Exhibit 10.1

EXECUTION COPY

EQUITY PURCHASE AGREEMENT

AMONG

OMEGA PROTEIN CORPORATION,

INCON PROCESSING, L.L.C.,

INCON INTERNATIONAL, INC.

AND

EACH OF THE SHAREHOLDERS OF INCON INTERNATIONAL, INC.

DATED AS OF SEPTEMBER 9, 2011

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TABLE OF CONTENTS

 

Section

       Page   ARTICLE I   DEFINITIONS      1   

1.1

  Certain Definitions      1    ARTICLE II   SALE AND PURCHASE OF SHARES      9
  

2.1

  Sale and Purchase of Membership Interest      9    ARTICLE III   CONSIDERATION
     9   

3.1

  Consideration      9   

3.2

  Payment of Purchase Price      9   

3.3

  Purchase Price Adjustment      9   

3.4

  Earn-Out      12    ARTICLE IV   CLOSING AND TERMINATION      15   

4.1

  Closing Date      15   

4.2

  Termination of Agreement      15   

4.3

  Procedure Upon Termination      16   

4.4

  Effect of Termination      16    ARTICLE V   REPRESENTATIONS AND WARRANTIES OF
THE SHAREHOLDER      16   

5.1

  Organization and Good Standing      16   

5.2

  Authorization of Agreement      17   

5.3

  Conflicts; Consents of Third Parties      17   

5.4

  Capitalization      18   

5.5

  Subsidiaries      18   

5.6

  Corporate Records      18   

5.7

  Ownership and Transfer of Membership Interest      18   

5.8

  Financial Statements      18   

5.9

  No Undisclosed Liabilities      19   

5.10

  Absence of Certain Developments      19   

5.11

  Taxes      21   

5.12

  Real Property      23   

5.13

  Tangible Personal Property      24   

 

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5.14

  Intellectual Property      25   

5.15

  Material Contracts      28   

5.16

  Employee Benefits Plans      29   

5.17

  Employees; Labor      33   

5.18

  Litigation      33   

5.19

  Compliance with Laws; Permits      33   

5.20

  Environmental Matters      34   

5.21

  Insurance      35   

5.22

  Inventories      35   

5.23

  Accounts and Notes Receivable and Payable      35   

5.24

  Related Party Transactions      36   

5.25

  Customers and Suppliers      36   

5.26

  Product Warranty; Product Liability      36   

5.27

  FDA Compliance      37   

5.28

  Banks      39   

5.29

  Full Disclosure      39   

5.30

  Financial Advisors      39    ARTICLE VI   REPRESENTATIONS AND WARRANTIES OF
PURCHASER      39   

6.1

  Organization and Good Standing      39   

6.2

  Authorization of Agreement      39   

6.3

  Conflicts; Consents of Third Parties      40   

6.4

  Litigation      40   

6.5

  Investment Intention      40   

6.6

  Financial Advisors      40   

6.7

  Solvency      40    ARTICLE VII   COVENANTS      41   

7.1

  Access to Information      41   

7.2

  Conduct of the Business Pending the Closing      41   

7.3

  Consents      44   

7.4

  Further Assurances      44   

7.5

  No Shop      44   

7.6

  Non-Competition; Non-Solicitation; Confidentiality      45   

7.7

  Preservation of Records      46   

 

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7.8

  Publicity      47   

7.9

  Use of Name      47   

7.10

  Environmental Matters      48   

7.11

  Employees and Consultants      48   

7.12

  Destruction of Software and Technology      48   

7.13

  Release of Claims      48    ARTICLE VIII   CONDITIONS TO CLOSING      49   

8.1

  Conditions Precedent to Obligations of Purchaser      49   

8.2

  Conditions Precedent to Obligations of the Shareholder      50    ARTICLE IX  
INDEMNIFICATION      51   

9.1

  Survival of Representations and Warranties      51   

9.2

  Indemnification      51   

9.3

  Indemnification Procedures      52   

9.4

  Exclusive Remedies      54   

9.5

  Limitations on Liability; No Recourse      54   

9.6

  Tax Matters      55   

9.7

  Offset Rights      57   

9.8

  Tax Treatment of Indemnity Payments      58   

9.9

  Reduction of Losses      58   

9.10

  No Indirect Damages      58    ARTICLE X   MISCELLANEOUS      58   

10.1

  Expenses      58   

10.2

  Specific Performance      58   

10.3

  Submission to Jurisdiction; Consent to Service of Process; Arbitration      59
  

10.4

  Entire Agreement; Amendments and Waivers      60   

10.5

  Governing Law      60   

10.6

  Notices      60   

10.7

  Severability      61   

10.8

  Binding Effect; Assignment      61   

10.9

  Non-Recourse      62   

10.10

  Counterparts      62   

10.11

  Construction      62   

10.11

  Facsimile or Email Transmission      62   

 

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Schedules

 

Schedule 3.2    Wire Transfer Instructions Schedule 5.3(b)    Consents and
Approvals Schedule 5.4    Ownership of Equity Interests of Shareholder Schedule
5.10    Absence of Certain Developments Schedule 5.11    Taxes Schedule 5.12(a)
   Real Property Leases Schedule 5.13(a)    Fixed Assets Schedule 5.13(b)   
Personal Property Leases Schedule 5.14(a)    Intellectual Property Schedule
5.14(a)(i)    Intellectual Property Jurisdiction Schedule 5.14(b)(i)   
Intellectual Property Ownership Exceptions Schedule 5.14(c)    Patents Schedule
5.14(d)    Intellectual Property Licenses Schedule 5.14(e)    Intellectual
Property Contracts Schedule 5.14(m)    Intellectual Property Software Schedule
5.14(n)    Domain Names Schedule 5.15    Material Contracts Schedule 5.16(a)   
Employee Benefit Plans Schedule 5.16(g)    Present Value of Benefits Schedule
5.16(q)    Nonqualified Deferred Compensation Plans Schedule 5.17    Employees
and Consultants Schedule 5.19    Permits Schedule 5.20    Environmental Matters
Schedule 5.21    Insurance Schedule 5.23    Accounts and Notes Receivable
Schedule 5.24    Related Party Transactions Schedule 5.25    Customers and
Suppliers Schedule 5.26    Product Warranties Schedule 5.27    FDA Compliance
Schedule 5.28    Banks

Exhibits

 

Exhibit A — Form of Employment Agreement Exhibit B — Form of Opinion of Counsel
Exhibit C — Form of Opinion of Patent Counsel

 

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EQUITY PURCHASE AGREEMENT

This EQUITY PURCHASE AGREEMENT, dated as of September 9, 2011 (the “Agreement”),
is entered into by and among OMEGA PROTEIN CORPORATION, a Nevada corporation
(“Purchaser”), INCON PROCESSING, L.L.C., a Delaware limited liability company
(the “Company”), INCON INTERNATIONAL, INC., an Illinois corporation (the
“Member”), each of the shareholders of the Member who are signatories to this
Agreement (collectively the “Shareholders”) and each of John R. Palmer, Jr.,
John R. Palmer, III, Hugh V. Palmer and Niazahamed P. Shaikh (the “Principals”).

W I T N E S S E T H:

WHEREAS, the Member owns one hundred percent (100%) of the equity interests of
the Company (the “Membership Interest”);

WHEREAS, the Shareholders own one hundred percent (100%) of the outstanding
capital stock of the Member, and each of the Shareholders is a trust;

WHEREAS, the Principals are the principal officers and managers of the Company
and are the beneficiaries of the trusts comprising the Shareholders;

WHEREAS, the Member desires to sell to Purchaser, and Purchaser desires to
purchase from the Member, the Membership Interest for the purchase price and
upon the terms and conditions hereinafter set forth; and

WHEREAS, certain terms used in this Agreement are defined in Section 1.1;

NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter contained, the parties hereby agree as follows:

ARTICLE I

DEFINITIONS

1.1 Certain Definitions.

(a) For purposes of this Agreement, the following terms shall have the meanings
specified in this Section 1.1:

“Affiliate” means, with respect to any Person, any other Person that, directly
or indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, such Person, and the term “control” (including
the terms “controlled by” and “under common control with”) means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through ownership of voting
securities, by contract or otherwise.

 

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“Business Day” means any day of the year on which national banking institutions
in Houston, Texas are open to the public for conducting business and are not
required or authorized to close.

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

“Contract” means any contract, agreement, indenture, note, bond, loan,
instrument, lease, commitment or other arrangement or agreement, whether written
or oral.

“Environmental Costs and Liabilities” means, with respect to any Person, all
liabilities, obligations, responsibilities, Remedial Actions, losses, damages,
punitive damages, consequential damages, treble damages, costs and expenses
(including all reasonable fees, disbursements and expenses of counsel, experts
and consultants and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any claim or demand by
any other Person or in response to any violation of Environmental Law, whether
known or unknown, accrued or contingent, whether based in contract, tort,
implied or express warranty, strict liability, criminal or civil statute, to the
extent based upon, related to, or arising under or pursuant to any Environmental
Law, Environmental Permit, order or agreement with any Governmental Body or
other Person, which relates to any environmental, health or safety condition,
violation of Environmental Law or a Release or threatened Release of Hazardous
Materials.

“Environmental Law” means any foreign, federal, state or local statute,
regulation, ordinance, rule of common law or other legal requirement, as now or
hereafter in effect, in any way relating to the protection of human health and
safety, the environment or natural resources including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
§ 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. App.
§ 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et
seq.), the Clean Water Act (33 U.S.C. § 1251 et seq.), the Clean Air Act
(42 U.S.C. § 7401 et seq.) the Toxic Substances Control Act (15 U.S.C. § 2601 et
seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. § 136
et seq.), and the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.),
as each has been or may be amended and the regulations promulgated pursuant
thereto.

“Environmental Permit” means any Permit required by Environmental Laws for the
operation of the Company.

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

“GAAP” means generally accepted accounting principles in the United States as of
the date hereof.

 

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“Governmental Body” means any government or governmental or regulatory body
thereof, or political subdivision thereof, whether federal, state, local or
foreign, or any agency, instrumentality or authority thereof, or any court or
arbitrator (public or private).

“Hazardous Material” means any substance, material or waste that is regulated,
classified, or otherwise characterized under or pursuant to any Environmental
Law as “hazardous,” “toxic,” “pollutant,” “contaminant,” “radioactive,” or words
of similar meaning or effect, including without limitation, petroleum and its
by-products, asbestos, polychlorinated biphenyls, radon, mold, urea formaldehyde
insulation.

“Indebtedness” of any Person means, without duplication, (i) the principal of
and premium (if any) in respect of (A) indebtedness of such Person for money
borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such Person is responsible or
liable; (ii) all obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations of such Person and
all obligations of such Person under any title retention agreement (but
excluding trade accounts payable and other accrued current liabilities arising
in the Ordinary Course of Business); (iii) all obligations of such Person under
leases required to be capitalized in accordance with GAAP; (iv) all obligations
of such Person for the reimbursement of any obligor on any letter of credit,
banker’s acceptance or similar credit transaction; (v) the liquidation value of
all redeemable preferred stock of such Person; (vi) all obligations of the type
referred to in clauses (i) through (v) of any Persons for the payment of which
such Person is responsible or liable, directly or indirectly, as obligor,
guarantor, surety or otherwise, including guarantees of such obligations; and
(vii) all obligations of the type referred to in clauses (i) through (vi) of
other Persons secured by any Lien on any property or asset of such Person
(whether or not such obligation is assumed by such Person).

“Intellectual Property” means all intellectual property rights owned, filed,
practiced or used by the Company arising from or in respect of the following,
whether protected, created or arising under the laws of the United States or any
other jurisdiction: (i) all patents and applications therefor, including
continuations, divisionals, continuations-in-part, or reissues of patent
applications and patents issuing thereon (collectively, “Patents”), (ii) all
trademarks, service marks, trade names, service names, brand names, trade dress
rights, logos, Internet domain names and corporate names and general intangibles
of a like nature, together with the goodwill associated with any of the
foregoing, and all applications, registrations and renewals thereof,
(collectively, “Marks”), (iii) copyrights and registrations and applications
therefor, works of authorship and mask work rights (collectively, “Copyrights”),
(iv) discoveries, concepts, ideas, research and development, know-how, formulae,
inventions, compositions, manufacturing and production processes and techniques,
technical data, procedures, designs, drawings, specifications, databases, and
other proprietary and confidential information, including customer lists,
supplier lists, pricing and cost information, and business and marketing plans
and proposals of the Company, in each case excluding any rights in respect of
any of the foregoing that comprise or are protected by Copyrights or Patents
(collectively, “Trade Secrets”), and (v) all Software and Technology of the
Company.

 

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“Intellectual Property Licenses” means (i) any grant to a third Person of any
right to use any of the Intellectual Property, and (ii) any grant to the Company
of a right to use a third Person’s intellectual property rights which is
necessary for the use of any Intellectual Property.

“IRS” means the Internal Revenue Service.

“Key Employees” means each of John R. Palmer, Jr., John R. Palmer, III and Hugh
V. Palmer.

“Knowledge” or “Company Knowledge” means, with respect to any Person, the actual
knowledge of any Key Employee or Mr. Niazahamed P. Shaikh.

“Law” means any foreign, federal, state or local law (including common law),
statute, code, ordinance, rule, regulation or other requirement.

“Legal Proceeding” means any judicial, administrative or arbitral actions,
suits, proceedings (public or private) or claims or proceedings by or before a
Governmental Body.

“Liability” means any debt, loss, damage, adverse claim, liability or obligation
(whether direct or indirect, known or unknown, asserted or unasserted, absolute
or contingent, accrued or unaccrued, liquidated or unliquidated, or due or to
become due, and whether in contract, tort, strict liability or otherwise), and
including all costs and expenses relating thereto.

“Lien” means any lien, pledge, mortgage, deed of trust, security interest,
claim, lease, charge, option, right of first refusal, easement, servitude,
proxy, voting trust or agreement, transfer restriction under any shareholder or
similar agreement, encumbrance or any other restriction or limitation
whatsoever.

“Material Adverse Effect” means (a) a material adverse effect on the business,
assets, properties, results of operations or condition (financial or otherwise)
of the Company, taken as a whole, except for any such effects resulting from
(i) the transactions contemplated by this Agreement or the announcement thereof,
(ii) changes in general economic or political conditions or the securities
markets in general, (iii) changes, after the date of this Agreement, in
conditions generally applicable to businesses in the same industries of the
Company including (A) changes in Laws generally applicable to such businesses or
industry and (B) changes in applicable Law, or (iv) national or international
hostilities, acts of terror, or acts of war, provided that in the case of the
foregoing clauses (i) - (iii), except to the extent such event, change,
circumstance or effect disproportionately impacts the Company taken as a whole
relative to other companies in the industries in which the Company operates,
(b) a material adverse effect on the value of the Company, or (c) a material
adverse effect on the ability of the Company, the Member, the Shareholders or
the Principals to consummate the transactions contemplated by this Agreement or
perform their respective obligations under this Agreement or the Shareholder
Documents.

 

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“Order” means any order, injunction, judgment, decree, ruling, writ, assessment
or arbitration award of a Governmental Body.

“Ordinary Course of Business” means the ordinary and usual course of day-to-day
operations of the business through the date hereof consistent with past
practice.

“Permits” means any approvals, authorizations, consents, licenses, permits or
certificates of a Governmental Body.

“Permitted Exceptions” means (i) statutory liens for current Taxes, assessments
or other governmental charges not yet delinquent or the amount or validity of
which is being contested in good faith by appropriate proceedings, provided an
appropriate reserve is established therefor; (ii) mechanics’, carriers’,
workers’, repairers’ and similar Liens arising or incurred in the Ordinary
Course of Business that are not material to the business, operations and
financial condition of the Company or the property so encumbered and that are
not resulting from a breach, default or violation by the Company of any Contract
or Law; and (iii) zoning, entitlement and other land use and environmental
regulations by any Governmental Body, provided that such regulations have not
been violated.

“Person” means any individual, corporation, partnership, limited liability
company, firm, joint venture, association, joint-stock company, trust,
unincorporated organization, Governmental Body or other entity.

“Release” means any release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, or leaching into the indoor or outdoor
environment, or into or out of any property.

“Remedial Action” means all actions to (i) clean up, remove, treat or in any
other way address any Hazardous Material; (ii) prevent the Release of any
Hazardous Material so it does not endanger or threaten to endanger public health
or welfare or the indoor or outdoor environment; (iii) perform pre-remedial
studies and investigations or post-remedial monitoring and care; or (iv) to
correct a condition of noncompliance with Environmental Laws.

“Software” means any and all (i) computer programs, including any and all
software implementations of algorithms, models and methodologies, whether in
source code or object code, (ii) databases and compilations, including any and
all data and collections of data, whether machine readable or otherwise,
(iii) descriptions, flow-charts and other work product used to design, plan,
organize and develop any of the foregoing, screens, user interfaces, report
formats, firmware, development tools, templates, menus, buttons and icons, and
(iv) all documentation including user manuals and other training documentation
related to any of the foregoing.

 

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“Subsidiary” means any Person of which a majority of the outstanding voting
securities or other voting equity interests are owned, directly or indirectly,
by the Company.

“Taxes” means (i) all federal, state, local or foreign taxes, charges, fees,
imposts, levies or other assessments, including, without limitation, all income,
net income, gross receipts, capital, sales, use, ad valorem, value added,
alternative or add-on minimum, gross margin, transfer, franchise, registration,
profits, inventory, capital stock, license, withholding, payroll, employment,
social security, unemployment, disability, excise, severance, stamp, occupation,
premium, windfall profits, environmental, property and estimated taxes, customs
duties, fees, assessments and charges of any kind whatsoever, (ii) all interest,
penalties, fines, additions to tax or additional amounts imposed by any Taxing
Authority in connection with any item described in clause (i) and (iii) any
transferee liability in respect of any items described in clauses (i) and/or
(ii) payable by reason of contract, assumption, transferee liability, operation
of Law, Treasury Regulation Section 1.1502-6(a) (or any predecessor or successor
thereof of any analogous or similar provision under Law) or otherwise.

“Taxing Authority” means the IRS and any other Governmental Body responsible for
the administration of any Tax.

“Tax Return” means any return, report or statement required to be filed with
respect to any Tax (including any attachments thereto, and any amendment
thereof) including, but not limited to, any information return, claim for
refund, amended return or declaration of estimated Tax, and including, where
permitted or required, combined, consolidated or unitary returns for any group
of entities that includes the Company.

“Technology” means, collectively, all designs, formulae, algorithms, procedures,
methods, techniques, ideas, know-how, research and development, technical data,
programs, subroutines, tools, materials, specifications, processes, inventions
(whether patentable or unpatentable and whether or not reduced to practice),
apparatus, creations, improvements, works of authorship and other similar
materials, and all recordings, graphs, drawings, reports, analyses, and other
writings, and other tangible embodiments of the foregoing, in any form whether
or not specifically listed herein, and all related technology, that are used in,
incorporated in, embodied in, displayed by or relate to, or are used by the
Company.

“WARN” means the Worker Adjustment and Retraining Notification Act of 1988, as
amended.

