Document:

ex10110142008.htm

     

    

    

    

    

    

    

    

    

    

    

    

    ASSET
PURCHASE AGREEMENT

    

    BY
AND AMONG

    

    NDS
NUTRITIONAL PRODUCTS, INC.,

    

    CORY
WIEDEL,

    

    RYAN
ZINK,

    

    

    AND

    

    BOND
LABORATORIES, INC.

    

    October
1, 2008

    

    

    

    

    

    

    

    

    

    

    
      
        
          
            

            4416103v.8 

          

           

        

        
           

          
            

          

        

        
          
            
               

            

          

        

      

    

    TABLE
OF CONTENTS

                                                                                                    PAGE

    
      
        	
                ARTICLE
      I

                 

              	 
      	
                ASSETS
      AND LIABILITIES

              	
                1

              
	
                1.1.

              	 
      	
                Acquired
      Assets.

              	
                1

              
	
                1.2.

              	 
      	
                Excluded
      Assets

              	
                2

              
	
                1.3.

              	 
      	
                Assumed
      Liabilities

              	
                2

              
	
                1.4.

              	 
      	
                Excluded
      Liabilities

              	
                2

              
	
                1.5.

              	 
      	
                Employees

              	
                3

              
	
                1.6.

              	 
      	
                Purchases
      of Product Inventory

              	
                4

              
	
                1.7.

              	 
      	
                Instruments
      of Transfer

              	
                5

              
	
                1.8.

              	 
      	
                Payment
      of Sales Taxes

              	
                5

              
	 
      	 
      	 
      	 
      
	
                ARTICLE
      II

                 

              	 
      	
                PURCHASE
      PRICE

              	
                5

              
	
                2.1.

              	 
      	
                Purchase
      Price

              	
                5

              
	
                2.2.

              	 
      	
                Gross
      Profit Adjustments to Earn-Out Amount.

              	
                6

              
	
                2.3.

              	 
      	
                Pro-Rations

              	
                8

              
	
                2.4.

              	 
      	
                Allocation
      of Purchase Price

              	
                8

              
	
                2.5.

              	 
      	
                Negotiated
      Value

              	
                8

              
	
                2.6.

              	 
      	
                Distribution
      of Shares to Shareholders

              	
                8

              
	
                2.7.

              	 
      	
                Bulk
      Sales Compliance

              	
                8

              
	 
      	 
      	 
      	 
      
	
                ARTICLE
      III

              	 
      	
                PURCHASE
      PRICE

              	
                8

              
	 
      	 
      	 
      	 
      
	
                ARTICLE
      IV

                 

              	 
      	
                REPRESENTATIONS
      AND WARRANTIES OF SELLER AND SHAREHOLDERS

              	
                9

              
	
                4.1.

              	 
      	
                Organization,
      Good Standing and Qualification

              	
                9

              
	
                4.2.

              	 
      	
                Authorization;
      Binding Obligation

              	
                9

              
	
                4.3.

              	 
      	
                Consents
      and Approvals.

              	
                9

              
	
                4.4.

              	 
      	
                No
      Violation

              	
                10

              
	
                4.5.

              	 
      	
                Licenses
      and Permits

              	
                10

              
	
                4.6.

              	 
      	
                Ownership;
      No Subsidiaries

              	
                10

              
	
                4.7.

              	 
      	
                Acquired
      Assets

              	
                10

              
	
                4.8.

              	 
      	
                Leases
      of Personal Property

              	
                11

              
	
                4.9.

              	 
      	
                Financial
      Statements

              	
                11

              
	
                4.10.

              	 
      	
                Absence
      of Certain Events

              	
                11

              
	
                4.11.

              	 
      	
                Legal
      Proceedings

              	
                13

              
	
                4.12.

              	 
      	
                Solvency
      and Value of Transfer

              	
                13

              
	
                4.13.

              	 
      	
                Compliance
      with FDA and FTC Regulations.

              	
                13

              
	
                4.14.

              	 
      	
                Compliance
      with Laws.

              	
                14

              
	
                4.15.

              	 
      	
                Employment
      Matters.

              	
                15

              
	
                4.16.

              	 
      	
                Benefit
      Plan Compliance with Provisions of  Applicable
    Law

              	
                16

              
	
                4.17.

              	 
      	
                No
      Undisclosed Liability

              	
                17

              
	
                4.18.

              	 
      	
                No
      Brokers

              	
                17

              
	
                4.19.

              	 
      	
                Taxes

              	
                17

              
	
                4.20.

              	 
      	
                List
      of Contracts

              	
                18

              
	
                4.21.

              	 
      	
                Real
      Properties

              	
                19

              
	
                4.22.

              	 
      	
                Financing
      Statements

              	
                19

              
	
                4.23.

              	 
      	
                Transactions
      With Affiliates

              	
                19

              
	
                4.24.

              	 
      	
                Insurance

              	
                19

              
	
                4.25.

              	 
      	
                Intellectual
      Property

              	
                19

              
	 
      	 
      	 
      	 
      
	
                ARTICLE
      V

                 

              	 
      	
                REPRESENTATIONS
      AND WARRANTIES OF BUYER

              	
                20

              
	
                5.1.

              	 
      	
                Organization,
      Good Standing and Qualification

              	
                20

              
	
                5.2.

              	 
      	
                Authorization;
      Binding Obligation

              	
                20

              
	
                5.3.

              	 
      	
                Legal
      Proceedings

              	
                21

              
	
                5.4.

              	 
      	
                No
      Brokers

              	
                21

              
	
                5.5.

              	 
      	
                No
      Violation

              	
                21

              
	
                5.6.

              	 
      	
                Consents
      and Approvals.

              	
                21

              
	
                5.7.

              	 
      	
                Commission
      Documents, Financial Statements

              	
                21

              
	
                5.8.

              	 
      	
                Issuance
      of Securities

              	
                22

              
	
                5.9.

              	 
      	
                No
      Brokers

              	
                22

              
	
                5.10.

              	 
      	
                No
      Implied Representations or Warranties; Due Diligence

              	
                22

              
	 
      	 
      	 
      	 
      
	
                ARTICLE  VI

                 

              	 
      	
                COVENANTS

              	
                23

              
	
                6.1.

