Exhibit 10.01
 
Asset Purchase Agreement

 
This Asset Purchase Agreement (the “Agreement”) is made  this 29th day of
December 2009, by and between  Nutrition 21, Inc., a New York corporation,
(“Nutrition 21”) ( the “Seller”)) and Nature’s Products, Inc.,  a Florida
corporation (“Buyer”).
 
Whereas, Seller conduct a business that sells finished and packaged end-products
to retailers for ultimate sale to end users without further fabrication or
packaging (the “Business”)
 
WHEREAS, Nutrition 21 also conducts (i) a business that sells raw materials,
formulations, compounds, blends, and bulk and other materials, whether or not
encapsulated, to third party non-end users to be further fabricated, blended or
packaged for ultimate sale to end users with or without prescriptions; and (ii)
a “consumer business” which sells finished and packaged nutritional supplement
end-products directly to end users by direct response under the name Iceland
Health, neither of which businesses are included in the Business; and
 
WHEREAS, subject to the terms and conditions hereof, Seller desires to sell,
transfer and assign to Buyer, and Buyer desires to purchase from Seller, certain
of the properties, rights and assets used or held for use in connection with the
Business.
 
Now therefore, in consideration of the mutual covenants and agreement herein
contained, the parties hereto agree as follow:
 
ARTICLE 1
PURCHASE AND SALE OF ASSETS.
 
1.1          Sale of Assets.  Upon the terms and subject to the conditions set
forth in this Agreement, and the performance by the parties hereto of their
respective obligations hereunder, Seller agrees to sell, assign, transfer and
deliver to Buyer, free and clear of all Liens, and Buyer agrees to purchase from
Seller, all of Seller’s right, title and interest in and to all assets of the
Business wherever located, including the following rights, interests, properties
and assets, but subject to the exclusions hereinafter expressly set forth:
 
(a)           All inventory owned by Seller as of the Closing Date relating to
the Business and listed as “Included Inventory” in the Working Capital
Adjustment Schedule that is Exhibit 1.5 attached hereto, and inclusive of all
components, packaging materials and bulk utilized in the production of the
Business, but exclusive, of Inventory listed in Exhibit 1.5 as “Excluded
Inventory” (the inventory being sold hereunder being collectively referred to as
the “Inventory”);Seller;
 
 
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(b)           All accounts receivable exclusive, however, of accounts receivable
listed on the Working Capital Adjustment Schedule that is an attachment to
Exhibit 1.5 attached hereto(“Excluded Receivables”); the receivables being sold
hereunder being collectively referred to as the “Receivables”);
 
(bb)    The contracts of Seller with third parties that are listed on Schedule
1.1(bb) attached hereto (the “Assigned Contracts”);
 
(c)           All Intellectual Property (as defined below) owned or utilized by
Seller in the operation of the Business, all as set forth on Schedule 1.1(c)
attached hereto.  For purposes hereof, the term “Intellectual Property”
includes:  (i) all trade names and all trade logos, slogans, Internet domain
names, registered and unregistered trademarks and service marks and applications
(collectively “Marks”); (ii) all copyrights in both published and unpublished
works, including, without limitation, all compilations, databases and computer
programs, sales and marketing materials,  and all copyright registrations and
applications (collectively, “Copyrights”); (iii) a patent license in the form of
Exhibit 6.4(d) (the “Patent License”) in respect of certain patents and patent
applications owned by Seller (collectively, “Patents”), it being understood that
certain other Patents used in the Business that are not owned by Seller shall
also be licensed to Buyer as provided elsewhere herein; (iv) all know-how, trade
secrets, formulae, products under development, confidential or proprietary
information, customer and supplier lists of the Business, (collectively, “Trade
Secrets”); (v) all Internet web-sites and addresses (“IP Addresses”), all domain
name registrations and reservations, web-site content and underlying software
(collectively, “Websites”); and (vi) all goodwill, franchises, licenses,
permits, consents, approvals, technical information, and claims of infringement
against third parties (the “Rights”);
 
(d)           All of the goodwill of Seller in, and the going concern value of,
the Business, and all of the business assets associated therewith, including
customer and supplier lists, sales and marketing materials including, without
limitation, all commercials, film and statistical marketing reports and results,
catalogs, proprietary information, and trade secrets related to the Business
(Exhibit 1.1(d) contains a list of marketing materials of the Business that are
not owned by the Seller);
 
(e)           All of the equipment used in the operation of the Business,
including, without limitation, the items listed on Exhibit 1.1(e);
 
(f)           All of the Seller’s revenue producing contracts related to the
Business, including, without limitation, those listed on Exhibit 1.1 (f); and
 
(g)           The telephone and facsimile numbers, e-mail addresses, restrictive
covenants, licenses, computer software, customer lists, manufacturer, vendor and
supplier lists, operating guides and manuals, financial and accounting records,
creative materials, advertising and marketing  materials and data, promotional
materials, studies, reports, correspondence and other similar documents and
records.
 
 
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The assets, properties and business of Seller being sold to and purchased by
Buyer under and as identified in this Section 1.1 are referred to herein
collectively as the “Assets.”
 
1.2          Excluded Assets.  In addition to the Excluded Inventory and the
Excluded Receivables, there shall also be excluded from the Assets and retained
by Seller (i) to the extent in existence on the Closing Date, cash, cash
equivalents, (ii) barter agreements with Active International and Icon
International, Inc.; (iii) deposits related to credit card processing; and (iv)
all patents. All assets that are excluded from the Assets are collectively
referred to as “Excluded Assets”).
 
1.3          Liabilities; Excluded Liabilities; Employees.
 
(a)          Assumption of Liabilities.  The Buyer shall assume (i) the Seller’s
trade accounts payable for the Business as of the Closing, specifically
excluding  payables which are subject to litigation against the Seller, (ii)
present and future obligations of Seller under the Assigned Contracts, (iii) and
any existing or future claims by retailers for returns and allowances, charge
backs, "unsalables" and promotional allowances, or equivalent deductions or
charges however called,  whether known on unknown and (iv) any future product
liability claims in respect of any Product  sold by Buyer after Closing
excluding sale of Seller’s existing Inventory sold and delivered to Buyer
hereunder (collectively “Assumed Liabilities”). Other than the Assumed
Liabilities, Buyer does not and shall not accept or assume, and shall have no
liability or responsibility for or with respect to any liability or obligation
of the Seller (“Excluded Liabilities.”).  The term Excluded Liabilities means,
except for the Assumed Liabilities, (i) any and all liabilities or obligations
arising out of Seller’s ownership of the Assets or Seller’s operation of the
Business; and (ii) any and all other obligations and liabilities of Seller of
any nature whatsoever at any time existing, arising or asserted, whether, known,
unknown, fixed, contingent or otherwise, including, without limitation, for
vacation pay, sick pay and holiday pay with respect to the Employees (as defined
below), patent claims against Seller related to the sale by Seller of any
product  that is a combination of glucosamine and fish oil, and for any
obligations, “earn-out” or notes of Seller associated with the Seller’s
acquisition of the Business.
 
(b)          Excluded Liabilities.  It is expressly understood that,
notwithstanding anything herein to the contrary, Buyer shall not assume, pay or
be liable for any of the Excluded Liabilities, all of which shall be retained,
and remain the responsibility and obligation of Seller.
 
(c)          Employees, Wages and Benefits.
 
Buyer shall have no obligation to offer employment to any persons who, as of the
Closing Date, are employed in the operation of the Business or otherwise by
Seller.  Buyer shall not be obligated under and hereby specifically disclaims
any assumption of any liability with respect to any employee benefit plan
policy, plant closing obligation, practice or agreement including but not
limited to group health, post-retirement medical or life insurance benefits,
severance benefits, qualified retirement plans, non-qualified plans to which
Seller are parties or under which any of Seller’s employees or former employees
is covered, all of which are included in Excluded Liabilities.
 
