Exhibit 10.30

 

ASSET PURCHASE AGREEMENT

 

THIS ASSET PURCHASE AGREEMENT (this “Agreement”) is entered this 22nd day of
February, 2006, between BOEHRINGER INGELHEIM VETMEDICA, INC. a corporation
incorporated under the laws of Delaware (the “Seller”) and KMG BERNUTH, INC., a
corporation incorporated under the laws of Delaware (the “Buyer”). The Buyer and
the Seller are referred to collectively herein as the “Parties.”

 

RECITALS:

 

WHEREAS, this Agreement contemplates a transaction in which the Buyer will
purchase substantially all of the assets of the Seller’s Business and assume
certain of the Liabilities of the Seller in return for the consideration
described below;

 

WHEREAS, the Seller desires to sell, transfer and assign to Buyer, and Buyer
desires to purchase and acquire from Seller, such assets, upon the terms
hereinafter set forth;

 

WHEREAS, the Parties hereto desire to set forth certain agreements made as an
inducement to the execution and delivery of this Agreement;

 

NOW THEREFORE, in consideration of these premises and the agreements herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the Parties, intending to be
legally bound, agree as follows:

 

1—DEFINITIONS.  Unless context otherwise requires, capitalized terms shall have
the meanings ascribed to them in EXHIBIT 1.

 

2—BASIC TRANSACTION.

 

2.1          PURCHASE AND SALE OF ASSETS.  On and subject to the terms of this
Agreement, the Buyer agrees to purchase from the Seller, and the Seller agrees
to sell, transfer, convey, and deliver to the Buyer, all of the Acquired Assets
at the Closing for the consideration specified below in this §2. 
Notwithstanding anything else contained herein, the Acquired Assets shall not
include any of the assets or rights listed and described on EXHIBIT 2.1 (the
“Excluded Assets”).

 

2.2          ASSUMPTION OF LIABILITIES.  On and subject to the terms of this
Agreement, the Buyer agrees to assume and become responsible for all of the
Assumed Liabilities at the Closing.  The Buyer will not assume or have any
responsibility, however, with respect to any other Liability of the Seller not
included within the definition of Assumed Liabilities, including (1) any Tax
Liabilities of Seller (exclusive of Property Taxes); (2) any Liability of Seller
to Employees including Liabilities related to accrued salaries, bonuses,
commissions, vacation or sick day benefits and related payroll taxes (both
employer and employee portions); (3) any Liability of the Seller related to the
operation of the Seller’s Business, or the conditions on the Elwood Property, in
each

 

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instance prior to the Closing Date; (4) any Liability of Seller to pay any
Employee severance or other payments with respect to any Employee terminated by
Seller on or prior to the Closing Date; and (5) any debt or Liability of Seller
to any Persons.

 

2.3          PURCHASE PRICE.  The Buyer agrees to pay to the Seller at Closing,
subject to post-closing adjustment as provided below at §2.4.3, an amount equal
to the sum of (a) Five Million Eight Hundred Fifty Thousand and No/100 Dollars
($5,850,000.00); and (b) the Estimated Net Acquired Inventory (as calculated
pursuant to §2.4.2 below).  The purchase consideration so paid on the Closing
Date shall be referred to as the “Closing Adjusted Purchase Price” and the
purchase consideration as adjusted pursuant to §2.4.3 after the Closing Date
shall be referred to as the “Post-Closing Adjusted Purchase Price”.  The Closing
Adjusted Purchase Price shall be paid in full by wire transfer of immediately
available funds at the Closing.  The Seller shall have provided the Buyer with
wiring instructions for the above payments no later than two days prior to the
Closing.

 

2.4          PURCHASE PRICE ADJUSTMENT.

 

2.4.1       NET ACQUIRED INVENTORY.  The term “Net Acquired Inventory” shall
mean only the book value of the inventory included within the Acquired Assets,
less Accrued Property Taxes.  The Parties acknowledge and agree that the
calculations of the Estimated Net Acquired Inventory and Closing Net Acquired
Inventory shall be based upon the methods and values described on EXHIBIT 2.4
hereto.  As used herein, the term “Property Taxes” means all personal and real
estate taxes, general and special, and all special assessments against the
Acquired Assets (including the Elwood Property) for any period after June 30,
2005.  The term “Accrued Property Taxes” means the Property Taxes accrued for
the period between June 30, 2005 and the Closing Date, based upon the per diem
amounts agreed to by the Parties under the terms of EXHIBIT 2.4 (with the Seller
to pay for the Closing Date).  If Closing shall occur before the tax rate is
fixed for the then current tax year, the apportionment of taxes shall be upon
the basis of the tax rate for the preceding year applied to the latest assessed
valuation of the relevant Acquired Assets.  Buyer shall be responsible for
payment of Property Taxes after the Closing, regardless of whether the Seller is
billed for such Property Taxes.

 

2.4.2       CALCULATION OF CLOSING ADJUSTED PURCHASE PRICE.  The Seller and the
Buyer have mutually agreed that the attached Exhibit 2.4 (a) sets forth the
Seller’s raw materials, work-in-process, and finished goods inventory directly
and solely related to the Seller’s Business (the “Inventory”) that is not
out-of-date or obsolete; (b) establishes the values of each Inventory item for
purposes of this Section 2.4; and (c) includes a written estimate of the value
of the Net Acquired Inventory as of the date of such estimate (the “Estimated
Net Acquired Inventory”).

 

2.4.3       POST-CLOSING ADJUSTMENT.  As soon as is practicable, but in any
event not later than sixty (60) days following the Closing Date, Buyer shall
prepare (with the Seller’s assistance) and cause to be delivered to the Seller a
statement, including all applicable supporting documentation or other materials
reasonably necessary for the Seller to verify the Buyer’s calculation (the
“Closing Statement”) reflecting the Buyer’s

 

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proposed calculation of value of the Net Acquired Inventory as of the Closing
Date (the value of the Net Acquired Inventory as of the Closing Date is herein
referred to as the “Closing Net Acquired Inventory”). The Closing Statement
shall be identical to the written statement of the Estimated Net Acquired
Inventory, except that the Closing Statement shall reflect, (a) with respect to
Inventory, Inventory sold, manufactured, or acquired in the Ordinary Course of
Business or damaged between the date of the Estimated Net Acquired Inventory and
the Closing Date; and, (b) with respect to Accrued Property Taxes, the increase
in Accrued Property Taxes between the date of the Estimated Net Acquired
Inventory and the Closing Date (based upon the per diem amounts included within
EXHIBIT 2.4).

 

2.4.4       ADJUSTMENT DISPUTES.  The Seller shall have thirty (30) days
following receipt of the Closing Statement to review the Buyer’s proposed
calculation of the Closing Net Acquired Inventory and make any objections in
writing to Buyer. If no objection is received from the Seller within such thirty
(30) day time period, the Seller shall be deemed to have accepted Buyer’s
calculation of the Closing Net Acquired Inventory, and such calculations shall
be deemed final. Buyer and the Seller shall use reasonable efforts to reach
agreement on any disputed items or amounts. If Buyer and the Seller are unable
to reach such agreement within twenty (20) days of the Seller’s delivery of a
written objection, they shall promptly thereafter cause a nationally recognized
firm of independent certified public accountants (having no current or
contemplated business relationship to any of the Parties or their respective
Affiliates) chosen by and mutually acceptable to Buyer and the Seller (the
“Accounting Referee”) to review this Agreement and the disputed items or amounts
for the purpose of calculating the final Closing Net Acquired Inventory. The
Accounting Referee shall be authorized only to review and settle the disputed
items identified by the Seller and shall not review, de novo, any items not
disputed by the Seller. The Accounting Referee shall deliver to Buyer and the
Seller, as promptly as practicable, but in no event later than thirty (30) days
after retention of the Accounting Referee, a report setting forth the Accounting
Referee’s calculation of the final Closing Net Acquired Inventory. Such report
shall be final and binding upon the Parties and shall constitute an arbitral
award upon which a judgment may be entered in any court having jurisdiction
thereof. The cost of such review and report shall be borne by the Party whose
calculation of the Closing Net Acquired Inventory was mathematically farthest
from the Accounting Referee’s calculation of the Closing Net Acquired Inventory.

