnified under
Section 7.2 exceeds the amount then in the Escrowed Funds, Sellers shall be
responsible for all such excess amounts.

 

(b)                                 Time Limit for Claims against Sellers. No
claim for indemnification for matters identified in Section 7.2 may be asserted
or brought by Purchaser against Sellers after the applicable Survival Period
has expired; provided, however, that any such claim asserted by written notice
prior to expiration of the applicable Survival Period may be prosecuted until
its conclusion, which may be after the applicable Survival Period expires.

 

(c)                                  Insurance. Damages in respect of
which Sellers are required to indemnify the Purchaser Indemnitees under this
Agreement shall be (i) reduced by an amount equal to the insurance proceeds
paid to or realized by the Purchaser Indemnitees with respect to any claim
giving rise to Damages under this Agreement, and (ii) increased by an amount
equal to the sum of the reasonable out-of-pocket costs incurred by the Purchaser
Indemnitees in its pursuit of such insurance proceeds.

 

7.4.                            Indemnification
by Purchaser. Purchaser shall indemnify and hold harmless Sellers and any
present or future heirs, personal representatives, successors and assigns of
the respective Sellers from, against and in respect of any and all Damages
incurred, paid or accrued in connection with or resulting from or arising out
of:

 

(a)                                  the breach or
inaccuracy of any representation or warranty of Purchaser contained in this
Agreement or any Ancillary Document to be executed and delivered by Purchaser
pursuant hereto and thereto or in any certificate delivered to Sellers pursuant
to Section 2.5; and

 

(b)                                 the breach or
violation of any covenant or other obligation of Purchaser under this Agreement
or any Ancillary Document executed by Purchaser or its representatives pursuant
hereto or thereto.

 

7.5.                            Procedure
for Indemnification.

 

(a)                                  In
the event a party intends to seek indemnification pursuant to the provisions of
Sections 7.2 or 7.4 hereof (the “Indemnified Party”), the Indemnified
Party shall promptly give notice hereunder to the other party (the “Indemnifying
Party”) of a claim and such other information the Indemnified Party may have
relating to the underlying basis for the claim, or after obtaining written
notice of any claim, investigation, or the service of a summons or other
initial or continuing legal or administrative process or Proceeding in any
action instituted against the Indemnified Party as to which recovery or other
action may be sought against the Indemnified Party because of the
indemnification provided for in Section 7.2 or 7.4 hereof, and, if such
indemnity shall arise from the claim of a third party, the Indemnified Party
shall permit the Indemnifying Party to assume the defense of any such claim and
any litigation resulting from such claim; provided, however, that the
Indemnified Party shall not be required to permit such an assumption of the
defense of any claim or Proceeding which, if not first paid, discharged or
otherwise complied with, would result in a material interruption or disruption
of the business of the Indemnified Party, or any material part thereof. Notwithstanding
the foregoing, the right to

 

39

 

indemnification hereunder shall not be affected by any failure of the
Indemnified Party to give such notice (or by delay by the Indemnified Party in
giving such notice) unless, and then only to the extent that, the rights and
remedies of the Indemnifying Party shall have been prejudiced as a result of
the failure to give, or delay in giving, such notice. Failure by the
Indemnifying Party to notify the Indemnified Party of its election to defend
any such claim or action by a third party within thirty (30) days after written
notice thereof shall have been given to and acknowledged by the Indemnifying
Party shall be deemed a waiver by the Indemnifying Party of its right to defend
such claim or action.