 
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1.4          The Closing.  The transactions contemplated by this Agreement shall
take place at a closing (the “Closing”) to be held at 2:00 p.m., local time, at
the offices of Buyer’s counsel, on December 29, 2009 (the “Closing Date”) or at
such other time as shall be agreed by Seller and Buyer.
 
1.5          Purchase Price  In consideration of the sale by the Seller to Buyer
of the Assets, and subject to the satisfaction of the terms and conditions
contained herein, Buyer shall pay Seller $1,000,000, plus or minus any
adjustment to be made at Closing in accordance with Exhibit 1.5 hereto (the
“Purchase Price”), which Purchase Price is payable by wire transfer on the
Closing Date.
 
1.6          Debt Satisfaction.  With respect to the following matters (the
“Debt”), on or before the Closing:
 
(a)           Except for the Assumed Liabilities, all secured and unsecured
liabilities and obligations of Seller affecting the Assets or the Business shall
have been fully satisfied, paid and extinguished by Seller and Seller shall have
provided to Buyer satisfactory evidence thereof (with the exception of the
“earn-out” or notes of Seller associated with the Seller’s acquisition of the
Business, trade payables that are the subject of litigation or good faith
dispute, and other liabilities and obligations not to exceed $25,000);
 
(b)           Seller shall have fully satisfied all Taxes accrued and due and
payable by Seller that affect the Assets or the Business;
 
(c)           Seller shall have provided to Buyer satisfactory evidence that any
and all Liens affecting the Assets and Business have been released, terminated
and extinguished on or before the Closing Date. No advertising obligation shall
be due in connection with the telephone numbers or web addresses of the
Business.
 
1.7          Purchase Price Allocation.  The Buyer and Seller agree that the
Buyer shall supply to the Seller the allocation of the Purchase Price within 30
days of Closing.  Such allocation shall be binding upon Buyer and Seller for all
purposes.  Buyer and Seller each further agree to file their Federal income tax
returns and other tax returns reflecting such allocation, Form 8594 and any
other reports required by Section 1060 of the Code.
 
1.8          Further Assurances.  Seller from time to time after the Closing at
the request of Buyer and without further consideration, shall execute and
deliver further instruments of transfer and assignment and take such other
action as Buyer may reasonably require to more effectively transfer and assign
to, and vest in, Buyer the Assets free and clear of all Liens (as defined
hereinafter).
 
 
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1.9           Sales and Transfer Taxes.  All sales, transfer, use, recordation,
documentary, stamp, excise taxes, personal property taxes, fees and duties,
(including any real estate transfer taxes) under applicable law incurred in
connection with this Agreement or the transactions contemplated thereby will be
borne and paid by Seller, and Seller shall promptly reimburse Buyer for the
payment of any such tax, fee or duty which Buyer is required to make under
applicable law.
 
1.10 Access to Original Records.
 
After the Closing, at reasonable times and on reasonable notice, Seller shall
have access to the books and records pertaining to operations of the Business
prior to the Closing, and Buyer shall retain such books and records, for a
period of three years after the Closing, and prior to disposing of such records
shall offer to deliver them to Seller.
 
1.11 Matters Relating to Excluded Receivables
 
Seller agree that until the 180th day after the Closing they will not contact
any obligor to collect an Excluded Receivable, and Buyer shall forward to Seller
all payments received thereon. Should Buyer generate any new receivables after
the Closing from any obligor, payments from that obligor shall be applied to
receivables from that obligor based on the indication of the obligor on or
accompanying the payment.
 
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER
 
In order to induce Buyer to enter into this Agreement, Seller hereby makes the
following representations and warranties to Buyer subject to exceptions that are
fully disclosed on schedules attached hereto (collectively, the
“Schedules”).  For the purposes of this Agreement, a “Material Adverse Effect”
means an unfavorable or harmful effect upon the assets, properties, business
prospects, condition (financial or other) or results of operations of the
Business which is material in magnitude, nature or other respects.
 
2.1           Organization; Subsidiaries.  Seller is duly qualified to do
business in the State of New York.  Seller has the full power and authority,
corporate or otherwise, to own or lease its properties and to conduct its
business in the manner and in the places where such properties are owned or
leased or such business is currently conducted or proposed to be conducted.
Seller does not own any equitable or ownership interest in any other
business.  Seller is not required to be authorized to do business in any State
other than New York, Ohio, Maine, Indiana and Pennsylvania, except to the extent
that the failure to qualify will not materially affect Seller or the Business.
 
2.2           Required Action.  All actions and proceedings necessary to be
taken by or on the part of Seller in connection with the transactions
contemplated by this Agreement have been, or by the Closing will have been, duly
and validly taken, and this Agreement and each other agreement, document and
instrument to be executed and delivered by or on behalf of Seller pursuant to,
or as contemplated by, this Agreement (collectively, the “Seller Document(s)”)
has been, or by the Closing will have been, duly and validly authorized,
executed and delivered by Seller and no other action on the part of Seller is
required in connection therewith.  Seller has full right, authority, power and
capacity to execute and deliver this Agreement and each other Seller Document
and to carry out the transactions contemplated hereby and thereby.  This
Agreement and each other Seller Document constitutes, or when executed and
delivered will constitute, the legal, valid and binding obligation of Seller
enforceable in accordance with its respective terms.
 
 
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2.3           No Conflicts.  The execution, delivery and performance by Seller
of this Agreement and each other Seller Document does not and will not (i)
violate any provision of its Certificate of Incorporation, as amended to date,
or the bylaws or any agreement among shareholders , (ii) constitute a violation
of, or conflict with or result in any breach of, acceleration of any obligation
under, right of termination under, or default under, any agreement or instrument
to which it is a party or by which it  or the Assets are bound, (iii) violate
any judgment, decree, order, statute, rule or regulation applicable to Seller,
or the Assets, (iv) require Seller  to obtain any approval, consent or waiver
of, or to make any filing with, any person or entity (governmental or otherwise)
that has not been obtained or made, or (v) result in the creation or imposition
of any and all mortgages, pledges, security interests, claims, charges, liens,
assessments, restrictions on or conditions to transfer or assignment and
encumbrances or restrictions of any kind whatsoever (individually, a “Lien” and
collectively, “Liens”) on any of the Assets.  The signatories who execute this
Agreement and the other Seller Documents contemplated hereby on behalf of Seller
have and shall have all requisite power to do so in the name of and on behalf of
Seller.
 
2.4           Taxes.  Seller has properly filed all federal, state and local tax
returns and estimates required to be filed by the Seller for any and all
federal, state, foreign, or local income, property, sales, use ad valorem,
license, business, excise, franchise, employment, withholding, worker’s
compensation or other taxes, fees or assessments (together with interest
additions and penalties) (the “Taxes”).  All Taxes which are due and payable by
the Seller, or which will become due and payable by the Seller prior to or after
the Closing Date, have been, or will be, paid in full in a timely manner.  No
issues have been raised in writing by, and are currently pending with, any
taxing authority in connection with any such returns.  Seller have never been
part of an “affiliated group” or a party to an allocation or sharing agreement
for Tax purposes.
 
2.5           Compliance with Laws.  Seller have operated the Business, and
presently Seller’s operation of the Business is, in compliance in all material
respects with, and Seller are responsible for no act or omission which
reasonably could be expected to result in material liability under, any and all
applicable statutes, ordinances, orders, rules and regulations promulgated by
any federal, state, municipal or other governmental authority (collectively,
“Laws”), and Seller has not received notices of violations or alleged violations
of any such Laws.  Seller has not received any information to indicate that any
of its policies or practices are being audited or investigated by any
government.  Seller are not bound by any order, decree or judgment or similar
administrative government arrangement which may have a Material Adverse Effect.
 