(b) Terms Defined Elsewhere in this Agreement. For purposes of this Agreement,
the following terms have meanings set forth in the sections indicated:

 

Term

 

Section

AAA

  10.3(b)

Acquisition Transaction

  7.5(a)

 

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Term

 

Section

AAA

  10.3(b)

Agreement

  Recitals

Annual Earn-Out Payments

  3.4(a)

Applicable Percentage

  3.4(a)

Acquisition Transaction

  7.5(a)

Arbiter

  3.3(b)(iii)

Balance Sheet

  5.8(a)

Balance Sheet Date

  5.8(a)

Basket

  9.5(b)

Cause

  3.4(d)

Closing

  4.1

Closing Balance Sheet

  3.3(b)(ii)

Closing Date

  4.1

Closing Working Capital

  3.3(b)(i)

Closing Working Capital Statement

  3.3(b)(ii)

COBRA

  5.16(p)

Company Marks

  7.9

Company Plans

  5.16(a)

Confidential Information

  7.6(c)

Copyrights

  1.1 (in Intellectual Property definition)

Domain Names

  5.14(n)

EBITDA

  3.4(b)

Employees

  5.16(a)

ERISA Affiliate

  5.16(a)

Estimated Closing Balance Sheet

  3.3(a)(i)

Estimated Closing Working Capital

  3.3(a)(i)

Expenses

  9.2(a)

FDA

  5.27

FTC

  5.27

FTC Act

  5.27

Financial Statements

  5.8(a)

FIRPTA Affidavit

  8.1(g)

Included Current Assets

  3.3(b)(i)

Included Current Liabilities

  3.3(b)(i)

Indemnification Claim

  9.3(a)

Losses

  9.2(a)(i)

Marks

  1.1 (in Intellectual Property definition)

Material Contracts

  5.15

Member Indemnified Parties

  9.2(b)

Membership Interest

  Recitals

Multiemployer Plan

  5.16(a)

Patents

  1.1 (in Intellectual Property definition)

Personal Property Leases

  5.13(b)

Product

  3.4(b)

 

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Term

 

Section

Products

  5.27

Purchase Price

  3.1

Purchaser

  Recitals

Purchaser Documents

  6.2

Purchaser Indemnified Parties

  9.2(a)

Real Property Leases

  5.12(a)

Representatives

  7.5(a)

Restricted Business

  7.6(a)

Restricted Territory

  7.6(a)

Securities Act

  6.5

Shareholders

  Recitals

Shareholder Documents

  5.2(a)

State Authorities

  5.27

Straddle Period

  9.6(c)

Survival Period

  9.1

Tax Claim

  9.6(d)(i)

Title IV Plans

  5.16(a)

Toll Processing/Product Revenues

  3.4(b)

Trade Secrets

  1.1 (in Intellectual Property definition)

USDA

  5.27

(c) Other Definitional and Interpretive Matters. Unless otherwise expressly
provided, for purposes of this Agreement, the following rules of interpretation
shall apply:

Calculation of Time Period. When calculating the period of time before which,
within which or following which any act is to be done or step taken pursuant to
this Agreement, the date that is the reference date in calculating such period
shall be excluded. If the last day of such period is a non-Business Day, the
period in question shall end on the next succeeding Business Day.

Dollars. Any reference in this Agreement to $ shall mean U.S. dollars.

Exhibits/Schedules. All Exhibits and Schedules annexed hereto or referred to
herein are hereby incorporated in and made a part of this Agreement as if set
forth in full herein. Any capitalized terms used in any Schedule or Exhibit but
not otherwise defined therein shall be defined as set forth in this Agreement.

Gender and Number. Any reference in this Agreement to gender shall include all
genders, and words imparting the singular number only shall include the plural
and vice versa.

Headings. The provision of a Table of Contents, the division of this Agreement
into Articles, Sections and other subdivisions and the insertion of headings

 

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are for convenience of reference only and shall not affect or be utilized in
construing or interpreting this Agreement. All references in this Agreement to
any “Section” are to the corresponding Section of this Agreement unless
otherwise specified.

Herein. The words such as “herein,” “hereinafter,” “hereof,” and “hereunder”
refer to this Agreement as a whole and not merely to a subdivision in which such
words appear unless the context otherwise requires.

Including. The word “including” or any variation thereof means “including,
without limitation” and shall not be construed to limit any general statement
that it follows to the specific or similar items or matters immediately
following it.

ARTICLE II

SALE AND PURCHASE OF MEMBERSHIP INTEREST

2.1 Sale and Purchase of Membership Interest. Upon the terms and subject to the
conditions contained herein, on the Closing Date, the Member agrees to sell to
the Purchaser, and the Purchaser agrees to purchase from the Member, the
Membership Interest.

ARTICLE III

CONSIDERATION

3.1 Consideration. The aggregate consideration for the Membership Interest shall
be an amount in cash equal to (i) Eight Million Six Hundred Seventy Seven
Thousand Dollars ($8,677,000) (ii) plus or minus any adjustment pursuant to
Section 3.3, (iii) less any Indebtedness of the Company as of the Closing Date
to the extent not paid at the Closing, and (iv) less any expenses of the Company
incurred in connection with this Agreement (the “Purchase Price”). In addition,
the Member shall be entitled to receive any Annual Earn-Out Payments due
pursuant to Section 3.4.

3.2 Payment of Purchase Price. On the Closing Date, Purchaser shall pay an
amount in cash equal to the Purchase Price to the Member by wire transfer of
immediately available funds in accordance with the wire instructions set forth
on Schedule 3.2.

3.3 Purchase Price Adjustment.

(a) Closing Date Purchase Price Adjustment.

(i) Not later than three days prior to the Closing Date, the Member shall
provide Purchaser with an estimated balance sheet of the Company as of the open
of business on the Closing Date (the “Estimated Closing Balance Sheet”) and a
statement of the estimated Closing Working Capital, derived from the Estimated
Closing Balance Sheet (“Estimated Closing Working Capital”). The Estimated
Closing Balance Sheet and Estimated Closing Working Capital shall be prepared by
the Company and the

 

9

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Member on a tax accrual basis applied using the same accounting methods,
practices, principles, policies and procedures, with consistent classifications,
judgments and valuation and estimation and accrual methodologies that were used
in the preparation of the Company’s Financial Statements for the most recent
fiscal year end as if such Estimated Closing Balance Sheet and Estimated Closing
Working Capital were being prepared as of a fiscal year end.

(ii) If Estimated Closing Working Capital is a positive number, the Purchase
Price payable at Closing by Purchaser will be increased by the Estimated Closing
Working Capital amount. If Estimated Closing Working Capital is a negative
number, the Purchase Price payable at Closing by Purchaser will be decreased by
the Estimated Closing Working Capital amount.

(b) Post-Closing Date Purchase Price Adjustment.

(i) Following the Closing, the Purchase Price shall be adjusted as provided
herein to reflect the difference between Closing Working Capital and Estimated
Closing Working Capital. “Closing Working Capital” means (i) the consolidated
Included Current Assets of the Company, less (ii) the consolidated Included
Current Liabilities of the Company, determined as of the open of business on the
Closing Date. “Included Current Assets” means cash, accounts receivable, prepaid
assets and inventory of the Company, determined on a tax accrual basis applied
using the same accounting methods, practices, principles, policies and
procedures, with consistent classifications, judgments and valuation and
estimation methodologies that were used in the preparation of the Company’s
Financial Statements for the most recent fiscal year end as if such accounts
were being prepared as of a fiscal year end. “Included Current Liabilities”
means accounts payable, advances, accrued Taxes, retirement contributions and
other accrued liabilities, determined on a tax accrual basis using the same
accounting methods, practices, principles, policies and procedures, with
consistent classifications, judgments and valuation and estimation methodologies
that were used in the preparation of the Company’s Financial Statements for the
most recent fiscal year end as if such accounts were being prepared as of a
fiscal year end.

(ii) Within 90 days following the Closing Date, Purchaser shall deliver to the
Member a balance sheet of Company as of the open of business on the Closing Date
(the “Closing Balance Sheet”) and a statement of Closing Working Capital derived
from the Closing Balance Sheet (the “Closing Working Capital Statement”). The
Closing Balance Sheet and the Closing Working Capital Statement shall be
prepared on a tax accrual basis applied using the same accounting methods,
practices, principles, policies and procedures, with consistent classifications,
judgments and valuation and estimation methodologies that were used in the
preparation of the Company’s Financial Statements for the most recent fiscal
year end as if such Closing Balance Sheet was as of a fiscal year end.

(iii) Dispute Procedures. The Closing Balance Sheet and the Closing Working
Capital Statement (and the computation of Closing Working Capital indicated
thereon) delivered by Purchaser to the Member shall be conclusive and binding

 

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upon the parties unless the Member, within 30 days after delivery to the Member
of the Closing Balance Sheet and the Closing Working Capital Statement, notifies
Purchaser in writing that the Member disputes any of the amounts set forth
therein, specifying the nature of the dispute and the basis therefore. The
parties shall in good faith attempt to resolve any dispute, in which event the
Closing Balance Sheet and the Closing Working Capital Statement (and the
computation of Closing Working Capital indicated thereon), as amended to the
extent necessary to reflect the resolution of the dispute, shall be conclusive
and binding on the parties. If the parties do not reach agreement resolving the
dispute within 30 days after notice is given by the Member to Purchaser pursuant
to the second preceding sentence, the parties shall submit the dispute to a
mutually satisfactory partner in the Chicago, Illinois office of a mutually
agreeable independent accounting firm (the “Arbiter”) for resolution. If the
parties cannot agree on the selection of a partner at an independent accounting
firm to act as Arbiter, the parties shall request the American Arbitration
Association to appoint such a partner, and such appointment shall be conclusive
and binding on the parties. Promptly, but no later than 30 days after acceptance
of his or her appointment as Arbiter, the Arbiter shall determine (it being
understood that in making such determination, the Arbiter shall be functioning
as an expert and not as an arbitrator), based solely on written submissions by
Purchaser and the Member, and not by independent review, only those issues in
dispute and shall render a written report as to the resolution of the dispute
and the resulting computation of the Closing Working Capital which shall be
conclusive and binding on the parties. All proceedings conducted by the Arbiter
shall take place in Chicago, Illinois. In resolving any disputed item, the
Arbiter (x) shall be bound by the provisions of this Section 3.3 and (y) may not
assign a value to any item greater than the greatest value for such items
claimed by either party or less than the smallest value for such items claimed
by either party. The fees, costs and expenses of the Arbiter (1) shall be borne
by Purchaser in the proportion that the aggregate dollar amount of such items so
submitted that are successfully disputed by the Member (as finally determined by
the Arbiter) bears to the aggregate dollar amount of such items so submitted and
(2) shall be borne by the Member in the proportion that the aggregate dollar
amount of such disputed items so submitted that are unsuccessfully disputed by
the Member (as finally determined by the Arbiter) bears to the aggregate dollar
amount of such items so submitted.

(iv) Payment. Upon final determination of Closing Working Capital as provided in
Section 3.3(b)(iii) above, (A) if Closing Working Capital is greater than
Estimated Closing Working Capital, the Purchase Price shall be increased by the
excess of Closing Working Capital over Estimated Closing Working Capital and
Purchaser shall promptly, but no later than five (5) business days after such
final determination, pay to Member the amount of such difference, together with
interest thereon from the Closing Date to the date of payment thereof as
determined below; and (B) if Closing Working Capital is less than Estimated
Closing Working Capital, the Purchase Price shall be decreased by the excess of
Estimated Closing Working Capital over Closing Working Capital and the Member
shall promptly, but no later than five (5) business days after such final
determination, pay to Purchaser the amount of such difference, together with
interest thereon from the Closing Date to the date of payment thereof as
determined below.

 

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(v) Interest. For the purposes of this Section 3.3(b), interest will be payable
at the “prime” rate, as announced by The Wall Street Journal, from time to time
to be in effect, calculated based on a 365 day year and the actual number of
days elapsed.

3.4 Earn-Out.

(a) Subject to Section 9.7 and clause (d) below, the Member shall be entitled to
receive additional annual payments (“Annual Earn-Out Payments”) from the
Purchaser based on annual EBITDA (as defined below) generated by Toll
Processing/Product Revenues (as defined below) for each of the twelve-month
periods from January 1 through December 31 in the years 2012, 2013, 2014, 2015
and 2016. To determine each Annual Earn-Out Payment, annual EBITDA within each
EBITDA Range set forth in the table below shall be multiplied by the percentage
applicable to such EBITDA Range as set forth in the table below (the “Applicable
Percentage”). No Annual Earn-Out Payment shall be payable in any year in which
EBITDA is a negative number. If in any calendar year of the earn-out, Purchaser
pays any amount to acquire a new company or business that operates processing
facilities that will directly improve the EBITDA derived from the Toll
Processing/Product Revenues, then (1) EBITDA in respect of such calendar year
shall be reduced by the product of (A) fifteen percent (15%) and (B) a fraction,
the numerator of which is the number of days from the closing date of the
acquisition to the end of such calendar year, and the denominator of which is
365 and (C) the amount of the purchase price paid; and (2) EBITDA in respect of
each subsequent calendar year during the earn-out shall be reduced by the
product of (A) fifteen percent (15%) and (B) the amount of the purchase price
paid. If in any calendar year of the earn-out, Purchaser incurs capital
expenditures (excluding up to $323,000 of capital expenditures that may be
incurred by Purchaser for GMP compliance following the Closing Date) to
construct or upgrade the Company’s processing facilities in an aggregate amount
during such calendar year in excess of $100,000, then (1) EBITDA in respect of
such calendar year shall be reduced by the product of (A) fifteen percent
(15%) and (B) a fraction, the numerator of which is the number of days from the
date on which such new or upgraded asset is placed in service (provided, that if
the asset is placed in service more than 12 months after the incurrence of the
capital expenditure, the measurement date shall begin 12 months after the
incurrence of the capital expenditure) to the end of such calendar year, and the
denominator of which is 365 and (C) the amount of the capital expenditure
incurred (including the initial $100,000); and (2) EBITDA in respect of each
subsequent calendar year during the earn-out shall be reduced by the product of
(A) fifteen percent (15%) and (B) the amount of the capital expenditure
incurred.

EBITDA Ranges and Applicable Percentages for Years 2012 Through 2016

 

EBITDA Range

  

Applicable Percentage

Up to $3,000,000

   5%

From $3,000,001 to $6,000,000

   10%

From $6,000,001 to $9,000,000

   15%

From $9,000,001 to $12,000,000

   20%

Over $12,000,000

   30%

 

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(b) As used herein, these terms have the following meanings:

“EBITDA” means earnings from operations before interest, taxes, depreciation and
amortization determined in accordance with GAAP consistently applied, in each
case as attributable to Toll Processing/Product Revenues. In determining EBITDA
for purposes of this Agreement:

(1) EBITDA shall be computed without regard to “extraordinary items” of gain or
loss as that term shall be defined in GAAP;

(2) EBITDA shall not include any gains, losses or profits realized from the sale
of any assets other than in the ordinary course of business;

(3) EBITDA shall not include any management fees, general overhead expenses or
other intercompany charges charged by the Purchaser to the Company, except that
Purchaser may allocate its proportionate share of direct costs that directly
benefit the Company such as (for example and not in limitation) insurance
premiums and payroll processing fees;

(4) No deduction shall be made for legal or accounting fees and expenses arising
out of this Agreement; and

(5) The purchase and sales prices of goods and services (other than
administrative or professional services) sold by the Purchaser or its Affiliates
to the Company, or purchased by the Purchaser or its Affiliates from the
Company, shall be adjusted to reflect the amounts that the Company would have
realized or paid if dealing with an independent party in an arm’s-length
commercial transaction.

“Toll Processing/Product Revenues” shall mean for each calendar year from
January 1, 2012 through December 31, 2016, (1) all revenue generated by the toll
processing business of the Company and (2) all revenue from sales of Product (as
defined below) by the Company or Purchaser or Affiliate of Purchaser.

“Product” means:

(A) Omega-3 concentrates, derivatives and conjugates from menhaden and other
sources (plant, animal and microbial);

(B) upgraded refined oils from menhaden and other sources that utilize
materially different processing technologies than currently utilized by
Purchaser;

(C) products developed or brought in by the Company and agreed to by Purchaser;
and

 

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(D) products requested by Purchaser for the Company to develop or manufacture;

provided, however, that any product developed by Purchaser or Company or any of
their Affiliates as a result of a processing technology that (i) is developed by
Purchaser independently from the Company or any Key Employee or acquired by
Purchaser or Company or any of their Affiliates through the acquisition of
another business after the Closing Date, and (ii) is materially different than
the processing technology used by the Company at the time of the acquisition or
development, shall not be treated as a “Product” for purposes of this
Section 3.4.

(c) Any Annual Earn-Out Payments due to the Member shall be paid by Purchaser
within thirty (30) days following the date on which Purchaser determines EBITDA
for each period (and the date on which Purchaser determines EBITDA shall be no
later than March 15 following the end of such period). Any payments pursuant to
this Section 3.4 shall be made by wire transfer of immediately available funds
into an account designated by the Member. The Member shall have the right, upon
ten Business Days’ notice to Purchaser, to inspect Purchaser’s books and records
or to have Purchaser’s books and records inspected or audited by an accountant
chosen by the Member in order to verify calculations of amounts under this
Section 3.4. The Member will be liable for any accounting, auditing, legal, or
other professional service provider costs incurred by the Member in connection
with evaluating Purchaser’s books and records. Any disputes regarding the
Earn-Out Payment shall be resolved as provided in Section 3.3(b)(iii).

(d) The amount of any Annual Earn-Out Payment otherwise due to the Member shall
be reduced by 33.33% for each Key Employee whose employment was previously
terminated (1) voluntarily by the Key Employee except as a result of the Key
Employee’s death or disability (as determined in the Key Employee’s Employment
Agreement with the Company) or (2) for Cause (as defined below) by the Company
or Purchaser. If all of the Key Employees have been terminated as of December 31
of any year (1) voluntarily by any such Key Employee except as a result of the
Key Employee’s death or disability (as determined in the Key Employee’s
Employment Agreement with the Company) or (2) for Cause (as defined below) by
the Company or Purchaser, no Annual Earn-Out Payment shall be payable to the
Member in respect of such year or any future year. As used herein, “Cause”
means: (i) the commission of an act of fraud, embezzlement, or theft against the
Company or any of its affiliates, (ii) any acts involving gross negligence,
willful misconduct, moral turpitude, dishonesty or fraud, which will likely
cause a material harm to the business, prospects or reputation of Purchaser or
Company or any of their Affiliates, (iii) an unauthorized disclosure or misuse
of any trade secrets or confidential information of the Company or any of its
Affiliates, (iv) breach by the Key Employee of his obligations under Section 6
of the Key Employee’s Employment Agreement with the Company; or (v) willful
misconduct by the Key Employee that is intended to materially injure the
business, prospects or reputation of Purchaser or Company or their Affiliates.

(e) Notwithstanding anything contained in this Section 3.4, no Annual Earn-Out
Payment shall be earned during any period of time that there exists a ban on the
sale of Omega-3 in the continental United States; provided that the foregoing
shall not extend the earn-out period beyond December 31, 2016.