 

(b)                                 If
the Indemnifying Party assumes the defense of such claim, investigation or Proceeding
resulting therefrom, the obligations of the Indemnifying Party hereunder as to
such claim, investigation or Proceeding shall include taking all steps
necessary in the defense or settlement of such claim, investigation or
Proceeding and holding the Indemnified Party harmless from and against any and
all losses arising from, in connection with or incident to any settlement
approved by the Indemnifying Party or any judgment entered in connection with
such claim, investigation or Proceeding, except where, and only to the extent
that, the Indemnifying Party has been prejudiced by the actions or omissions of
the Indemnified Party. The Indemnifying Party shall not, in the defense of such
claim or any Proceeding resulting therefrom, consent to entry of any judgment
(other than a judgment of dismissal on the merits without costs) except with
the written consent of the Indemnified Party (which consent shall not be
unreasonably withheld, delayed or conditioned) or enter into any settlement
(except with the written consent of the Indemnified Party, which consent shall
not be unreasonably withheld, delayed or conditioned) unless (i) there is
no finding or admission of any violation of Applicable Law and no material
effect on any claims that could reasonably be expected to be made by or against
the Indemnified Party, (ii) the sole relief provided is monetary damages
that are paid in full for losses, and (iii) the settlement shall include
the giving by the claimant or the plaintiff to the Indemnified Party a release
from all Liability in respect to such claim or litigation. In the event the
Indemnified Party unreasonably withholds, delays or conditions its consent to a
settlement agreed to by a third party claimant, the liability of the
Indemnifying Party for such claim shall be limited to the amount of such
settlement, plus the amount of any litigation costs or expenses incurred by the
Indemnified Party through the date its consent to the settlement was requested
and the Indemnified Party shall indemnify and hold harmless the Indemnifying
Party against any Damages suffered by the Indemnifying Party as a result of the
Indemnified Party’s unreasonably withholding, delaying or conditioning its
consent to such settlement.

 

(c)                                  If
the Indemnifying Party assumes the defense of such claim, investigation or
Proceeding resulting therefrom, the Indemnified Party shall be entitled to
participate in the defense of the claim. The Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it to participate in
its defense unless any of the following shall apply: (i) the employment of
such counsel shall have been authorized in writing by the Indemnifying Party,
or (ii) the Indemnifying Party’s legal counsel shall advise the
Indemnifying Party in writing, with a copy to the Indemnified Party, that there
is a conflict of interest that would make it inappropriate under applicable
standards of professional conduct to have common counsel and the Indemnifying
Party refuses to retain separate counsel for the Indemnified Party. If clause
(i) or (ii) in the immediately preceding sentence is applicable, then the
Indemnified Party may employ separate counsel at the expense of the
Indemnifying Party to represent the Indemnified Party, but in no event shall
the Indemnifying Party be obligated to pay the costs and expenses of more than 

 

40

 

one such separate counsel for any one complaint, claim, action or
Proceeding in any one jurisdiction.

 

(d)                                 If
the Indemnifying Party does not assume the defense of any such claim by a third
party or litigation resulting therefrom after receipt and acknowledgment by it
of written notice from the Indemnified Party, the Indemnified Party may defend
such claim or litigation in such manner as is reasonably appropriate, and
unless the Indemnifying Party shall deposit with the Indemnified Party a sum
equivalent to the total amount demanded in such claim or litigation plus the
Indemnified Party’s estimate of the cost (including attorneys’ fees) of defending
the same, the Indemnified Party may settle such claim or Proceeding on such
terms as it may reasonably deem appropriate and the Indemnifying Party shall
promptly reimburse the Indemnified Party for the amount of such settlement and
for all reasonable costs (including attorneys’ fees), expenses and damages
incurred by the Indemnified Party in connection with the defense against or
settlement of such claim, investigation or litigation, or if any such claim or
litigation is not so settled, the Indemnifying Party shall promptly reimburse
the Indemnified Party for the amount of any final nonappealable judgment
rendered with respect to any claim by a third party in such litigation and for
all costs (including attorneys’ fees), expenses and damage reasonably incurred
by the Indemnified Party in connection with the defense of such claim or
litigation, whether or not resulting from, arising out of, or incurred with
respect to, the act of a third party.

 

(e)                                  Each
party shall cooperate in good faith and in all respects with each Indemnifying
Party and its representatives (including without limitation its counsel) in the
investigation, negotiation, settlement, trial and/or defense of any Proceedings
(and any appeal arising therefrom) or any claim. The parties shall cooperate
with each other in any notifications to and information requests of any
insurers. No individual representative of any Person, or their respective
Affiliates shall be personally liable for any loss or losses under this
Agreement, except as specifically agreed to by said individual representative.