 
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2.6           Contracts.  Schedule 2.6 attached hereto contains a true, correct
and complete list of all  leases, contracts, agreements and arrangements,
whether oral or written, (the “Contracts”) (and a description of each oral
Contract, if any), and Seller has provided Buyer with true and complete copies
of all written Contracts related to the Business.  Neither the Seller nor, to
the knowledge of the Seller,  any other party is in default or in arrears in
performance under any Contract, nor does any condition exist that with notice or
lapse of time or both would constitute such a default, and no waiver or
indulgence has been granted by any party under any Contract.  Seller has not
received notice of, and Seller has no knowledge of, any fact which would result
in a termination, repudiation or breach of any Contract.  Seller has not entered
into any other agreement or arrangement with any other party with respect to the
sale, transfer or any other disposition of the Business or the Assets, in whole
or in part.  Seller is not subject to or bound by any agreement which may have a
Material Adverse Effect.
 
2.7           Title.  Seller has good and marketable title to all of the Assets
free and clear of all Liens.  Except for the Excluded Assets, the Assets include
all of the assets and properties (i) held for use by Seller to conduct the
Business as presently conducted; (ii) necessary for Buyer to operate the
Business in the same manner as such business is currently operated by Seller;
and all data related to the Business that is housed with or serviced by a third
party vendor.  All of the tangible Assets have been well maintained and are in
good condition, and comply in all material respects with applicable laws,
ordinances and regulations. Seller warrants to Buyer that, at the time of
Closing, all Assets shall be free and clear of all any charge, claim, community
or other marital property interest, condition, equitable interest, lien, option,
pledge, security interest, mortgage, right of way, easement, encroachment,
building or use restriction, servitude, conditional sales agreement, right of
first option, right of first refusal or similar restriction, encumbrance or
right of third parties, whether voluntarily or by operation of law, and
includes, without limitation, any agreement to give any of the foregoing in the
future, and any contingent sale or other title retention agreement or lease in
the nature thereof.
 
2.8           No Litigation.  Seller is not involved in nor, to the knowledge of
Seller, is Seller threatened to be involved in any litigation or legal or other
proceedings related to or affecting the Business or any Asset or which would
prevent or hinder the consummation of the transactions contemplated by this
Agreement.  Seller has not been operating the Business under, and the Business
is not subject to, any order, injunction or decree of any federal, state or
municipal court or other governmental agency.
 
2.9           Employee; Labor Matters.  Seller is not delinquent in payment to
any of its employees for any wages, salaries, commissions, bonuses or other
direct compensation for any services performed for it to the date hereof or
amounts required to be reimbursed to such employees.  Neither the termination of
the employment of any of said employees, nor the consummation of the
transactions contemplated hereby will result in any liability to any of said
employees for any bonus, accrued sick, vacation or holiday severance or other
compensation payments.  There are no charges of employment discrimination or
unfair labor practices threatened against or involving Seller.  No collective
bargaining agreement exists and no question concerning representation exists,
respecting any group of employees of Seller.

 
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2.10        Financial Statements.  Included in Schedule 2.10 attached hereto are
copies of the: (1) unaudited balance sheet of Seller as of September 30, 2009
(the “Base Balance Sheet”), (2) the unaudited statement of income and expense
and statement of retained earnings of Seller for the period July 1 to September
30, 2009, (3) the audited Comparative Balance Sheet of Seller as of June 30 of
2007 and 2008, (collectively the “Financial Statements”).  The Financial
Statements have been prepared in accordance with GAAP and Seller’s historical
accounting practices during the periods covered thereby, and present fairly and
accurately the financial condition of the Business, as combined with the
business described in clause (ii) of the second Whereas clause at the head of
this Agreement, at the dates of said balance sheets and the results of
operations of the Business as so combined for the periods covered by such
Statements of Income and Expenses.   Seller had no liabilities or obligations of
any kind with respect to the Business, whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), that are not disclosed and adequately reserved against on the Base Balance
Sheet, except that the representation as to  any future claims by retailers for
returns and allowances, charge backs, "unsalables" and promotional allowances,
or equivalent deductions or charges however called related to the sale of
Products by Seller, is made only to the knowledge of Seller.
 
2.11        Business Since the Base Balance Sheet Date.  Since the Base Balance
Sheet Date, there has been no material adverse change, material obligation in
liability incurred by Seller or with respect to the Business or the Assets,
operations or financial condition of the Business; and the Business has been
conducted in the ordinary course of business and in substantially the same
manner as it was conducted before the date of the Base Balance Sheet.
 
2.12         Approvals; Consents.  No approval, consent, authorization permit,
license or exemption from or filing with any government agency or any person or
entity not a party to this Agreement is required to be obtained or made by
Seller in connection with the execution and delivery of this Agreement and the
Seller Documents and the consummation of the transactions contemplated hereby
and thereby.
 
2.13        Customers and Suppliers; Warranties.  Seller’s relations with its
customers and suppliers are good and there are not pending or, to Seller’s
knowledge, threatened claims or controversies with any customer or suppliers
that are material to the Assets or the Business or reasonably can be deemed to
pose a risk of resulting in a Material Adverse Effect.  The products of the
Business have the warranties listed on Schedule 2.13 hereto. Also set forth on
Schedule 2.13 hereto is, to the best knowledge of Seller, a list of existing or
future claims by retailers for returns and allowances, charge backs,
"unsalables" and promotional allowances, or equivalent deductions or charges of
any nature.
 
2.14        Inventory.  The Inventory is merchantable and fit for the purpose
for which it was procured or manufactured and none of which is damaged, or
defective. No material supplier of the Seller has indicated any intention to not
continue its business relations with Seller or Buyer as a result of the
transaction contemplated hereby or otherwise.
 
 
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2.15        Brokers.  Other than Nature’s Equity, LLC, Seller has not retained,
nor are Seller aware of, any broker or finder or other person who would have any
valid claim against any of the parties to this Agreement for a commission or
brokerage fee in connection with this Agreement or the transactions contemplated
hereby. The fee of Nature’s Equity is the sole responsibility of the Seller.
 
2.16        Intellectual Property.
 
(a)           Identity of Intellectual Property. Schedule 1.1(c) attached hereto
sets forth all Intellectual Property of Seller which is or has been utilized in
the operation of the Business.
 
(b)           Title to Intellectual Property.  Seller has exclusive ownership
of, and have good, valid and marketable title or interest as a licensee in and
to, all of the Intellectual Property, free and clear of any Liens, and have the
right to use, license, transfer, distribute and bring infringement actions with
respect to all of the Intellectual Property without payment to any third
party.  Seller has not licensed or granted any rights in the Intellectual
Property and Seller’s rights in all of such Intellectual Property are freely
transferable.  There are no claims or demands pending or, to the knowledge of
Seller, threatened by any other person pertaining to any of such Intellectual
Property and no proceedings have been instituted or are pending or, to the
knowledge of Seller, threatened against Seller and/or its officers, employees
and consultants which challenge the validity and enforceability of Seller’s
rights in respect of the Intellectual Property.  The use of the Intellectual
Property in the Business has not infringed and currently does not infringe (and,
following Closing, Buyer will be able to continue to use the Intellectual
Property in the same manner as heretofore used by Seller without infringing) on
the proprietary rights of any third party, and Seller has not received any
notice or allegation of infringement.  The Patents, Marks and Copyrights are
currently in compliance with formal legal requirements (including without
limitations payment of filing, examination and maintenance fees and proofs of
working or use), are valid and enforceable, and are not subject to any
maintenance fees, taxes or actions falling due within ninety (90) days after the
Closing Date.  In each case where a Patent, Mark or Copyright is held by Seller
by assignment, the assignment has been duly recorded with the appropriate
governmental authority and all other jurisdictions of registration.  No Patent
has been or is now involved in any interference, reissue, re-examination or
opposition proceeding.  There is no potentially interfering Patent of any third
party.  Any products made, used or sold under the Patents have been marked with
the proper patent notice.  No Mark has been or is now involved in any
opposition, invalidation or cancellation proceeding and, to the knowledge of
Seller, no such actions are threatened with respect to any of the Marks.  All
products and materials containing a Mark bear the proper notice where permitted
by law.  All copies of works encompassed by the Copyrights have been marked with
the proper copyright notice.
 