 

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ARTICLE IV

CLOSING AND TERMINATION

4.1 Closing Date. Subject to the satisfaction of the conditions set forth in
Sections 8.1 and 8.2 hereof (or the waiver thereof by the party entitled to
waive that condition), the closing of the sale and purchase of the Membership
Interest provided for in Section 2.1 hereof (the “Closing”) shall take place at
the offices of Baker & Hostetler LLP, located at 1000 Louisiana, Suite 2000,
Houston, Texas 77002 (or at such other place as the parties may designate in
writing) at 10:00 a.m. (Houston time) on a date to be specified by the parties,
which date shall be no later than the second Business Day after the satisfaction
or waiver of each conditions to the Closing set forth in Article VIII (other
than conditions that by their nature are to be satisfied at the Closing, but
subject to the satisfaction or waiver of such conditions), unless another time
or date, or both, are agreed to in writing by the parties hereto. The date on
which the Closing shall be held is referred to in this Agreement as the “Closing
Date.”

4.2 Termination of Agreement. This Agreement may be terminated prior to the
Closing as follows:

(a) At the election of the Member or Purchaser, on or after September 30, 2011,
if the Closing shall not have occurred by the close of business on such date,
provided that the terminating party is not in material default of any of its
obligations hereunder;

(b) by mutual written consent of the Member and Purchaser;

(c) by written notice from Purchaser to the Member that there has been an event,
change, occurrence or circumstance that has had or could reasonably be expected
to have a Material Adverse Effect;

(d) by the Member or Purchaser if there shall be in effect a final nonappealable
Order of a Governmental Body of competent jurisdiction restraining, enjoining or
otherwise prohibiting the consummation of the transactions contemplated hereby;
it being agreed that the parties hereto shall promptly appeal any adverse
determination which is not nonappealable (and pursue such appeal with reasonable
diligence);

(e) by Purchaser if there shall have been a material breach of any
representation, warranty, covenant or agreement of the Company or the Member set
forth in this Agreement, which breach would give rise to a failure of a
condition set forth in Sections 8.1(a) or 8.1(b) and is incapable of being cured
or, if capable of being cured, shall not have been cured within ten (10) days
following receipt by the Member of notice of such breach from the Purchaser; or

 

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(f) by the Member if there shall have been a material breach of any
representation, warranty, covenant or agreement of Purchaser set forth in this
Agreement, which breach would give rise to a failure of a condition set forth in
Sections 8.2(a) or 8.2(b) and is incapable of being cured or, if capable of
being cured, shall not have been cured within ten (10) days following receipt by
Purchaser of notice of such breach from the Member.

4.3 Procedure Upon Termination. In the event of termination and abandonment by
Purchaser or the Member, or both, pursuant to Section 4.2 hereof, the
terminating party shall send written notice thereof to the other parties hereto,
and this Agreement shall terminate, and the purchase of the Membership Interest
hereunder shall be abandoned, without further action by Purchaser or the Member.

4.4 Effect of Termination. In the event that this Agreement is validly
terminated as provided herein, then each of the parties shall be relieved of
their duties and obligations arising under this Agreement after the date of such
termination and such termination shall be without liability to Purchaser, the
Company, the Member or the Shareholders or the Principals; provided, however,
that (i) the obligations of the parties set forth in Article X hereof and
(ii) the terms and conditions of that certain Confidentiality Agreement by and
between the Company and Purchaser dated May 10, 2011, shall survive any such
termination and shall be enforceable hereunder; provided, further, however, that
nothing in this Section 4.4 shall relieve Purchaser, the Company the Member, the
Shareholders or the Principals of any liability for a breach of this Agreement
prior to the effective date of termination.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE MEMBER, THE

SHAREHOLDERS AND THE PRINCIPALS

The Member, each of the Shareholders and each of the Principals hereby represent
and warrant to Purchaser that:

5.1 Organization and Good Standing. The Company is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite company power and authority to own,
lease and operate its properties and to carry on its business as now conducted.
The Member is a corporation duly organized, validly existing and in good
standing under the laws of the State of Illinois and has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as now conducted. Each of the Company and the Member is duly qualified
or authorized to do business as a foreign company and is in good standing under
the laws of each jurisdiction in which it owns or leases real property and each
other jurisdiction in which the conduct of its business or the ownership of its
properties requires such qualification or authorization.

 

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5.2 Authorization of Agreement.

(a) The Company, the Member and each of the Shareholders have all requisite
power, authority and legal capacity to execute and deliver this Agreement and
each other agreement, document, or instrument or certificate contemplated by
this Agreement or to be executed by any of them in connection with
the consummation of the transactions contemplated by this Agreement (together
with this Agreement, the “Shareholder Documents”), and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Shareholder Documents and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all required action
on the part of the Company, the Member and the Shareholders. This Agreement has
been, and the Shareholder Documents will be at or prior to the Closing, duly and
validly executed and delivered by the Company, the Member and the Shareholders
and (assuming the due authorization, execution and delivery by the other parties
hereto and thereto) this Agreement constitutes, and the Shareholder Documents
when so executed and delivered will constitute, legal, valid and binding
obligations of the Company, the Member and the Shareholders, enforceable against
each of them in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors’ rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).

5.3 Conflicts; Consents of Third Parties.

(a) None of the execution and delivery by the Company, the Member, the
Shareholders or the Principals of this Agreement or the Shareholder Documents,
the consummation of the transactions contemplated hereby or thereby, or
compliance by the Company, the Member, the Shareholders or the Principals with
any of the provisions hereof or thereof will conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to loss of a material benefit under, or give rise to any
obligation of the Company to make any payment under, or to the increased,
additional, accelerated or guaranteed rights or entitlements of any Person
under, or result in the creation of any Liens upon the Membership Interest or
any of the properties or assets of the Company under, any provision of (i) the
certificate of formation or the operating agreement of the Company and the
Member or the trust agreement and related agreements of any Shareholder;
(ii) any Contract, or Permit to which the Company, the Member or any Shareholder
is a party or by which any of the properties or assets of the Company, the
Member or any Shareholder are bound; (iii) any Order of any Governmental Body
applicable to the Company, the Member or any Shareholder or any of the
properties or assets of the Company, the Member or any Shareholder as of the
date hereof; or (iv) any applicable Law.

(b) Except as set forth on Schedule 5.3(b), no consent, waiver, approval,
declaration or filing with, or notification to, any Person or Governmental Body
is required on the part of the Company, the Member, the Shareholders or the
Principals in connection with (i) the execution and delivery of this Agreement
or the Shareholder Documents, the compliance by the Company, the Member or any
of the Shareholders or

 

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Principals with any of the provisions hereof, or the consummation of the
transactions contemplated hereby, or (ii) the continuing validity and
effectiveness immediately following the Closing of any Permit or Contract of the
Company.

5.4 Capitalization.

(a) The Membership Interest owned by the Member represents all of the
outstanding equity interests of the Company. The Membership Interest was duly
authorized for issuance and is validly issued, fully paid and non-assessable.
The Shareholders are the record and beneficial owners of one hundred percent
(100%) of the membership interests of the Member in the amounts set forth on
Schedule 5.4.

(b) There is no existing option, warrant, call, right or Contract of any
character to which the Company, the Member or any Shareholder is a party
requiring, and there are no securities of the Company outstanding which upon
conversion or exchange would require, the issuance, sale or transfer of any
additional membership interest or other equity securities of the Company or
other securities convertible into, exchangeable for or evidencing the right to
subscribe for or purchase membership interests or other equity securities of the
Company. None of the Company, the Member or any Shareholder is a party to any
voting trust or other Contract with respect to the voting, redemption, sale,
transfer or other disposition of the Membership Interest or any other equity
securities of the Company.

5.5 Subsidiaries. The Company does not have, and since October 31, 2005 has not
had, any Subsidiaries, and does not own, and since October 31, 2005 has not
owned, an equity interest in any Person. To the Company’s Knowledge, it did not
have any Subsidiaries at any time prior to October 31, 2005.

5.6 Corporate Records. The Member has delivered to Purchaser true, correct and
complete copies of the certificate of formation and the operating agreement of
the Company.

5.7 Ownership and Transfer of Membership Interest. The Member is the record and
beneficial owner of the Membership Interest, free and clear of any and all
Liens. The Member has the requisite power and authority to sell, transfer,
assign and deliver the Membership Interest as provided in this Agreement, and
such delivery will convey to Purchaser good and marketable title to the
Membership Interest, free and clear of any and all Liens.

5.8 Financial Statements.

(a) The Member has delivered to Purchaser copies of (i) the balance sheet of the
Company as of December 31, 2010 and 2009 and the related statement of income of
the Company for the years then ended internally generated by the Company’s
accountants and (ii) the balance sheet of the Company as of June 30, 2011 and
the related statement of income for the six-month period then ended (such
statements, including the related notes and schedules thereto, if any, are
referred to herein as the “Financial Statements”) internally generated by the
Company’s accountants). Each of the Financial

 

18

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Statements is complete and correct in all material respects, has been prepared
on a tax accrual basis consistently applied by the Company without modification
of the accounting principles used in the preparation thereof throughout the
periods presented and presents fairly the consolidated financial position,
results of operations and cash flows of the Company as of the dates and for the
periods indicated therein.

For the purposes hereof, the consolidated balance sheet of the Company as at
June 30, 2011 is referred to as the “Balance Sheet” and June 30, 2011 is
referred to as the “Balance Sheet Date.”

(b) The Company makes and keeps books, records and accounts which, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of their
respective assets, in all material respects. The Company maintains systems of
internal accounting controls sufficient to provide reasonable assurances that:
(i) transactions are executed in accordance with management’s general or
specific authorization; (ii) transactions are recorded as necessary to permit
the preparation of financial statements on a tax accrual basis and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with the actual levels at
reasonable intervals and appropriate action is taken with respect to any
differences.

(c) The financial projections provided by the Company and the Member to
Purchaser prior to the date hereof were reasonably prepared on a basis
reflecting management’s best estimates, assumptions and judgments, at the time
provided to Purchaser, as to the future financial performance of the Company,
based solely on the sale volume estimates provided by Purchaser to the Company
to prepare such projections.

5.9 No Undisclosed Liabilities. The Company has no Indebtedness, obligations or
Liabilities of any kind other than those (i) fully reflected in, reserved
against or otherwise described in the Balance Sheet or the notes thereto,
(ii) arising under Contracts or (iii) immaterial to the Company and incurred in
the Ordinary Course of Business since the Balance Sheet Date.

5.10 Absence of Certain Developments. Except as expressly contemplated by this
Agreement or as set forth on Schedule 5.10, since the Balance Sheet Date (i) the
Company has conducted its business only in the Ordinary Course of Business and
(ii) there has not been any event, change, occurrence or circumstance that has
had or could reasonably be expected to have a Material Adverse Effect. Without
limiting the generality of the foregoing, except as set forth on Schedule 5.10,
since the Balance Sheet Date:

(i) there has not been any damage, destruction or loss, whether or not covered
by insurance, with respect to the property and assets of the Company having a
replacement cost of more than $10,000 for any single loss or $25,000 for all
such losses;

 

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(ii) there has not been any declaration, setting aside or payment of any
dividend or other distribution in respect of the Membership Interest or any
repurchase, redemption or other acquisition by the Company of any outstanding
shares of capital stock or other securities of, or other ownership interest in,
the Company;

(iii) the Company has not entered into any employment, deferred compensation,
severance or similar agreement (nor amended any such agreement) or agreed to
increase the compensation payable or to become payable by it to any of its
directors, officers, employees, agents or representatives or agreed to increase
the coverage or benefits available under any severance pay, termination pay,
vacation pay, company awards, salary continuation for disability, sick leave,
deferred compensation, bonus or other incentive compensation, insurance, pension
or other employee benefit plan, payment or arrangement made to, for or with such
directors, officers, employees, agents or representatives;

(iv) there has not been any change by the Company in accounting or Tax reporting
principles, methods or policies;

(v) the Company has not made or rescinded any election relating to Taxes, or
settled or compromised any claim relating to Taxes;

(vi) the Company has not entered into any transaction or Contract or conducted
its business other than in the Ordinary Course of Business;

(vii) the Company has not failed to promptly pay and discharge current
liabilities except where disputed in good faith by appropriate proceedings;

(viii) the Company has not made any loans, advances or capital contributions to,
or investments in, any Person or paid any fees or expenses to the Member or any
director, officer, partner, stockholder or Affiliate of the Member;

(ix) the Company has not mortgaged, pledged or subjected to any Lien any of its
assets, or acquired any assets or sold, assigned, transferred, conveyed, leased
or otherwise disposed of any assets of the Company, except for assets acquired
or sold, assigned, transferred, conveyed, leased or otherwise disposed of in the
Ordinary Course of Business;

(x) the Company has not discharged or satisfied any Lien, or paid any obligation
or liability (fixed or contingent), except in the Ordinary Course of Business
and which, in the aggregate, would not be material to the Company taken as a
whole;

(xi) the Company has not canceled or compromised any debt or claim or amended,
canceled, terminated, relinquished, waived or released any Contract or right
except in the Ordinary Course of Business and which, in the aggregate, would not
be material to the Company taken as a whole;

 

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(xii) the Company has not made or committed to make any capital expenditures or
capital additions or betterments in excess of $10,000 in the aggregate;

(xiii) the Company has not issued, created, incurred, assumed or guaranteed any
Indebtedness;

(xiv) the Company has not granted any license or sublicense of any rights under
or with respect to any Intellectual Property;

(xv) the Company has not instituted or settled any material Legal Proceeding;
and

(xvi) neither the Member nor the Company has agreed, committed, arranged or
entered into any understanding to do anything set forth in this Section 5.10.

5.11 Taxes.

(a) (i) All Tax Returns required to be filed by or on behalf of the Company have
been duly and timely filed with the appropriate Taxing Authority in all
jurisdictions in which such Tax Returns are required to be filed (after giving
effect to any valid extensions of time in which to make such filings), and all
such Tax Returns are true, complete and correct in all respects; and (ii) all
Taxes payable by or on behalf of the Company (whether or not shown or required
to be shown on any Tax Return) have been fully and timely paid. All required
estimated Tax payments sufficient to avoid any underpayment penalties have been
made by or on behalf of the Company.

(b) The Company has complied in all material respects with all applicable Laws
relating to the payment and withholding of Taxes and has duly and timely filed
all returns and forms and withheld and paid over to the appropriate Taxing
Authority all amounts required to be so withheld and paid under all applicable
Laws in connection with amounts paid or owing to any employee, independent
contractor, creditor, shareholder, or other third party.

(c) The Member has made available to Purchaser complete copies of (i) all
federal, state, local and foreign Tax Returns of the Company relating to the
taxable periods ending after December 31, 2006 and (ii) any audit report issued
relating to any Taxes due from or with respect to the Company with respect to
which the statute of limitations has not expired.

(d) Schedule 5.11 sets forth the Tax classification of the Company for federal,
state and local income tax purposes and lists (i) all types of Taxes paid, and
all types of Tax Returns filed by or on behalf of the Company relating to
taxable periods ending after December 31, 2006, and (ii) all of the
jurisdictions that impose such Taxes and/or duty to file such Tax Returns. No
claim has been made by a Taxing Authority in a jurisdiction where the Company
does not file Tax Returns such that it is or may be subject to taxation by that
jurisdiction.

 

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(e) The Company has not waived any statute or limitations in respect of Taxes or
agreed to any extension of time with respect to a Tax assessment or deficiency.
All deficiencies asserted or assessments made as a result of any examinations by
any Taxing Authority of the Tax Returns of, or including, the Company have been
fully paid, and to Company’s Knowledge, there are no other audits or
investigations by any Taxing Authority in progress, nor have the Member or the
Company received any notice from any Taxing Authority that it intends to conduct
such an audit or investigation. No issue has been raised by a Taxing Authority
in any prior examination of the Company which, by application of the same or
similar principles, could reasonably be expected to result in a proposed
deficiency for any subsequent taxable period.

(f) Neither the Company, nor any other Person on its behalf has (i) filed a
consent pursuant to Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as such term is defined in Section 341(f)(4) of the Code) owned by the Company,
(ii) agreed to or is required to make any adjustments pursuant to Section 481(a)
of the Code or any similar provision of Law or has any knowledge that any Taxing
Authority has proposed any such adjustment, or has any application pending with
any Taxing Authority requesting permission for any changes in accounting methods
that relate to the Company, (iii) executed or entered into a closing agreement
pursuant to Section 7121 of the Code or any similar provision of Law with
respect to the Company, (iv) requested any extension of time within which to
file any Tax Return, which Tax Return has since not been filed, (v) granted any
extension for the assessment or collection of Taxes, which Taxes have not since
been paid, or (vi) granted to any Person any power of attorney that is currently
in force with respect to any Tax matter.

(g) No property owned by the Company is (i) property required to be treated as
being owned by another Person pursuant to the provisions of Section 168(f)(8) of
the Internal Revenue Code of 1954, as amended and in effect immediately prior to
the enactment of the Tax Reform Act of 1986, (ii) “tax-exempt use property”
within the meaning of Section 168(h)(1) of the Code or (iii) “tax-exempt bond
financed property” within the meaning of Section 168(g) of the Code,
(iv) “limited use property” within the meaning of Rev. Proc. 2001-28,
(v) subject to Section 168(g)(1)(A) of the Code, or (vi) subject to any
provision of state, local or foreign Law comparable to any of the provisions
listed above.

(h) The Member is not a foreign person within the meaning of Section 1445 of the
Code.

(i) The Company is not a party to any tax sharing, allocation, indemnity or
similar agreement or arrangement (whether or not written) pursuant to which it
will have any obligation to make any payments after the Closing.

(j) There is no contract, agreement, plan or arrangement covering any person
that, individually or collectively, could give rise to the payment of any amount
that would not be deductible by the Purchaser or the Company by reason of
Section 280G of the Code.

 

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(k) The Company is not subject to any private letter ruling of the IRS or
comparable rulings of any Taxing Authority.

(l) There are no liens as a result of any unpaid Taxes upon any of the assets of
the Company.

(m) The Company has never been a member of any consolidated, combined,
affiliated or unitary group of corporations for any Tax purposes.

(n) The Company has not constituted either a “distributing corporation” or a
“controlled corporation” (within the meaning of Section 355(a)(1)(A) of the
Code) in a distribution of stock qualifying for tax-free treatment under
Section 355 of the Code (A) in the two (2) years prior to the date of this
Agreement or (B) in a distribution which could otherwise constitute part of a
“plan” or “series of related transactions” (within the meaning of Section 355(e)
of the Code) in conjunction with the transactions contemplated by this
Agreement.

(o) There is no taxable income of the Company that will be required under
applicable Tax Law to be reported by the Purchaser or any of its Affiliates,
including the Company, for a taxable period beginning after the Closing Date
which taxable income was realized (and reflects economic income) arising prior
to the Closing Date.

(p) The Company has disclosed on its federal income Tax Returns all positions
taken therein that could give rise to substantial understatement of federal
income tax within the meaning of Section 6662 of the Code.

(q) The Company has not been a party to any “reportable transaction” as defined
in Section 6707A(c)(1) of the Code or Reg. 1.6011-4(b).