 

2.4.5       PAYMENT OF ADJUSTMENT.  Within three (3) business days following the
final determination of the Closing Net Acquired Inventory, a dollar for dollar
adjustment as provided herein shall be made to the Closing Adjusted Purchase
Price to reflect any difference between the value of the Estimated Net Acquired
Inventory and the Closing Net Acquired Inventory (the amount of such adjustment
shall be referred to as the “Post-Closing Adjustment”): (i) the absolute value
of the difference between the Closing Net Acquired Inventory figure and the
Estimated Net Acquired Inventory figure, plus (ii) simple interest thereon from
the Closing Date through the date of payment at the Applicable Rate. If the
Closing Net Acquired Inventory figure is in excess of the Estimated Net Acquired
Inventory figure, then an amount equal to the Post-Closing Adjustment shall be
payable by the Buyer to the Seller. If the Closing Net Acquired

 

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Inventory figure is less than the Estimated Net Acquired Inventory figure, then
an amount equal to the Post-Closing Adjustment shall be payable directly by the
Seller to the Buyer. The Post-Closing Adjustment shall be payable to the Party
so entitled by wire transfer of immediately available funds within five (5) days
of the final determination of the Closing Net Acquired Inventory. If there is a
Post-Closing Adjustment pursuant to this §2.4, the allocation of the Purchase
Price under §2.7 shall also be adjusted accordingly

 

2.5          THE CLOSING.  The closing of the transactions contemplated by this
Agreement (the “Closing”) shall take place at the offices of the Seller located
at 2621 North Belt Highway, St. Joseph, Missouri, commencing at 9:00 a.m. local
time on the date of this Agreement (the “Closing Date”).

 

2.6          DELIVERIES AT THE CLOSING.  At the Closing, (a) the Seller will
execute, have acknowledged by a notary public (if appropriate), and deliver (or
cause to be delivered) to the Buyer (1) an assignment and assumption agreement
in the form attached hereto as EXHIBIT 2.6(A)(1); (2) a deed in the form of
EXHIBIT 2.6(A)(2); (3) an assignment of intellectual property in the form of
EXHIBIT 2.6(A)(3); (4) a transition services agreement in the form of
EXHIBIT 2.6(A)(4); (5) a warehouse lease agreement in the form of
EXHIBIT 2.6(A)(5); (6) a distribution agreement in the form of
EXHIBIT 2.6(A)(6); (7) a termination and release agreement in the form of
EXHIBIT 2.6(A)(7); (8) a bill of sale in the form of EXHIBIT 2.6(A)(8);
(9) registration transfer agreements for the approval and recordation by the
appropriate Governmental Agency of the transfer of the Registrations that are
part of the Acquired Assets, in a form agreed by the Parties; and (10) all
Technical Records; (b) the Buyer will execute, have acknowledged by a notary
public (if appropriate), and deliver to the Seller counterparts of the documents
referenced above (to the extent that execution by the Buyer is required); and
(c) the Buyer will deliver to the Seller the Closing Adjusted Purchase Price, as
contemplated above.

 

2.7          ALLOCATION.  The Parties have prepared and delivered to one another
an allocation schedule (the “Allocation Schedule”) and agree that the Parties
shall allocate the Purchase Price (and all other capitalizable costs) among the
Acquired Assets for income tax purposes in accordance with the Allocation
Schedule.  The Seller and the Buyer shall cooperate with each other in the
preparation, execution and filing of (a) all information returns and supplements
thereto required to be filed with the Internal Revenue Service by the parties
under Section 1060 of the Code, as amended, and the Treasury Regulations
promulgated thereunder relating to the allocation of the Purchase Price and
(b) all similar filings required to be filed with respect to the transactions
contemplated by this Agreement with the Internal Revenue Service and other
appropriate taxing authorities.  As used herein, the term “Purchase Price” shall
mean the Post-Closing Adjusted Purchase Price, as increased by the amount of
Adverse Consequences actually recovered by the Seller pursuant to §6 and
decreased by the amount of Adverse Consequences actually recovered by the Buyer
pursuant to §6.

 

3—REPRESENTATIONS AND WARRANTIES OF THE SELLER .  The Seller represents and
warrants to the Buyer that the statements contained in this §3 are correct and
complete as of the date of this Agreement except as set forth in the disclosure
schedule accompanying this Agreement (the “Disclosure Schedule”). The Disclosure

 

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Schedule will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this §3.

 

3.1          AUTHORIZATION.  The Seller has full power and authority (including
full corporate power and authority) to execute and deliver this Agreement and to
perform its obligations hereunder.  This Agreement constitutes the valid and
legally binding obligation of the Seller, enforceable in accordance with its
terms.  Without limiting the generality of the foregoing, the Seller’s board of
directors have duly authorized the execution, delivery, and performance of this
Agreement by the Seller.

 

3.2          ORGANIZATION OF THE SELLER.  The Seller is a corporation duly
organized, validly existing, and in good standing under the Laws of the
jurisdiction of its incorporation.

 

3.3          BROKERS’ FEES.  The Seller has no Liability, agreement, commitment,
or obligation, oral or written, to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by this Agreement
for which the Buyer could become liable or obligated.

 

3.4          TAX MATTERS.  The Seller has filed all Tax Returns that it was
required to file and paid all Taxes required to be paid when due and payable.
All such Tax Returns were correct and complete in all material respects.  The
Seller has withheld and paid all Taxes required to have been withheld and paid
in connection with amounts paid or owing to any Employee.

 

3.5          TITLE TO ASSETS.  Except as set forth in §3.5 of the Disclosure
Schedule with respect to Elwood Property, the Seller has good, indefeasible, and
marketable title to all of the Acquired Assets, and as of the Closing Date, the
Acquired Assets will be free and clear of any Security Interest or restriction
on transfer.

 

3.6          NONCONTRAVENTION.

 

3.6.1       NONCONTRAVENTION.  Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in §2.6 above), will
(a) violate any Law or Order to which the Seller is subject or any provision of
the charter or bylaws of the Seller; or (b) result in the creation of any
Security Interest that could attach to any of the Acquired Assets.

 

3.6.2       NOTICES AND CONSENTS.  Except as set forth in §3.6.2 of the
Disclosure Schedule, the Seller does not need to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any Person or
Governmental Authority in order for the Parties to consummate the transactions
contemplated by this Agreement (including the assignments and assumptions
referred to in §2.6 above).

 

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3.7          EMPLOYEE BENEFITS.

 

3.7.1       DETAILS OF PLANS.  To the extent related to the Seller’s Business,
§3.7.1 of the Disclosure Schedule lists each Employee Benefit Plan that the
Seller maintains or to which the Seller contributes or has any obligation to
contribute.

 

(A)           EACH SUCH EMPLOYEE BENEFIT PLAN (AND EACH RELATED TRUST, INSURANCE
CONTRACT, OR FUND) COMPLIES IN FORM AND IN OPERATION IN ALL RESPECTS WITH THE
APPLICABLE REQUIREMENTS OF ERISA, THE CODE, AND OTHER APPLICABLE LAWS AND THE
TERMS OF THE EMPLOYEE BENEFIT PLAN.

 

(B)           EACH SUCH EMPLOYEE BENEFIT PLAN WHICH IS AN EMPLOYEE PENSION
BENEFIT PLAN MEETS THE REQUIREMENTS OF A “QUALIFIED PLAN” UNDER CODE §401(A),
HAS RECEIVED A FAVORABLE DETERMINATION LETTER FROM THE INTERNAL REVENUE SERVICE
THAT IT IS A “QUALIFIED PLAN” WITH RESPECT TO GUST (AS DEFINED IN SECTION 2 OF
REV. PROC. 2002-6), AND THE SELLER HAS NO KNOWLEDGE OF ANY FACTS OR
CIRCUMSTANCES THAT COULD RESULT IN THE REVOCATION OF SUCH DETERMINATION LETTER.