 
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2.17        Absence of Certain Business Practices.   Neither Seller nor any
present officer, employee or agent of Seller nor any other person or entity
acting on their behalf, including to the best knowledge of the Seller any past
officer of the Seller, has, directly or indirectly, during the ownership of the
Business or Assets given or agreed to give any gift or similar benefit to any
customer, supplier, governmental employee or other Person who is or may be in a
position to help or hinder the Business (or assist Seller in connection with any
actual or proposed transaction relating to the Business) which (a) if not given
in the past, might have had a material and adverse effect on the assets,
business or operations of the Seller as reflected in the Financial Statements,
or (b) if not continued in the future, might materially and adversely affect the
Seller’s assets, business, operations or prospects or which might subject
Seller  to suit or penalty in any private or governmental litigation or
proceedings.
 
2.18        Disclosure   The representations, warranties and statements
contained in this Agreement and in the certificates, exhibits, and Schedules
delivered by Seller to Buyer pursuant to this Agreement do not contain any
untrue statement of a material fact, and, when taken together, do not omit to
state a material fact required to be stated therein or necessary in order to
make such representations, warranties or statements not materially misleading in
light of the circumstances under which they were made.  There are no facts known
to Seller about the Business or Assets which presently or would in the future
have a Material Adverse Effect which have not been specifically disclosed herein
or in a Schedule furnished.
 
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER.
 
As a material inducement to Seller entering into this Agreement, Buyer hereby
represents and warrants to Seller as follows:
 
3.1           Organization.  Buyer is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware.  Buyer has all requisite power and authority to conduct its business
as it is now conducted and to own, lease and operate its properties and assets.
 
3.2           Required Actions.  All actions and proceedings necessary to be
taken by or on the part of Buyer in connection with the transactions
contemplated by this Agreement have been duly and validly taken, and this
Agreement and each other agreement, document and instrument to be executed and
delivered by or on behalf of Buyer pursuant to, or as contemplated by, this
Agreement (collectively, the “Buyer Documents”) has been, or by the Closing Date
will have been, duly and validly authorized, executed and delivered by
Buyer.  Buyer has full right, authority, power and capacity to execute and
deliver this Agreement and each other Buyer Document and to carry out the
transactions contemplated hereby and thereby.  This Agreement and each other
Buyer Document constitutes, or when executed and delivered will constitute, the
legal, valid and binding obligation of Buyer enforceable in accordance with its
respective terms.
 
 
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3.3           No Conflicts.  The execution, delivery and performance by Buyer of
this Agreement and each other Buyer Document does not and will not (a) violate
any provision of the Articles of Incorporation of Buyer, as amended to date, (b)
constitute a violation of, or conflict with or result in any breach or,
acceleration of any obligation under, right of termination under, or default
under, any agreement or instrument to which Buyer is a party of by which it is
bound, (c) violate any judgment, decree, order, statute, rule or regulation
applicable to Buyer, (d) require Buyer to obtain any approval, consent or waiver
of, or to make any filing with, any person or entity (governmental or otherwise)
that has not been obtained or made.  The officers who execute this Agreement and
the other Buyer Documents contemplated hereby on behalf of Buyer have and shall
have all requisite power to do so in the name of and on behalf of Buyer.
 
3.4          No Litigation.  
 
Buyer is not now involved in nor, to the knowledge of Buyer, is Buyer threatened
to be involved in any litigation or legal or other proceedings which would
prevent or hinder the consummation of the transactions contemplated by this
Agreement.  Buyer is not operating under and is not subject to, any order,
injunction or decree of any federal, state or municipal court or other
governmental agency.
 
3.5          Brokers.  
 
Buyer has not retained, nor is Buyer aware of, any broker or finder or other
person who would have any valid claim against any of the parties to this
Agreement for a commission or brokerage fee in connection with this Agreement or
the transactions contemplated hereby.
 
3.6          Disclosure.
 
The representations, warranties and statements contained in this Agreement and
in the certificates, exhibits, and Schedules delivered by Buyer to Seller
pursuant to this Agreement do not contain any untrue statement of a material
fact, and, when taken together, do not omit to state a material fact required to
be stated therein or necessary in order to make such representations, warranties
or statements not materially misleading in light of the circumstances under
which they were made.
 
ARTICLE 4
COVENANTS OF SELLER.
 
Seller covenants and agrees that, from the date hereof until consummation of the
transactions contemplated hereby at the Closing (and thereafter, as specified
below), Seller shall comply with the following provisions.
 
4.1          Access to Premises and Records.  Commencing on the date hereof and
thereafter prior to the Closing, Seller (a) shall give Buyer and its
representatives, free access to Seller’s employees and other representatives
(including accountants and other professional consultants)  and,  (b)  shall
give Buyer and its representatives, free access to the properties, books and
records of Seller, the Business and with respect to the Assets, and (c) will
furnish to Buyer and its representatives such information regarding Seller, the
Business and the Assets as Buyer or its representatives may from time to time
reasonably request in order that Buyer may have full opportunity to make a
diligent investigation.
 
 
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4.2          Continuity and Maintenance of Operations of the Business.  Except
as to actions which Buyer has been advised and to which Buyer has consented to
in writing, and except as specifically permitted or required by this Agreement,
Seller shall (a) operate the Business in the ordinary course consistent with
past practices, use its commercially reasonable efforts to keep available the
services of the employees who are involved in the operation of the Business, and
use best efforts to preserve any beneficial business relationships with
customers, suppliers and others having business dealings with Seller relating to
the Business, (b) use and operate the Assets in a manner consistent with past
practice and maintain the Assets in good operating condition, ordinary wear and
tear excepted; and (c) refrain from taking or allowing to be taken any action
which would interfere with consummation of the transactions contemplated
hereunder or which would diminish the value of the Assets or the Business.
 
4.3          Consents.  Prior to Closing, Seller shall obtain, as soon as
practicable and at their expense, the consent of all third parties required to
transfer the Assets to Buyer.  Such consents shall be in form and substance
reasonably satisfactory to Buyer.
 
4.4           Notification of Certain Matters.  Seller shall promptly notify
Buyer of (i) any fact, event, circumstances or action the existence or
occurrence of which would cause any of Seller’s representations or warranties
under this Agreement, or the disclosures in any Schedules or exhibits attached
hereto, not to be true in any material respect, (or if it had existed or
occurred prior to the date of this Agreement, would have caused the same not to
be true in any material respect); (ii) any failure on Seller’s part to comply
with or satisfy in any material respect any covenant, condition or agreement to
be complied with or satisfied by it under this Agreement;  (iii) anything which,
if not corrected prior to the Closing Date, would prevent Seller from fulfilling
any condition to Closing described in ARTICLE 6 hereof; and (iv) any planned
material changes, including, without limitation, any increase in customary
levels of inventory. Should Buyer proceed to Closing despite the matters
disclosed in such notice, Seller shall not be obligated to indemnify Buyer
therefor.
 