              	 
      	
                Conduct
      of Seller’s Business Pending Closing

              	
                23

              
	
                6.2.

              	 
      	
                Notice
      by Seller of Certain Events

              	
                24

              
	
                6.3.

              	 
      	
                Consents
      and Approvals.

              	
                24

              
	
                6.4.

              	 
      	
                Inventory

              	
                25

              
	
                6.5.

              	 
      	
                Payments;
      Collections.

              	
                25

              
	
                6.6.

              	 
      	
                Preservation
      of and Access to Certain Records.

              	
                26

              
	
                6.7.

              	 
      	
                Maintenance
      of Insurance Coverage

              	
                27

              
	
                6.8.

              	 
      	
                Supply,
      License and Transition Services Agreement

              	
                27

              
	 
      	 
      	 
      	 
      
	
                ARTICLE
      VII

                 

              	 
      	
                CONFIDENTIALITY

              	
                27

              
	
                7.1.

              	 
      	
                Confidentiality.

              	
                27

              
	 
      	 
      	 
      	 
      
	
                ARTICLE
      VIII

                 

              	 
      	
                CONIDITIONS
      PRECENDENT TO BUYER’S PERFORMANCE AND TO SELLER’S
    PERFORMANCE

              	
                28

              
	
                8.1.

              	 
      	
                Conditions
      to Buyer’s Obligations

              	
                28

              
	
                8.2.

              	 
      	
                Conditions
      to Seller’s Obligations

              	
                30

              
	
                8.3.

              	 
      	
                No
      Injunction or Action

              	
                31

              
	 
      	 
      	 
      	 
      
	
                ARTICLE
      IX

                 

              	 
      	
                SURVIVAL
      OF REPRESENTATIONS AND WARRANTIES;

              	
                32

              
	
                9.1.

              	 
      	
                Survival
      of Representations and Warranties

              	
                32

              
	
                9.2.

              	 
      	
                Indemnification
      by Seller and Shareholders

              	
                32

              
	
                9.3.

              	 
      	
                Indemnification
      by Buyer

              	
                33

              
	
                9.4.

              	 
      	
                Indemnification
      Process

              	
                33

              
	
                9.5.

              	 
      	
                Limitations
      on Indemnification.

              	
                34

              
	 
      	 
      	 
      	 
      
	
                ARTICLE
      X

                 

              	 
      	
                MISCELLANEOUS

              	
                36

              
	
                10.1.

              	 
      	
                Termination

              	
                36

              
	
                10.2.

              	 
      	
                Notice
      of Termination; Effect of Termination

              	
                36

              
	
                10.3.

              	 
      	
                Expenses

              	
                37

              
	
                10.4.

              	 
      	
                Entire
      Subject Matter; Amendment

              	
                37

              
	
                10.5.

              	 
      	
                Assignment

              	
                37

              
	
                10.6.

              	 
      	
                Counterparts

              	
                37

              
	
                10.7.

              	 
      	
                Governing
      Law; Submission to Jurisdiction

              	
                37

              
	
                10.8.

              	 
      	
                Schedules
      and Exhibits

              	
                38

              
	
                10.9.

              	 
      	
                Severability

              	
                38

              
	
                10.10.

              	 
      	
                Notices

              	
                38

              
	
                10.11.

              	 
      	
                Representation
      by Counsel

              	
                39

              
	
                10.12.

              	 
      	
                Construction

              	
                39

              
	
                10.13.

              	 
      	
                Headings

              	
                39

              
	
                10.14.

              	 
      	
                Waivers

              	
                39

              
	
                10.15.

              	 
      	
                Attorney’s
      Fees

              	
                40

              
	
                10.16.

              	 
      	
                No
      Consequential Damages

              	
                40

              

      

    

     

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
           
i

          
            

          

        

        
           

        

      

    

    

    ASSET PURCHASE
AGREEMENT

     

    This
ASSET PURCHASE AGREEMENT (the “Agreement”)
is made and entered into as of the 1st day of October, 2008 (the “Effective
Date”), by and among NDS Nutritional Products, Inc., a Nebraska
corporation (“Seller”),
Bond Laboratories, Inc., a Nevada corporation (“Buyer”),
and Cory Wiedel and Ryan Zink (together, the “Shareholders”).

     

    R E C I T A L S

     

    A. Seller is
engaged in the business of selling products and providing services in the weight
loss, sports nutrition, general health and related categories (hereinafter the
“Seller’s
Business” or , the “Business”).

     

    B. The
Shareholders own all of the issued and outstanding capital stock of
Seller.

     

    C. Buyer
desires to purchase from Seller and Seller desires to sell to Buyer all of the
assets, properties and rights of Seller relating to Seller’s Business (except
for the Excluded Assets) on the terms and conditions hereinafter set
forth.

     

    D. As
additional consideration, and as a material inducement to Buyer to enter into
this Agreement and to consummate the transactions contemplated hereby, Seller
and Shareholders desire to make certain representations, warranties,
indemnities, covenants and agreements relating to the sale of Seller’s
Business.

     

    E. Capitalized
terms used herein shall have the meaning set forth in the Table of Definitions
attached hereto as Schedule
1.0.

     

    A G R E E M E N
T

     

    NOW,
THEREFORE, in consideration of the foregoing premises and the covenants,
agreements, representations and warranties contained herein, the parties hereto
hereby agree as follows:

     

    ARTICLE
I

     

    ASSETS
AND LIABILITIES

     

     1.1. Acquired
Assets.

     

    (a) Subject
to the terms and the conditions set forth in this Agreement and on the basis of
the representations and warranties herein, Seller agrees to sell, convey,
transfer, assign and deliver to Buyer and Buyer agrees to purchase, receive and
accept from Seller all right, title and interest in and to the assets and
properties of every kind, character and description (other than property and
rights specifically excluded in this Agreement), used in Seller’s Business,
whether tangible, intangible, real, personal or mixed, and wherever located,
including any assets of any of Seller’s Affiliates which are primarily used in
Seller’s Business or otherwise owned by Seller (collectively referred to
hereinafter as the “Acquired  Assets”),
including but not limited to the assets set forth at Schedule 1.1
hereto.