 

ARTICLE 8

 

TAX MATTERS

 

The following provisions shall govern the allocation of responsibility
as between Purchaser and Sellers for certain Tax Matters following the Closing
Date:

 

8.1.                            Tax
Returns.

 

(a)                                  Purchaser
and Sellers agree to take all action required, or cause the Companies to take
the required action, to elect under Code Section 1377(a)(2) to make an interim
closing of the Companies’ books and treat the taxable year of sale as two
separate tax years, the first ending as of the Closing Date.

 

(b)                                 Sellers
have the exclusive authority and obligation to prepare, execute on behalf of
the Companies and timely file, or cause to be prepared and timely filed, all
Tax Returns of the Companies that are due with respect to any taxable year or
other taxable period ending prior to the Closing Date. Such authority shall
include, but not be limited to, the determination of the 

 

41

 

manner in which any items of income, gain, deduction, loss or credit
arising out of the income, properties and operations of the Companies shall be
reported or disclosed in such Tax Returns; provided, however, that such Tax
Returns shall be prepared by treating items on such Tax Returns in a manner
consistent with the past practices with respect to such items and in a manner
consistent  and in good faith compliance
with all applicable IRS regulations.

 

(c)                                  Except
as provided in Section 8.1(a), Purchaser shall have the exclusive
authority and obligation to prepare, execute on behalf of the Companies and
timely file, or cause to be prepared and timely filed, all Tax Returns of the
Companies that are due with respect to any taxable year or other taxable period
ending after the Closing Date. Such authority shall include, but not be limited
to, the determination of the manner in which any items of income, gain,
deduction, loss or credit arising out of the income, properties and operations
of the Companies shall be reported or disclosed in such Tax Returns; provided,
however, that such Tax Returns shall be prepared by treating items on such Tax
Returns in a manner consistent with the Companies’ past practices with respect
to such items and in a manner consistent 
and in good faith compliance with all applicable IRS regulations. Tax
preparation expenses for tax returns for periods beginning prior to Closing and
ending after Closing shall be borne equally by the parties.

 

8.2.                            Controversies.

 

(a)                                  Purchaser
shall promptly notify Sellers in writing upon receipt by Purchaser or any
Affiliate of Purchaser (including the Companies after the Closing Date) of
written notice of any inquiries, claims, assessments, audits or similar events
with respect to Taxes relating to a taxable period ending prior to the Closing
Date for which Sellers may be liable under this Agreement (any such inquiry,
claim, assessment, audit or similar event, a “Tax Matter”). Sellers, at its
sole expense, shall have the authority to represent the interests of the
Companies with respect to any Tax Matter before the IRS, any other taxing
authority, any other Governmental Body or authority or any court and shall have
the sole right to control the defense, compromise or other resolution of any
Tax Matter, including responding to inquiries, filing Tax Returns and
contesting, defending against and resolving any assessment for additional Taxes
or notice of Tax deficiency or other adjustment of Taxes of, or relating to, a
Tax Matter. Neither Purchaser nor any of its Affiliates shall enter into any
settlement of or otherwise compromise any Tax Matter that affects or may affect
the Tax Liability of Sellers or the Companies for any period ending after the
Closing Date, which includes a portion of a period beginning before the Closing
Date and ending after the Closing Date (the “Overlap Period”), without the
prior written consent of Sellers, which consent shall not be unreasonably
withheld, delayed or conditioned. The parties hereto shall keep the other fully
and timely informed with respect to the commencement, status and nature of any
Tax Matter.