4.5           No Solicitation.  Until the earlier of the Closing and the
termination of this Agreement as provided herein, Seller shall refrain, and
Seller shall cause its officers, employees, stockholders, directors, agents and
representatives and all other employees who perform services with respect to the
operation of the Business to refrain, from soliciting or engaging in any
discussions with any person relating to the possible sale of the Assets or
Business (or any material portion thereof) or the capital stock of Seller or the
merger, consolidation or joint venture of Seller or the Business.  During the
period aforesaid, Seller shall promptly inform Buyer of any inquiries or
proposals regarding the same and shall provide all pertinent documentation
related thereto.
 
4.6           Cooperation.  Seller shall use its best efforts to take all steps
necessary or appropriate in order to carry out the intent of this Agreement and
consummate the transactions contemplated hereby and shall cooperate with all
requests of Buyer and its counsel in connection with Buyer’s due diligence
investigation of the Business and Assets.
 
 
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ARTICLE 5
COVENANTS OF BUYER.
 
Buyer covenants and agrees that, from the date hereof until consummation of the
transactions contemplated hereby at the Closing, Buyer shall:
 
5.1          Cooperation.  Buyer shall use its reasonable best efforts to take
all steps necessary or appropriate in order to carry out the intent of this
Agreement and consummate the transactions contemplated hereby.
 
5.2          Notification of Certain Matters
 
  Buyer shall promptly notify Seller of (i) any fact, event, circumstances or
action the existence or occurrence of which would cause any of Buyer’s
representations or warranties under this Agreement not to be true in any
material respect, (or if it had existed or occurred prior to the date of this
Agreement, would have caused the same not to be true in any material respect);
(ii) any failure on Buyer’s part to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied by
it under this Agreement, or (iii) anything which, if not corrected prior to the
Closing Date, would prevent Buyer from fulfilling any condition to Closing
described in ARTICLE 7 hereof.
 
ARTICLE 6
CONDITIONS PRECEDENT TO OBLIGATION OF BUYER.
 
Buyer’s obligation to consummate the transactions contemplated by this Agreement
is subject to the satisfaction, on or prior to the Closing Date, of each of the
following conditions, unless otherwise waived by Buyer in writing:
 
6.1          Accuracy of Representations and Warranties.  The representations
and warranties of Seller contained in this Agreement shall be true and correct
in all material respects as of the Closing Date with the same effect as though
made at such time and the representations and warranties of Seller contained in
this Agreement which are qualified by materiality shall be true and correct in
all respects as of the Closing Date with the same effect as though made at such
time.
 
6.2          Performance of Agreements and Deliveries.  Seller shall have
performed in all material respects all of its covenants, agreements and
obligations under this Agreement which are to be performed or complied with by
Seller prior to or upon the Closing Date and shall have delivered all documents
and items required to be delivered at or prior to the Closing, including,
without limitation:
 
(a)           A certificate, dated the Closing Date, from the President of IH
and Nutrition 21 to the effect that the conditions set forth in this ARTICLE 6
have been satisfied and Seller have performed all covenants which it is
obligated to perform prior to Closing;
 
 
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(b)           A certificate, dated the Closing Date, from the Secretary of IH
and Nutrition 21 as to the good standing of the Seller, and the authority and
the incumbency of all officers executing the Seller Documents on behalf of
Seller;
 
(c)           an opinion of Folger & Folger, dated the Closing Date, in the form
reasonably acceptable to the Buyer;
 
(d)           Buyer and Seller shall have executed a Noncompetition Agreement in
a form reasonably acceptable to Buyer, which shall include a restriction period
of four years, and Buyer shall have been assigned certain non-competition and
confidentiality agreements between the Seller and each of Mark Stenberg and
Arnold Blair;
 
(e)           A long form Certificate of Good Standing for each of IH and
Nutrition 21 issued by the state of their formation dated no earlier than 15
days prior to Closing;
 
(f)            An Escrow Agreement in a form acceptable to Buyer providing for
the escrow of $100,000.001  in respect of any future claim (an “Escrow Claim”)
by the holder of Patent 5,843,919 on glucosamine and fish oil combinations (the
“ Subject Patent”) that Buyer is liable to the holder of the Subject Patent
because Seller infringed the Subject Patent prior to the Closing. Each of Buyer
and Seller agree to instruct the escrow agent in writing (with a copy of the
other party) to promptly release: (a) to Buyer all amounts necessary to satisfy
Seller’s indemnification to Buyer in respect of any Escrow Claim; and (b) to
Seller all amounts remaining in escrow after any Escrow Claim (i) has been
settled by agreement with the holder of the Subject Patent, or (ii) has been
determined by the final and non-appealable judgment of a court. The Escrow
Agreement shall also direct the escrow agent to release to Seller all amounts
that remain in escrow on the second anniversary of the Closing. The escrow is
not available to fund any other claim or claims by Buyer against Seller, whether
for indemnification under this Agreement or otherwise. Regardless of any such
other claim or claims, amounts shall be released from escrow as provided above
and only as provided above, and Buyer shall be entitled to proceed against
Seller for such other claim or claims only by separate action as if there were
no amounts in escrow;
 
(g)           An Assignment and Assumption Agreement in a form acceptable to
Buyer and Seller; and
 
(h)           Such other certificates, instruments, actions and deliveries
reasonably requested by Buyer.
 

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1
The $100,000 escrow is in respect of Escrow Claims under this Agreement as well
as the asset purchase agreement related to the transaction referenced in
Sections 6.8 and 7.5 hereof. The total escrow amount is $100,000.00 and is to be
available with respect to an Escrow Claim arising under either such transaction
in accordance with this Section 6.2(f) or the like section in such other asset
purchase agreement. The funds will be held in escrow pursuant to a single Escrow
Agreement.

 
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6.3          No Material Adverse Effect.  None of the Schedules, documents or
other information to be furnished by Seller to Buyer pursuant to this Agreement,
shall disclose any fact, circumstance or matter, or any change in or development
in connection with any matter, which has, or could reasonably be expected to
have, a Material Adverse Effect on the Assets or on the Business; and there
shall have been no other changes or developments affecting either the Assets or
the Business since the Base Balance Sheet Date which have, or could reasonably
be expected to have, a Material Adverse Effect on the Assets or the Business.
 
6.4          Asset Transfer.  Seller shall have delivered to Buyer the following
instruments of transfer and assignment in accordance with the provisions hereof,
transferring to Buyer all of Seller’s right, title and interest in and to the
Assets, free and clear of all Liens:
 
(a)           A Bill of Sale in a form reasonably acceptable to Buyer;
 
(b)           Assignments of Intellectual Property in forms reasonably
acceptable to Buyer;
 
(c)           An Agreement to Assign Internet Domain Names and InterNic
addresses in a form reasonably acceptable to Buyer;
 
(d)           Patent licenses under patents owned by Seller in forms reasonably
acceptable to Buyer and a patent sublicense under patent owned by McLeod
Discoveries, LLC, in forms reasonably acceptable to Buyer (the “McLeod
License”);
 
(e)           Seller’s files and records relating to the Assets;
 
(f)            Delivery of an executed Supply Agreement in a form acceptable to
the parties;
 
(g)           Delivery of an executed Assignment and Assumption Agreement in a
form acceptable to the parties; and
 
(h)           Such other instruments of transfer reasonably requested by Buyer.
 
6.5          Approval of Management.  The Buyer shall have received the approval
of the transaction contemplated hereby by its managing members, and if
applicable, its Board of Directors.
 