     

    

    
      
        
          
            

            4416103v.8 

          

           

        

        
          1

          
            

          

        

        
           

        

      

    

    

    (b) Without
limitation of the foregoing, the Acquired Assets shall include all tangible
property, equipment, tenant improvements (regardless of whether they are
accounted for as an asset on the books of Seller, of any Affiliate of Seller, or
of a landlord or other third party), customer accounts, customer lists,
goodwill, software, Intellectual Property, Assigned Contracts, Assigned Personal
Property Leases, books and records, any Seller policies and procedures relating
to the Seller’s Business, telephone and facsimile numbers, all Licenses of
Seller and other permits and other authorizations necessary for the conduct of
Seller’s Business (to the extent transferable to Buyer), the Component Inventory
listed on Schedule 2.1(v), and all insurance benefits, including rights and
proceeds, arising from or relating to the Assumed Liabilities prior to the
Effective Date, unless expended in accordance with this Agreement.

     

     1.2. Excluded
Assets

     

    .  Notwithstanding
anything contained in Section 1.1, Buyer is not purchasing Seller’s cash and
cash equivalents, prepaid expenses, deposits, accounts receivable, insurance
refunds or Seller’s product inventory (including any finished goods inventory,
but specifically excluding the Component Inventory) expressly listed on Schedule 1.2 (the
“Product
Inventory”), or the other assets and properties expressly set forth on
Schedule 1.2
(such assets collectively being referred to as the “Excluded
Assets” and such Schedule 1.2 being
referred to herein as the “Excluded Assets
Schedule”).

     

     1.3. Assumed
Liabilities.  As of the Closing Date, Seller shall assign to
Buyer and Buyer shall assume Seller’s obligations arising from events occurring
on or after the Closing Date under (i) those outstanding purchase orders of the
Seller set forth on Schedule 1.3; (ii)
customer product returns in the ordinary course of business (but excluding any
returns, pursuant to large-scale product recalls and other product returns not
in the ordinary course of business, of products that were sold by Seller prior
to the Closing Date); (iii) the Unassigned Obligations as provided in Section
6.3; (iv) the bonus and PTO obligations under Section 1.5; and (v) those
agreements and contracts (or responsibilities under agreements or contracts)
designated specifically on Schedule 4.8 as
Assigned Personal Property Leases and on Schedule 4.20 as
Assigned Contracts, except to the extent that any such executory obligations
result from, arise out of, relate to, or are caused by, any one or more of the
following: (a) a breach of any of the Assigned Personal Property Leases or
Assigned Contracts occurring prior to the Closing Date; (b) a breach of warranty
(except a breach of warranty that leads solely to a customer product return as
contemplated in subpart(ii) above), infringement or violation of law occurring
prior to the Closing Date; or (c) an event or condition occurring or existing
prior to the Closing Date which, through the passage of time or the giving of
notice or both, would constitute a breach or default by Seller under any of the
Assigned Personal Property Leases or Assigned Contracts (collectively, the
“Assumed
Liabilities”).

     

     1.4. Excluded
Liabilities.  EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT,
BUYER DOES NOT ASSUME AND SHALL NOT BE LIABLE FOR ANY OF THE DEBTS, OBLIGATIONS
OR LIABILITIES OF SELLER, SELLER’S BUSINESS, ANY SHAREHOLDER OR ANY AFFILIATE OF
SELLER, WHENEVER ARISING AND OF WHATEVER TYPE OR NATURE.  In
particular, but without limiting the foregoing, Buyer shall not assume, and
shall not be deemed by anything contained in this Agreement (other than to the
extent expressly provided in Section 1.3 Assumed Liabilities)
to have assumed, and shall not be liable for any debts, obligations or
liabilities of Seller, any Affiliate of Seller or Seller’s Business whether
known or unknown, contingent, absolute or otherwise and whether or not they
would be included
or disclosed in financial statements prepared in accordance with GAAP (the
“Excluded
Liabilities”).  Without limitation of the foregoing, the
Excluded Liabilities shall include debts, liabilities and
obligations:  (a) under any real estate lease or any contract or
agreement to which Seller is a party or by which Seller or Seller’s Business is
bound that has not been listed as an Assigned Contract on Schedule 4.20 hereof
or any Personal Property Lease by which Seller or Seller’s Business is bound
that has not been listed as an Assigned Personal Property Lease on Schedule 4.8 hereof,
except as otherwise provided in Section 6.3; (b) with respect to any Assigned
Contract or Assigned Personal Property Lease, arising from the period prior to
the Closing Date; (c) arising out of any collective bargaining agreement to
which Seller is a party; (d) for any Employee Benefit Plan; (e) for any
obligation for Taxes; (f) for any liability for local or state sales, use or
transfer tax and taxes that may be imposed upon the sale or assignment of the
Acquired Assets pursuant to this Agreement and the Assignment and Assumption and
Bill of Sale, regardless of when such obligations may become known and due; (g)
for any damages or injuries to persons or property or for any tort or strict
liability arising from events, actions or inactions in Seller’s Business or the
operation of Seller’s Business prior to the Closing Date; (h) arising out of any
litigation arising with respect to the period prior to the Closing Date, whether
or not threatened or pending on or before the Closing Date; (i) incurred by
Seller or by Seller’s Business for borrowed money; (j) with respect to any
warranty claims related to sale by Seller of products and services prior to the
Closing Date (except product warranty claims that lead solely to customer
product returns as contemplated in Section 1.3(ii) above), and (k) for any
accounts payable of Seller or any Affiliate of Seller.  The intent and
objective of Buyer and Seller is that, except for liabilities explicitly assumed
by Buyer hereunder, including the Unassigned Obligations, Buyer does not assume,
and no transferee liability shall attach to Buyer pertaining to, any of the
Excluded Liabilities.