 

(b)                                 Except
as otherwise provided in this Section 8.2, Purchaser shall have the sole
right to control any audit or examination by any taxing authority, initiate any
claim for refund or amend any Tax Return, and contest, resolve and defend
against any assessment for additional Taxes, notice of Tax deficiency or other
adjustment of Taxes of, or relating to, the income, assets or operations of the
Companies for all taxable periods; provided, however, that Purchaser shall not,
and shall cause its Affiliates (including the Companies) not to, enter into any
settlement of any contest or otherwise compromise any issue with respect to the
portion of the Overlap Period 

 

42

 

ending on or prior to the Closing Date without the prior written
consent of Sellers, which consent shall not be unreasonably withheld, delayed
or conditioned.

 

8.3.                            Transfer
Taxes. All transfer, documentary, stamp, registration, sales and use and
similar Taxes and fees (including all penalties and interest) imposed in
connection with the sale of the Stock or any other transaction that occurs
pursuant to this Agreement shall be the obligation of Sellers except as may be
expressly provided in the Real Property Sale and Purchase Agreement to the
contrary.

 

8.4.                            Post-Closing
Access and Cooperation. From and after the Closing Date, Purchaser agrees,
and agrees to cause the Companies, to permit Sellers and its representatives to
have reasonable access, during normal business hours, to the books and records
of the Companies, to the extent that such books and records relate to a
Pre-Closing Period, and personnel, for the purpose of enabling Sellers to:  (i) prepare Tax Returns,
(ii) investigate or contest any Tax Matter which Sellers has the authority
to conduct, and (iii) evaluate any claim for indemnification.

 

ARTICLE 9

 

PERFORMANCE FOLLOWING THE CLOSING DATE

 

The following covenants and agreements are to be performed after the
Closing by the parties and shall continue in effect for the periods
respectively indicated or, where no indication is made, until performed:

 

9.1.                            Further
Acts and Assurances. The parties agree that, at any time and from time to
time, on and after the Closing Date, upon the reasonable request of the other
party, they will do or cause to be done all such further acts and things and
execute, acknowledge and deliver, or cause to be executed, acknowledged and
delivered any and all papers, documents, instruments, agreements, assignments,
transfers, assurances and conveyances as may be necessary or desirable to carry
out and give effect to the provisions and intent of this Agreement. In
addition, from and after the Closing Date, Purchaser will afford to Sellers and
its attorneys, accountants and other representatives access, during normal
business hours, to such personnel, books and records relating to the Companies
as may reasonably be required in connection with the preparation of financial
information or the filing of Tax Returns and will cooperate in all reasonable
respects in connection with claims and Proceeding asserted by or against third
parties, relating to or arising from the transactions contemplated hereby.

 

9.2.                            Employee
Matters.

 

(a)                                  Employment. Each Employee who is
employed by SSI or UCA on the Closing Date shall continue to be employed by SSI
and UCA, as applicable, on and after the Closing Date at substantially the same
base wage or salary as in effect immediately prior to the Closing Date and with
substantial the same titles and levels of responsibility. Such continued
employment shall be employment at-will, except for those Employees with
employment agreements identified in Schedule 3.20(b) of this
Agreement, and nothing in this Section 9.2 is 

 

43

 

intended to create, or shall create or confer, any right of employment
after the Closing Date for any Employee.

 

(b)                                 Service Credit. All past service of
the Employees with SSI and UCA shall be taken into account for purposes of
eligibility and vesting under the benefit plans provided by Purchaser and for
purposes of calculating vacation benefits and severance benefits under the
vacation plan and severance plan maintained by Purchaser.

 