(r) The Company does not have, and has never had, a permanent establishment in
any country other than the United States, and the Company has not engaged in a
trade or business in any country other than the United States that subjected it
to tax in such country.

(s) The Company does not have any potential tax liability for any Tax under
Section 1374 of the Code. The Company has not, in the past 10 years,
(i) acquired assets from another corporation in a transaction in which such
entity’s tax basis for the acquired asset was determined, in whole, or in part,
by reference to the Tax basis of the acquired assets (or any other property) in
the hands of the transferor or (ii) acquired the stock of any corporation which
is a validly qualified “S” corporation subsidiary (a “QSSS”).

5.12 Real Property.

(a) The Company does not own any real property or any interest in real property.
Schedule 5.12(a) sets forth a complete list of all real property and interests
in real property leased by the Company (individually, a “Real Property Lease”
and

 

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collectively, the “Real Property Leases”) as lessee or lessor. The Real Property
Leases constitute all interests in real property currently used or currently
held for use in connection with the business of the Company and which are
necessary for the continued operation of the business of the Company as the
business is currently conducted. The properties subject to the Real Property
Leases and all fixtures and improvements thereon are in good operating condition
and repair (subject to normal wear and tear). The Member has delivered or
otherwise made available to Purchaser true, correct and complete copies of the
Real Property Leases, together with all amendments, modifications or
supplements, if any, thereto, and any other real property leases that the
Company has been a party to within the last five years.

(b) The Company has a valid and enforceable leasehold interest under the Real
Property Leases, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors’ rights and remedies generally
and subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity). The Real
Property Leases are in full force and effect, and the Company has not received
or given any notice of any default or event that with notice or lapse of time,
or both, would constitute a default by the Company under any Real Property Lease
and, to the Knowledge of the Company, no other party is in default thereof, and
no party to any Real Property Lease has exercised any termination rights with
respect thereto.

(c) The Company is in compliance with applicable zoning and similar requirements
of any Governmental Body necessary for the current use and operation of the
properties subject to the Real Property Leases.

(d) There does not exist any actual or, to the Knowledge of the Company,
threatened or contemplated condemnation or eminent domain proceedings that
affect the properties subject to the Real Property Leases or any part thereof,
and the Company has not received any notice, oral or written, of the intention
of any Governmental Body or other Person to take or use all or any part thereof.

(e) The Company has not received any notice from any insurance company that has
issued a policy with respect to the properties subject to the Real Property
Leases requiring performance of any structural or other repairs or alterations
to any such property.

(f) The Company does not own or hold, and is not obligated under or a party to,
any option, right of first refusal or other contractual right to purchase,
acquire, sell, assign or dispose of any real estate or any portion thereof or
interest therein.

5.13 Tangible Personal Property.

(a) The Company has good and marketable title to all of the items of tangible
personal property reflected on the Balance Sheet (except as sold or disposed of
subsequent to the date thereof in the Ordinary Course of Business), free and
clear of any and all Liens, other than the Permitted Exceptions. Schedule
5.13(a) sets forth an

 

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accurate and complete list of all fixed assets of the Company. All such items of
tangible personal property which, individually or in the aggregate, are material
to the operation of the business of the Company are in good condition and in a
state of good maintenance and repair (ordinary wear and tear excepted) and are
reasonably suitable for the purposes currently used by the Company in all
material respects.

(b) Schedule 5.13(b) sets forth all leases of personal property (“Personal
Property Leases”) relating to personal property used in the business of the
Company or to which the Company is a party or by which the properties or assets
of the Company are bound. All of the items of personal property under the
Personal Property Leases are in good condition and repair (ordinary wear and
tear excepted) and are reasonably suitable for the purposes currently used by
the Company in all material respects, and such property is in all material
respects in the condition required of such property by the terms of the lease
applicable thereto during the term of the lease. The Member has delivered or
otherwise made available to Purchaser true, correct and complete copies of the
Personal Property Leases, together with all amendments, modifications or
supplements thereto.

(c) The Company has a valid and enforceable leasehold interest under each of the
Personal Property Leases under which it is a lessee, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors’ rights and remedies generally and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity). Each of the Personal Property Leases is in full
force and effect. There is no default under any Personal Property Lease by the
Company or, to the Knowledge of the Company, by any other party thereto, and no
event has occurred that with the lapse of time or the giving of notice or both
would constitute a default thereunder. No party to any of the Personal Property
Leases has exercised any termination rights with respect thereto.

5.14 Intellectual Property

(a) Schedule 5.14(a) sets forth an accurate and complete list of all Patents,
registered Marks, pending applications for registrations of any Marks and
unregistered Marks, registered Copyrights, and pending applications for
registration of Copyrights and Software owned, filed, practiced or used by the
Company. Schedule 5.14(a)(i) lists the jurisdictions in which each such item of
Intellectual Property described in the preceding sentence has been issued or
registered or in which any such application for such issuance and registration
has been filed.

(b) Except as disclosed in Schedule 5.14(b)(i), the Company is the sole and
exclusive owner of all right, title and interest in and to all of the
Intellectual Property, including Patents, the Marks, each of the registered
Copyrights and pending applications filed by the Company therefor, the Software
and Technology, and each of the other Copyrights in any works of authorship
prepared by or for the Company that resulted from or arose out of any work
performed by or on behalf of the Company or by any employee, officer, consultant
or contractor of any of them. The Company is the sole and exclusive owner of, or
has valid and continuing rights to use, sell and license, as the case may be,

 

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all other Intellectual Property used, sold or licensed by the Company in their
businesses as presently conducted and as currently proposed to be conducted,
free and clear of all Liens or obligations to others (except for those specified
licenses included in Schedule 5.14(e)).

(c) The Intellectual Property owned, used, practiced or otherwise commercially
exploited by the Company, the manufacturing, licensing, marketing, importation,
offer for sale, sale or use of the Products or Technology in connection with the
business as presently conducted, and the Company’s present business practices
and methods do not infringe, constitute an unauthorized use or misappropriation
of any patent (including each of the patents listed on Schedule 5.14(c)),
copyright, trade secret or other similar right, of any Person and do not
infringe, constitute an unauthorized use of, or violate any other right of any
Person (including, without limitation, pursuant to any non-disclosure agreements
or obligations to which the Company or any of their present or former employees
is a party). The Intellectual Property owned, used or practiced by, or licensed
to, the Company includes all of the intellectual property rights necessary to
enable the Company to conduct their businesses in the manner in which such
business is currently being conducted. The Products and Technology in connection
with the business as presently conducted and the Company’s present and currently
proposed business practices and methods do not infringe any claim of any of the
patents listed on Schedule 5.14(c).

(d) Except with respect to licenses of commercial off-the-shelf Software, and
except pursuant to the Intellectual Property Licenses listed in
Schedule 5.14(d), the Company is not required, obligated, or under any liability
whatsoever, to make any payments by way of royalties, fees or otherwise to any
owner, licensor of, or other claimant to any Intellectual Property, or other
third party, with respect to the use thereof or in connection with the conduct
of the business of the Company as currently conducted or proposed to be
conducted. Except as disclosed in Schedule 5.14(d), none of the Software or
Technology owned, used, practiced or otherwise exploited by the Company includes
any open source software or code.

(e) Schedule 5.14(e) sets forth a complete and accurate list of all Contracts to
which the Company is a party (i) granting any Intellectual Property Licenses,
(ii) containing a covenant not to compete or otherwise limiting its ability to
(A) exploit fully any of the Intellectual Property or (B) conduct the business
in any market or geographical area or with any Person or (iii) containing an
agreement to indemnify any other person against any claim of infringement of
Intellectual Property.

(f) Each of the Intellectual Property Licenses is in full force and effect and
is the legal, valid and binding obligation of the Company, enforceable against
them in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors’ rights and
remedies generally and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in
equity). The Company is not in default under any Intellectual Property License,
nor to Company’s Knowledge is any other party to any Intellectual Property
License in default thereunder, and no event has

 

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occurred that with the lapse of time or the giving of notice or both would
constitute a default thereunder. No party to any of the Intellectual Property
Licenses has exercised any termination rights with respect thereto.

(g) No Trade Secret or any other non-public, proprietary information material to
the business of the Company as presently conducted has been authorized to be
disclosed or, has been actually disclosed by the Member or the Company to any
employee or any third party other than pursuant to a non-disclosure agreement
restricting the disclosure and use of the Intellectual Property. The Member and
the Company have taken adequate security measures to protect the secrecy,
confidentiality and value of all the Trade Secrets of the Company and any other
confidential information, including invention disclosures, not covered by any
patents owned or patent applications filed by the Company, which measures are
reasonable in the industry in which the Company operate. Each employee,
consultant and independent contractor of the Company, has entered into a written
non-disclosure and invention assignment agreement with the Company in a form
provided to Purchaser.

(h) As of the date hereof, the Company is not the subject of any pending or, to
Company’s Knowledge, threatened Legal Proceedings which involve a claim of
infringement, unauthorized use, or violation by any Person against the Company
or challenging the ownership, use, validity or enforceability of, any material
Intellectual Property. The Company has not received notice of any such
threatened claim and, there are no facts or circumstances that would form the
basis for any claim of infringement, unauthorized use, or violation by any
Person against the Company, or challenging the ownership, use, validity or
enforceability of any material Intellectual Property. All of the Company’s
rights in and to material Intellectual Property are valid and enforceable. The
Company is not the subject of any pending or threatened Legal Proceedings which
involve a claim of infringement, unauthorized use, or violation of any claim of
any of the patents listed on Schedule 5.14(c), and the Company has not received
notice of any such threatened claim. There are no facts or circumstances that
would form the basis for any claim of infringement, unauthorized use, or
violation of any claim of any of the patents listed on Schedule 5.14(c).

(i) To Company’s Knowledge, no Person is infringing, violating, misusing or
misappropriating any material Intellectual Property of the Company, and no such
claims have been made against any Person by the Company.

(j) There are no Orders to which the Company is a party or by which the Company
is bound which restrict, in any material respect, the rights to use any of the
Intellectual Property.

(k) The consummation of the transactions contemplated hereby will not result in
the loss or impairment of Purchaser’s right to own or use any of the
Intellectual Property, in a manner as currently used by the Company.

(l) No present or former employee has any right, title, or interest, directly or
indirectly, in whole or in part, in any material Intellectual Property owned or

 

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used by the Company. To Company’s Knowledge, no employee, consultant or
independent contractor of the Company is, as a result of or in the course of
such employee’s, consultant’s or independent contractor’s engagement by the
Company, in default or breach of any material term of any employment agreement,
non-disclosure agreement, assignment of invention agreement or similar
agreement.

(m) Schedule 5.14(m) sets forth a complete and accurate list of (i) all Software
that is owned exclusively by the Company and is material to the operation of the
business and (ii) all Software that is used by the Company in the business that
is not exclusively owned by the Company, excluding Software available on
reasonable terms through commercial distributors or in consumer retail stores
for a license fee of no more than $1,000.

(n) Domain Names. Schedule 5.14(n) sets forth a complete and accurate list of
all domain names owned by the Company (the “Domain Names”). All Domain Names are
properly registered in the name of the Company, in compliance with all legal
requirements, and are freely assignable to Purchaser. No Domain Name has been or
is now involved in any dispute, opposition, invalidation or cancellation
proceeding and, to Company’s Knowledge no such action is threatened with respect
to any Domain Name. No Domain Name has to Company’s Knowledge been infringed or
has been challenged, interfered with or threatened in any way. No Domain Name
infringes, interferes with or is alleged to interfere with or infringe the
trademark, copyright or domain name of any other Person.

5.15 Material Contracts. Schedule 5.15 sets forth a complete and accurate list
of each of the following contracts to which the Company is a party or by which
it or any of its assets or properties is bound (collectively, the “Material
Contracts”):

(a) all bonds, debentures, notes, loans, credit or loan agreements or loan
commitments, mortgages, indentures, letters of credit, guarantees or other
contracts relating to the borrowing of money;

(b) all contracts and agreements granting any Person a Lien on all or any part
of any assets of the Company;

(c) all contracts and agreements granting to any Person an option or a first
refusal, first-offer or similar preferential right to purchase or acquire any
assets of the Company;

(d) all contracts and agreements that limit or restrict any Company or any
officer or key employee of any Company from engaging or competing in any
business in any jurisdiction or geographic location or from soliciting any
employees, customers, independent contractors or suppliers of any Person;

(e) all contracts and agreements providing for the indemnification or holding
harmless of any officer, director, employee, independent contractor or
consultant;

 

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(f) all alliance, teaming, joint bid, joint venture, joint operating or
partnership contracts and agreements;

(g) all guarantees of the performance of any Person and all escrow arrangements;

(h) all surety bonds (including performance bonds, bid bonds, tax bonds and
licensing bonds) and any indemnity or underwriting agreements or other contracts
with a surety; and

(i) all other contracts and agreements to which the Company is a party or by
which it or any of its assets is bound that involve annual expenditures or
receipts in excess of $25,000.

Each Contract to which the Company is a party or by which it or its assets is
otherwise bound is in full force and effect and is the legal, valid and binding
obligation of the Company, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors’ rights and remedies generally and subject, as
to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity). The Company is not
in default under any such Contract, nor, to Company’s Knowledge, is any other
party to any such Contract in default thereunder, and to Company’s Knowledge, no
event has occurred that with the lapse of time or the giving of notice or both
would constitute a default thereunder. No party to any of the Material Contracts
has exercised any termination rights with respect thereto. The Member has
delivered or otherwise made available to Purchaser true, correct and complete
copies of all of the Material Contracts, together with all amendments,
modifications or supplements thereto.

5.16 Employee Benefits Plans.

(a) Schedule 5.16(a) sets forth a correct and complete list of: (i) all
“employee benefit plans” (as defined in Section 3(3) of ERISA), and all other
employee benefit plans, programs, agreements, policies, arrangements or payroll
practices, including bonus plans, employment, consulting or other compensation
agreements, collective bargaining agreements, incentive, equity or equity-based
compensation, or deferred compensation arrangements, change in control,
termination or severance plans or arrangements, stock purchase, severance pay,
sick leave, vacation pay, salary continuation for disability, hospitalization,
medical insurance, life insurance and scholarship plans and programs maintained
by the Company or to which the Company contributed or is obligated to contribute
thereunder for current or former employees of the Company (the “Employees”)
(collectively, the “Company Plans”), and (ii) all “employee pension plans” (as
defined in Section 3(2) of ERISA, subject to Title IV of ERISA or Section 412 of
the Code, maintained by the Company or any of its Affiliates and any trade or
business (whether or not incorporated) that is or has ever been under common
control, or that is or has ever been treated as a single employer, with any of

 

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them under Section 414(b), (c), (m) or (o) of the Code (each, an “ERISA
Affiliate”) or to which the Company or any ERISA Affiliate contributed or has
ever been obligated to contribute thereunder (the “Title IV Plans”). Schedule
5.16(a) sets forth each Company Plan and Title IV Plan that is a “multiemployer
plan” (as defined in Section 3(37) of ERISA (a “Multiemployer Plan”)), or is or
has been subject to Sections 4063 or 4064 of ERISA.

(b) Correct and complete copies of the following documents, with respect to each
of the Company Plans (other than a Multiemployer Plan), have been made available
or delivered to Purchaser by the Member, to the extent applicable: (i) any
plans, all amendments thereto and related trust documents, insurance contracts
or other funding arrangements, and amendments thereto; (ii) the most recent
Forms 5500 and all schedules thereto and the most recent actuarial report, if
any; (iii) the most recent IRS determination letter; (iv) summary plan
descriptions; (v) written communications to employees relating to the Company
Plans; and (vi) written descriptions of all non-written agreements relating to
the Company Plans.

(c) The Company Plans have been maintained in all material respects in
accordance with their terms and with all provisions of ERISA, the Code
(including rules and regulations thereunder) and other applicable Federal and
state Laws and regulations, and neither the Company nor any “party in interest”
or “disqualified person” with respect to the Company Plans has engaged in a
non-exempt “prohibited transaction” within the meaning of Section 4975 of the
Code or Section 406 of ERISA. No fiduciary has any liability for breach of
fiduciary duty or any other failure to act or comply in connection with the
administration or investment of the assets of any Company Plan.

(d) The Company Plans intended to qualify under Section 401 of the Code are so
qualified and any trusts intended to be exempt from Federal income taxation
under Section 501 of the Code are so exempt, and nothing has occurred with
respect to the operation of the Company Plans that could cause the loss of such
qualification or exemption or the imposition of any liability, penalty or tax
under ERISA or the Code.

(e) Each Company Plan that is intended to meet the requirements for tax-favored
treatment under Subchapter B of Chapter 1 of Subtitle A of the Code meets such
requirements.

(f) Neither the Company nor any ERISA Affiliate has withdrawn in a complete or
partial withdrawal from any Multiemployer Plan prior to the Closing Date, nor
has any of them incurred any liability due to the termination or reorganization
of a Multiemployer Plan. Purchaser shall not have (i) any obligation to make any
contribution to any Multiemployer Plan or (ii) any withdrawal liability from any
Multiemployer Plan under Section 4201 of ERISA, which it would not have had but
for the consummation of the transactions contemplated by this Agreement.

(g) Schedule 5.16(g) sets forth on a plan by plan basis, the present value of
benefits payable presently or in the future to Employees under each unfunded
Company Plan.

 

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(h) All contributions (including all employer contributions and employee salary
reduction contributions) required to have been made under any of the Company
Plans (including workers compensation) or Title IV Plans or by Law (without
regard to any waivers granted under Section 412 of the Code), to any funds or
trusts established thereunder or in connection therewith have been made by the
due date thereof (including any valid extension), and all contributions for any
period ending on or before the Closing Date that are not yet due will have been
paid or sufficient accruals for such contributions and other payments in
accordance with GAAP are duly and fully provided for on the Balance Sheet. No
accumulated funding deficiencies exist in any of the Company Plans or Title IV
Plans subject to Section 412 of the Code.

(i) There is no “amount of unfunded benefit liabilities” (as defined in
Section 4001(a)(18) of ERISA) in any of the Title IV Plans. Each of the Title IV
Plans are fully funded in accordance with the actuarial assumptions used by the
Pension Benefit Guaranty Corporation (“PBGC”) to determine the level of funding
required in the event of the termination of a Title IV Plan and the “benefit
liabilities” (as defined in Section 4001(a)(16) of ERISA) of such Title IV Plan
using such PBGC assumptions do not exceed the assets of such Title IV Plan.

(j) There has been no “reportable event” (as defined in Section 4043 of ERISA)
with respect to the Title IV Plans that would require the giving of notice or
any event requiring disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA.

(k) Neither the Company nor any ERISA Affiliate has terminated any Title IV
Plan, or incurred any outstanding liability under Section 4062 of ERISA to the
PBGC or to a trustee appointed under Section 4042 of ERISA. All premiums due the
PBGC with respect to the Title IV Plans have been paid.

(l) No liability under any Company Plan or Title IV Plan has been funded nor had
any such obligation been satisfied with the purchase of a contract from an
insurance company that is not rated AA by Standard & Poor’s Corporation or the
equivalent by any other nationally recognized rating agency.