     

    
      
        
          
             

            4416103v.8 

          

           

        

        
          2

          
            

          

        

        
           

        

      

    

     

     1.5. Employees.  Within
thirty (30) days following the Closing Date, (A) Buyer or an Affiliate of Buyer
shall offer employment to each employee of Seller who is principally employed in
Seller’s Business (collectively, the “Seller
Employees”), provided, however, that such
employee (i) is listed on Schedule 1.5 attached
hereto, and (ii) if required by Buyer, agrees to the release of his or her
employment files to Buyer or its Affiliate prior to hiring of such Seller
Employee (and agrees to performance of any reasonable background checks, if
required by Buyer), and (B) Seller covenants and agrees to terminate the
employment of the Seller Employees who accept Buyer’s or its Affiliate’s offer
of employment, and to reasonably cooperate with Buyer in the transition of such
Seller Employees to Buyer or its Affiliate.  Those Seller Employees
who accept Buyer’s or its Affiliate’s offer of employment shall be designated on
Schedule 1.5 as
“Transferring
Employees” and referred to hereinafter as such.  Except as
otherwise provided in this Section 1.5, Seller acknowledges and agrees that, as
between the parties, it is responsible for paying to the Transferring Employees
all compensation and benefits accrued up to the date that such Transferring
Employee accepts an offer of employment with Buyer or its Affiliate (each such
date, a “Transfer
Date”), including without limitation PTO, provided, however, that Buyer
shall pay the compensation and benefits (including without limitation PTO) for
each Transferring Employee for the period beginning on the Closing Date and
ending on the earlier to occur of (i) the date such Transferring Employee
accepts an offer of employment with Buyer, and (ii) immediately after the second
payroll after Closing with respect to such Transferring
Employee.  Buyer shall pay the 2008 bonus for each employee that is
designated on Schedule
1.5 as a Transferring Employee’s once such amounts are determined (which
bonuses shall be calculated in accordance with the existing criteria for each
bonus, which criteria have been provided to the Buyer); provided, however, Seller shall
reimburse Buyer for that portion of each Transferring Employee’s bonus earned
through the Closing Date which reimbursed amounts shall be equal to the amount
of such bonus paid by Buyer multiplied by the quotient of (x) the amount of the
Sales revenue generated by the Business for the period beginning on January 1,
2008 and ending on the Closing Date divided by (y) the amount of the Sales
revenue generated by the Business for the fiscal year ended December 31, 2008,
and which reimbursed amounts Buyer shall offset, as these amounts are paid by
Buyer to the Transferring Employees, at its election against amounts owed to
Seller pursuant to the Notes or the Earnout Amount.  With respect to
each Transferring Employee, the parties agree that Seller shall transfer and
Buyer shall assume up to eighty (80) hours of PTO per employee which has accrued
through the Closing Date (the “Assumed
PTO”), and the payment obligations of Buyer pursuant to the Notes or the
Earnout Amount shall be reduced by the aggregate value of such Assumed
PTO.  Any PTO in excess of Assumed PTO shall be paid by Seller to each
Transferring Employee in the next Seller payroll disbursed, whether at or
following the applicable Transfer Date for each such Transferring Employee, but
in any event no more than fourteen (14) business days following the applicable
Transfer Date.  Schedule 1.5 sets
forth with respect to each of the Seller Employees such person’s position, date
of hire, current salary, bonus range/potential, accrued PTO through the Closing
Date, and amount of any other accrued benefits to which such person may be
entitled or for which such person has made either written or oral claim to
Seller.  Seller shall provide an updated Schedule 1.5 at
Closing, which schedule shall be updated each time a Transferring Employee
officially commences employment with Buyer or its Affiliate.  All
Transferring Employees shall be employees at will, subject to Buyer’s or its
Affiliate’s employment policies; provided, however, that Buyer
shall provide all Transferring Employees with health/dental and other similar
benefits that are substantively equivalent to (or greater than) the benefits
offered to such Transferring Employees by Seller.  Nothing herein
shall obligate Buyer or an Affiliate of Buyer to employ the Transferring
Employees for any specific time period.  Nothing in this Section shall
be construed to grant any employee any rights as a third party
beneficiary.  Seller shall retain all liabilities with respect to any
and all Seller Employees who are not Transferring Employees.  Buyer
shall not terminate Ryan Zink’s employment with Buyer without “cause” (as
defined in the Zink Employment Agreement) for a period of at least eighteen (18)
months following the Closing Date.

     

    Buyer agrees unconditionally to
indemnify, defend and hold Seller and Shareholders harmless, on demand, from and
against any and all Losses of every kind, nature or description which arise out
of or result from or as a consequence of any claims of any nature brought by any
Transferring Employees against Seller on and following the Closing Date through
the applicable Transfer Date  of such Transferring Employee (the
“Transition
Period”) which claim relates to such Transition Period except for those
Losses arising out of the acts or omissions of Seller.  The
indemnification obligations set forth in this Section 1.5 shall be subject to
the terms and provisions of Article IX hereof, but shall not be subject to any
of the limitations set forth in Section 9.5 .

     

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          3

          
            

          

        

        
           

        

      

    

     

         1.6. Purchases of Product
Inventory.  Buyer covenants and agrees that to the extent
applicable, it shall fill all customer product orders it receives after the
Closing by first purchasing such products from Seller at Seller’s cost out of the Product
Inventory (as the Product Inventory exists as of Closing); provided, however, that Buyer
shall not be obliged to purchase, and Seller shall not sell to Buyer, any
expired, defective or spoiled products.  Buyer shall make all payments
owed Seller for the Product Inventory by the date that is the earlier of fifteen
(15) days from invoice date for such shipment of products, or Buyer’s receipt of
such products.  To the extent that Buyer receives a product order for
a product that is not in the Product Inventory, Buyer shall be entitled to
purchase that product from any other source.  Buyer shall be
responsible for the costs of storing, insuring, handling and shipping the
Product Inventory, and Buyer shall accept and dispose of, at its own cost, any
returned products. 

     

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          4

          
            

          

        

        
           

        

      

    

    

     

     1.7. Instruments of
Transfer.  The sale of the Acquired Assets and the assumption
of the Assumed Liabilities as herein provided shall be effected at Closing by
the Assignment and Assumption and Bill of Sale in the form attached hereto as
Exhibit A (the
“Bill of
Sale”).