 

(C)           THE SELLER HAS DELIVERED TO THE BUYER CORRECT AND COMPLETE COPIES
OF THE SUMMARY PLAN DESCRIPTIONS FOR EACH SUCH EMPLOYEE BENEFIT PLAN.

 

3.7.2       NATURE OF PLANS.  With respect to each Employee Benefit Plan that
the Seller maintains with respect to the Seller’s Business:

 

(A)           NO EMPLOYEE BENEFIT PLAN IS AN EMPLOYEE BENEFIT PLAN SUBJECT TO
TITLE IV OF ERISA OR CODE §412 NOR A MULTIEMPLOYER PLAN.

 

(B)           NO FIDUCIARY OR ANY OFFICER, DIRECTOR OF THE SELLER HAS ANY
LIABILITY FOR BREACH OF FIDUCIARY DUTY UNDER ERISA OR ANY OTHER FAILURE TO ACT
OR COMPLY IN CONNECTION WITH THE ADMINISTRATION OR INVESTMENT OF THE ASSETS OF
ANY SUCH EMPLOYEE BENEFIT PLAN.  NO FIDUCIARY OR ANY OFFICER, DIRECTOR OF THE
SELLER HAS ENGAGED IN A PROHIBITED TRANSACTION INVOLVING ANY EMPLOYEE BENEFIT
PLAN.

 

(C)           NO PROCEEDING WITH RESPECT TO THE ADMINISTRATION OR THE INVESTMENT
OF THE ASSETS OF ANY SUCH EMPLOYEE BENEFIT PLAN (OTHER THAN ROUTINE CLAIMS FOR
BENEFITS) IS PENDING OR, TO THE KNOWLEDGE OF THE SELLER, THREATENED.

 

(D)           NO EMPLOYEE BENEFIT PLAN IS AN EMPLOYEE WELFARE BENEFIT PLAN
PROVIDING MEDICAL, HEALTH, OR LIFE INSURANCE OR OTHER WELFARE-TYPE BENEFITS FOR
CURRENT OR FUTURE RETIRED OR TERMINATED EMPLOYEES, THEIR SPOUSES, OR THEIR
DEPENDENTS (OTHER THAN IN ACCORDANCE WITH CODE §4980B).  NO EMPLOYEE BENEFIT
PLAN IS OR HAS BEEN A “MULTIPLE EMPLOYER WELFARE PLAN” AS DEFINED IN
ERISA § 3(40)(A).

 

(E)           THERE ARE NO PENDING OR THREATENED CLAIMS BY OR ON BEHALF OF ANY
EMPLOYEE BENEFIT PLAN, BY ANY PERSON COVERED THEREBY (OTHER THAN ORDINARY CLAIMS
FOR BENEFITS SUBMITTED BY PARTICIPANTS OR BENEFICIARIES) OR ANY GOVERNMENTAL
AUTHORITY, AND NEITHER THE SELLER NOR ANY ERISA AFFILIATE, HAS ANY OBLIGATION
UNDER ANY EMPLOYEE

 

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BENEFIT PLAN WITH RESPECT TO WHICH THE BUYER WOULD HAVE ANY LIABILITY OR THAT
COULD RESULT IN A SECURITY INTEREST ATTACHING TO THE ACQUIRED ASSETS.

 

3.8          ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS.

 

3.8.1       COMPLIANCE.  With respect to the Elwood Property, the Seller has
complied and is in compliance with all, and has no Liability relating to any,
Environmental, Health, and Safety Requirements.  No condition exists with
respect to any such real property, the Business or any of the Acquired Assets
which would subject the Seller or the Acquired Assets to any remedial
obligations or other Liability under any Environmental, Health, and Safety
Requirements.

 

3.8.2       ENVIRONMENTAL PERMITS. Except as shown on §3.8.3 of the Disclosure
Schedule, with respect to the Elwood Property, the Seller has obtained, timely
applied for renewal of, and complied with, and is in compliance with, all
permits, licenses and other authorizations that are required pursuant to
Environmental, Health, and Safety Requirements for the occupation of its
facilities and the operation of its business on such property.  A list of all
such permits, licenses and other authorizations is set forth on §3.8.2 of the
Disclosure Schedule.

 

3.8.3       NOTICE OF VIOLATION OR LIABILITY.  Except as shown in §3.8.3 of the
Disclosure Schedule, the Seller has not received any written notice regarding
any violation of, or any Liability under, any Environmental, Health, and Safety
Requirements with respect to the Elwood Property, nor any Liability, including
any investigatory, remedial or corrective obligations, relating to the Elwood
Property and Environmental, Health, and Safety Requirements.

 

3.8.4       PROPERTIES.  Except as shown in §3.8.4 of the Disclosure Schedule,
none of the following exists at the Elwood Property: (1) underground storage
tanks, (2) asbestos-containing material in any form or condition, (3) materials
or equipment containing polychlorinated biphenyls, or (4) landfills, surface
impoundments, pits, sumps, or disposal areas.

 

3.8.5       WASTE. With respect to the Elwood Property, Seller has not treated,
stored, disposed of, or released any hazardous substance, in a manner that has
given or would give rise to Liability, including any Liability for response
costs, corrective action costs, personal injury, property damage, natural
resources damages or attorney fees, pursuant to any Environmental, Health, and
Safety Requirements.

 

3.9          FINANCIAL STATEMENTS.  The Seller has provided the Buyer with the
following financial statements (collectively the “Financial Statements”):
(i) statements of sales and gross margin for the last two fiscal years ended as
of December 31, 2005 for the Seller with respect to the Seller’s Business only;
and (ii) sales and gross margin as of and for the one (1) month ended
January 31, 2006 (the “Most Recent Fiscal Month End”) for the Seller with
respect to the Seller’s Business only.  The Financial Statements for the Most
Recent Fiscal Month End are attached hereto as EXHIBIT 3.9.  The Financial
Statements have been prepared in accordance with the Seller’s accounting
practices,

 

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applied on a consistent basis throughout the periods covered thereby, and
present fairly in all material respects (with respect to the Seller’s Business
only) the results of operations of the Seller for such periods; provided,
however, that the Financial Statements are subject to normal year-end and audit
adjustments, are incomplete by virtue of the fact that they only relate to the
Seller’s Business and sales and gross margin figures, and lack footnotes and
other presentation items.

 

3.10        UNDISCLOSED LIABILITIES.  In connection with the Seller’s Business,
the Seller does not have any Liabilities, except for (i) Assumed Liabilities and
(ii) Liabilities which have arisen in the Ordinary Course of Business (none of
which results from, arises out of, relates to, is in the nature of, or was
caused by any breach of contract, breach of warranty, tort, infringement, or
violation of Law).

 

3.11        EVENTS SUBSEQUENT TO MOST RECENT FISCAL MONTH END.  Since the Most
Recent Fiscal Month End with respect to the Seller’s Business only, there has
not been any material adverse change in the business, financial condition,
operations, or results of operations of the Seller’s Business.

 

3.12        LEGAL COMPLIANCE.  To Seller’s Knowledge with respect to its
Business, (i) the Seller has complied with all applicable Laws and (ii) no
Proceeding or notice has been filed or commenced against Seller alleging any
failure so to comply.

 

3.13        LITIGATION.  With respect to the Seller’s Business, Seller is not
(i) subject to any outstanding Order or (ii) a party or threatened to be made a
party to any Proceeding.

 

3.14        INVENTORY.  All of the finished goods Inventory included within the
Acquired Assets conforms to the specifications and description set forth on the
labels thereof.  The finished goods Inventory will be adequately contained,
packaged, marked, and labeled.

 

3.15        PERMITS AND REGISTRATIONS.  All Permits and Registrations that are
held by the Seller in connection with its Business are listed in §3.15 of the
Disclosure Schedule and are in full force and effect.  §3.15 of the Disclosure
Schedule indicates whether each such Permit and Registration is transferable to
the Buyer and indicates the country in which each Registration is maintained. 
The Permits and Registrations listed in §3.15 of the Disclosure
Schedule collectively constitute all of the material permits necessary for the
Seller to lawfully conduct and operate the Business in the manner in which it
currently conducts and operates the Business and to own, maintain and use the
Acquired Assets in the manner in which it currently owns, maintains and uses
such Acquired Assets.  Except as shown on §3.8.3 of the Disclosure Schedule, to
Seller’s Knowledge, (i) there are no violations of any such Permit or
Registration; and (ii) no Proceeding is pending or threatened to revoke or limit
any such Permit or Registration.