(m) Neither the Company nor any ERISA Affiliate or any organization to which the
Company is a successor or parent corporation within the meaning of
Section 4069(b) of ERISA has engaged in any transaction within the meaning of
Section 4069 or 4212(c) of ERISA.

(n) There are no pending actions, claims or lawsuits that have been asserted or
instituted against the Company Plans, the assets of any of the trusts under the
Company Plans or the sponsor or administrator of any of the Company Plans, or
against any fiduciary of the Company Plans with respect to the operation of any
of the Company Plans (other than routine benefit claims), nor does the Company
or the Member have any Knowledge of facts that could form the basis for any such
claim or lawsuit.

(o) There is no material violation of ERISA or the Code with respect to the
filing of applicable reports, documents and notices regarding the Company Plans

 

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with the Secretary of Labor or the Secretary of the Treasury or the furnishing
of such documents to the participants in or beneficiaries of the Company Plans.
All amendments and actions required to bring the Company Plans into conformity
in all material respects with all of the applicable provisions of the Code,
ERISA and other applicable Laws have been made or taken. Any bonding required
with respect to the Company Plans in accordance with applicable provisions of
ERISA has been obtained and is in full force and effect.

(p) None of the Company Plans provides for post-employment life or health
insurance, benefits or coverage for any participant or any beneficiary of a
participant, except as may be required under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”), and at the expense of the
participant or the participant’s beneficiary. Each of the Company and any ERISA
Affiliate which maintains a “group health plan” within the meaning
Section 5000(b)(1) of the Code has complied with the notice and continuation
requirements of Section 4980B of the Code, COBRA, Part 6 of Subtitle B of Title
I of ERISA and the regulations thereunder.

(q) Neither the execution and delivery of this Agreement nor the consummation of
the transactions contemplated hereby will (i) result in any payment becoming due
to any Employee, (ii) increase any benefits otherwise payable under any Company
Plan or Title IV Plan or (iii) result in the acceleration of the time of payment
or vesting of any such benefits under any Company Plan or Title IV Plan.
Schedule 5.16(q) lists each Company Plan that is a “nonqualified deferred
compensation plan” subject to Section 409A of the Code. Each such Company Plan
complies with the requirements of Section 409A(a)(2), (3), and (4) of the Code
and any Internal Revenue Service guidance issued thereunder and no amounts under
any such Company Plan is or has been subject to the interest and additional tax
set forth under Section 409A(a)(1)(B) of the Code. Neither Company nor any of
its Subsidiaries has any actual or potential obligation to reimburse or
otherwise “gross-up” any Person for the interest or additional tax set forth
under Section 409A(a)(1)(B) of the Code.

(r) The Company does not have any contract, plan or commitment, whether legally
binding or not, to create any additional Company Plan or to modify any existing
Company Plan.

(s) No partnership interest or other security issued by the Company forms or has
formed a material part of the assets of any Company Plan.

(t) Any individual who performs services for the Company (other than through a
contract with an organization other than such individual) and who is not treated
as an employee of the Company for Federal income tax purposes by the Company is
not an employee for such purposes.

 

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5.17 Employees; Labor.

(a) Schedule 5.17 contains a complete list of all current employees and
independent contractors of the Company, listing the title or position held, base
salary, any commissions or other compensation paid or payable, all employee
benefits received by such employees and any other terms of any oral or written
agreement (including a copy of any such written agreement) between the employee
or contractor and the Company or any Affiliate thereof.

(b) The Company is not a party to any labor or collective bargaining agreement
and there are no labor or collective bargaining agreements which pertain to
employees of the Company. No Employees are represented by any labor
organization. There are no unfair labor practice charges, grievances or
complaints pending or, to the Knowledge of the Company, threatened by or on
behalf of any employee or group of employees of the Company.

(c) There are no complaints, charges or claims against the Company pending or,
to Knowledge of the Company, threatened that could be brought or filed, with any
Governmental Body or based on, arising out of, in connection with or otherwise
relating to the employment or termination of employment or failure to employ by
the Company, of any individual. The Company is in compliance with all Laws
relating to the employment of labor, including all such Laws relating to wages,
hours, WARN and any similar state or local “mass layoff” or “plant closing” Law,
collective bargaining, discrimination, civil rights, safety and health, workers’
compensation and the collection and payment of withholding and/or social
security taxes and any similar tax except for immaterial non-compliance. The
Company has not classified any individual as an independent contractor who
should have been properly classified as an employee of the Company.

5.18 Litigation. There is no Legal Proceeding pending (nor has any Legal
Proceeding been adjudicated, settled, or otherwise resolved or terminated within
one year prior to the Closing Date) or, to the Knowledge of the Company,
threatened against the Company (or to the Knowledge of the Company, pending or
threatened, against any of the officers, directors or employees of the Company
with respect to their business activities on behalf of the Company), or to which
the Member or the Company is otherwise a party before any Governmental Body; nor
to the Knowledge of the Company is there any reasonable basis for any such Legal
Proceeding. The Company is not subject to any Order. The Company is not engaged
in any legal action to recover monies due it or for damages sustained by it.

5.19 Compliance with Laws; Permits.

(a) Except as set forth on Schedule 5.19, the Company is in compliance in all
material respects with all Laws of any Governmental Body applicable to its
business, operations or assets. The Company has not received any notice of or
been charged with the violation of any Laws. The Company is not under
investigation with respect to the violation of any Laws and to the Knowledge of
the Company, there are no facts or circumstances which could form the basis for
any such violation. The Company is and has been in compliance with all Laws
regarding immigration.

 

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(b) Schedule 5.19 contains a list of all Permits which are required for the
operation of the business of the Company as presently conducted. The Company
currently has all Permits which are required for the operation of its business
as presently conducted. Except as set forth on Schedule 5.19, the Company is not
in default or violation, and no event has occurred which, with notice or the
lapse of time or both, would constitute a default or violation, in any material
respect of any term, condition or provision of any Permit to which it is a
party, to which its business is subject or by which its properties or assets are
bound, and to the Knowledge of the Company, there are no facts or circumstances
which could form the basis for any such default or violation.

5.20 Environmental Matters. Except as set forth on Schedule 5.20 hereto:

(a) The operations of the Company are and have been in compliance with all
applicable Environmental Laws, which compliance includes obtaining, maintaining
in good standing and complying with all Environmental Permits and no action or
proceeding is pending or, to the Knowledge of the Company, threatened to revoke,
modify or terminate any such Environmental Permit, and, to the Knowledge of the
Company, no facts, circumstances or conditions currently exist that could
adversely affect such continued compliance with Environmental Laws and
Environmental Permits or require currently unbudgeted capital expenditures to
achieve or maintain such continued compliance with Environmental Laws and
Environmental Permits;

(b) the Company is not the subject of any outstanding written order or Contract
with any Governmental Body or person respecting (i) Environmental Laws,
(ii) Remedial Action or (iii) any Release or threatened Release of a Hazardous
Material;

(c) no claim has been made or is pending, or to the Knowledge of the Company,
threatened against the Company alleging either or both that the Company may be
in violation of any Environmental Law or Environmental Permit, or may have any
liability under any Environmental Law;

(d) no facts, circumstances or conditions exist with respect to the Company or
any property currently or formerly owned, operated or leased by the Company or
any property to which the Company arranged for the disposal or treatment of
Hazardous Materials that could reasonably be expected to result in the Company
incurring liability under Environmental Laws;

(e) there are no investigations of the business, operations, or currently or, to
the Knowledge of the Company, previously owned, operated or leased property of
the Company pending or, to the Knowledge of the Company, threatened which could
lead to the imposition of any liability under Environmental Law;

(f) the transactions contemplated hereunder do not require the consent of or
filings with any Governmental Body with jurisdiction over the Company and
environmental matters;

 

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(g) there is not located at any of the properties of the Company any
(i) underground storage tanks, (ii) landfill, (iii) surface impoundment,
(iii) asbestos-containing material or (iv) equipment containing polychlorinated
biphenyls; and

(h) the Member has provided to Purchaser all environmentally related audits,
studies, reports, analyses, and results of investigations that have been
performed with respect to the currently or previously owned, leased or operated
properties of the Company.

5.21 Insurance. The Company has insurance policies in full force and effect for
such amounts as are sufficient for all requirements of Law and all agreements to
which the Company is a party or by which it is bound. Set forth in Schedule 5.21
is a list of all insurance policies and all fidelity bonds held by or applicable
to the Company setting forth, in respect of each such policy, the policy name,
policy number, carrier, term, type and amount of coverage and annual premium.
Except as set forth on Schedule 5.21, no event relating to the Company has
occurred which could reasonably be expected to result in a retroactive upward
adjustment in premiums under any such insurance policies or which could
reasonably be expected to result in a prospective upward adjustment in such
premiums. Excluding insurance policies that have expired and been replaced in
the Ordinary Course of Business, no insurance policy has been cancelled within
the last two (2) years and, to the Knowledge of the Company, no threat has been
made to cancel any insurance policy of the Company during such period. Except as
noted on Schedule 5.21, all such insurance will remain in full force and effect
immediately for the benefit of the Company immediately following the
consummation of the transactions contemplated hereby. No event has occurred,
including, without limitation, the failure by the Company to give any notice or
information or the Company giving any inaccurate or erroneous notice or
information, which limits or impairs the rights of the Company under any such
insurance policies.

5.22 Inventories. The inventories of the Company are in good and marketable
condition, and are saleable in the Ordinary Course of Business. The inventories
of the Company set forth in the Balance Sheet were properly stated therein on a
tax accrual basis consistently applied. The inventories of the Company
constitute sufficient quantities for the normal operation of the business in
accordance with past practice.

5.23 Accounts and Notes Receivable and Payable.

(a) All accounts and notes receivable of the Company have arisen from bona fide
transactions in the Ordinary Course of Business consistent with past practice
and are payable on ordinary trade terms. Except as set forth in Schedule 5.23,
all accounts and notes receivable of the Company reflected on the Balance Sheet
are good and collectible at the aggregate recorded amounts thereof, net of any
applicable reserve for returns or doubtful accounts reflected thereon, which
reserves are adequate and were calculated in a manner consistent with past
practice and on tax accrual basis consistently applied. All accounts and notes
receivable arising after the Balance Sheet Date are good and collectible at the
aggregate recorded amounts thereof, net of any applicable reserve for returns or
doubtful accounts, which reserves are adequate and were calculated in a

 

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manner consistent with past practice and on a tax accrual basis consistently
applied. None of the accounts or the notes receivable of the Company (i) are
subject to any setoffs or counterclaims or (ii) represent obligations for goods
sold on consignment, on approval or on a sale-or-return basis or subject to any
other repurchase or return arrangement.

(b) All accounts payable of the Company reflected in the Balance Sheet or
arising after the date thereof are the result of bona fide transactions in the
Ordinary Course of Business and have been paid or are not yet due and payable.

5.24 Related Party Transactions.

(a) Schedule 5.24 lists each Contract, agreement or arrangement (whether written
or oral) between the Company, on the one hand, and any Affiliate of the Company,
any director, officer, employee of the Company, or the Member or any
Shareholder, on the other hand. Except as set forth in Schedule 5.24, neither
the Member nor any Shareholder, nor any director, officer, employee or Affiliate
of the Company (i) owns any direct or indirect interest of any kind in, or
controls or is a director, officer, employee or partner of, or consultant to, or
lender to or borrower from or has the right to participate in the profits of,
any Person which is (A) a competitor, supplier, customer, landlord, tenant,
creditor or debtor of the Company, (B) engaged in a business related to the
business of the Company, or (C) a participant in any transaction to which the
Company is a party or (ii) is a party to any Contract with the Company.

(b) Each Contract, agreement or arrangement between the Company, on the one
hand, and any Affiliate of the Company, any director, officer or employee of the
Company, or the Member or any Shareholder, on the other hand, is on commercially
reasonable terms no more favorable to such Affiliate, director, officer or
employee than what any third party negotiating on an arms-length basis would
expect.

(c) Except for the addition by Antares Health Products, Inc. of TPGS/emulsifier
blends to fish oil, none of InCon International, Inc., InCon Industries, Inc.,
Antares Health Products, Inc., Arcturus Performance Products, LLC, Acquamed
Technologies, Inc. or InCon Process Systems, LLC are engaged in the business of
refining, enhancement or concentration of fish oil or any other Omega-3 sources.

5.25 Customers and Suppliers.

(a) Schedule 5.25 sets forth a list of the ten (10) largest customers and the
ten (10) largest suppliers of the Company, as measured by the dollar amount of
purchases therefrom or thereby, during each of the fiscal years ended
December 31, 2010 and 2009 and the six-month period ended on June 30, 2011,
showing the total sales by the Company to each such customer and the total
purchases by the Company from each such supplier, during such period.

(b) Since the Balance Sheet Date, no customer or supplier listed on Schedule
5.25 has terminated its relationship with the Company or materially reduced or
changed the pricing or other terms of its business with the Company and, to the
Knowledge of the Company, no customer or supplier listed on Schedule 5.25 has
notified the Company that it intends to terminate or materially reduce or change
the pricing or other terms of its business with the Company.

 

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5.26 Product Warranty; Product Liability.

(a) Each product manufactured, sold, distributed or delivered and each service
delivered by the Company in conducting its business has been in conformity with
all product specifications, service requirements and all express and implied
warranties. The Company has no liability for replacement or repair of any such
products or other damages in connection therewith or any other customer or
product obligations not reserved against on the Balance Sheet. The Company has
not sold any products or delivered any services that included a warranty for a
period of longer than one (1) year. Attached hereto as Schedule 5.26 are
representative copies of all warranties given by the Company in the ordinary
course of its business.

(b) The Company has not committed any act or failed to commit any act, which
would result in, and there has been no occurrence which would give rise to or
form the basis of, any product liability or liability for breach of warranty
(whether covered by insurance or not) on the part of the Company with respect to
products designed, developed, manufactured, assembled, distributed, repaired,
maintained, delivered or installed or services rendered prior to the Closing.

5.27 FDA Compliance.

(a) Except as set forth on Schedule 5.27, the Company is, with respect to all
products currently made, sold or marketed in the United States, or imported into
the United States, or under development by the Company (collectively, the
“Products”), in compliance in all material respects with the applicable
provisions of the Federal Food, Drug, and Cosmetic Act (the “FDC Act”) and the
implementing regulations, policies and guidances issued by the U.S. Food and
Drug Administration (the “FDA”), the applicable provisions of the Federal Trade
Commission Act (the “FTC Act”) and the implementing regulations, policies and
guidances issued by the Federal Trade Commission (the “FTC”), any applicable
regulations and requirements adopted by the U.S. Department of Agriculture (the
“USDA”), and any applicable requirements established by state or local
authorities responsible for regulating dietary supplement products and
establishments (collectively, the “State Authorities”), as well as with all
material terms and conditions imposed in any licenses, permits, approvals,
clearances, registrations or other authorizations granted to the Company by the
FDA, the USDA, or any State Authority, including, but not limited to, any
applicable facility registrations and fees; current good manufacturing practice
(cGMP), Hazard Analysis and Critical Control Point (HACCP), or sanitation
requirements; requirements relating to food; product or nutrition labeling
requirements; inspection requirements; product composition requirements; testing
requirements or protocols; recordkeeping and product traceability requirements;
reporting and monitoring requirements; packaging (including co-packing and
repackaging) requirements; laboratory controls; storage and warehousing
procedures; prior import notice, product certifications and shipping
requirements; and shelf-life requirements.

 

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(b) Except as set forth on Schedule 5.27, the Company, the Products, and the
facilities in which the Products are made, processed, labeled, packaged, handled
or stored are not now subject (nor have they been subject during the previous
three years) to any adverse inspection, finding, recall, investigation, penalty
assessment, audit or other compliance or enforcement action, or to the Knowledge
of the Company any investigation, by the FDA, the FTC, the USDA, any State
Authority, or any other authority having responsibility for the regulation of
food or dietary supplement products, and, to the Knowledge of the Company, none
of the assemblers or distributors which receive, assemble or distribute the
Products is subject (or has been subject during the previous three years) to any
such adverse action with regard to the Products. To the Knowledge of the
Company, no supplier that supplies goods (including food ingredients or dietary
ingredients for dietary supplements) or services in relation to the Products is
subject (or has been subject during the previous three years) to any such
adverse action with regard to such goods (including food ingredients or dietary
ingredients) or services. The Company has obtained all necessary approvals,
licenses, permits, registrations, clearances and authorizations from, and has
made all necessary and appropriate applications and other submissions to, the
FDA, the USDA, any State Authority and any other authority having responsibility
for the regulation of dietary supplement products, for their current and past
business activities relating to the Products, including, without limitation, any
new dietary ingredient (NDI) or generally recognized as safe (GRAS)
notifications, and notifications for “structure function” claims for the
Products.

(c) Neither the Company nor, to the Knowledge of the Company, any third party
retained by the Company have made on behalf of the Company any material false
statements or material omissions in applications or other submissions to the
FDA, the FTC, the USDA, any State Authority or any other authority having
responsibility for the regulation of food products, and neither the Company nor,
to the Knowledge of the Company, any third party retained by the Company has
made or offered on behalf of the Company any payments, gratuities, or other
things of value that are prohibited by any law or regulation to personnel of the
FDA, the FTC the USDA, any State Authority, or other authority having
responsibility for the regulation of food or dietary supplement products.

(d) Neither the Company nor the Member has received any information or report
from the FDA, the FTC, the USDA, any State Authority, or any other authority
having responsibility for the regulation of food or dietary supplement products,
indicating that any Product is unsafe or unsuitable for its intended use, and to
the Knowledge of the Company, there are no facts that would reasonably be
expected to result in the FDA, the USDA, any State Authority, or other authority
having responsibility for the regulation of food or dietary supplement products,
prohibiting or materially restricting the marketing, sale, distribution or use
in the United States of any Product currently made, marketed, or under
development by the Company, or the operation or use of any facility currently
used by the Company in connection with the Products.

(e) During the past three years there have been no product recalls, market
withdrawals, embargoes, off-sale orders, warning letters or seizures with
respect to any products manufactured or sold by the Company. Further, no reports
of reportable foods have been submitted to the Reportable Food Registry
maintained by the FDA.

 

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5.28 Banks. Schedule 5.28 contains a complete and correct list of the names and
locations of all banks in which the Company has accounts or safe deposit boxes
and the names of all persons authorized to draw thereon or to have access
thereto. Except as set forth on Schedule 5.28, no person holds a power of
attorney to act on behalf of the Company.

5.29 Full Disclosure. This Agreement and the Shareholder Documents and their
respective schedules and exhibits delivered by or on behalf of the Company or
the Member hereunder and thereunder are true, correct and complete in all
material respects. No representation or warranty of the Member contained in this
Agreement or in any of the Shareholder Documents and no written statement made
by or on behalf of the Company or the Member to Purchaser or any of its
Affiliates pursuant to this Agreement or any of the Shareholder Documents
contains an untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained herein or therein not
misleading. To the Knowledge of the Company, there is no fact which the Company
or the Member has not disclosed to Purchaser that could reasonably be expected
to have a Material Adverse Effect.