6.6          Release of Liens.  At or prior to the Closing, Seller shall have
obtained and delivered to Buyer instruments releasing any and all Liens on the
Assets.
 
6.7          Debt Satisfaction.  All Debt related to the Assets and Business
shall have been satisfied, terminated, released or extinguished to the extent
required by Section 1.6 hereof.
 
6.8          Completion of Other Transaction.  Buyer and Nutrition 21 shall have
completed a separate transaction related to the business of Nutrition 21 that
sells finished and packaged end-products to retailers for ultimate sale to end
users without further fabrication or packaging

 
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6.9          Transition Plan.  Buyer and Seller shall enter into a Transitional
Services Agreement in a form reasonably acceptable to the parties  to facilitate
the transfer of the Business and the Assets to Buyer, including agreed terms as
to the transition of Seller’s customers, invoicing, Assumed Liabilities and
accounts receivable.
 
ARTICLE 7
CONDITIONS PRECEDENT TO OBLIGATION OF SELLER.
 
The obligation of Seller to consummate the transactions contemplated by this
Agreement is subject to the satisfaction, on or prior to the Closing Date, of
the following conditions, unless waived by Seller in writing:
 
7.1          Accuracy of Representations and Warranties.  The representations
and warranties of Buyer contained in this Agreement shall be true and correct in
all material respects at the Closing Date with the same effect as though made at
such time, and the representations and warranties of Buyer contained in this
Agreement which are qualified by materiality shall be true and correct in all
respects as of the Closing Date with the same effect as though made at such
time.
 
7.2          Performance of Agreement and Deliveries.  Buyer shall have
performed in all material respects all of its covenants, agreements and
obligations under this Agreement to be performed or complied with by Buyer prior
to or upon the Closing Date and shall have delivered all documents and items
required to be delivered at or prior to the Closing, including, without
limitation:
 
(a)           The tendering of the Purchase Price pursuant to Section 1.5 hereof
pending satisfaction of all the conditions set forth in ARTICLE 6 hereof;
 
(b)           A certificate, dated the Closing Date, from a managing member or
the President of Buyer to the effect that the conditions set forth in this
ARTICLE 7 have been satisfied and Buyer has performed all covenants which it is
obligated to perform prior to Closing;
 
(c)           A certificate, dated the Closing Date, from a managing member or
from Buyer’s Secretary as to the authority and the incumbency of all those
executing the Buyer Documents on behalf of Buyer; and
 
(d)           A Certificate of Good Standing for Buyer issued by the Secretary
of State of the State of Delaware dated no earlier than ten days prior to
Closing.
 
(e)           An opinion of Genovese Joblove & Battista, P.A., dated the Closing
Date, in a form reasonably acceptable to the Seller;
 
(f)            Delivery of an executed Transitional Services Agreement in a form
acceptable to the parties to facilitate the transfer of the Business and the
Assets to Buyer, including agreed terms as to the transition of Seller’s
customers, invoicing, Assumed Liabilities and accounts receivable;

 
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(g)           Delivery of an executed Supply Agreement in a form acceptable to
the parties;
 
(h)           Delivery of an executed Assignment and Assumption Agreement in a
form acceptable to the parties; and
 
 (i)            Such other instruments of transfer reasonably requested by
Seller.
 
7.3          Minimum Purchase Price
 
The Purchase Price as adjusted shall not be less than $ 2.2 million.
 
7.4          Fairness Opinion
 
Seller shall have received a fairness opinion that the Purchase Price is fair
and reasonable.
 
7.5          Completion of Other Transaction.  Buyer and Nutrition 21 shall have
completed a separate transaction related to the business of Nutrition 21 that
sells finished and packaged end-products to retailers for ultimate sale to end
users without further fabrication or packaging
 
ARTICLE 8
TERMINATION.
 
8.1          Events of Termination.  This Agreement and the transactions
contemplated by this Agreement may be terminated at any time prior to the
Closing:
 
(a)          By the mutual written consent of Buyer and Seller.
 
(b)          By Seller, if it is not in breach or default hereunder and any of
the following occurs and, in Seller’s reasonable assessment, results in a
material impairment of Buyer’s ability to close as contemplated hereunder;
 
(1)           if any representation or warranty of Buyer made herein is untrue
in any material respect (and, if the false nature of the representation or
warranty was unintentional, such breach is not cured within ten (10) days of
Buyer’s receipt of a notice from Seller that such breach exists or has
occurred);
 
(2)           if Buyer shall have defaulted in any material respect in the
performance of any material obligation under this Agreement and such breach is
not cured within ten (10) days of Buyer’s receipt of a notice from Seller that
such default exists or has occurred; and
 
(3)           if the conditions to Seller’s obligations to consummate the
Closing as set forth in ARTICLE 7 hereof cannot reasonably be satisfied or
performed on or before the Closing Date (unless such failure of satisfaction,
non-compliance or non-performance is the result, directly or indirectly, of any
action or failure to act on the part of Seller).

 
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(c)          By Buyer, if it is not in breach or default hereunder and any of
the following occurs and, in Buyer’s reasonable assessment, results in a
material impairment of Seller’s ability to close as contemplated hereunder:
 
(1)           if any representation or warranty of Seller made herein is untrue
in any material respect (and, if the false nature of the representation or
warranty was unintentional, such breach is not cured within ten (10) days of
Seller’s receipt of a notice from Buyer that such breach exists or has
occurred);
 
(2)           if Seller shall have defaulted in any material respect in the
performance of any material obligation under this Agreement and such breach is
not cured within ten (10) days of Seller’s receipt of a notice from Buyer that
such default exists or has occurred; or
 
(3)           if the conditions to Buyer’s obligations to consummate the Closing
as set forth in ARTICLE 6 hereof cannot reasonably be satisfied or performed on
or before the Closing Date (unless such failure of satisfaction, non-compliance
or non-performance is the result directly or indirectly of any action or failure
to act on the part of Buyer).
 
8.2          Manner of Exercise.  In the event of the termination of this
Agreement by either Buyer or Seller pursuant to Section 8.1 hereof, notice
thereof shall forthwith be given to the other party in accordance with the
provisions set forth in ARTICLE 11 hereof and this Agreement shall terminate and
the transactions contemplated hereunder shall be abandoned without further
action by Buyer or Seller, except as otherwise expressly provided herein.
 
8.3          Termination by Seller Seller may terminate this Agreement by notice
to Buyer if Seller receives a proposal from a third party to acquire the
Business on terms and conditions which are more favorable to Seller than the
transaction contemplated by this Agreement. If this Agreement is terminated as
provided in this Section, Seller shall within 30 days thereafter pay to Buyer a
$75,000 termination fee.
 
ARTICLE 9
POST-CLOSING COVENANTS; SURVIVAL.
 
9.1          Use of Trade Names.  After the Closing, neither Seller, nor any
person controlling, controlled by or under common control with Seller, will for
any reason, directly or indirectly, for itself or any other person, (a) use the
Marks (or any other name which is a variation thereof or otherwise confusingly
similar therewith) or any other names which are currently used by Seller in
conjunction with the Business, or (b) use or disclose any trade secrets,
confidential information, know-how, proprietary information or other
Intellectual Property of Seller transferred pursuant to this Agreement.

 
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9.2          Post-Closing Transitional Matters.  Following the Closing, without
any compensation or further consideration payable by Buyer, Seller shall respond
positively to inquiries of customers and suppliers regarding the transaction
contemplated hereby.
 