     

     1.8. Payment of Sales
Taxes.  Seller covenants and agrees to pay any and all sales,
use or other transfer taxes payable by reason of the transfer and conveyance of
the Acquired Assets hereunder.  The parties will prepare and deliver
and if necessary file at or before Closing all transfer tax returns and other
filings necessary to vest in Buyer full right, title and interest in the
Acquired Assets.

     

    

     

    ARTICLE
II

    PURCHASE
PRICE

     

     2.1. Purchase
Price.  Subject to any adjustments pursuant to this Article II,
and in reliance on Seller’s and Shareholders’ representations, warranties and
covenants, the purchase price to be paid by Buyer to Seller for the Acquired
Assets and the other rights set forth herein shall be payable as
follows:

     

    (i) Seven
Hundred Thousand Dollars ($700,000) payable in cash at the Closing (the “Cash Purchase
Price”);

     

    (ii) Three Hundred
Fifty Thousand Dollars ($350,000) in the form of a secured promissory note
payable in eighteen (18) fixed monthly installments and accruing interest at the
rate of six percent (6%) per annum, substantially in the form of Exhibit B-1 attached
hereto (the "Installment
Note");

     

    (iii) An amount
equal to the book value of those fixed assets of Seller listed on Schedule 2.1(iii)
hereto (the “Fixed
Assets”), such amount to be determined prior to the Closing, in the form
of a secured promissory note, substantially in the form of Exhibit B-2 attached
hereto (the "FAP
Note");

     

    (iv) An
earn-out payment in the amount of Three Hundred Fifty Thousand Dollars
($350,000) (subject to adjustment based on Gross Profits from the Business, as
described below), payable in six (6) consecutive, equal, quarterly installments
(the "Earn-Out
Amount");

     

    (v) An amount
equal to the book value of the Product Inventory which consists of component
parts (i.e., lids, labels, bottles, boxes, packaging, etc.) listed on Schedule 2.1(v)
hereto (the “Component
Inventory”), such amount to be determined prior to the Closing, in the
form of a secured promissory note,  payable in twelve (12) fixed
monthly installments and

     

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          5

          
            

          

        

        
           

        

      

    

    

    (vi) accruing
interest at the rate of six percent (6%) per annum, substantially in the form of
Exhibit B-3
attached hereto (the "Component
Inventory Note" and together with the Installment Note and the FAP Note,
the “Notes”);
and

     

    (vii) Issuance
by Buyer at the Closing of One Million Five Hundred Fifty Thousand (1,550,000)
shares of unregistered Common Stock, par value $0.001 per share, of Buyer (the
“Shares”),
which Shares shall have such transfer rights and be subject to certain
restrictions on resale and transfer as set forth herein and in that certain
Stock Rights and Restriction Agreement by and among Buyer, Seller and the
Shareholders in substantially the form of Exhibit C attached
hereto (the “Stock Rights and
Restriction Agreement”) (the “Equity Purchase
Price” and together with the Cash Purchase Price, the Notes and the
Earn-Out Amount, the “Purchase
Price”).

     

    In
connection with the Notes, Earn-Out Amount and Buyer’s obligations with respect
to the purchase of the Product Inventory after the Closing, Buyer will enter
into a Security Agreement, substantially in the form attached hereto as Exhibit D (the “Security
Agreement”), pursuant to which Buyer will grant Shareholders, for
purposes of securing Buyer’s payment obligations under the Notes, and with
respect to the Earn-Out Amount and Product Inventory purchases, a first priority
security interest in and to the Acquired Assets and Product Inventory (assuming
the Acquired Assets and Product Inventory are transferred to Buyer free and
clear of all Liens).

     

     2.2. Gross Profit Adjustments to
Earn-Out Amount.

     

    (a) Determination of Adjustment
Amount.  The projected Earn-Out Amount of $350,000 shall be
payable in six (6) cash installments of Fifty-Eight Thousand Three Hundred
Thirty-Three Dollars and Thirty-Three Cents ($58,333.33) (each a “Target Quarterly
Earn-Out Payment” and collectively the “Target Quarterly
Earn-Out Payments”) payable over the six (6) consecutive quarters, which
quarters will be measured commencing as of the Effective Date and terminating on
March 30, 2010 (the “GP
Period”).  Notwithstanding the foregoing, each Target Quarterly
Earn-Out Payment shall be subject to adjustment based on Gross Profits earned
during the relevant quarter of the GP Period as follows: To the extent that
Gross Profits during the relevant quarter are (i) more than Seven Hundred
Ninety-Nine Thousand Eight Hundred Twenty-Four Dollars ($799,824) (such amount,
hereinafter the “GP Quarterly
Target”), then
the accompanying Target Quarterly Earn-Out Payment will be increased by the
amount of the overage multiplied by 0.22
(e.g., if the amount of the overage is $100,000, then the applicable Target
Quarterly Earn-Out Payment will be increased by $22,000 (100,000 x 0.22 =
22,000) for an actual payment of $80,333.33 for such quarter) or, (ii) less than
the GP Quarterly Target, then the accompanying Target Quarterly Earn-Out Payment
will be reduced, but not below zero, by the amount of the shortfall multiplied by 0.22
(e.g., if the amount of the shortfall is $100,000, then the applicable Target
Quarterly Earn-Out Payment will be reduced by $22,000 (100,000 x 0.22 = 22,000)
from $58.333.33 to $36, 333.33); provided, however, that if the
amount of the product of the shortfall multiplied by 0.22 in a given quarter is
greater than the applicable Target Quarterly Earn-Out Payment, then the amount
of any such shortfall that cannot be applied to the applicable Target Quarterly
Earn-Out Payment shall, at the discretion of Buyer, either be applied to
reduction of the subsequent Target Quarterly Earn-Out Payment(s) as necessary to
fully reflect the amount of such shortfall or carried over to the final Target
Quarterly Earn-Out Payment (at which time, Seller shall pay any amounts due and
owing to Buyer as a result of such shortfall; provided, however, Seller’s
obligation to pay Buyer the amount of such shortfall shall in no event exceed
the Actual Quarterly Earn-Out Payments previously received from
Buyer).  The amount by which each Target Quarterly Earn-Out Payment is
adjusted each quarter may hereinafter be referred to as a “GP Adjustment
Amount” and collectively as the “GP Adjustment
Amounts”.  Each Target Quarterly Earn-Out Payment, as reduced
or increased by the applicable GP Adjustment Amount, shall hereinafter be
referred to as an “Actual Quarterly
Earn-Out Payment” and collectively as the “Actual Quarterly
Earn-Out Payments”.