 

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3.16        INTELLECTUAL PROPERTY.

 

3.16.1     LIST OF PROPERTY.  §3.16.1 of the Disclosure Schedule describes all
Intellectual Property owned and used by the Seller solely and directly in the
conduct of its Business.

 

3.16.2     NO INTERFERENCE.  In operating its Business, the Seller has not
received written notice that Seller has interfered with, infringed upon, or
misappropriated any Intellectual Property rights of third parties.  To Seller’s
Knowledge, no third party has interfered with, infringed upon, or
misappropriated any Intellectual Property rights of the Seller related to its
Business.  The Seller has taken all actions reasonably required to maintain the
registrations of the Intellectual Property shown on §3.16.4 of the Disclosure
Schedule, including the appropriate labeling of products and writings that
embody the registered Intellectual Property and reasonable pursuit of
enforcement actions against infringement or threatened infringement of such
Intellectual Property.

 

3.16.3     OWNERSHIP.  The Seller owns all of the Intellectual Property shown on
§3.16.1 of the Disclosure Schedule.  Each item of Intellectual Property so owned
by the Seller will be owned by the Buyer immediately subsequent to the Closing
hereunder.

 

3.16.4     DETAILS.  §3.16.4 of the Disclosure Schedule identifies each
registration which has been issued to Seller with respect to any of its
Intellectual Property used by the Seller solely and directly in connection with
its Business, identifies each pending application for registration which the
Seller has made with respect to any of such Intellectual Property, and
identifies each license, agreement, or other permission which Seller has granted
to any third party with respect to any of such Intellectual Property. The Seller
will deliver at Closing to the Buyer correct and complete copies of all such
registrations, applications, licenses, agreements, and permissions (as amended
to date) and will make available to the Buyer correct and complete copies of all
other written documentation evidencing ownership and prosecution (if applicable)
of each such item. §3.16.4 of the Disclosure Schedule also identifies each trade
name or unregistered trademark used by Seller directly and solely in connection
with its Business.  With respect to each item of Intellectual Property
identified in §3.16.1 of the Disclosure Schedule: (a) the Seller possesses all
right, title, and interest in and to the item, free and clear of any Security
Interest, license, or other restriction; (b) the item is not subject to any
outstanding Order; (c) no Proceeding is pending or to the Knowledge of Seller is
threatened which challenges the legality, validity, enforceability, use, or
ownership of the item; and (d) Seller has not agreed to indemnify any Person for
or against any interference, infringement, misappropriation, or other conflict
with respect to the item.

 

3.17        TANGIBLE ASSETS.  Each of the tangible Acquired Assets is free from
substantial defects, has been maintained in accordance with the Seller’s normal
practice, and is in good operating condition (subject to normal wear and tear). 
The Seller will provide at Closing to the Buyer a full and complete copy of all
maintenance records in its possession for each Acquired Asset.  At Closing,
Seller will deliver a list of the furniture, fixtures, and equipment included
within the Acquired Assets.

 

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3.18        REAL PROPERTY.

 

3.18.1     OWNED REAL PROPERTY.  Except for the Excluded Assets and the Elwood
Property, there is no real property that the Seller owns and uses directly and
solely in connection with its Business. With respect to the Elwood Property:
(a) the Seller has good and marketable title to the parcel of real property,
free and clear of any Security Interest; (b) there are no pending or, to the
Seller’s Knowledge, threatened condemnation Proceedings relating to the property
or other matters affecting adversely the current use, occupancy, or value
thereof; (c) the legal description for the parcel contained in the deed thereof
describes such parcel fully and adequately, the buildings and improvements are
located within the boundary lines of the described parcels of land, are not in
violation of applicable setback requirements, zoning Laws, and ordinances (and
none of the properties or buildings or improvements thereon are subject to
“permitted non-conforming use” or “permitted non-conforming structure”
classifications), and do not encroach on any easement which may burden the land,
the land does not serve any adjoining property for any purpose inconsistent with
the use of the land; (d) there are no leases, subleases, licenses, concessions,
or other agreements granting to any party or parties the right of use or
occupancy of any portion of the parcel of real property; (e) there are no
outstanding options or rights of first refusal to purchase the parcel of real
property, or any portion thereof or interest therein; (f) there are no parties
(other than the Seller) in possession of the parcel of real property; (g) all
facilities located on the parcel of real property are supplied with utilities
and other services necessary for the operation of such facilities, including
gas, electricity, water, telephone, sanitary sewer, and storm sewer; and
(h) each parcel of real property abuts on and has direct vehicular access to a
public road, or has access to a public road via a permanent, irrevocable,
appurtenant easement benefiting the parcel of real property, and access to the
property is provided by paved public right-of-way with adequate curb cuts
available.

 

3.18.2     LEASED PROPERTY.  Since the date of the Brown Lease and except for
the property subject to the Brown Lease, the Seller has not leased any real
property that is used in connection with its Business.

 

3.19        CONTRACTS.

 

3.19.1     TYPES OF CONTRACTS.  §3.19.1 of the Disclosure Schedule lists the
following types of contracts to which the Seller is a party and are solely and
directly related to its Business: (a) any agreement (or group of related
agreements) for the lease of personal property to or from any Person providing
for lease payments in excess of $5,000 per annum; (b) any agreement (or group of
related agreements) for the purchase or sale of raw materials, commodities,
supplies, products, or other personal property, or for the furnishing or receipt
of services, the performance of which will extend over a period of more than 6
months or involve consideration in excess of $5,000; (c) any agreement
concerning confidentiality or noncompetition; (d) any collective bargaining
agreement; (e) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis, or providing severance
benefits; (f) any agreement under which it has advanced or loaned any amount to
any of its employees outside the Ordinary Course of Business; (g) any agreement
with any competitor of the Seller’s Business or

 

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that conducts a business substantially similar to the Business; (h) any
agreement with any third party or Governmental Authority regarding data that is
related to the Registrations; and (i) any agreement with respect to the Elwood
Property that covers maintenance, security, utilities, telecommunications, HVAC
or other facility-related matters.  §3.19.1 of the Disclosure
Schedule identifies, with respect to each contract, whether consent of a third
party for the assignment contemplated under this Agreement, and whether a
guaranty is required to be issued for the obligations of the Buyer following
assignment of such contract to the Buyer.

 

3.19.2     STATUS OF CONTRACTS.  The Seller has delivered to the Buyer a correct
and complete copy of the agreement between Seller and Fort Dodge Australia Pty
Limited listed in §3.19.1(b) of the Disclosure Schedule.  With respect to each
such agreement: (a) the agreement is legal, valid, binding, enforceable, and in
full force and effect; (b) if the agreement is an Assumed Contract, then the
agreement will continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of the
transactions contemplated hereby (including the assignments and assumptions
referred to in §2.6 above); (c) Seller is not in breach or default; and (d) no
party has repudiated in writing any provision of the agreement.

 

3.20        PRODUCT WARRANTY.  Each product manufactured or sold by the Seller
in connection with its Business has been in conformity with all applicable
contractual warranties, and the Seller has no Liability (and there is no Basis
for any present or future Proceeding against Seller giving rise to any
Liability) for replacement or repair thereof or other damages in connection
therewith.  §3.20 of the Disclosure Schedule includes the applicable warranty
provisions of the Seller’s standard terms and conditions of sale for its
Business.

 

3.21        PRODUCT LIABILITY.  In connection with its Business, the Seller has
no Liability (and there is no Basis for any present or future Proceeding against
Seller giving rise to any Liability) arising out of any injury to individuals or
property as a result of the ownership, possession, or use of any product
manufactured or sold by the Seller.