5.30 Financial Advisors. No Person has acted, directly or indirectly, as a
broker, finder or financial advisor for the Member or the Company in connection
with the transactions contemplated by this Agreement and no Person is entitled
to any fee or commission or like payment in respect thereof.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser hereby represents and warrants to the Member that:

6.1 Organization and Good Standing. Purchaser is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization.

6.2 Authorization of Agreement. Purchaser has full corporate or other power and
authority to execute and deliver this Agreement and each other agreement,
document, instrument or certificate contemplated by this Agreement or to be
executed by Purchaser in connection with the consummation of the transactions
contemplated hereby and thereby (the “Purchaser Documents”), and to consummate
the transactions contemplated hereby and thereby. The execution, delivery and
performance by Purchaser of this Agreement and each Purchaser Document have been
duly authorized by all necessary corporate action on behalf of Purchaser. This
Agreement has been, and each Purchaser Document will be at or prior to the
Closing, duly executed and delivered by Purchaser and (assuming the due
authorization, execution and delivery by the other parties hereto and thereto)
this Agreement constitutes, and each Purchaser Document when so executed and
delivered will constitute, the legal, valid and binding obligation of Purchaser,

 

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enforceable against Purchaser in accordance with its respective terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting creditors’ rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).

6.3 Conflicts; Consents of Third Parties.

(a) Neither of the execution and delivery by Purchaser of this Agreement and of
the Purchaser Documents, nor the compliance by Purchaser with any of the
provisions hereof or thereof will (i) conflict with, or result in the breach of,
any provision of the certificate of incorporation or by-laws of Purchaser,
(ii) conflict with, violate, result in the breach of, or constitute a default
under any note, bond, mortgage, indenture, license, agreement or other
obligation to which Purchaser is a party or by which Purchaser or its properties
or assets are bound or (iii) violate any statute, rule, regulation or Order of
any Governmental Body by which Purchaser is bound, except, in the case of
clauses (ii) and (iii), for such violations, breaches or defaults as would not,
individually or in the aggregate, have a material adverse effect on the ability
of Purchaser to consummate the transactions contemplated by this Agreement.

(b) No consent, waiver, approval, Order, Permit or authorization of, or
declaration or filing with, or notification to, any Person or Governmental Body
is required on the part of Purchaser in connection with the execution and
delivery of this Agreement or the Purchaser Documents or the compliance by
Purchaser with any of the provisions hereof or thereof.

6.4 Litigation. There are no Legal Proceedings pending or, to the Knowledge of
Purchaser, threatened that are reasonably likely to prohibit or restrain the
ability of Purchaser to enter into this Agreement or consummate the transactions
contemplated hereby.

6.5 Investment Intention. Purchaser is acquiring the Membership Interest for its
own account, for investment purposes only and not with a view to the
distribution (as such term is used in Section 2(11) of the Securities Act of
1933, as amended (the “Securities Act”) thereof. Purchaser understands that the
Membership Interest has not been registered under the Securities Act and cannot
be sold unless subsequently registered under the Securities Act or an exemption
from such registration is available.

6.6 Financial Advisors. No Person has acted, directly or indirectly, as a
broker, finder or financial advisor for Purchaser in connection with the
transactions contemplated by this Agreement and no Person is entitled to any fee
or commission or like payment in respect thereof.

6.7 Solvency. At Closing, there is no bankruptcy or insolvency proceeding of any
character, including, without limitation, bankruptcy, receivership,
reorganization, dissolution, or arrangement with creditors, voluntary or
involuntary, affecting Purchaser,

 

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and Purchaser has not taken any action in contemplation of, or which would
constitute a basis for, the institution of such proceedings. Purchaser is
solvent and the consummation of this transaction will not render the Purchaser
insolvent as of the Closing Date pursuant to any Law.

ARTICLE VII

COVENANTS

7.1 Access to Information. The Company and the Member agree that, prior to the
Closing Date, Purchaser shall be entitled, through its officers, employees and
representatives (including, without limitation, its legal advisors and
accountants), to make such investigation of the properties, businesses and
operations of the Company and such examination of the books, records and
financial condition of the Company as it reasonably requests and to make
extracts and copies of such books and records. Any such investigation and
examination shall be conducted during regular business hours and under
reasonable circumstances upon prior written notice to the Member, and the Member
shall cooperate, and shall cause the Company to cooperate, fully therein. No
investigation by Purchaser prior to or after the date of this Agreement shall
diminish or obviate any of the representations, warranties, covenants or
agreements of the Member contained in this Agreement or the Shareholder
Documents. In order that Purchaser may have full opportunity to make such
physical, business, accounting and legal review, examination or investigation as
it may reasonably request of the affairs of the Company, the Company and the
Member shall cause the officers, employees, consultants, agents, accountants,
attorneys and other representatives of the Company to cooperate fully with such
representatives in connection with such review and examination.

7.2 Conduct of the Business Pending the Closing.

(a) Except as otherwise expressly provided in this Agreement or with the prior
written consent of Purchaser, the Member shall, and shall cause the Company to:

(i) conduct the businesses of the Company only in the Ordinary Course of
Business;

(ii) use its commercial reasonable efforts to (A) preserve its present business
operations, organization (including, without limitation, management and the
sales force) and goodwill of the Company and (B) preserve its present
relationship with Persons having business dealings with the Company (including,
without limitation, customers and suppliers);

(iii) maintain (A) all of the assets and in the ordinary course of business
properties of the Company in their current condition, ordinary wear and tear
excepted and (B) insurance upon all of the properties and assets of the Company
in such amounts and of such kinds comparable to that in effect on the date of
this Agreement;

 

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(iv) (A) maintain the books, accounts and records of the Company in the Ordinary
Course of Business, (B) continue to collect accounts receivable and pay accounts
payable utilizing normal procedures and without discounting or accelerating
payment of such accounts, and (C) comply with all contractual and other
obligations applicable to the operation of the Company; and

(v) comply in all material respects with all applicable Laws; and

(vi) not take any action which would adversely affect the ability of the parties
to consummate the transactions contemplated by this Agreement.

(b) Except as otherwise expressly provided in this Agreement or with the prior
written consent of Purchaser, the Member shall not, and shall not permit the
Company to:

(i) transfer, issue, sell or dispose of any membership interest or other
securities of the Company or grant options, warrants, calls or other rights to
purchase or otherwise acquire membership interests or other securities of the
Company;

(ii) effect any recapitalization, reclassification, stock split or like change
in the capitalization of the Company;

(iii) amend the certificate of formation or operating agreement of the Company;

(iv) (A) materially increase the annual level of compensation of any employee of
the Company, (B) increase the annual level of compensation payable or to become
payable by the Company to any of their respective executive officers, (C) grant
any unusual or extraordinary bonus, benefit or other direct or indirect
compensation to any employee, director or consultant, (D) increase the coverage
or benefits available under any (or create any new) severance pay, termination
pay, vacation pay, company awards, salary continuation for disability, sick
leave, deferred compensation, bonus or other incentive compensation, insurance,
pension or other employee benefit plan or arrangement made to, for, or with any
of the directors, officers, employees, agents or representatives of the Company
or otherwise modify or amend or terminate any such plan or arrangement or
(E) enter into any employment, deferred compensation, severance, consulting,
non-competition or similar agreement (or amend any such agreement) to which the
Company is a party or involving a director, officer or employee of the Company
in his or her capacity as a director, officer or employee of the Company;

(v) incur or assume any Indebtedness;

(vi) subject to any Lien or otherwise encumber or, except for Permitted
Exceptions, permit, allow or suffer to be encumbered, any of the properties or
assets (whether tangible or intangible) of the Company;

 

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(vii) acquire any material properties or assets or sell, assign, license,
transfer, convey, lease or otherwise dispose of any of the material properties
or assets of the Company;

(viii) enter into or agree to enter into any merger or consolidation with, any
corporation or other entity, and not engage in any new business or invest in,
make a loan, advance or capital contribution to, or otherwise acquire the
securities of any other Person;

(ix) cancel or compromise any debt or claim or waive or release any material
right of the Company except in the Ordinary Course of Business;

(x) enter into any commitment for capital expenditures of the Company in excess
of $10,000 in the aggregate;

(xi) enter into, modify or terminate any labor or collective bargaining
agreement of the Company or, through negotiation or otherwise, make any
commitment or incur any liability to any labor organization with respect to the
Company;

(xii) introduce any material change with respect to the operation of the
Company, including any material change in the types, nature, composition or
quality of its products or services, or, other than in the Ordinary Course of
Business, make any change in product specifications or prices or terms of
distributions of such products;

(xiii) permit the Company to enter into any transaction or to enter into, modify
or renew any Contract which by reason of its size, nature or otherwise is not in
the Ordinary Course of Business;

(xiv) except for transfers of cash pursuant to normal cash management practices
in the Ordinary Course of Business, permit the Company to make any investments
in or loans to, or pay any fees or expenses to, or enter into or modify any
Contract with any Affiliate of the Company, or any director, officer or employee
of the Company;

(xv) make a change in its accounting or Tax reporting principles, methods or
policies;

(xvi) make, change or rescind any election relating to Taxes or settle or
compromise any claim or proceeding relating to Taxes;

(xvii) file any amended Tax Return, settle any Tax claim or assessment or
consent to any extension or waiver of the period of limitation on any Tax claim
or assessment;

(xviii) enter into any Contract, understanding or commitment that restrains,
restricts, limits or impedes the ability of the Company to compete with or
conduct any business or line of business in any geographic area;

 

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(xix) terminate, amend, restate, supplement or waive any rights under any
Material Contract, Intellectual Property License or Permit; and

(xx) agree to do anything prohibited by this Section 7.2 or anything which would
make any of the representations and warranties of the Member in this Agreement
or the Shareholder Documents untrue or incorrect in any material respect.

7.3 Consents. The Member shall use (and shall cause the Company to use) its best
efforts, and Purchaser shall cooperate with the Member, to obtain at the
earliest practicable date all consents and approvals required to consummate the
transactions contemplated by this Agreement, including the consents and
approvals referred to in Schedule 5.3(b).

7.4 Further Assurances. Each of the Principals, the Shareholders, the Member and
Purchaser shall use its commercially reasonable efforts (i) to cause the Company
to take all actions necessary or appropriate to consummate the transactions
contemplated by this Agreement and (ii) to cause the fulfillment at the earliest
practicable date of all of the conditions to their respective obligations to
consummate the transactions contemplated by this Agreement.

7.5 No Shop.

(a) The Principals, the Shareholders and the Member will not, and will not
permit the Company or any of the directors, officers, employees, representatives
or agents of the Company (collectively, the “Representatives”) to, directly or
indirectly, (i) discuss, negotiate, undertake, authorize, recommend, propose or
enter into, either as the proposed surviving, merged, acquiring or acquired
corporation, any transaction involving a merger, consolidation, business
combination, purchase or disposition of any amount of the assets of the Company
or any capital stock of the Company (an “Acquisition Transaction”) other than
the transactions contemplated by this Agreement, (ii) facilitate, encourage,
solicit or initiate discussions, negotiations or submissions of proposals or
offers in respect of an Acquisition Transaction, (iii) furnish or cause to be
furnished, to any Person, any information concerning the business, operations,
properties or assets of the Company in connection with an Acquisition
Transaction, or (iv) otherwise cooperate in any way with, or assist or
participate in, facilitate or encourage, any effort or attempt by any other
Person to do or seek any of the foregoing.

(b) The Principals, the Shareholders and the Member shall (and shall cause the
Company and its Representatives to) immediately cease and cause to be terminated
any existing discussions or negotiations with any Persons (other than Purchaser)
conducted heretofore with respect to any of the foregoing. The Principals, the
Shareholders and the Member agree not to (and to cause the Company not to)
release any third party from the confidentiality and standstill provisions of
any agreement to which the Company is a party.

 

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7.6 Non-Competition; Non-Solicitation; Confidentiality.

(a) For a period of five (5) years from and after the Closing Date, each of the
Principals, the Shareholders and the Member shall not, and shall cause its
respective Affiliates not to, within the Restricted Territory (as defined
below), directly or indirectly, own, manage, engage in, operate, control, work
for, consult with, render services for, do business with, maintain any interest
in (proprietary, financial or otherwise) or participate in the ownership,
management, operation or control of, any Restricted Business. For purposes of
this Section 7.6, “Restricted Business” means any business, whether in
corporate, proprietorship or partnership form or otherwise, that is engaged in
(i) the manufacturing or development of high vacuum distillation systems or
supporting technology, or (ii) the refining, concentration or enhancement of
fish oil or any other Omega-3 sources; provided that a Restricted Business, for
purposes of clause (i), shall not be any business conducted on the Closing Date
by InCon Industries, Inc., Antares Health Products, Inc., Arcturus Performance
Products, LLC and InCon Process Systems, LLC. The exception set forth in the
foregoing proviso shall not apply to clause (ii) of the definition of Restricted
Business; provided, that, for purposes of clause (ii), the addition by Antares
Health Products, Inc. of TPGS/emulsifier blends to fish oil shall not violate
the covenants in this Section 7.6. The restrictions contained in this
Section 7.6(a) shall not restrict the acquisition by any Principal, Shareholder
or the Member, directly or indirectly, of less than 2% of the outstanding
capital stock of any publicly traded company engaged in a Restricted Business.
For purposes of this Section 7.6, “Restricted Territory” means the United States
of America and each other geographic area in which the Company has conducted
business. The parties hereto specifically acknowledge and agree that the remedy
at law for any breach of the foregoing will be inadequate and that Purchaser, in
addition to any other relief available to it, shall be entitled to temporary and
permanent injunctive relief without the necessity of proving actual damage or
posting any bond whatsoever.

(b) For a period of five (5) years from and after the Closing Date, each of the
Principals, the Shareholders and the Member shall not, and shall cause its
respective Affiliates not to, directly or indirectly: (i) cause, solicit, induce
or encourage any individual, who was an employee of the Company at, or at any
time prior to, the Closing Date to leave such employment or hire, employ or
otherwise engage any such individual; provided, however, that ordinary course
communications between Principals who are members of the same family shall not
be deemed to violate this clause (i) so long as no Principal hires, employs or
otherwise engages any other Principal; or (ii) cause, induce or encourage any
Person that was an actual customer, supplier, or licensor of the Company at, or
at any time prior to, the Closing Date, or any other Person who had a material
business relationship with the Company at, or at any time prior to, the Closing
Date to terminate or modify any such relationship with the Company. The
foregoing covenants shall apply to each of the Principals, the Shareholders and
the Member regardless of the extent to which, following the Closing Date, the
Purchaser combines the Company’s business with the Purchaser’s business, or
causes Company employees to become employees of Purchaser.

(c) From and after the Closing Date, each of the Principals, the Shareholders
and the Member shall not and shall cause its Affiliates not to, directly or
indirectly, disclose, reveal, divulge or communicate to any Person other than
authorized

 

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officers, directors and employees of Purchaser or use or otherwise exploit for
its own benefit or for the benefit of anyone other than Purchaser, any
Confidential Information (as defined below). The Principals, the Shareholders
and the Member shall not have any obligation to keep confidential (or cause the
Company or its officers, directors or Affiliates to keep confidential) any
Confidential Information if and to the extent disclosure thereof is specifically
required by law; provided, however, that in the event disclosure is required by
applicable Law, the Member or the Member shall, to the extent reasonably
possible, provide Purchaser with prompt notice of such requirement prior to
making any disclosure so that Purchaser may seek an appropriate protective
order. For purposes of this Section 7.6(c), “Confidential Information” shall
mean any confidential information with respect to the Company, including,
methods of operation, customer lists, products, prices, fees, costs, Technology,
inventions, Trade Secrets, know-how, Software, marketing methods, plans,
personnel, suppliers, competitors, markets or other specialized information or
proprietary matters. “Confidential Information” does not include, and there
shall be no obligation hereunder with respect to, information that (i) is
generally available to the public on the date of this Agreement; (ii) becomes
generally available to the public other than as a result of a disclosure not
otherwise permissible hereunder; or (iii) know-how, methods, plans, ideas,
concepts or other information generally known by the Key Employees and
Shareholders as of the Closing Date and not a trade secret of the Company or
specialized or proprietary information solely of the Company.

(d) The covenants and undertakings contained in this Section 7.6 relate to
matters which are of a special, unique and extraordinary character and a
violation of any of the terms of this Section 7.6 will cause irreparable injury
to the parties, the amount of which will be impossible to estimate or determine
and which cannot be adequately compensated. Therefore, Purchaser will be
entitled to seek an injunction, restraining order or other equitable relief from
any court of competent jurisdiction in the event of any breach of this
Section 7.6. The rights and remedies provided by this Section 7.6 are cumulative
and in addition to any other rights and remedies which Purchaser may have
hereunder or at law or in equity. In the event that Purchaser were to seek
damages for any breach of this Section 7.6, the portion of the consideration
delivered to the Member hereunder which is allocated by the parties to the
foregoing covenant shall not be considered a measure of or limit on such
damages.

(e) The parties hereto agree that, if any court or arbitrator of competent
jurisdiction in a final nonappealable judgment or decision determines that a
specified time period, a specified geographical area, a specified business
limitation or any other relevant feature of this Section 7.6 is unreasonable,
arbitrary or against public policy, then a lesser period of time, geographical
area, business limitation or other relevant feature which is determined to be
reasonable, not arbitrary and not against public policy may be enforced against
the applicable party.

7.7 Preservation of Records. Purchaser shall (and shall cause the Company to)
preserve and keep the records held by them relating to the respective businesses
of the Company as of Closing for a period of seven (7) years from the Closing
Date and shall make such records and personnel available to the Member and
Shareholders as may be

 

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reasonably required by such party in connection with, among other things, any
insurance claims by, legal proceedings against or governmental investigations of
the Member, the Company, or Purchaser or any of their Affiliates or in order to
enable the Member or Shareholders to comply with their respective obligations
under this Agreement and each other agreement, document or instrument
contemplated hereby or thereby. In the event any Purchaser wishes to destroy (or
permit to be destroyed) such records after that time, it shall first give ninety
(90) days prior written notice to the Member and the Shareholder shall have the
right at its option and expense, upon prior written notice given to the Member
and the Shareholder within that ninety (90) day period, to take possession of
the records within one hundred and eighty (180) days after the date of such
notice.

7.8 Publicity.

(a) None of the Principals, the Shareholders, the Member nor Purchaser shall
(and the Member shall cause the Company not to) issue any press release or
public announcement concerning this Agreement or the transactions contemplated
hereby without obtaining the prior written approval of the other party hereto,
which approval will not be unreasonably withheld or delayed, unless, in the sole
judgment of the Shareholders, the Member or the Purchaser, disclosure is
otherwise required by applicable Law or by the applicable rules of any stock
exchange on which Purchaser or its Affiliates lists securities, provided that,
to the extent required by applicable Law, the party intending to make such
release shall use its best efforts consistent with such applicable Law to
consult with the other party with respect to the text thereof.

(b) Each of Purchaser, the Company, and the Member agrees that the terms of this
Agreement shall not be disclosed or otherwise made available to the public and
that copies of this Agreement shall not be publicly filed or otherwise made
available to the public, except where such disclosure, availability or filing is
required by applicable Law or by the applicable rules of any stock exchange on
which Purchaser or its Affiliates lists securities, and only to the extent
required by such Law or rules.