     

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          6

          
            

          

        

        
           

        

      
 

     

    (b) Adjustment
Procedure.  Buyer shall deliver to the Shareholders no later
than ten (10) business days after expiration of each quarter during the GP
Period its calculations of the GP Adjustment Amount and the Actual Quarterly
Earn-Out Payment for such quarter and such other supporting materials reasonably
necessary to allow the Shareholders to validate such GP Adjustment Amount and
such Actual Quarterly Earn-Out Payment (collectively, the “Earn-Out
Materials”).  The auditors preparing the Earn-Out Materials
will be auditors selected by Buyer.  Upon receipt of the Earn-Out
Materials, the Shareholders shall have five (5) business days to review the
Earn-Out Materials (the “GP Objection
Period”).  The Earn-Out Materials and the calculations
pertaining to each GP Adjustment Amount and each Actual Quarterly Earn-Out
Payment shall be conclusive and binding on the parties unless the Shareholders
provide the Buyer with written notice (a “GP Objection
Notice”) within the GP Objection Period that the Shareholders dispute
such computations.  In the event that a GP Objection Notice is
provided to Buyer within the GP Objection Period, Buyer and the Shareholders
shall use best efforts to resolve the dispute within ten (10) business days of
Buyer’s receipt of the GP Objection Notice.  If Buyer and the
Shareholders are unable to agree upon the dispute within such ten (10) business
day period, Buyer
and the Shareholders agree to resolve such dispute in accordance with Section 2.2(d)
below.

     

    (c) Payment of Target Quarterly
Earn-Out Payments.  Buyer shall pay undisputed Actual Quarterly
Earn-Out Payments within seven (7) business days of the termination of the
applicable GP Objection Period; provided, however, that if a GP
Objection Notice is tendered to Buyer within a GP Objection Period, then the
applicable Actual Quarterly Earn-Out Payment shall be payable (A) within seven
(7) business days of the date that Buyer, Seller and Shareholders resolve
amongst themselves any dispute set forth in a GP Objection Notice pursuant to
Section 2.2(b) above, or, (B) if the parties are unable to resolve such dispute
amongst themselves pursuant to Section 2.2(b) as contemplated by clause (A)
above, then the GP Adjustment Amount shall be payable within seven (7) business
of the date that the Auditor (as defined below) renders final determination of
the Actual Quarterly Earn-Out Payment as described in Section 2.2(d)
below.

     

    (d) Dispute
Resolution.  If Buyer and the Shareholders are unable to
resolve a dispute within fifteen (15) business days of Buyer’s receipt of the GP
Objection Notice as contemplated by Section 2.2(b) above, Buyer and the
Shareholders will mutually select an independent accounting firm (the “Auditor”)
to make a determination of the GP Adjustment Amount Price.  In the
event the parties are unable to agree on an independent accounting firm, the
parties will select by lot (from a pool of three recognized accounting firms
mutually selected by the parties) an independent, national accounting firm to
serve as the Auditor.  The Auditor will render final determination of
the Actual Quarterly Earn-Out Payment within thirty (30) days of its selection
and such determination will be binding upon the parties.  The fees,
costs and expenses of the accounting firm so selected will be borne by the party
whose positions generally did not prevail in such determination, or if the
accounting firm determines that neither party could be fairly found to be the
prevailing party, then such fees, costs and expenses will be borne 50% by Buyer
and 50% by the Shareholders.  In the event the Auditor rules in favor
of Seller with respect to a particular Actual Quarterly Earn-Out Payment, Seller
shall be entitled to interest from Buyer at the rate of six percent (6%) on said
amount from the date said payment was payable by Buyer had Buyer not disputed
said amount.

     

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          7

          
            

          

        

        
           

        

      

    

     

    (e) Operation of
Business.  During the GP Period, Buyer shall use commercially
reasonable best efforts to operate the Business substantially consistent with
Seller’s past practices.

     

     2.3. Pro-Rations.  All
ordinary course of business expenses incurred, such as utilities, will be
pro-rated as of the Closing Date, such that Buyer is responsible for amounts
incurred on or after the Closing Date and Seller is responsible for amounts
incurred prior to the Closing Date.

     

     2.4. Allocation of Purchase
Price.  Buyer and Seller acknowledge and agree that the
Purchase Price shall be allocated to the Acquired Assets in accordance with
Schedule 2.4
hereto, which allocation shall include asset valuation and an amount
attributable to the covenants not to compete set forth in the Non-Competition
Agreements.  Seller further acknowledges and agrees that (a) execution
of the Non-Competition Agreements is a material inducement to Buyer to enter
into this Agreement, and Buyer is doing so in reliance upon full compliance by
Seller and each Shareholder agreeing to be bound by such covenants; and (b) in
light of such reliance, the amount allocated herein to the covenants not to
compete is not intended by the parties as a measure of damages that might be
incurred by Buyer in the event of a breach of such covenant.  Buyer
and Seller agree to report the transactions contemplated by this Agreement for
federal and state income tax purposes in accordance with such
allocation.  The parties shall execute all forms required to be filed
for tax purposes with any taxing authority in a manner consistent with the
allocation on Schedule
2.4 hereto.

     

     2.5. Negotiated
Value.  The parties agree that the Purchase Price and the
Purchase Price allocation set forth on Schedule 2.4 reflect
the fair value of the Seller’s Business and the fair values of the Acquired
Assets, respectively, agreed to by the parties hereto as a result of arms’
length negotiations.

     

     2.6. Distribution of Shares to
Shareholders.  Seller shall be entitled to transfer the Shares
to the Shareholders as provided in the Stock Rights and Restriction
Agreement.