 

3.22        EMPLOYEES.  A list of Seller’s salaried and non-salaried employees
that work primarily in connection with its Business (the “Employees”) has been
provided to the Buyer.  Included within such list was a list of each such
Employee’s (a) current rate of pay; (b) gross compensation paid to such Employee
during the last full calendar year; (c) tenure with the Seller; and (d) job
title or description.  Except for those Employees that are subject to contracts
described in §3.19.1 of the Disclosure Schedule, all of the Employees are
terminable at will.  To the Knowledge of the Seller, no executive, key employee,
or group of employees has any plans to terminate employment with the Seller
prior to the Closing.  In connection with its Business and except as shown on
§3.19.1 of the Disclosure Schedule, the Seller is not a party to nor bound by
any collective bargaining agreement, nor has the Seller experienced any strikes,
grievances, claims of unfair labor practices, or other collective bargaining
disputes.  The Seller has not committed any unfair labor practice. To the
Seller’s Knowledge, there is no organizational effort presently being made or
threatened by or on behalf of any labor union with respect to employees of the
Seller.

 

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3.23        IMMIGRATION MATTERS.  Seller has no Employees for whom it currently
has petitions or applications for immigration benefits pending with the INS or
DOL.  The Seller has maintained appropriate immigration forms (i.e., forms I-9)
on all Employees to which such requirements apply, and has no reason to believe
that any of the information set forth thereon is inaccurate.

 

3.24        NO OTHER REPRESENTATIONS.  Except as expressly set forth in this §3,
the Seller makes no representation or warranty, express or implied, at law or in
equity, in respect of any of its assets (including, without limitation, the
Acquired Assets), Liabilities or operations, including, without limitation, with
respect to merchantability or fitness for any particular purpose, and any such
other representations or warranties are hereby expressly disclaimed.  Buyer
hereby acknowledges and agrees that, except to the extent specifically set forth
in this §3, the Buyer is purchasing the Acquired Assets on an “as-is, where-is”
basis.

 

4—REPRESENTATIONS AND WARRANTIES OF BUYER.  Buyer represents and warrants to the
Seller that the statements contained in this §4 are correct and complete as of
the date of this Agreement.

 

4.1          ORGANIZATION OF THE BUYER.  The Buyer is a corporation duly
organized, validly existing, and in good standing under the Laws of the
jurisdiction of its incorporation.

 

4.2          AUTHORIZATION OF TRANSACTION.  The Buyer has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder.  This Agreement
constitutes the valid and legally binding obligation of the Buyer, enforceable
in accordance with its terms.

 

4.3          NONCONTRAVENTION.  To the Knowledge of the Buyer, neither the
execution and the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will violate any Law or Order to which the
Buyer is subject or any provision of the charter or bylaws of the Buyer.

 

4.4          BROKERS’ FEES.  The Buyer has no Liability, agreement, commitment,
or obligation, oral or written, to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by this Agreement
for which the Seller could become liable or obligated.

 

5—COVENANTS.  The Parties agree as follows with respect to the period between
the execution of this Agreement and the Closing.

 

5.1          NOTICE OF ASSUMED CONTRACTS.  §5.1 of the Disclosure Schedule sets
forth a list of agreements listed on §3.19.1 of the Disclosure Schedule that the
Buyer intends to assume (the “Assumed Contracts”).

 

5.2          SALES TAXES.  Buyer and Seller each agree to deliver to the other
Party (or to such Governmental Authority as the other Party reasonable directs)
any form of

 

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document that may be required or reasonably requested in order to obtain an
exemption with respect to any federal, state, local or other, sales, use or
other transfer taxes that may otherwise be required to be paid on the transfer
of the Acquired Assets or that may otherwise be due with respect to such
transfer, promptly upon the earlier of (i) reasonable demand by the other Party
or (ii) learning that such form or document is required.  The Seller has
determined that there are no real estate transfer taxes that apply to the
transactions contemplated by this Agreement.  Except for real estate transfer
taxes, the Buyer shall be responsible for all fees and Taxes payable in order to
transfer title to any vehicles, trailers, or other Acquired Assets the ownership
of which is evidenced by a certificate of title.  The Buyer and the Seller shall
each be severally responsible for other taxes that are properly assessable
against them in connection with the transactions contemplated by this Agreement.

 

5.3          BULK SALES.  Buyer hereby agrees to waive compliance by Seller with
the provisions of any applicable bulk sales Law; provided, however, that Seller
agrees to pay and discharge when due or to contest or litigate all claims of
creditors which are asserted against Buyer or the Acquired Assets by reason of
such noncompliance (other than with respect to the Assumed Liabilities), to
indemnify, defend and hold harmless Buyer from and against any and all such
claims in the manner provided in §6.2.2 hereof, and to take promptly all
necessary action to remove any Security Interest which is placed on the Acquired
Assets by reason of such noncompliance.

 

5.4          OBLIGATIONS CONCERNING EMPLOYEES.

 

5.4.1       NOTICE TO EMPLOYEES.  Seller has notified all of its salaried and
non-salaried Employees of the transactions contemplated hereby.  Buyer has
provided the Employees with notice with respect to Buyer’s hiring procedures.

 

5.4.2       INTERVIEWS.  Before the Closing Date, Buyer has had the right upon
reasonable notice to Seller during normal business hours and without undue
disruption of the operation of the Seller’s business, to interview the Employees
and otherwise conduct hiring procedures with regard to its possible hiring of
the Employees.  On or before the Closing Date, Buyer represents that it has
extended written offers of employment to all of the Employees, at base rates of
pay and on terms of employment substantially similar to those pursuant to which
the Employees are employed by the Seller.  The Buyer has provided the Seller
with a written list of the Employees and represents that the Employees shown on
such list have accepted such offers of employment from the Buyer (such
Employees, the “Transferred Employees”).  Seller shall comply with all
provisions of federal and state Law (including COBRA) relating to the
continuation of health insurance benefits for terminated Employees.

 

5.4.3       NON-SOLICITATION OF EMPLOYEES.  Whether for the Seller’s own account
or the account of any other person (a) at any time during the sixty months
following the Closing Date, solicit for a position as an employee, independent
contractor, or otherwise, Sharlene M. Parry, at any time when she is then an
employee of the Buyer (or any of its Affiliates) or in any manner induce or
attempt to induce her to terminate her employment with the Buyer (or any of its
Affiliates); or (b) at any time during the twelve

 

13

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months following the Closing Date, solicit for a position as an employee,
independent contractor, or otherwise, any Transferred Employee, at any time when
such a Transferred Employee is then an employee of the Buyer (or any of its
Affiliates) or in any manner induce or attempt to induce such Transferred
Employee to terminate his or her employment with the Buyer (or any of its
Affiliates).

 

5.4.4       COMPLIANCE WITH LAW.  In connection with the foregoing and the
transactions contemplated hereby, the Seller agrees to provide any required
notice under the Worker Adjustment and Retraining Act of 1988, as amended, or
any similar federal or state Law, and to otherwise comply with any such statute
with respect to any “plant closing” or “mass layoff” (as defined in such act or
similar applicable legal requirements) or similar event affecting the Employees.

 

5.5          GENERAL.  In case at any time after the Closing any further action
is necessary or desirable to carry out the purposes of this Agreement, the
Parties will take such further action (including the execution and delivery of
such further instruments and documents) as any other Party may request, all at
the sole cost and expense of the requesting Party (unless the requesting Party
is entitled to indemnification therefor under §6 below), provided, however, that
no Party shall charge the other Party for internal expenses (such as copies,
faxes, telephone calls, employee time, and in-house counsel charges).

 

5.6          CONFIDENTIALITY.  The Seller will treat and hold as such all of the
Confidential Information, refrain from using any of the Confidential Information
except in connection with this Agreement, and deliver promptly to the Buyer or
destroy, at the request and option of the Buyer, all Confidential Information in
possession or control of Seller.  If the Seller is requested or required (by
oral question or request for information or documents in any legal Proceeding)
to disclose any Confidential Information, the Seller shall be permitted to so
disclose the Confidential Information, but shall notify the Buyer of the request
or requirement so that the Buyer may seek an appropriate protective Order or
waive compliance with the provisions of this §5.6.  This obligation shall
survive the Closing for a period of twenty-four months.