(c)                                  Welfare Plans. If the applicable
carrier(s) consents, Purchaser shall take all action necessary and appropriate
to ensure that, as soon as practicable after the Closing Date, Purchaser
maintains or adopts, as of the Closing Date, one or more employee welfare
benefit plans, including medical, health, dental, flexible spending account,
accident, life, short-term disability, and other employee welfare benefit plans
for the benefit of the Employees (the “Purchaser Welfare Plans”). If the
applicable carrier(s) consents, the Purchaser Welfare Plans shall provide as of
the Closing Date benefits to the Employees (and their dependents and
beneficiaries) that, in the aggregate, are comparable to the benefits to which
they were entitled under the corresponding welfare benefit plans maintained by
SSI and UCA on the Closing Date (the “Companies Welfare Plans”), through the
applicable renewal date. At renewal, Purchaser shall review renewal increases
and make necessary modifications. Any restrictions on coverage for preexisting
conditions or requirements for evidence of insurability under the Purchaser
Welfare Plans shall be waived for the benefit of the Employees, and the
Employees shall receive credit under the Purchaser Welfare Plans for
co-payments and payments under a deductible limit made by them and for
out-of-pocket maximums applicable to them during the plan year of the Companies
Welfare Plans in accordance with the corresponding the Companies Welfare Plan. Notwithstanding
the aforementioned, nothing contained herein shall obligate Purchaser to
provide Purchaser Welfare Plans having benefits in excess of those currently
offered to Purchaser’s existing employees. Purchaser shall indemnify and hold
harmless the Seller Indemnitees from and against any claims arising from the
modification of the Companies Welfare Plans.

 

ARTICLE 10

 

MISCELLANEOUS

 

10.1.                     Preservation
of and Access to Records. Purchaser shall preserve or cause the Companies
to preserve all books and records of the Companies for a period of nine (9)
years after the later of the Closing Date, or the filing date of any SSI and
UCA tax return due post-closing or any later date of retention required by
Applicable Law; provided, however, Purchaser may destroy any part or parts of
such records upon obtaining written consent of Sellers for such destruction,
which consent may be withheld in Sellers’ absolute discretion. Such records
shall be made available to Sellers and its representative at all reasonable
times during normal business hours of the Companies, during said retention
period with the right at Sellers’ expense to make abstracts from and copies
thereof.

 

10.2.                     Specific
Performance. The parties hereto agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that, except as 

 

44

 

otherwise provided in this Agreement, the parties shall be entitled to
injunctive relief to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.

 

10.3.                     Public and
Private Announcements. Any public or private announcement or similar
publicity (including, without limitation, the publication of any press release)
with respect to this Agreement will be issued at such time and in such manner
as the parties mutually agree in writing. Purchaser and Sellers shall keep this
Agreement strictly confidential and may not make any disclosure of this
Agreement to any Person (except for (i) lenders, banks and financial
institutions in connection with Purchaser’s financing of the acquisition, and
(ii) representatives, customers, and suppliers of the Companies); provided,
however, that any party hereto may make a public and/or private announcement to
the extent required by law, judicial process or the rules, regulations or
interpretations of the Securities and Exchange Commission or any national
securities exchange.

 

10.4.                     Notices. All
notices, demands and other communications provided for hereunder shall be in
writing and shall be given (i) by personal delivery, (ii) via e-mail
or facsimile transmission (receipt confirmed, with follow up transmittal within
48 hours by (iii) or (iv) which follows), (iii) by nationally recognized
overnight courier (prepaid), or (iv) by certified or registered first
class mail, postage prepaid, return receipt requested, sent to each party, at
its and its representative’s address as set forth below or at such other
address or in such other manner as may be designated by such party or the
respective representative in a written notice to each of the other parties:

 

If to Purchaser:                                                               Symmetry
Medical USA Inc.

220 West Market Street

Warsaw, IN 46580

E-Mail: 
fred.hite@symmetrymedical.com

Fax No.: 
574-267-4551

Attention: 
Fred Hite, Chief Financial Officer

 

With a copy to:                                                             Barrett
& McNagny LLP

215 East Berry Street

Fort Wayne, IN  46802

E-Mail: 
sjt@barrettlaw.com

Phone: 
260-423-8812

Fax No.: 
260-423-8920

Attention: 
Samuel J. Talarico, Jr., Esq.

 

If to Sellers:                                                                                 Louis
C. Wallace

c/o Specialty Surgical Instrumentation, Inc.

200 River
Hills Drive

Nashville, TN 
37210

E-Mail: 
LouWallace@specialty-surgical.com

 

45

 

and

 

Charles O. Mann, Jr.

c/o Specialty Surgical Instrumentation, Inc.