     

     2.7. Bulk Sales
Compliance.  Seller represents and warrants to Buyer that
Nebraska does not have any laws with respect to the bulk transfer of assets
which would be applicable to the sale of the Acquired Assets.

     

    ARTICLE
III

     

    CLOSING

     

    The
closing of the sale and purchase of the Acquired Assets (the “Closing”)
shall take place on October 1, 2008 (the “Closing
Date”) by facsimile or other electronic transmission (with original
copies to follow via United States or overnight mail).  Buyer, Seller
and Shareholders shall use their respective good faith efforts to close this
transaction as promptly as possible after the Effective Date.  Closing
shall be deemed to have occurred at 12:01 a.m. local time at the location of
Seller’s Business on the Closing Date.

     

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          8

          
            

          

        

        
           

        

      

    

    

    ARTICLE
IV

    REPRESENTATIONS
AND WARRANTIES OF SELLER AND SHAREHOLDERS

     

    Seller
jointly and severally and Shareholders severally (in proportion to the stock
ownership of each in Seller as of immediately prior to the Closing) hereby
represent and warrant to Buyer, as of the Effective Date and as of the Closing
Date (except for those representations and warranties that are made as of the
Closing Date only, which are true and correct as of the Closing Date), as
follows:

     

     4.1. Organization, Good Standing
and Qualification.  Seller is a corporation duly organized,
validly existing and in good standing under the provisions of the laws of the
State of Nebraska, and, except as set forth on Schedule 4.1 hereto,
is qualified and licensed to do business in every other jurisdiction in which it
conducts business or the nature of its business and operations would require
qualification as a foreign corporation, except where the failure to be qualified
would not, individually or in the aggregate, cause a Seller Material Adverse
Effect.  Seller has all requisite power and authority to own and
operate its properties and to carry on its business as now
conducted.  Seller has all power and authority to enter into all of
the Acquisition Agreements to which Seller is a party and to carry out and
perform its obligations under the Acquisition Agreements.

     

     4.2. Authorization; Binding
Obligation.  Seller and each Shareholder have full legal and
corporate (in the case of Seller) right, power, and authority to execute and
deliver the Acquisition Agreements to which Seller is a party, and to carry out
the transactions contemplated thereby. The execution and delivery by Seller of
the Acquisition Agreements and all of the documents and instruments required
thereby and the consummation of the transactions contemplated thereby have been
duly authorized by all requisite action on the part of Seller.  The
Acquisition Agreements to which Seller and the Shareholders are a party and each
of the other documents and instruments required thereby or delivered in
connection therewith have been duly executed and delivered by Seller and the
Shareholders, and constitute the legal, valid and binding obligations of Seller
and Shareholders, enforceable against them in accordance with their respective
terms except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other Laws of general application affecting
enforcement of creditors’ rights generally and (ii) as limited by Laws relating
to the availability of specific performance, injunctive relief or other
equitable remedies.

     

     4.3. Consents and
Approvals.

     

    (a) Governmental Consents and
Approvals.  Except as set forth on Schedule 4.3(a), to
the Knowledge of Seller no registration or filing with, or consent or approval
of, or other action by, any federal, state or other governmental agency or
instrumentality is or will be necessary for the valid execution, delivery and
performance of this Agreement or any other Acquisition Agreement by Seller and
the Shareholders, the transfer of the Acquired Assets to Buyer and the operation
of the Seller’s Business by Buyer after Closing (each, a “Governmental
Approval”).

     

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          9

          
            

          

        

        
           

        

      

    

    

    (b) Third Party
Consents.  Except as set forth on Schedule 4.3(b), to
the Knowledge of Seller, no consent, approval or authorization of any
non-governmental third party is required in order to consummate the transactions
or perform the related covenants and agreements contemplated hereby or to vest
full right, title and interest in the Acquired Assets free and clear of any Lien
upon Buyer, all without any change in the Acquired Assets and all rights therein
after Closing (each, a “Third Party
Consent”).

     

     4.4. No
Violation.  The execution, delivery, compliance with and
performance by Seller and the Shareholders of the Acquisition Agreements and
each of the other documents and instruments delivered in connection therewith do
not and will not (a) violate or contravene the organizational certificates,
documents and agreements, as amended to date, of Seller, (b) violate or
contravene any law, statute, rule, regulation, order, judgment or decree to
which Seller or any Shareholder is subject except where such violation or
contravention would not, individually or in the aggregate, cause a Seller
Material Adverse Effect, (c) except for any Third Party Consents which are not
obtained, conflict with or result in a breach of or constitute a default by any
party under any contract, agreement, instrument or other document to which
Seller or any Shareholder is a party or by which Seller or any Shareholder or
any of their assets or properties are bound or subject or to which any entity in
which Seller or any Shareholder has an interest, is a party, or by which any
such entity is bound, or (d) result in the creation of any Lien upon the
Acquired Assets or Seller’s Business or any interest of the Shareholders
therein.

     

     4.5. Licenses and
Permits.  Schedule 4.5 attached
hereto contains a true, correct and complete list and summary description of all
Licenses which have been issued to Seller in connection with the Acquired Assets
or Seller’s Business (the “Seller
Licenses”).  Each Seller License is valid and in full force and
effect as of the date hereof, no Seller License is subject to any Lien,
limitation, restriction, probation or other qualification and there is no
default under any Seller License or any basis for the assertion of any default
thereunder.  Schedule 4.5
specifies the holder of each Seller License and whether or not such Seller
License is transferable to Buyer.  There is no investigation or
proceeding, pending or, to the Knowledge of Seller, threatened that could result
in the termination, revocation, limitation, suspension, restriction or
impairment of any Seller License or the imposition of any fine, penalty or other
sanctions for violation of any legal or regulatory requirements relating to any
Seller License or, to Seller’s Knowledge, any basis therefor.  To
Seller’s Knowledge, Seller and the Shareholders have, and have had at all
relevant times, all Licenses that are or were necessary in order to enable
Seller to own the Acquired Assets and conduct Seller’s Business.