 

5.7          RESTRICTIVE COVENANTS.

 

5.7.1       NON-COMPETE.  For the period between the Closing Date and the fifth
(5th) anniversary thereof (such anniversary, the “Termination Date”), neither
the Seller nor any of its Affiliates shall, directly or indirectly own, engage
in, manage, operate, control, finance or participate in the ownership,
management, operation, control or financing of, or permit its or its Affiliates’
names to be used by or in connection with the Business within the United States
of America, and each other country in which the Seller maintains Registrations,
as shown on §3.15 of the Disclosure Schedule (collectively, the “Restricted
Area”).

 

(A)           THE OWNERSHIP BY THE SELLER OR ITS AFFILIATES OF LESS THAN 5% OF
THE OUTSTANDING STOCK OF ANY PUBLICLY TRADED CORPORATION SHALL BE DEEMED NOT TO
VIOLATE THE TERMS OF THIS §5.7.1.

 

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(B)           NOTWITHSTANDING ANYTHING ELSE CONTAINED HEREIN, IF BY VIRTUE OF AN
ACQUISITION, MERGER, CONSOLIDATION, AMALGAMATION, OR EQUITY PURCHASE (AN
“ACQUISITION”), THE SELLER WOULD BE CONDUCTING BUSINESS IN VIOLATION OF THIS
§5.7.1, THE SELLER MAY UNILATERALLY ELECT TO TERMINATE ITS OBLIGATIONS UNDER
THIS §5.7.1 WITH RESPECT TO SUCH BUSINESS OUTSIDE OF THE UNITED STATES, BUT
WITHIN THE RESTRICTED AREA, BY DELIVERING A WRITTEN NOTICE TO THE BUYER
IDENTIFYING SUCH BUSINESS (THE “TERMINATION NOTICE”), ALONG WITH A PAYMENT TO
BUYER, IN CASH, IN AN AMOUNT EQUAL TO THE TERMINATION PAYMENT. FOLLOWING THE
BUYER’S RECEIPT OF SUCH NOTICE AND THE TERMINATION PAYMENT, THE SELLER AND ITS
AFFILIATES SHALL BE PERMITTED TO CONTINUE THE BUSINESS IDENTIFIED IN THE
TERMINATION NOTICE WITHIN THE RESTRICTED AREA, EXCLUDING THE UNITED STATES,
NOTWITHSTANDING THE PROVISIONS OF THIS §5.7.1. AS USED HEREIN, THE TERM
“TERMINATION PAYMENT” MEANS AN AMOUNT EQUAL TO FIVE HUNDRED THOUSAND AND NO/100
DOLLARS ($500,000.00) AS OF THE CLOSING DATE, WITH SUCH AMOUNT TO BE REDUCED BY
ONE HUNDRED THOUSAND AND NO/100 DOLLARS ($100,000.00) ON EACH ANNIVERSARY OF THE
CLOSING DATE.

 

(C)           UPON PROVIDING FIFTEEN (15) DAYS PRIOR WRITTEN NOTICE TO THE BUYER
SPECIFYING THE DATE UPON WHICH EITHER THE SELLER OR ITS AFFILIATES WILL AS A
RESULT OF AN ACQUISITION ENGAGE IN THE BUSINESS, THE SELLER SHALL BE PERMITTED
TO ENGAGE IN THE BUSINESS ANYWHERE WITHIN THE RESTRICTED AREA, WITHOUT PAYMENT
TO THE BUYER AND WITHOUT VIOLATION OF THIS §5.7.1, FOR A PERIOD OF ONE HUNDRED
EIGHTY (180) DAYS FROM THE DATE SPECIFIED IN SUCH NOTICE.

 

5.7.2       PROCEDURES.  If the final judgment of a court of competent
jurisdiction declares that any term or provision of this §5.7 is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed. The period of time applicable to any
covenant in this §5.7 will be extended by the duration of any violation of such
covenant.

 

5.8          SATISFACTION OF LIABILITIES.  The Buyer shall have no
responsibility and the Seller shall be solely responsible for the satisfaction
of all Liabilities of the Seller (other than the Assumed Liabilities); provided,
however, that such satisfaction may occur in the Ordinary Course of Business;
and, provided, further, that the Seller shall have no obligation, as a result of
this Agreement, to satisfy any Liability that the Seller is disputing in good
faith.  The Seller shall have no responsibility and the Buyer shall be solely
responsible for the satisfaction of all Assumed Liabilities and Liabilities of
the Business arising after the Closing Date; provided, however, that such
satisfaction may occur in the Ordinary Course of Business; and, provided,
further, that the Buyer shall have no obligation, as a result of this Agreement,
to satisfy any Liability that the Buyer is disputing in good faith.

 

5.9          INSPECTION OF RECORDS.  Each Party shall retain and make its books
and records available for inspection by the any other Party, or by its duly
authorized

 

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representatives, for reasonable business purposes at reasonable times during
normal business hours, for a two (2) year period after the Closing Date, with
respect to all transactions relating to the Closing and the Acquired Assets;
provided, however, that the execution of a confidentiality agreement may be a
pre-condition to the examination of any such records.

 

5.10        PAYMENTS RECEIVED.  The Buyer is not acquiring any receivables of
the Seller, whether related to its Business or otherwise.  The Buyer agrees that
after the Closing the Buyer will hold and will promptly, but in any event within
10 days, transfer and deliver to the Seller, from time to time as and when
received by Buyer, any cash, checks with appropriate endorsements (using the
Buyer’s best efforts not to convert such checks into cash), or other property
that Buyer may receive on or after the Closing which properly belongs to the
Seller, including any account payments which belong to Seller, and will account
to the Seller for all such receipts.

 

5.11        EMPLOYEE REPORTING.  Each Party shall be responsible for filing
Forms W-2 with respect to wages paid by it during the 2006 taxable year to
Transferred Employees in accordance with the “Standard Procedures” in IRS
Revenue Procedure 96-60, 1996-2 C.B. 399.

 

5.12        INVENTORY LICENSE.

 

5.12.1     .DEFINITIONS.  The following terms shall have the meanings ascribed
to them in this Section 5.12.1:

 

(A)           BUYER PRODUCT.  MEANS PRODUCTS OF THE TYPE DESCRIBED BY THE
RELEVANT LABEL STOCK (EXCLUSIVE OF FINISHED GOODS), TO WHICH LABEL STOCK WILL BE
AFFIXED AFTER THE CLOSING.

 

(B)           FINISHED GOODS.  MEANS ALL OF THE INVENTORY THAT REQUIRED NO
ADDITIONAL PROCESSING, PACKAGING, OR LABELING AT THE TIME THEY WERE SOLD TO THE
BUYER UNDER THIS AGREEMENT.

 

(C)           LABEL STOCK.  MEANS ANY OF THE LABELING INCLUDED WITHIN THE
INVENTORY, TO THE EXTENT THAT SUCH LABELS (A) HAVE NOT BEEN PERMANENTLY AFFIXED
TO FINISHED GOODS; AND (B) BEAR SELLER’S TRADEMARKS.

 

(D)           SELLER’S TRADEMARKS.  MEANS THE SELLER’S TRADEMARKS, TRADENAMES,
AND LOGOS SHOWN OR LISTED ON SECTION 5.12.1(D) OF THE DISCLOSURE SCHEDULE.

 

(E)           TERM.  MEANS THE PERIOD BETWEEN THE CLOSING DATE AND THE EARLIER
OF (1) DECEMBER 31, 2006, OR (2) THE EXHAUSTION OF THE LABEL STOCK.

 

5.12.2     BUYER PRODUCT.  Buyer warrants that the Buyer Products shall conform
to the specifications and description on the Label Stock affixed thereto.  The
Buyer Products will be adequately contained, packaged, marked, and labeled.  The
Label Stock affixed to any Buyer Product shall be permanently affixed and
thereafter, the Buyer shall neither alter, deface, or tamper with, nor permit
the deterioration of, the Buyer

 

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Products or their respective labels or appearances.  Buyer shall store Buyer
Products in accordance with the requirements on the labels thereto.  Buyer shall
not sell the Buyer Products after their respective expiration dates.  Buyer
shall not add any additional markings, designations, or labels to the Buyer
Products, except as required by applicable Law.