200 River
Hills Drive

Nashville, TN 
37210

E-Mail: charlesmann.ssi@starband.net

 

With a copy to:                                                             John
L. Van Cleave

Watkins & McNeilly, PLLC

Suite 300, 314 Second Avenue North

Nashville, TN

E-Mail: 
john@watkinsmcneilly.com

Phone: 
615-255-2191

Fax No.: 
615-242-0238

 

10.5.                     Entire
Agreement. Except for any confidentiality agreement executed by a party
hereto, this Agreement, including the Ancillary Documents to be executed by the
parties pursuant hereto, contains the entire agreement of the parties hereto
and supersedes all prior or contemporaneous agreements and understandings, oral
or written, between the parties hereto with respect to the subject matter
hereof.

 

10.6.                     Amendments. No
purported amendment, modification or waiver of any provision of this Agreement
or any of the documents, instruments or agreements to be executed by the
parties pursuant hereto shall be effective unless in writing specifically
referring to this Agreement and signed by all of the parties hereto.

 

10.7.                     Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective heirs, personal representatives,
successors and permitted assigns, but except as hereinafter provided in this
Section 10.7, nothing in this Agreement is to be construed as an authorization
or right of any party to assign its rights or delegate its duties under this
Agreement without the prior written consent of the other parties hereto. Notwithstanding
the foregoing, Purchaser, in its sole discretion, may assign its rights in
and/or delegate its duties under this Agreement to an Affiliate of Purchaser. In
the event of such an assignment of rights and/or delegation of duties, all
references to Purchaser, as applicable to the assignment in this Agreement,
shall also be deemed to be references to the Person to which this Agreement is
assigned; provided that no such assignment and/or delegation shall relieve the
assignor of any of its duties or obligations hereunder.

 

10.8.                     Fees and
Expenses. Except as otherwise set forth in this Agreement or any Ancillary
Document, each party hereto shall pay their own fees and expenses incurred in
connection with negotiating and preparing this Agreement and consummating the
transactions contemplated hereby, including but not limited to fees and
disbursements of their respective attorneys, accountants and investment
bankers, except with respect to such post-Closing Date accounting and auditing
fees as referenced elsewhere in this Agreement. If the transaction is
consummated, all fees and expenses, including legal, accounting, investment
banking, broker’s 

 

46

 

and finder’s fees and expenses incurred by Sellers in connection with
this transaction shall be deemed expenses of Sellers and shall be borne by
Sellers.

 

10.9.                     Counterparts
and Facsimile Signature. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same Agreement. The counterparts of this
Agreement and all Ancillary Documents may be executed and delivered by
facsimile signature by any of the parties to any other party and the receiving
party may rely on the receipt of such document so executed and delivered by
facsimile as if the original had been received.

 

10.10. Headings. The
headings of the articles, sections and subsections of this Agreement are
intended for the convenience of the parties only and shall in no way be held to
explain, modify, construe, limit, amplify or aid in the interpretation of the
provisions hereof. The terms “this Agreement,” “hereof,” “herein,” “hereunder,”
“hereto” and similar expressions refer to this Agreement as a whole and not to
any particular article, section, subsection or other portion hereof and include
the Schedules and Exhibits hereto and any document, instrument or agreement
executed and/or delivered by the parties pursuant hereto.

 

10.11. Number and Gender. Unless
the context otherwise requires, words importing the singular number shall
include the plural and vice versa and words importing the use of any gender
shall include all genders.

 

10.12. Severability. In
the event that any provision of this Agreement is declared or held by any court
of competent jurisdiction to be invalid or unenforceable, such provision shall
be severable from, and such invalidity or unenforceability shall not be
construed to have any effect on, the remaining provisions of this Agreement,
unless such invalid or unenforceable provision goes to the essence of this
Agreement, in which case the entire Agreement may be declared invalid and not
binding upon any of the parties.

 

10.13. Parties in Interest. Nothing
implied in this Agreement is intended or shall be construed to confer any
rights or remedies under or by reason of this Agreement upon any Person other
than Purchaser and Sellers and their respective representatives, successors and
permitted assigns. Nothing in this Agreement is intended to relieve or
discharge the Liabilities of any third Person to Purchaser or Sellers.