7.9 Use of Name. The Principals, the Shareholders and the Member hereby agree
that upon the consummation of the transactions contemplated hereby, Purchaser
and the Company shall have the sole right to the use of the name “InCon,” “InCon
Processing” and all similar names and any service marks, trademarks, trade
names, identifying symbols, logos, emblems, signs or insignia related thereto or
containing or comprising the foregoing, including any name or mark confusingly
similar thereto (collectively, the “Company Marks”). Within thirty (30) days
following the Closing Date, the Principals, the Shareholders and the Member
(i) shall cause each of the Member, InCon Process Systems LLC and InCon
Industries, Inc. to change their names to (or, in lieu thereof, to adopt a dba
in) a name that does not use the word “ InCon” or any other Company Mark and
(ii) thereafter shall not, and shall not permit their respective Affiliates to,
use such names or any variation or simulation thereof or any of the other
Company Marks; provided, however, that InCon Industries, Inc. shall be permitted
to continue using such name as long as it has fewer than six (6) customers.

 

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7.10 Environmental Matters. The Member shall cause the Company to promptly file
all materials required by Environmental Laws as a result of or in furtherance of
the transaction contemplated hereunder, including, but not limited to any
notifications or approvals required under environmental property transfer laws,
and all requests required or necessary for the transfer or re-issuance of
Environmental Permits required to conduct the Company’s business. Purchaser
shall cooperate in all reasonable respects with Member with respect to such
filings.

7.11 Employees and Consultants.

(a) The Principals, the Shareholders and the Member shall use commercially
reasonable efforts to encourage all employees of the Company listed on Schedule
5.17 to remain employed by Company or Purchaser or its Affiliates following the
Closing Date although Purchaser or its Affiliates shall have no obligation to
employ any employee of the Company, or to assume any liability of the Company to
any employee or former employee other than Included Current Liabilities,
included in Closing Working Capital. The terms of employment and benefits for
such employees shall be consistent with Purchaser’s standard employment packages
for comparably situated employees.

(b) The Principals, the Shareholders and the Member shall use commercially
reasonable efforts to encourage all consultants to the Company listed on
Schedule 5.17 to continue their association with the Company or Purchaser or its
Affiliates as necessary and sufficient for the Purchaser to conduct the business
of the Company following the Closing.

7.12 Destruction of Software and Technology. Within three Business Days after
the Member or any Principal or Shareholder receives written notice from
Purchaser, the Member or such Principal or Shareholder shall delete or destroy
any copies of the Software and Technology in its possession or stored on any
personal property or computer hardware of the Member or such Principal or
Shareholder.

7.13 Release of Claims. Each of the Principals, the Shareholders and the Member
hereby release the Company and its officers and directors from any and all
obligations, liabilities, claims, losses, damages, judgments, debts, dues and
suits of every kinds, nature and description whatsoever that any such Principal
or Shareholder or the Member had, now has or may have against the Company and
its officers and directors as of the Closing Date related to the Principal’s,
the Shareholder’s or the Member’s position as a member or shareholder of the
Company or as an employee, officer or director of the Company. Except with
respect to accrued payroll and employee benefits set forth on the Closing
Balance Sheet, each Principal and each Shareholder and the Member understands
and acknowledges that even if it should eventually suffer additional damage,
loss or injury arising out of the facts and circumstances of his status as a
shareholder, employee, officer or director of the Company, he will not be able
to make any claim for those damages, losses or injuries; and he will not be able
to make any claim for any damage, loss or injury which may exist as of the date
of this Agreement, but which it may not know or realize to exist and which if
known, would materially affect its decision to execute this Agreement,
regardless of whether that lack of knowledge is the result of ignorance,
oversight, error, negligence or any other cause.

 

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ARTICLE VIII

CONDITIONS TO CLOSING

8.1 Conditions Precedent to Obligations of Purchaser. The obligation of
Purchaser to consummate the transactions contemplated by this Agreement is
subject to the fulfillment, on or prior to the Closing Date, of each of the
following conditions (any or all of which may be waived by Purchaser in whole or
in part to the extent permitted by applicable law.

(a) the representations and warranties of the Member qualified as to materiality
shall be true and correct, and those not so qualified shall be true and correct
in all material respects, as of the date of this Agreement and as of the Closing
as though made at and as of the Closing, except to the extent such
representations and warranties expressly relate to an earlier date (in which
case such representations and warranties qualified as to materiality shall be
true and correct, and those not so qualified shall be true and correct in all
material respects, on and as of such earlier date);

(b) each of the Principals, the Shareholders, the Member and the Company shall
have performed and complied in all material respects with all obligations and
agreements required in this Agreement to be performed or complied with by it
prior to the Closing Date, and Purchaser shall have received copies of such
certificates and other documents evidencing the performance thereof as Purchaser
may reasonably request;

(c) there shall not have been or occurred any event, change, occurrence or
circumstance that has had or could reasonably be expected to have a Material
Adverse Effect since the Balance Sheet Date;

(d) no Legal Proceedings shall have been instituted or threatened or claim or
demand made against any Principal, Shareholder, the Member, the Company or
Purchaser seeking to restrain or prohibit or to obtain damages with respect to
the consummation of the transactions contemplated hereby, and there shall not be
in effect any Order by a Governmental Body of competent jurisdiction
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated hereby;

(e) Purchaser shall have received a certificate signed by the Member and by the
President of the Company, each in form and substance reasonably satisfactory to
Purchaser, dated the Closing Date, to the effect that each of the conditions
specified above in Sections 8.1(a)-(d) have been satisfied in all respects;

(f) (i) the Company, the Member, the Principals and the Shareholders shall have
obtained each consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Body required to be obtained or
made the

 

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Company, the Member, the Principals or the Shareholders in connection with the
execution and delivery of this Agreement or the performance of the transactions
contemplated herein and (ii) the Company, the Member, the Principals and the
Shareholders shall have obtained those consents, waivers and approvals referred
to in Schedule 5.3(b) hereof in a form satisfactory to Purchaser;

(g) the Member shall have provided Purchaser with an affidavit of non-foreign
status that complies with Section 1445 of the Code (a “FIRPTA Affidavit”);

(h) Each of John R. Palmer, Jr., Hugh V. Palmer and John R. Palmer III shall
have executed and delivered an Employment Agreement with the Company or
Purchaser substantially in the form of Exhibit A hereto;

(i) all Indebtedness of the Company shall have been paid in full;

(j) all Liens (other than Permitted Exceptions) on the assets and properties of
the Company shall have been released and satisfied in full in a manner approved
by the Purchaser;

(k) the Member shall have delivered, or caused to be delivered, to Purchaser
certificates of good standing as of a recent date with respect to the Company
issued by the Secretary of State of the State of Delaware and for each state in
which the Company is qualified to do business as a foreign corporation;

(l) Purchaser has received written opinions of counsel to the Company and the
Member, in substantially the forms of Exhibit B and Exhibit C hereto; and

(m) the Member shall have delivered, or caused to be delivered, to Purchaser
such other documents as Purchaser shall reasonably request.

8.2 Conditions Precedent to Obligations of the Member. The obligations of the
Member to consummate the transactions contemplated by this Agreement are subject
to the fulfillment, prior to or on the Closing Date, of each of the following
conditions (any or all of which may be waived by the Member in whole or in part
to the extent permitted by applicable Law):

(a) the representations and warranties of Purchaser set forth in this Agreement
qualified as to materiality shall be true and correct, and those not so
qualified shall be true and correct in all material respects, as of the date of
this Agreement and as of the Closing as though made at and as of the Closing,
except to the extent such representations and warranties expressly relate to an
earlier date (in which case such representations and warranties qualified as to
materiality shall be true and correct, and those not so qualified shall be true
and correct in all material respects, on and as of such earlier date);

(b) Purchaser shall have performed and complied in all respects with all
obligations and agreements required by this Agreement to be performed or
complied with by Purchaser on or prior to the Closing Date;

 

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(c) there shall not be in effect any Order by a Governmental Body of competent
jurisdiction restraining, enjoining or otherwise prohibiting the consummation of
the transactions contemplated hereby;

(d) Purchaser shall have obtained each consent, approval, order or authorization
of, or registration, declaration or filing with, any Governmental Body required
to be obtained or made by it in connection with the execution and delivery of
this Agreement or the performance of the transactions contemplated herein; and

(e) Purchaser shall have delivered, or caused to be delivered, to the Member
evidence of the wire transfer referred to in Section 3.2 hereof.

ARTICLE IX

INDEMNIFICATION

9.1 Survival of Representations and Warranties. The representations and
warranties of the parties contained in Article V and Article VI of this
Agreement shall survive the Closing through and including the two-year
anniversary of the Closing Date; provided, however, that the representations and
warranties of the Member set forth in Sections 5.2, 5.3, 5.4, 5.7, 5.11, 5.16
and 5.20 and the representations and warranties of Purchaser set forth in
Sections 6.2 and 6.3 shall survive the Closing until ninety (90) days following
the expiration of the applicable statute of limitations with respect to the
particular matter that is the subject matter thereof (in each case, the
“Survival Period”); provided further, however, that any obligations to indemnify
and hold harmless shall not terminate with respect to any Losses as to which the
Person to be indemnified shall have given notice to the indemnifying party in
accordance with Section 9.3(a) before the termination of the applicable Survival
Period.

9.2 Indemnification.

(a) Subject to Section 9.1, each of the Principals, the Shareholders and the
Member hereby agree to indemnify and hold Purchaser and the Company and their
respective directors, officers, employees, Affiliates, stockholders, agents,
attorneys, representatives, successors and assigns (collectively, the “Purchaser
Indemnified Parties”) harmless from and against:

(i) any and all losses, liabilities, obligations, damages, costs and expenses
(individually, a “Loss” and, collectively, “Losses”) based upon, attributable to
or resulting from the failure of any representation or warranty of any
Shareholder, the Member or the Company set forth in this Agreement or in any of
the Member Documents, to be true and correct in all respects at the date hereof
and at the Closing Date;

(ii) any and all Losses based upon, attributable to or resulting from the breach
of any covenant or other agreement on the part of the Principals, the
Shareholders, the Member or (at any time prior to the Closing) the Company under
this Agreement or the Member Documents;

 

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(iii) any and all Losses based upon, attributable to or resulting from claims
made by any Principal, any Shareholder or the Member (except for claims relating
to a breach of this Agreement or the Shareholder Documents), arising out of or
relating to events that occurred, conditions that existed, services performed,
or the ownership or operation of the Company by the Member or any of its
Subsidiaries and their respective businesses prior to the Closing Date;

(iv) any and all Losses based upon, attributable to or resulting from any
Indebtedness of the Company or its Subsidiaries outstanding at any time prior to
the Closing Date;

(v) any and all Losses based upon, attributable to or resulting from the
business, operations, liabilities or employees of any of the Affiliates of the
Company, including InCon International, Inc., Antares Health Products, Inc.,
InCon Process Systems, LLC, Acquamed Technologies, Inc., InCon Industries, Inc.,
and Arcturus Performance Products, LLC;

(vi) any and all Losses based upon, attributable to or resulting from any
amounts owed by the Company or any of its Affiliates to New Horizons Global Ltd.
or any of its Affiliates; and

(vii) any and all notices, actions, suits, proceedings, claims, demands,
assessments, judgments, costs, penalties and expenses, including attorneys’ and
other professionals’ fees and disbursements (collectively, “Expenses”) incident
to any and all Losses with respect to which indemnification is provided
hereunder.

(b) Subject to Section 9.1, Purchaser hereby agrees to indemnify and hold the
Member and its attorneys, representatives, successors and assigns (collectively,
the “Member Indemnified Parties”) harmless from and against:

(i) any and all Losses based upon, attributable to or resulting from the failure
of any representation or warranty of Purchaser set forth in this Agreement or
any of the Purchaser Documents, to be true and correct at the date hereof and at
the Closing Date;

(ii) any and all Losses based upon, attributable to or resulting from the breach
of any covenant or other agreement on the part of Purchaser under this Agreement
or any of the Purchaser Documents; and

(iii) any and all Expenses incident to any and all Losses with respect to which
indemnification is provided hereunder.

9.3 Indemnification Procedures.

(a) In the event that any Legal Proceedings shall be instituted or that any
claim or demand shall be asserted by any Person in respect of which payment may
be sought under Section 9.2 hereof (“Indemnification Claim”), the indemnified
party shall promptly cause written notice of the assertion of any
Indemnification Claim of which it

 

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has knowledge which is covered by this indemnity to be forwarded to the
indemnifying party. The indemnifying party shall have the right, at its sole
expense, to be represented by counsel of its choice, which must be reasonably
satisfactory to the indemnified party, and to defend against, negotiate, settle
or otherwise deal with any Indemnification Claim which relates to any Losses
indemnified against hereunder; provided that the indemnifying party shall have
acknowledged in writing to the indemnified party its unqualified obligation to
indemnify the indemnified party as provided hereunder. If the indemnifying party
elects to defend against, negotiate, settle or otherwise deal with any
Indemnification Claim which relates to any Losses indemnified against hereunder,
it shall within five (5) days (or sooner, if the nature of the Indemnification
Claim so requires) notify the indemnified party of its intent to do so. If the
indemnifying party elects not to defend against, negotiate, settle or otherwise
deal with any Indemnification Claim which relates to any Losses indemnified
against hereunder, fails to notify the indemnified party of its election as
herein provided or contests its obligation to indemnify the indemnified party
for such Losses under this Agreement, the indemnified party may defend against,
negotiate, settle or otherwise deal with such Indemnification Claim. If the
indemnified party defends any Indemnification Claim, then the indemnifying party
shall reimburse the indemnified party for the Expenses of defending such
Indemnification Claim upon submission of periodic bills. If the indemnifying
party shall assume the defense of any Indemnification Claim, the indemnified
party may participate, at his or its own expense, in the defense of such
Indemnification Claim; provided, however, that such indemnified party shall be
entitled to participate in any such defense with separate counsel at the expense
of the indemnifying party if and provided, further, that the indemnifying party
shall not be required to pay for more than one such counsel for all indemnified
parties in connection with any Indemnification Claim. The parties hereto agree
to cooperate fully with each other in connection with the defense, negotiation
or settlement of any such Indemnification Claim. Notwithstanding anything in
this Section 9.3 to the contrary, neither the indemnifying party nor the
indemnified party shall, without the written consent of the other party, settle
or compromise any Indemnification Claim or permit a default or consent to entry
of any judgment unless the claimant and such party provide to such other party
an unqualified release from all liability in respect of the Indemnification
Claim. Notwithstanding the foregoing, if a settlement offer solely for money
damages is made by the applicable third party claimant, and the indemnifying
party notifies the indemnified party in writing of the indemnifying party’s
willingness to accept the settlement offer and pay the amount called for by such
offer, and the indemnified party declines to accept such offer, the indemnified
party may continue to contest such Indemnification Claim, free of any
participation by the indemnifying party, and the amount of any ultimate
liability with respect to such Indemnification Claim that the indemnifying party
has an obligation to pay hereunder shall be limited to the lesser of (A) the
amount of the settlement offer that the indemnified party declined to accept
plus the Losses of the indemnified party relating to such Indemnification Claim
through the date of its rejection of the settlement offer or (B) the aggregate
Losses of the indemnified party with respect to such Indemnification Claim. If
the indemnifying party makes any payment on any Indemnification Claim, the
indemnifying party shall be subrogated, to the extent of such payment, to all
rights and remedies of the indemnified party to any insurance benefits or other
claims of the indemnified party with respect to such Indemnification Claim.

 

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(b) After any final decision, judgment or award shall have been rendered by a
Governmental Body of competent jurisdiction and the expiration of the time in
which to appeal therefrom, or a settlement shall have been consummated, or the
indemnified party and the indemnifying party shall have arrived at a mutually
binding agreement with respect to an Indemnification Claim hereunder, the
indemnified party shall forward to the indemnifying party notice of any sums due
and owing by the indemnifying party pursuant to this Agreement with respect to
such matter and the indemnifying party shall be required to pay all of the sums
so due and owing to the indemnified party by wire transfer of immediately
available funds within ten (10) Business Days after the date of such notice.

(c) The failure of the indemnified party to give reasonably prompt notice of any
Indemnification Claim shall not release, waive or otherwise affect the
indemnifying party’s obligations with respect thereto except to the extent that
the indemnifying party can demonstrate actual loss and prejudice as a result of
such failure.

(d) Notwithstanding anything to the contrary within this Section 9.3 or
otherwise in this Agreement, both the indemnifying party and the indemnified
party agree to reasonably cooperate in resolving any dispute or claim which
triggers this indemnification provision. After the giving of any Indemnification
Claim notice, the amount of indemnification to which an indemnified party shall
be entitled under this Article IX shall be determined: (i) by the written
agreement between the indemnified party and the indemnifying party; (ii) by a
final decision of an arbitrator or a judgment or decree of a court of competent
jurisdiction; or (iii) by any other means to which the indemnified party and the
indemnifying party shall agree.

9.4 Exclusive Remedies. Except in the case of fraud or willful misconduct, the
indemnification provisions in this Article IX shall be the exclusive remedies of
the Purchaser Indemnified Parties and the Member Indemnified Parties with
respect to the transactions contemplated by this Agreement. The parties shall
not be entitled to a rescission of this Agreement, or to any further
indemnification rights or other claims of any nature whatsoever in respect
thereof (whether by contract, common law, statute, law, regulation or otherwise,
including, without limitation, under the Racketeer Influence and Corrupt
Organizations Act of 1970, as amended), all of which the parties hereby waive;
provided, however, nothing herein is intended to waive any claims for fraud or
willful misconduct.

9.5 Limitations on Liability; No Recourse.

(a) Notwithstanding anything to the contrary contained in Article IX, the
aggregate liability of the Member, the Principals and the Shareholders for all
events or occurrences giving rise to the Member, the Principals and/or the
Shareholders being required to indemnify pursuant to Section 9.2 shall be
limited to Five Million Dollars ($5,000,000). Notwithstanding anything to the
contrary contained in Article IX, the

 

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aggregate liability of the Purchaser for all events or occurrences giving rise
to the Purchaser being required to indemnify pursuant to Section 9.2 shall be
limited to Five Million Dollars ($5,000,000).

(b) Purchaser Indemnified Parties are entitled to indemnification pursuant to
Section 9.2(a)(i) and (ii) only to the extent that the aggregate amount of any
Losses thereunder exceeds One Hundred Thousand Dollars ($100,000) (the
“Basket”), and then to the full amount of such Indemnified Amount in excess of
the Basket. Member Indemnified Parties are entitled to indemnification pursuant
to Section 9.2(b)(i) and (ii) only to the extent that the aggregate amount of
any Losses exceeds the Basket, and then to the full amount of such Indemnified
Amount in excess of the Basket.

(c) The proportional liability of each Shareholder (together with the Principal
who is the beneficiary of such Shareholder) for liabilities of the Member
pursuant to this Article IX shall not exceed the percentage ownership of such
Shareholder of the equity of the Member as of the date of this Agreement as set
forth in Schedule 5.4. In addition, no Shareholder (or Principal who is the
beneficiary of such Shareholder) shall be liable under this Article IX for the
liabilities of any other Shareholder (or Principal who is the beneficiary of
such Shareholder) pursuant to this Article IX.