 

5.12.3     FINISHED GOODS.  Buyer shall store Finished Goods in accordance with
the requirements on the labels thereto.   Buyer shall neither alter, deface, or
tamper with, nor permit the deterioration of, the Finished Goods or their
respective labels or appearances.  Buyer shall not sell the Finished Goods after
their respective expiration dates.  Buyer shall not add any additional markings,
designations, or labels to the Finished Goods, except as required by applicable
Law.

 

5.12.4     SELLER’S TRADEMARKS.  The Buyer shall use the Seller’s Trademarks
only in strict accord with the terms of this Section 5.12.4.  During the Term
and within the Restricted Area, Seller hereby grants to Buyer, subject to and in
compliance with all other terms and conditions of this Section 5.12, a
royalty-free, irrevocable, non-exclusive license to use Seller’s Trademarks,
solely in connection with the sale and exhaustion of Finished Goods and the
exhaustion of the Label Stock as applied to Buyer Products and only in
accordance with the quality standards set by, and under the control of, Seller. 
Buyer acknowledges the ownership of the Seller’s Trademarks by Seller and agrees
that it will do nothing inconsistent with such ownership, and that all use of
the Seller’s Trademarks and all goodwill developed therefrom shall inure to the
benefit of and be on behalf of Seller.  Buyer agrees that nothing in this
Section 5.12 shall give the Buyer any right, title, or interest in the Seller’s
Trademarks other than the right to use such Trademarks in accordance with this
Section 5.12.  Buyer agrees that it will not attack the title of the Seller to
the Seller’s Trademarks or attack the validity of this clause.  Buyer is
prohibited from entering into any sublicenses with respect to the Seller’s
Trademarks.  Buyer shall be permitted to produce additional Label Stock with the
Seller’s Trademarks upon Seller’s prior written consent, not to be unreasonably
withheld.

 

6—REMEDIES FOR BREACHES OF THIS AGREEMENT.

 

6.1          SURVIVAL OF REPRESENTATIONS AND WARRANTIES.  The representations
and warranties of the Seller contained in §§3.1 through 3.5 of this Agreement
shall survive the Closing and continue in full force and effect until the
expiration of the applicable statute of limitations.  The representations and
warranties of the Buyer contained in this Agreement shall survive the Closing
and continue in full force and effect until the expiration of the applicable
statute of limitations.  All of the representations and warranties of the Seller
contained in §3.8 this Agreement shall survive the Closing and continue in full
force and effect for a period thereafter of seven (7) years.  All of the
representations and warranties of the Seller not specifically described above
shall survive the Closing and continue in full force and effect for a period
thereafter of twenty four (24) months.

 

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6.2          INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE BUYER.

 

6.2.1       BREACH OF AGREEMENT.  If Seller breaches any of its representations,
warranties, and covenants contained in this Agreement, and, if there is an
applicable survival period pursuant §6.1 above, provided that the Buyer makes a
written claim for indemnification against the Seller pursuant to §7.6 below
within such survival period, then the Seller agrees to indemnify and hold the
Buyer harmless from and against any Adverse Consequences the Buyer shall suffer
through and after the date of the claim for indemnification caused proximately
by the breach.

 

6.2.2       LIABILITIES.  Seller agrees to indemnify the Buyer from and against
any Adverse Consequences the Buyer shall suffer caused proximately by any
Liability of the Seller (including any Liability of the Seller that becomes a
Liability of the Buyer under any bulk transfer Law of any jurisdiction, under
any common law doctrine of de facto merger or successor liability, under
Environmental, Health, and Safety Requirements, or otherwise by operation of
Law), to the extent such Liability is not an Assumed Liability.

 

6.3          INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE SELLER.

 

6.3.1       BREACH OF AGREEMENT.  If Buyer breaches any of its representations,
warranties, and covenants contained in this Agreement, and, if there is an
applicable survival period pursuant §6.1 above, provided that the Seller makes a
written claim for indemnification against the Buyer pursuant to §7.6 below
within such survival period, then the Buyer agrees to indemnify and hold the
Seller harmless from and against any Adverse Consequences the Seller shall
suffer through and after the date of the claim for indemnification caused
proximately by the breach.

 

6.3.2       ASSUMED LIABILITIES.  Buyer agrees to indemnify the Seller from and
against any Adverse Consequences the Seller shall suffer caused proximately by
any Assumed Liability or any Liability of the Buyer related to the operation of
the Business after the Closing Date.

 

6.4          LIMITATIONS.  The following limitations apply to any claims made
under this §6:

 

(A)           NO INDEMNIFYING PARTY SHALL HAVE ANY RESPONSIBILITY UNDER §§6.2.1
OR 6.3.1, UNTIL THE INDEMNIFIED PARTY SHALL HAVE SUFFERED ADVERSE CONSEQUENCES
FOR WHICH RECOVERY IS POSSIBLE UNDER §§6.2.1 OR 6.3.1 IN EXCESS OF $100,000.00,
AS AN AGGREGATE DEDUCTIBLE (AFTER WHICH POINT THE INDEMNIFYING PARTY WILL BE
OBLIGATED ONLY TO INDEMNIFY THE INDEMNIFIED PARTY FROM AND AGAINST FURTHER SUCH
DAMAGES).

 

(B)           NO INDEMNIFYING PARTY SHALL HAVE ANY RESPONSIBILITY UNDER §§6.2.1
OR 6.3.1 IN AN AGGREGATE AMOUNT IN EXCESS OF TWO MILLION NINE HUNDRED
TWENTY-FIVE THOUSAND AND NO/100 ($2,925,000.00), AS AN AGGREGATE CEILING (AFTER
WHICH POINT THE INDEMNIFYING PARTY SHALL HAVE NO FURTHER OBLIGATION UNDER
§§6.2.1 OR 6.3.1).

 

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(C)           SUBJECT TO §6.5.2, NO INDEMNIFYING PARTY SHALL BE RESPONSIBLE FOR
INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL (INCLUDING LOST PROFITS), OR
PUNITIVE DAMAGES.

 

(D)           IN CALCULATING ADVERSE CONSEQUENCES UNDER THIS §6, THE PARTIES
SHALL MAKE APPROPRIATE ADJUSTMENTS FOR TAX BENEFITS AND INSURANCE COVERAGE AND
TAKE INTO ACCOUNT THE TIME COST OF MONEY (USING THE APPLICABLE RATE AS THE
DISCOUNT RATE).  NO INDEMNIFYING PARTY SHALL HAVE RESPONSIBILITY FOR ADVERSE
CONSEQUENCES THAT COULD HAVE REASONABLY BEEN MITIGATED BY THE INDEMNIFIED PARTY.

 

6.5          MATTERS INVOLVING THIRD PARTIES.

 

6.5.1       THIRD PARTY CLAIMS.  If any third party shall notify any Party (the
“Indemnified Party”) with respect to any matter (a “Third Party Claim”) which
may give rise to a claim for indemnification against any other Party (the
“Indemnifying Party”) under this §6, then the Indemnified Party shall promptly
(and in any event within ten business days after receiving notice of the Third
Party Claim) notify the Indemnifying Party thereof in writing; provided,
however, that any failure to timely deliver such notice shall not limit the
Indemnified Party’s right under this §6, unless, and then only to the extent,
that the Indemnifying Party is prejudiced thereby.

 

6.5.2       INDEMNIFYING PARTY.  The Indemnifying Party will have the right at
any time to assume and thereafter conduct the defense of the Third Party Claim
with counsel of its choice; provided, however, that the Indemnifying Party will
not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably) unless the judgment or
proposed settlement involves only the payment of money damages and does not
impose an injunction or other equitable relief upon the Indemnified Party.  With
respect to any Third Party Claim, the Indemnifying Party shall be responsible
for any indirect, special, incidental, consequential (including lost profits),
or punitive damages paid or payable (by reason of settlement or final court
order) to the Person holding such Third Party Claim, notwithstanding the
provisions of §6.4(c).  For so long as the Indemnifying Party assumes the
defense of a Third Party Claim in accordance with this §6.5.2, the Indemnified
Party will not consent to the entry of any judgment or enter into any settlement
with respect to such Third Party Claim without the prior written consent of the
Indemnifying Party (not to be unreasonably withheld).