9.3          Survival.  All representations, warranties, covenants, agreements
and indemnities contained in this Agreement, or in any Schedule, exhibit,
certificate, agreement, document or statement delivered pursuant hereto shall be
deemed to have been relied upon by the parties and shall survive the Closing for
a period of two (2) years except that (i)  the representations and warranties of
Seller with respect to Taxes shall survive Closing until the expiration of the
applicable tax statutes of limitation plus a period of sixty (60) days; and
(ii) in the case of all representations and warranties made by Seller herein
with respect to title (including, without limitation, those set forth in
Sections 2.7 and 2.18(b) shall survive Closing for a period consistent with the
applicable statute of limitations relating to any claims which may arise from
such representations and warranties.
 
9.4          Seller’s Obligations.  Following Closing, Seller shall make full
and timely payment when due of all amounts that are not Assumed Liabilities, and
satisfaction of all other obligations that are not Assumed Liabilities,
including, without limitation, the Excluded Liabilities, owed by Seller to third
parties, which obligations affect the Assets or the Business and are not subject
to a good faith dispute.
 
9.5          Confidential Information and Cooperation.  Seller acknowledges that
all confidential information relating to Buyer and the Business, including
without limitation (a) trade secrets and intellectual property, (b) information
concerning services and products and the development, manufacturing, marketing,
distribution and pricing of services and products, (c) information concerning
customers, customer lists and suppliers and (d) credit and financial data  and
(d) all of the Assets (as defined herein) (collectively, the “Proprietary
Information”), are valuable, special and unique assets of the Buyer, access to
and knowledge of which have been gained by Seller.  Seller further agree that
all Proprietary Information shall be considered confidential information and
that from and after the date hereof, except as required by law, Seller will (x)
not disclose, at any time, any of such Proprietary Information to any person or
entity for any reason or purpose whatsoever, (y) not make use of any Proprietary
Information for Seller’s own purposes or for the benefit of any person other
than Buyer, and (z) from and after the Closing, Seller will surrender
immediately to Buyer all Proprietary Information existing in tangible form
(whether in print, photos, audio or video tape, computer disk or memory, or
otherwise) which is in the possession or control of Seller.
 
9.6          Buyer Cooperation as to Sales Data.          (a) Not later than 60
days after the end of each Accounting Period, Buyer will provide a Net Sales
Report to Seller for such Accounting Period for Products sold by Buyer Entities
that are Eligible Products.  Buyer shall from time to time at the request of
Stockholders give to Stockholders and their representatives access to the
records of Buyer relating to the Reports. The obligations of Nutrition 21 to pay
amounts to Stockholders under the Merger Agreement are Excluded Liabilities
within the meaning of this Agreement. Seller shall immediately notify Buyer when
the Nutrition 21 Section 5 Obligation has been terminated. The following
definitions shall apply to defined terms contained in this Section 9.6 that are
not otherwise defined herein:

 
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The “Merger Agreement” means an Amended and Restated Merger Agreement dated as
of August 25, 2006 by and among Nutrition 21, Inc., Arnold Blair, Mark Stenberg
and certain other parties
 
The “Stockholders” means Arnold Blair and Mark Stenberg.
 
“Net Sales” means gross sales less allowances, returns, volume discounts,
pricing discounts, guaranteed returns, freight, taxes, returns, cash discounts,
and other sales deductions. Except as aforesaid, Net Sales are computed on an
accrual basis in accordance with GAAP.
 
“Eligible Products” means any products that are sold under the Iceland Health
trademark or that contain fish oil or omega 3.
 
“Buyer Entities” means Buyer or its affiliates and its direct or indirect
assignees, licensees or sublicensees.
 
An “Accounting Period” means each of the successive three-month periods (i)
beginning from August to 27 through November 26, from November 27 through
February 26, from February 27 through May 26, and from May 27 through August 26
and so on, through and including the three-month period in which Seller’s
obligations to make certain reports and payments under Section 5 of the Merger
Agreement shall have terminated by its terms (the “Nutrition 21 Section 5
Obligation”).
 
A “Net Sales Report” for an Accounting Period means a reasonably detailed report
by Buyer’s VP of Finance on the volume of Net Sales during such Period. No Net
Sales Report shall contain pricing information or the identity of customers.
 
(b)           Buyer shall furnish to Seller such reports as are necessary for
Seller to fulfill its requirements as licensee under the McLeod License; such
reports shall be issued by Buyer to Seller within 45 days after the beginning of
each calendar quarter commencing with the second calendar quarter of 2010. Buyer
shall have no financial obligations related to the McLeod License.

 
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ARTICLE 10
INDEMNIFICATION.
 
10.1        Indemnification by Seller.  Seller hereby agrees to indemnify,
defend and hold harmless Buyer, its affiliates and its and their respective
directors, officers, stockholders, partners, members, employees, and agents
(individually, a “Buyer Indemnified Party” and collectively, “Buyer Indemnified
Parties”), against and in respect of all losses, liabilities, obligations,
damages, deficiencies, actions, suits, proceedings, demands, assessments,
orders, judgments, costs and expenses (including the reasonable fees,
disbursement and expenses of attorneys and consultants) of any kind or nature
whatsoever, but net of the proceeds from any insurance policies or other third
party reimbursement for such loss, to the extent sustained, suffered or incurred
by or made against any Buyer Indemnified Party, to the extent based upon,
arising out of or in connection with:  (i) any breach of any representation or
warranty made by Seller in this Agreement or in any Schedule, exhibit,
certificate, agreement or other instrument delivered pursuant to this Agreement;
(ii) any breach of any covenant or agreement made by Seller in this Agreement or
in any Schedule, exhibit, certificate, financial statement, agreement or other
instrument delivered by or binding upon Seller pursuant to this Agreement; (iii)
any claim made by any person or entity to the extent the same arises out of or
relates to the operation of the Assets or the Business and in connection with or
on the basis of events, acts, omissions, conditions or any other state of facts
occurring on or existing before the Closing Date (other than events, acts,
omissions, conditions or any other state of facts with respect to which Buyer
has specifically agreed to be responsible and has been provided specific written
notice by way of a Schedule attached hereto; (iv) any claim which arises in
connection with any liability or obligation of Seller that is not an Assumed
Liability; (v) any of the Excluded Liabilities; and (vi) the sales of inventory
by Seller and its affiliate, Iceland Health, LLC, to the customer identified as
NIN1000, as set forth on Exhibit 10.1 hereto. The sum of all amounts  paid by
Seller to Buyer pursuant to this Section 10.1 shall not exceed $1.0 million.
 
10.2        Indemnification by Buyer.  Buyer agrees to indemnify, defend and
hold harmless, Seller and its officers, directors, stockholders, employees and
agents (individually, a “Seller Indemnified Party” and collectively, “Seller
Indemnified Parties”) at all times against and in respect of all losses,
liabilities, obligations, damages, deficiencies, actions, suits, proceedings,
demands, assessments, orders, judgments, costs and expenses (including the
reasonable fees, disbursements and expenses of attorneys and consultants), of
any kind or nature whatsoever, to the extent sustained, suffered or incurred by
or made against any Seller Indemnified Party, to the extent based upon, arising
out of or in connection with:  (i) any breach of any representation or warranty
made by Buyer in this Agreement or in any Schedule, exhibit, certificate,
agreement or other instrument delivered pursuant to this Agreement; (ii) any
breach of any covenant or agreement made by Buyer in this Agreement or in any
Schedule, exhibit, certificate, agreement or other instrument delivered by or
binding upon Buyer pursuant to this Agreement; and (iii) any claim made against
Seller to the extent the same relates to, results from or arises out of Buyer’s
operation of the Assets or the Business from and after the Closing Date except
as may otherwise expressly be made the obligation of Seller pursuant to this
Agreement.
 