(d) The Principals, the Shareholders and the Member shall have no recourse
against the Company or its respective directors, officers, employees,
Affiliates, agents, attorneys, representatives, assigns or successors for any
Indemnification Claims asserted by Purchaser Indemnified Parties.

9.6 Tax Matters.

(a) Tax Indemnification. Each of the Principals, the Shareholders and the Member
hereby agree to be liable for and to indemnify and hold the Purchaser
Indemnified Parties harmless from and against any and all Losses and Expenses in
respect of (i) all Taxes of the Company (or any predecessor thereof) (A) for any
taxable period ending on or before the Closing Date, and (B) for the portion of
any Straddle Period ending at the close of business on the Closing Date
(determined as provided in Section 9.6(c)); (ii) any and all Taxes imposed on
any member of an affiliated, consolidated, combined or unitary group of which
the Company (or any predecessor thereof) is or was a member on or prior to the
Closing Date, pursuant to Treasury Regulation Section 1.1502-6(a) (or any
predecessor or successor thereof or any analogous or similar provision under
state, local or foreign Law); (iii) any and all Taxes of any Person imposed on
the Company as a transferee or successor by contract or pursuant to any law,
rule or regulation, which Taxes relate to an event or transaction occurring on
or before the Closing Date; (iv) the failure of any of the representations and
warranties contained in Section 5.11 to be true and correct in all respects
(determined without regard to any qualification related to materiality contained
therein) or the failure to perform any covenant contained in this Agreement with
respect to Taxes; and (v) any failure by the Member to timely pay any and all
Taxes required to be borne by the Member pursuant to Section 9.6(e), provided
however for purposes of this Section 9.6, “Taxes” shall not include Taxes which
are included in the computation of Closing Working Capital.

 

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(b) Filing of Tax Returns; Payment of Taxes.

(i) The Member shall cause the Company to timely file all Tax Returns required
to be filed by it for all periods ending on or prior to the Closing Date and
shall pay or cause to be paid all Taxes shown due thereon. All such Tax Returns
shall be prepared in a manner consistent with prior practice. The Member shall
cause the Company to provide Purchaser with copies of such completed Tax Returns
at least twenty (20) days prior to the due date for filing thereof, along with
supporting work papers, for Purchaser’s review and approval. The Member and
Purchaser shall attempt in good faith to resolve any disagreements regarding
such Tax Returns prior to the due date for filing. In the event that the Member
and the Purchaser are unable to resolve any dispute with respect to such Tax
Return at least ten (10) days prior to the due date for filing, such dispute
shall be resolved pursuant to Section 9.6(f), which resolution shall be binding
on the parties.

(ii) Following the Closing, Purchaser shall cause to be timely filed all Tax
Returns required to be filed by the Company for all periods ending after the
Closing Date and, subject to the rights to payment from the Member under
Section 9.6(b)(iii), pay or cause to be paid all Taxes shown due thereon.

(iii) Not later than ten (10) days prior to the due date for the payment of
Taxes on any Tax Returns which Purchaser has the responsibility to cause to be
filed pursuant to Section 9.6(b)(ii), the Principals, the Shareholders and the
Member shall pay to Purchaser the amount of Taxes, as reasonably determined by
Purchaser, owed by the Principals, the Shareholders and the Member pursuant to
the provisions of Section 9.6(a). No payment pursuant to this
Section 9.6(b)(iii) shall excuse the Shareholders and the Member from its
indemnification obligations pursuant to Section 9.6(a) if the amount of Taxes as
ultimately determined (on audit or otherwise) for the periods covered by such
Tax Returns exceeds the amount of the Member’s or the Member’s payment under
this Section 9.6(b)(iii).

(c) Straddle Period Tax Allocation. The Member and Purchaser will, unless
prohibited by applicable Law, close the taxable period of the Company as of the
close of business on the Closing Date. If applicable law does not permit the
Company to close its taxable year on the Closing Date or in any case in which a
Tax is assessed with respect to a taxable period which includes the Closing Date
(but does not begin or end on that day) (a “Straddle Period”), the Taxes, if
any, attributable to a Straddle Period shall be allocated (i) to the Member for
the period up to and including the close of business on the Closing Date, and
(ii) to Purchaser for the period subsequent to the Closing Date. Any Taxes
measured by income, receipts or payroll deductions attributable to a Straddle
Period shall be made by means of a closing of the books and records of the
Company as of the close of the Closing Date, provided that exemptions,
allowances or deductions that are calculated on an annual basis (including, but
not limited to, depreciation and amortization deductions) and other Taxes shall
be allocated between the period ending on the Closing Date and the period after
the Closing Date in proportion to the number of days in each such period.

 

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(d) Tax Audits.

(i) If notice of any Legal Proceeding with respect to Taxes of the Company (a
“Tax Claim”) shall be received by either party for which the other party may
reasonably be expected to be liable pursuant to Section 9.6(a), the notified
party shall notify such other party in writing of such Tax Claim; provided,
however, that the failure of the notified party to give the other party notice
as provided herein shall not relieve such failing party of its obligations under
this Section 9.6 except to the extent that the other party is actually and
materially prejudiced thereby.

(ii) Purchaser shall have the right, at the expense of the Member to the extent
such Tax Claim is subject to indemnification by the Member pursuant to
Section 9.6(a) hereof, to represent the interests of the Company in any Tax
Claim; provided, that with respect to a Tax Claim relating exclusively to
taxable periods ending on or before the Closing Date, Purchaser shall not settle
such claim without the consent of the Member, which consent shall not be
unreasonably withheld.

(e) Transfer Taxes. Each of the Principals, the Shareholders and the Member
hereby agree, jointly and severally, to be liable for and to pay (and shall
indemnify and hold harmless the Purchaser Indemnified Parties against) all
sales, use, stamp, documentary, filing, recording, transfer or similar fees or
taxes or governmental charges as levied by any Governmental Body including any
interest and penalties) in connection with the transactions contemplated by this
Agreement.

(f) Disputes. Any dispute as to any matter covered hereby shall be resolved by
an independent accounting firm mutually acceptable to the Member and the
Purchaser. The fees and expenses of such accounting firm shall be borne equally
by the Member, on the one hand, and the Purchaser on the other. If any dispute
with respect to a Tax Return is not resolved prior to the due date of such Tax
Return, such Tax Return shall be filed in the manner which the party responsible
for preparing such Tax Return deems correct.

(g) Time Limits. Any claim for indemnity under this Section 9.6 may be made at
any time prior to sixty (60) days after the expiration of the applicable Tax
statute of limitations with respect to the relevant taxable period (including
all periods of extension, whether automatic or permissive).

(h) Exclusivity. The indemnification provided for in this Section 9.6 shall be
the sole remedy for any claim in respect of Taxes, including any claim arising
out of or relating to a breach of Section 5.11. In the event of a conflict
between the provisions of this Section 9.6, on the one hand, and the provisions
of Sections 9.1 through 9.3, on the other, the provisions of this Section 9.6
shall control.

9.7 Offset Rights. Purchaser shall, in its reasonable discretion, be entitled to
offset against any amount payable by it pursuant to Section 3.3 or Section 3.4
any payment that the Member is obligated to make to any Purchaser Indemnified
Parties pursuant to this Article IX or Section 3.3.

 

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9.8 Tax Treatment of Indemnity Payments. The Member and the Purchaser agree to
treat any indemnity payment made pursuant to this Article IX as an adjustment to
the Purchase Price for federal, state, local and foreign income tax purposes.
If, notwithstanding the treatment required by the preceding sentence, any
indemnification payment under Article IX (including, without limitation, this
Section 9.8) is determined to be taxable to the party receiving such payment by
any Taxing Authority, the paying party shall also indemnify the party receiving
such payment for any Taxes incurred by reason of the receipt of such payment and
any Expenses incurred by the party receiving such payment in connection with
such Taxes (or any asserted deficiency, claim, demand, action, suit, proceeding,
judgment or assessment, including the defense or settlement thereof, relating to
such Taxes).

9.9 Reduction of Losses. The amount of any Indemnified Claim Losses for which
indemnification is provided under this Article IX shall be net of any amounts
actually recovered by the Indemnified Parties, as applicable, under insurance
policies with respect to such Losses and shall be reduced to take account of any
net tax benefit (including as a result of any basis adjustment) actually
realized by the indemnified parties arising from the incurrence or payment of
any such Losses. Other than filing insurance claims in the ordinary course of
business to the extent applicable, the foregoing shall not require any party to
pursue any recovery from its insurance carrier.

9.10 No Indirect Damages. Notwithstanding anything in this Agreement to the
contrary, except with respect to third party claims, in no event shall
indemnification obligations or remedies or right to recover for any Indemnified
Claim Losses or damages under this Agreement include losses or damages for loss
of profits, opportunity costs, business losses or any other indirect,
incidental, special punitive or consequential damages.

ARTICLE X

MISCELLANEOUS

10.1 Expenses. Except as otherwise provided in this Agreement, the Member and
the Purchaser shall each bear its own expenses incurred in connection with the
negotiation and execution of this Agreement and each other agreement, document
and instrument contemplated by this Agreement and the consummation of the
transactions contemplated hereby and thereby, it being understood that in no
event shall the Company bear any of such costs and expenses.

10.2 Specific Performance. The Member acknowledges and agrees that the breach of
this Agreement would cause irreparable damage to Purchaser and that Purchaser
will not have an adequate remedy at law. Therefore, the obligations of the
Member under this Agreement, including, without limitation, the Member’s
obligation to sell the Membership Interest to Purchaser, shall be enforceable by
a decree of specific performance issued by any court of competent jurisdiction,
and appropriate injunctive relief may be applied for and granted in connection
therewith. Such remedies shall, however, be cumulative and not exclusive and
shall be in addition to any other remedies which any party may have under this
Agreement or otherwise.

 

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10.3 Submission to Jurisdiction; Consent to Service of Process; Arbitration.

(a) For purposes of enforcing the rights set forth in Section 10.2, the parties
hereto hereby irrevocably submit to the non-exclusive jurisdiction of any
federal or state court located within Chicago, Illinois over any dispute arising
out of or relating to this Agreement or any of the transactions contemplated
hereby and each party hereby irrevocably agrees that all claims in respect of
such dispute or any suit, action proceeding related thereto may be heard and
determined in such courts. The parties hereby irrevocably waive, to the fullest
extent permitted by applicable law, any objection which they may now or
hereafter have to the laying of venue of any such dispute brought in such court
or any defense of inconvenient forum for the maintenance of such dispute. Each
of the parties hereto agrees that a judgment in any such dispute may be enforced
in other jurisdictions by suit on the judgment or in any other manner provided
by law.

(b) Any controversy, dispute or claim arising under or in connection with this
Agreement (including, without limitation, the existence, validity,
interpretation or breach hereof and any claim based on contract, tort of
statute) shall be resolved by a binding arbitration, to be held in Chicago,
Illinois pursuant to the Federal Arbitration Act and in accordance with
then-prevailing International Arbitration Rules of the American Arbitration
Association (the “AAA”). The AAA shall select three arbitrators. Each party
shall bear its own expenses incurred in connection with arbitration and the fees
and expenses of the arbitrators shall be shared equally by the parties involved
in the dispute and advanced by them from time to time as required. It is the
mutual intention and desire of the parties that the tribunal of three
arbitrators be constituted as expeditiously as possible following the submission
of the dispute to arbitration. Once such tribunal is constituted and except as
may otherwise be agreed in writing by the parties involved in such dispute or as
ordered by the arbitrators upon substantial justification shown, the hearing for
the dispute will be held within sixty (60) days after submission of the dispute
to arbitration. The arbitrators shall render their final award within sixty
(60) days, subject to extension by the arbitrators upon substantial
justification shown of extraordinary circumstances, following conclusion of the
hearing and any required post-hearing briefing or other proceedings ordered by
the arbitrators. Any discovery in connection with arbitration hereunder shall be
limited to information directly relevant to the controversy or claim in
arbitration. The arbitrators will state the factual and legal basis for the
award. The decision of the arbitrators in any such proceeding will be final and
binding and not subject to judicial review and final judgment may be entered
upon such an award in any court of competent jurisdiction, but entry of such
judgment will not be required to make such award effective.

(c) Each of the parties hereto hereby consents to process being served by any
party to this Agreement in any suit, action or proceeding by delivery of a copy
thereof in accordance with the provisions of Section 10.6.

 

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10.4 Entire Agreement; Amendments and Waivers. This Agreement (including the
schedules and exhibits hereto) represents the entire understanding and agreement
between the parties hereto with respect to the subject matter hereof and can be
amended, supplemented or changed, and any provision hereof can be waived, only
by written instrument making specific reference to this Agreement signed by the
party against whom enforcement of any such amendment, supplement, modification
or waiver is sought. No action taken pursuant to this Agreement, including
without limitation, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of compliance with
any representation, warranty, covenant or agreement contained herein. The waiver
by any party hereto of a breach of any provision of this Agreement shall not
operate or be construed as a further or continuing waiver of such breach or as a
waiver of any other or subsequent breach. No failure on the part of any party to
exercise, and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of such
right, power or remedy by such party preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. All remedies
hereunder are cumulative and are not exclusive of any other remedies provided by
law.

10.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois applicable to contracts made
and performed in such state.

10.6 Notices. All notices and other communications under this Agreement shall be
in writing and shall be deemed given (i) when delivered personally by hand (with
written confirmation of receipt), (ii) when sent by facsimile (with written
confirmation of transmission) or (iii) one business day following the day sent
by overnight courier (with written confirmation of receipt), in each case at the
following addresses and facsimile numbers (or to such other address or facsimile
number as a party may have specified by notice given to the other party pursuant
to this provision):

 

If to the Member, to:  

InCon International, Inc.

970 Douglas Road

Batavia, IL 60510-2294

 

With a copy to:  

Chuhak & Tecson, P.C.

Attention: Edwin I. Josephson

30 South Wacker Drive

Suite 2600

Chicago, IL 60606

Facsimile: (312) 444-9027

 

If to the Company (prior to the Closing):  

InCon Processing, L.L.C.

970 Douglas Road

Batavia, Illinois 60510-2294

Tel: (630) 761-1180

Fax: (630) 761-1190

 

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With a copy to:  

Chuhak & Tecson, P.C.

Attention: Edwin I. Josephson

30 South Wacker Drive

Suite 2600

Chicago, IL 60606

Facsimile: (312) 444-9027

 

If to Purchaser (or the Company following the Closing), to:  

Omega Protein Corporation

2105 City West Blvd., Suite 500

Houston, TX 77042-2838

Attention: General Counsel

Facsimile: 713-940-6122

 

With a copy to:  

Baker & Hostetler LLP

1000 Louisiana, Suite 2000

Houston, Texas 77002

Attention: W. Robert Shearer

Facsimile: 713-751-1717

10.7 Severability. If any term or other provision of this Agreement is invalid,
illegal, or incapable of being enforced by any law or public policy, all other
terms or provisions of this Agreement shall nevertheless remain in full force
and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal, or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible.

10.8 Binding Effect; Assignment. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and permitted
assigns. Nothing in this Agreement shall create or be deemed to create any third
party beneficiary rights in any person or entity not a party to this Agreement
except as provided below. No assignment of this Agreement or of any rights or
obligations hereunder may be made by either the Member or Purchaser (by
operation of law or otherwise) without the prior written consent of the other
parties hereto and any attempted assignment without the required consents shall
be void; provided, however, that Purchaser may assign this Agreement and any or
all rights or obligations hereunder (including, without limitation, Purchaser’s
rights to purchase the Membership Interest and Purchaser’s rights to seek
indemnification hereunder) to any Affiliate of Purchaser, any Person from which
it has borrowed money or any Person to which Purchaser or any of its Affiliates
proposes to sell all or substantially all of the assets relating to the
business; provided, however, that any such assignment by Purchaser shall not
relieve Purchaser from any liability under this Agreement. Upon any such
permitted assignment, the references in this Agreement to Purchaser shall also
apply to any such assignee unless the context otherwise requires.

 

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10.9 Non-Recourse. No past, present or future director, officer, employee,
incorporator, member, partner, stockholder, Affiliate, agent, attorney or
representative of Purchaser shall have any liability for any obligations or
liabilities of Purchaser under this Agreement or for any claim based on, in
respect of, or by reason of, the transactions contemplated hereby.

10.10 Counterparts. This Agreement may be executed in one or more counterparts,
each of which will be deemed to be an original copy of this Agreement and all of
which, when taken together, will be deemed to constitute one and the same
agreement.

10.11 Construction. Each party acknowledges and agrees that it has reviewed, and
has had an opportunity to have reviewed by qualified advisors, including
financial, tax and legal advisors, of its own choosing, this Agreement
(including all Exhibits and Schedules attached hereto), and it is the parties’
intent that this Agreement and the attachments not be construed against either
party as the drafting party, and, in the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as jointly
drafted by the parties hereto and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provision
of this Agreement.

10.12 Facsimile or E-mail Transmission. The parties may sign and deliver this
Agreement by facsimile transmission, or by e-mail with an attached scanned
signature page image. Each party agrees that the delivery of this Agreement by
facsimile, or by e-mail with an attached scanned signature page image, shall
have the same force and effect as delivery of original signatures and that each
party may use such signatures as evidence of the execution and delivery of this
Agreement by all parties to the same extent that an original signature could be
used.

** REMAINDER OF PAGE INTENTIONALLY LEFT BLANK**

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
written above.

 

OMEGA PROTEIN CORPORATION By:  

/s/ John D. Held

  John D. Held   Executive Vice President and General Counsel INCON
INTERNATIONAL, INC. By:  

/s/ John R. Palmer Jr

  John R. Palmer, Jr.   President INCON PROCESSING, L.L.C.   By: InCon
International, Inc., its sole Member By:  

/s/ John R Palmer Jr

  John R. Palmer, Jr.   President PRINCIPALS: By:  

/s/ John R Palmer Jr

  Mr. John R Palmer, Jr. By:  

/s/ John R. Palmer III

  Mr. John R. Palmer III By:  

/s/ Hugh V. Palmer

  Mr. Hugh V. Palmer By:  

/s/ Niazahmed P. Shaikh

  Mr. Niazahmed P. Shaikh SHAREHOLDERS: NIAZAHAMED P. SHAIKH LIVING TRUST By:  

/s/ Niazahmed P. Shaikh

  Niazahmed P. Shaikh   Co-Trustee

--------------------------------------------------------------------------------

By:  

/s/ Nereida Haikh

  Nereida Shaikh   Co-Trustee HUGH V. PALMER TRUST By:  

/s/ Hugh V. Palmer

  Hugh V. Palmer   Trustee JOHN R. PALMER, III TRUST By:  

/s/ John R. Palmer, III

  John R. Palmer, III   Trustee JOHN RICHARDSON PALMER, JR. INSURANCE TRUST By:
 

/s/ John R. Palmer Jr.

  John R. Palmer, Jr.   Trustee

[Signature Page to Equity Purchase Agreement]