 

10.14. Waiver. The
terms, conditions, warranties, representations and indemnities contained in
this Agreement, including the documents, instruments and agreements executed
and delivered by the parties pursuant hereto, may be waived only by a written
instrument executed by the party waiving compliance. Any such waiver shall only
be effective in the specific instance and for the specific purpose for which it
was given and shall not be deemed a waiver of any other provision hereof or of
the same breach or default upon any recurrence thereof. Any waiver or consent
required of Sellers shall be effective only if signed by both Sellers. No
failure on the part of a party hereto to exercise and no delay in exercising
any right hereunder shall operate as a waiver thereof nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right.

 

47

 

10.15. Construction. The
parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties
and no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any of the provisions of this Agreement. The
words “including,” “include” or “includes” shall mean including without
limitation. The parties intend that each representation, warranty and covenant
contained herein shall have independent significance. If any party has breached
any representation, warranty or covenant contained herein in any respect, the
fact that there exists another representation, warranty or covenant relating to
the same subject matter (regardless of the relative levels of specificity)
which the party has not breached shall not detract from or mitigate the fact
that the party is in breach of the first representation, warranty or covenant.

 

10.16. Dispute Resolution. In
the event a dispute arises under this Agreement, except with respect to
equitable remedies pursued under this Agreement, any controversy or claim
arising out of or relating to this Agreement, or the breach thereof, shall be
settled by arbitration administered by the American Arbitration Association
under its Commercial Arbitration Rules except as modified by this Section 10.16
(an “Arbitration”), with any hearing to be conducted in Fort Wayne, Indiana,
subject to the following further provisions:

 

(a)                                  Disputes
Covered. The agreement of the parties to arbitrate covers all
disputes of every kind relating to or arising out of this Agreement, and
related agreement or any of the contemplated transactions. Disputes include
actions for breach of contract with respect to this Agreement or the related
agreement, as well as any claim based upon tort or any other causes of action
relating to the contemplated transactions, such as claims based upon an
allegation of fraud or misrepresentation and claims based upon a federal or
state statute.

 

(b)                                 Selection.
There shall be three arbitrators, unless the parties are able to agree on a
single arbitrator. The parties shall make every reasonable effort to select a
single arbitrator, qualified by professional expertise and experience, to
determine any claim of damages for less than U.S. One Million Dollars. In the
absence of such agreement within ten (10) days after the American Arbitration
Association provides Sellers and Purchaser with a panel of potential commercial
arbitrators available to hear the Arbitration, Sellers shall select one
arbitrator and Purchaser shall select one arbitrator, and those two arbitrators
shall then select, within ten (10) days, a third arbitrator from the commercial
panel of the American Arbitration Association. The decision in writing agreed
to by at least two of the three arbitrators shall be final and binding upon the
parties.

 

(c)                                  Administration.
The Arbitration shall be administered by the American Arbitration
Association.

 

(d)                                 Rules.
The rules of arbitration shall be the Commercial Arbitration Rules of the
American Arbitration Association, as modified by any other instructions that
the parties may agree upon at the time or as set forth within this Section
10.16. The parties shall accept the application of the so-called fast track
rules where applicable.

 

48

 

(e)                                  Substantive
Law. The arbitrators shall be bound by and shall strictly
enforce the terms of this Agreement and may not limit, expand or otherwise
modify its terms. The arbitrators shall make a good faith effort to apply
substantive applicable law, but an arbitration decisions shall not be subject
to review because of errors of law. The arbitrators shall be bound to honor all
claims of privilege or work-product doctrine recognized at law.

 

(f)                                    Decision. The arbitrators’ decision
shall provide a reasoned basis for the resolution of each dispute and for any
award. The arbitrators shall not have power to award damages in connection with
any dispute in excess of damages permitted by this Agreement and shall not
multiply actual damages.