10.3        Indemnification Claims. All indemnification claims must be made in
writing prior to the second anniversary of the Closing Date, and shall otherwise
expire.  No indemnification shall be payable to a Buyer Indemnified Party or a
Seller Indemnified Party, under Section 10.1 or Section 10.2, respectively, with
respect to any claim unless and until the total of all claims for
indemnification against the Buyer or the Seller, as the case may be, shall
exceed $25,000 in the aggregate, at which time all claims arising pursuant to
Section 10.1 or 10.2, as the case may be, shall be payable.

 
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10.4       Procedure for Indemnification.  The following shall apply with
respect to all Claims by an indemnitee for indemnification (“Claims”) pursuant
to this Article 10:
 
a.           The indemnitee shall give the indemnitor prompt notice (the
“Indemnification Notice”) of any Claim or potential liability, or of the
commencement by any third party of any action or proceeding, with respect to
which such indemnitee seeks indemnification; provided, however, that the failure
of the indemnitee to give the Indemnification Notice to the indemnitor with
respect to any Claim shall not impair any of the rights or benefits of such
indemnitee, except to the extent that such failure materially and adversely
affects the ability of the indemnitor to defend such Claim or increases the
amount of such liability.  The Indemnification Notice shall describe the Claim
in reasonable detail.
 
b.           The indemnitor shall have the right to control the defense of any
Claim at its own expense and by its own counsel.  The indemnitee shall have the
right to participate therein, and shall have the right to employ its own counsel
which shall be at its sole expense unless the indemnitee shall reasonably
conclude, based upon an opinion of its counsel, that (i) there is a conflict of
interest between the indemnitor and the indemnitee in the conduct of the defense
of such Claim or (ii) there are specific defenses available to the indemnitee
which are different from or additional to those available to the indemnitor
which may create a conflict of interest such that it would be inappropriate for
counsel to the indemnitor to represent the indemnitee, in which event, the
indemnitor shall pay the reasonable fees and disbursements of counsel to each of
the indemnitor and the indemnitee; provided, however, that the indemnitor shall
not be responsible for the fees of more than one counsel for all indemnitees.
 
c.           Notwithstanding the foregoing, neither the indemnitor nor the
indemnitee may settle or compromise any Claim (provided, however, that either
Indemnitor may do so if the sole relief payable to a third party in respect of
such Claim is monetary damages that are paid in full by the Party settling or
compromising such claim, the settlement includes as an unconditional term
thereof the release by the claimant or the plaintiff if the indemnitee and its
Affiliates from all liability in respect of such claim and the settlement shall
not require an admission of liability and shall otherwise be confidential) over
the objection of the other; provided, however, that consent to settlement or
compromise shall not be unreasonably withheld.
 
d.           The indemnitee shall cooperate at the expense of the indemnitor in
the defense of any Claim and shall make available to the indemnitor any
personnel or any books, records or other documents within its control that are
reasonably necessary or appropriate for such defense, subject to the receipt of
appropriate confidentiality agreements.
 
10.5       Survival. If any claim for indemnification has been previously
asserted by a party to this Agreement and is still pending at the expiration of
survival period set forth herein, such claim shall continue to be subject to the
indemnification provisions of this Agreement until resolved.

 
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ARTICLE 11
NOTICES.
 
All notices and other communications required to be given hereunder, or which
may be given pursuant or relative to the provisions hereof, shall be in writing
and shall be deemed to have been given when delivered by hand or by an overnight
courier service, or mailed, postage prepaid, by first class United States mail,
certified return receipt requested, or transmitted by facsimile (with
transmission acknowledgment received, provided written notice delivered by any
of the other means of delivery specified in this ARTICLE 11 follows such
facsimile), as follows:

If to Buyer:
Nature’s Products, Inc.
 
1301 Sawgrass Corporate Parkway
 
Sunrise, Florida 33323-2813
 
Facsimile: (954) 233-1664
 
Attention:  Jose Minski, President
     
With a copy to:
     
Mark S. Feluren
 
Genovese Joblove & Battista, P.A.200 E. Broward Boulevard, Suite 1110
 
Fort Lauderdale, FL 33301
 
Facsimile: (954) 453-8010
   
If to Seller:
Chief Executive Officer
 
Nutrition 21, Inc.
 
4 Manhattanville Road
 
Purchase, NY 10577
     
With a copy to
 
Oscar Folger, Esquire
 
Folger & Folger
 
521 Fifth Avenue, 24th floor
 
New York New York 10175
 
Facsimile 212-697-7833

ARTICLE 12
OTHER AND MISCELLANEOUS PROVISIONS.
 
12.1        Assignability; Binding Effect; No Third-Party Beneficiaries.  This
Agreement shall not be assignable by Buyer or Seller except with the written
consent of the other, except that Buyer may assign its rights hereunder to an
affiliated entity of Buyer.  This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.  No parties other than Buyer and Seller shall have any rights
by virtue of this Agreement.

 
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12.2        Headings.  The subject headings used in this Agreement are included
for purposes of convenience only and shall not affect the construction or
interpretation of any of its provisions.
 
12.3        Amendments; Waivers.  This Agreement may not be amended or modified,
nor may compliance with any condition or covenant set forth herein be waived,
except by a writing duly and validly executed by Buyer and Seller or, in the
case of a waiver, the party waiving compliance.  No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any waiver on the part of any party of any such right,
power or privilege, or any single or partial exercise of any such right, power
or privilege, preclude any further exercise thereof or the exercise of any other
such right, power or privilege.
 
12.4        Entire Agreement.  This Agreement, together with the Schedules and
exhibits hereto and all other documents explicitly contemplated hereunder,
constitute the entire agreement between the parties with respect to the subject
matter hereof, and supersedes and cancels any and all prior or contemporaneous
arrangements, understandings and agreements between them relating to the subject
matter hereof.
 
12.5        Severability.  In the event that any provision or any portion of any
provision of this Agreement shall be held to be void or unenforceable, then the
remaining provisions of the Agreement (and the remaining portion of any
provisions held to be void or unenforceable in part only) shall continue in full
force and effect.
 
12.6        Governing Law.  This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Florida without regard to conflicts
of laws principles. Each party hereto agrees that it shall bring any action or
proceeding in respect of any claim arising out of or related to this Agreement
or the transactions contained in or contemplated by this Agreement, whether in
tort or contract or at law or in equity, exclusively in Broward County, Florida
for actions and proceedings instituted by Seller and in Westchester County, New
York for actions and proceedings instituted by Buyer (the "Chosen Courts") and
(a) irrevocably submits to the exclusive jurisdiction of the Chosen Courts; (b)
waives any objection to laying venue in any such action or proceeding in the
Chosen Courts; and (c) waives any objection that the Chosen Courts are an
inconvenient forum or do not have jurisdiction over any party hereto.
 
12.7        Counterparts.  This Agreement may be executed in two counterparts,
each of which shall be deemed an original and all of which shall constitute the
same instrument.
 
12.8        Expenses.  Each party shall pay its own expenses incident to the
negotiation, preparation and performance of this Agreement and the transactions
contemplated hereby, including all fees and expenses of its counsel and
accountants for all activities of such counsel and accountants undertaken
pursuant to this Agreement, whether or not the transactions contemplated hereby
are consummated. The Seller shall be responsible for the fees of its broker,
Natures Equity, LLC.

 
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12.9        Recitals and Introductory Paragraph.  The recitals and introductory
paragraph contained on the first page hereof are hereby incorporated herein and
made a part hereof.
 
In Witness Whereof, Seller and Buyer have caused this Asset Purchase Agreement
to be executed on the date first above written.

BUYER:
 
SELLER:
     
Nature’s  Products, Inc.
 
Nutrition 21, Inc.
     
By:
  
 
By:
  
Name:
  
 
Name:
Michael Zeher, Chief Executive Officer

 
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