 

6.5.3       INDEMNIFIED PARTY.  Unless and until an Indemnifying Party assumes
the defense of the Third Party Claim as provided above, however, the Indemnified
Party may defend against, compromise, or settle the Third Party Claim in any
manner the Indemnified Party reasonably may deem appropriate.

 

6.5.4       COOPERATION.  The Parties will reasonably cooperate in defense and
keep each other fully informed as to the status of Third Party Claims and
Proceedings.

 

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6.6          EXCLUSIVE REMEDY.  The Parties acknowledge and agree that the
foregoing indemnification provisions in this §6 shall be the exclusive remedy of
the Parties with respect to the Acquired Assets, Assumed Liabilities, the sale
of the Business, and the transactions contemplated by this Agreement (exclusive
of remedies provided in connection with the purchase price adjustment under §2.4
and in connection with those agreements described in Exhibits 2.6(a)(4),
2.6(a)(5), and 2.6(a)(6) and the Confidentiality Agreement described in §7.2,
which shall be governed by their respective terms).  Without limiting the
generality of the foregoing, the Buyer understands and agrees that its right to
indemnification under §6.2.1 for breach of the representations and warranties
contained in §3.8 shall constitute its sole and exclusive remedy against the
Seller with respect to any environmental, health, or safety matter relating to
the past, current or future facilities, properties or operations of its Business
and all of its predecessors or Affiliates, including without limitation any such
matter arising under any Environmental, Health, and Safety Requirements. Aside
from such right to indemnification, the Buyer hereby waives any right, whether
arising at law or in equity, to seek contribution, cost recovery, damages, or
any other recourse or remedy from the Seller, and hereby releases the Seller
from any claim, demand or liability, with respect to any such environmental,
health, or safety matter (including without limitation any arising under any
Environmental, Health, and Safety Requirements).

 

7—MISCELLANEOUS.

 

7.1          NO THIRD-PARTY BENEFICIARIES.  This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.  Without limiting the generality of the
foregoing, this Agreement shall not confer upon any Employee or Transferred
Employee the right to employment with any Party.

 

7.2          ENTIRE AGREEMENT.  This Agreement (including the documents referred
to herein) constitutes the entire agreement between the Parties and supersedes
any prior understandings, agreements, or representations by or between the
Parties, written or oral, to the extent they related in any way to the subject
matter hereof.  That certain Confidentiality Agreement, dated January 5, 2006,
between the Buyer and the Seller shall remain in full force and effect;
provided, however, that Buyer shall have no further obligation thereunder with
respect to any Acquired Assets.

 

7.3          SUCCESSION AND ASSIGNMENT.  This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Party; provided, however, that the Buyer may (i) assign
any or all of its rights and interests hereunder to one or more of its
Affiliates and (ii) designate one or more of its Affiliates to perform its
obligations hereunder (in any or all of which cases the Buyer nonetheless shall
remain responsible for the performance of all of its obligations hereunder).  In
furtherance of the foregoing, the Seller will, at the Buyer’s request, execute
such other documents as may be necessary to transfer all or a portion of the
Acquired Assets to the Buyer’s Affiliate at Closing.

 

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7.4          COUNTERPARTS.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.  Delivery of an executed
counterpart signature page by fax shall be considered delivery of an original
counterpart.

 

7.5          HEADINGS.  The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.

 

7.6          NOTICES.  All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:

 

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IF TO BUYER:

 

IF TO SELLER:

 

 

 

BOEHRINGER INGELHEIM

 

KMG BERNUTH, INC.

 

 

VETMEDICA, INC.

 

10611 HARWIN, SUITE 402
HOUSTON, TEXAS 77036
ATTENTION: CFO
FACSIMILE: (713) 988-9298

 

 

2621 NORTH BELT HIGHWAY
ST. JOSEPH, MO 64506-2002
ATTN: JIM KROMAN
FAX: (816) 233-3487

 

 

 

COPY TO:

 

COPY TO:

 

ROGER C. JACKSON, ESQ.
GENERAL COUNSEL
KMG CHEMICALS, INC.
10611 HARWIN, SUITE 402
HOUSTON, TEXAS 77036
FACSIMILE: (713) 988-9298

 

 

ARMSTRONG TEASDALE LLP
ONE METROPOLITAN SQUARE
SUITE 2600
ST. LOUIS, MISSOURI 63102-2740
ATTN: MARK L. STONEMAN
FAX: 314-612-2353

 

Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.

 

7.7          GOVERNING LAW.  This Agreement shall be governed by and construed
in accordance with the domestic Laws of the State of Missouri without giving
effect to any choice or conflict of Law provision or rule that would cause the
application of the Laws of any jurisdiction other than the State of Missouri,
except with respect to the transfer of any real property, in which case the laws
of the State of Kansas shall apply.

 

7.8          AMENDMENTS AND WAIVERS.  No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Parties. No waiver by any Party of any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.

 

7.9          SEVERABILITY.  Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.

 

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7.10        EXPENSES.  Each of the Parties will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby.  Notwithstanding the foregoing, the
Seller will pay all amounts payable to the Title Insurer in respect of the title
commitments, copies of exceptions referenced on such commitment and search fees,
which may be satisfied by updating the title commitment issued to the Seller in
2005.  Buyer shall pay all premiums for title insurance (including any premiums
due for endorsements).

 

7.11        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. Any reference to any federal, state, local, or
foreign statute or Law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word “including” shall mean including without limitation.

 

7.12        INCORPORATION OF EXHIBITS AND SCHEDULES.  The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.

 

7.13        TIME OF THE ESSENCE.  Time is of the essence of this Agreement.  If
any date herein set forth for the performance of any obligations by any Party
for the delivery of any instrument or notice as herein provided should be on a
Saturday, Sunday or legal holiday, the compliance with such obligations or
delivery shall be deemed acceptable on the next business day following such
Saturday, Sunday or legal holiday.  As used herein, the term “legal holiday”
means any state or federal holiday for which financial institutions or post
offices are generally closed in the State of Missouri for observance thereof.

 

7.14        SUBMISSION TO JURISDICTION.  Each of the Parties submits to the
jurisdiction of any state court sitting in Buchanan County, Missouri, or any
federal court with jurisdiction over the matter in the Western District of
Missouri in any Proceeding arising out of or relating to this Agreement and
agrees that all claims in respect of any such Proceeding may be heard and
determined in any such court.  Each Party also agrees not to bring any
Proceeding arising out of or relating to this Agreement in any other court. 
Each of the Parties waives any defense of inconvenient forum to the maintenance
of any Proceeding so brought and waives any bond, surety, or other security that
might be required of any other Party with respect thereto. Either Party may make
service on the other Party by sending or delivering a copy of the process to the
Party to be served at the address and in the manner provided for the giving of
notices in §7.6 above. Nothing in this §7.14, however, shall affect the right of
either Party to serve legal process in any other manner permitted by Law or in
equity. Each Party agrees that a final judgment in any Proceeding so brought
shall be conclusive and may be enforced by suit on the judgment or in any other
manner provided by Law or in equity.

 

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[THE REMAINDER OF THIS PAGE HAS INTENTIONALLY BEEN LEFT BLANK.  SIGNATURE
PAGE FOLLOWS.]

 

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In Witness Whereof, the undersigned have entered into this Agreement as of the
date and year first written above.

 

THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION
WHICH MAY BE ENFORCED BY THE PARTIES.

 

 

BUYER

KMG BERNUTH, INC.

 

 

By:

/s/ J. Neal Butler

 

Printed Name: J. Neal Butler

Title: President & Chief Operating Officer

 

 

SELLER

Boehringer Ingelheim Vetmedica, Inc.

 

 

By:

/s/ David J. Roberts

 

Printed Name: David J. Roberts

Title: Vice President Finance, Treasurer, and Asst. Secretary

 

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