 

(g)                                 Expenses.
Each party shall bear its own fees and expenses with respect to the
Arbitration and any proceeding related thereto and the parties shall share
equally the fees and expenses of the American Arbitration Association and the
arbitrators.

 

(h)                                 Remedies;
Award. The arbitrators shall have power and authority to award
any remedy or judgment that could be awarded by a court of law in Tennessee. The
award rendered by Arbitration shall be final and binding upon the parties, and
judgment upon the award may be entered in any court of competent jurisdiction
in the United States.

 

49

 

IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be executed by duly authorized
representatives as of the day, month and year first above written.

 

 

	
  PURCHASER

  	
  SYMMETRY MEDICAL USA INC.

  
	
   

  	
   

  
	
   

  	
  /s/ Fred L. Hite

  
	
   

  	
  By:

  	
  Fred L. Hite

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  

 

 

	
  SELLERS

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Louis C. Wallace

  
	
   

  	
  Louis C. Wallace

  

 

 

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Charles O. Mann, Jr.

  
	
   

  	
  Charles O. Mann, Jr.

  

 

50

 

DISCLOSURE SCHEDULES

TO THE

PURCHASE AGREEMENT

BY AND AMONG

SYMMETRY MEDICAL USA, INC.

(“PURCHASER”)

AND

LOUIS C. WALLACE

CHARLES O. MANN, JR.

(“SELLERS”)

 

DATED: AUGUST 29, 2007

 

Exhibits

 

Exhibit
A – Earn-Out Agreement

 

Exhibit
B – Real Property Sale and Purchase Agreement

 

Exhibit
C – Escrow Agreement

 

Exhibit
D – Form of Employment Agreement

 

Exhibit
E – Form of Non-Competition Agreement

 

Schedules

 

2.2
- Allocation of Purchase Price

 

3.1
- Organization and Good Standing

 

3.2
(b) - Authority; No Conflict

 

3.3(a)
- Capitalization – SSI

 

3.3(b)
- Capitalization – UCA

 

3.4
- Clear Title

 

3.5
- Condition of Assets

 

3.6
- Legal Proceedings

 

3.7
- Labor Matters

 

3.8
(a) - Tax Returns

 

3.8
(b) - Payment of Taxes

 

3.8
(c) - Other Tax Matters

 

3.9
(a) - Employee Benefit Plans

 

3.9(b)
- Funding and Administration of Employee Benefit Plans

 

3.9
(i) - Employee Benefits – Nonqualified Deferred Compensation Benefit Plans

 

51

 

3.10
- Guarantees

 

3.11
- Financial Statements

 

3.11(d)
- Financial Statements – Prepaid Expenses

 

3.11(e)
- Financial Statements – Inventory Write-Offs

 

3.12
- Absence of Certain Developments

 

3.13
- Intellectual Property

 

3.14
- Compliance with Laws

 

3.15
- Contracts

 

3.16
(a) - Contracts; Compliance

 

3.16(b)
- Contracts; Compliance

 

3.17
(a) - Real Estate – Leased Real Estate

 

3.17
(b) - Real Estate – Deferred Property Taxes/Assessments

 

3.17
(c) - Real Estate – Improvements

 

3.17
(d) - Real Estate – Structures of Adjoining Owners

 

3.18(a)
- Accounts Receivable

 

3.18(b)
- Accounts Receivable

 

3.20
(a) - Employees – SSI and UCA

 

3.20
(b) - Employees – Written Contracts

 

3.21
- Investments

 

3.22
(b) - Insurance – Description

 

3.22
(c) - Insurance – Pending Claims

 

3.24
- Environmental Matters

 

3.25
- Debt

 

3.26
(a) - SSI and UCA Customers

 

3.26
(b) - SSI and UCA Suppliers

 

3.26
(c) - Material Adverse Changes

 

3.27
- Seller Loans

 

3.29
- Related Party Transactions

 

52

 

3.30
- Permits

 

3.31
- Warranty and Product Liability Claims

 

3.32
- Defective Products

 

53

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