     

     4.6. Ownership; No
Subsidiaries.  The Shareholders own all of the issued and
outstanding shares of capital stock of Seller, and there are no other
outstanding rights (contingent or otherwise) to acquire, directly or indirectly,
any securities of Seller nor are there outstanding any securities (other than
the Shares) directly or indirectly convertible into or exercisable or
exchangeable for shares of capital stock of Seller.  Seller does not
own and has not owned, either directly or indirectly, any interest or investment
(whether debt or equity) in or been a member of any corporation, partnership,
joint venture, business trust or other entity, except as set forth on Schedule 4.6
hereto.

     

     4.7. Acquired
Assets.  Except for that portion of the Shared Assets owned by
Complete Nutrition, Inc., Seller is the sole and exclusive legal and equitable
owner of all right, title and interest in, and has good, clear, indefeasible,
insurable and marketable title to, all of the Acquired Assets free of all
Liens.  All of the Acquired Assets have been maintained in accordance
with normal industry practice, and are in good operating condition and
repair.  During the
past three (3) years, there has not been any interruption of the operations of
the Seller’s Business due to the condition of any of the Acquired
Assets.  Except for the Excluded Assets, the Acquired Assets include
all assets, properties and rights used by Seller in connection with the Seller’s
Business and which are necessary or desirable for Buyer to continue the Seller’s
Business as historically and currently conducted following
Closing.  Seller will convey to Buyer on the Closing Date all of the
Acquired Assets free and clear of any Lien, including the conveyance to Buyer of
any Acquired Asset not owned by Seller on the Effective Date or not owned free
of any Lien by Seller on the Effective Date, which items are set forth on Schedule
4.7.

     

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          10

          
            

          

        

        
           

        

      

    

     

     

     4.8. Leases of Personal
Property.  For the purposes of this Agreement, “Personal Property
Leases” means any lease, conditional or installment sale contract, Lien
or similar arrangement to which any tangible personal property used by Seller in
connection with the operation of Seller’s Business is subject.  Except
as set forth on Schedule 4.8, none of
the tangible personal property used by Seller in connection with the operation
of Seller’s Business is subject to a Personal Property Lease.  Seller
has delivered to Buyer a complete and correct copy of each Personal Property
Lease listed on Schedule
4.8.  All of such Personal Property Leases are valid, binding
and enforceable in accordance with their respective terms and are in full force
and effect.  Seller is not in default under any of such Personal
Property Leases and there has not been asserted, either by or against Seller
under any of such Personal Property Leases, any notice of default, set-off or
claim of default.  To Seller’s Knowledge, the parties to such Personal
Property Leases other than Seller are not in default of their respective
obligations under any of such Personal Property Leases.  To Seller’s
Knowledge, there has not occurred any event which, with the passage of time or
giving of notice (or both), would constitute such a default or breach under any
of such Personal Property Leases by any other party thereto.  Each
Personal Property Lease is separately designated on Schedule 4.8 as
either a Personal Property Lease that Seller has agreed to assign and that Buyer
has agreed to assume (each, an “Assigned Personal
Property Lease”) or as a Personal Property Lease that shall be paid off
by Seller prior to Closing at its own expense or paid off at Closing with a
portion of the Purchase Price (each, a “Terminated
Personal Property Lease”).

     

     4.9. Financial
Statements.  Set forth on Schedule 4.9 are (a)
the unaudited balance sheets of Seller as of December 31, 2006 and December 31,
2007, and the related statements of income for each of the applicable 12-month
periods then ended, prepared in accordance with GAAP (the “Year-End
Financial Statements”), and (b) the unaudited balance sheets of Seller as
of August 30, 2008 and the related unaudited statements of income for the period
then ended, prepared in accordance with GAAP (the “Interim Financial
Statements”).  The Year-End Financial Statements and the
Interim Financial Statements are referred to herein collectively as the “Financial
Statements.”  The Financial Statements fairly present the
financial condition and the results of operations and cash flow of Seller’s
Business as of the respective dates of and for the periods referred to in such
financial statements, in all material respects, all in accordance with GAAP,
subject to the absence of footnotes, provided that any disclosure omitted due to
the absence of such footnotes does not either individually or in the aggregate
cause a Seller Material Adverse Effect.  The Financial Statements
reflect the consistent application of GAAP throughout the periods involved,
subject to normal recurring year-end adjustments and the absence of
footnotes.

     

       
4.10. Absence of Certain
Events.  Except as noted on Schedule 4.10, since
the date of the Interim Financial Statements, Seller’s Business has been
conducted only in the ordinary course and in a manner consistent with past
practices.  As amplification and not in limitation of the foregoing,
since the date of the Interim Financial Statements, with respect to Seller’s
Business, there has not been:

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          11

          
            

          

        

        
           

        

      

    

    

     

    (a) any
decrease in the value of the Acquired Assets other than ordinary depreciation
consistent with past practices;

     

    (b) any
voluntary or involuntary sale, assignment, license or other disposition, of any
kind, of any property or right included in the Acquired Assets, except as
specifically contemplated by this Agreement and except for sale of product
inventory in the ordinary course of business;

     

    (c) any Lien
imposed or created on the Acquired Assets;

     

    (d) any
Seller Material Adverse Effect or event which could reasonably be expected to
cause a Seller Material Adverse Event;

     

    (e) any
damage or destruction of any of the assets that are material (either
individually or in the aggregate with other damaged or destroyed assets) in
Seller’s Business by fire or other casualty, whether or not covered by
insurance;

     

    (f) any sale,
transfer, assignment, termination, modification or amendment of any Contract,
except for terminations, modifications and amendments of Contracts made in the
ordinary course of business consistent with past practice and which would not
have a Seller Material Adverse Effect;

     

    (g) any
notice (written or oral) to Seller that any Contract has been breached or
repudiated or will be breached or repudiated;

     

    (h) except in
the ordinary course of business, or otherwise as necessary to comply with any
applicable minimum wage law, any increase in the salary or other compensation of
any employee or consultant engaged in Seller’s Business, or any increase in or
any addition to other benefits to which any such employee or consultant may be
entitled;

     

    (i) any
extraordinary compensation, bonus or distribution to Seller or to any Affiliate
of Seller;

     

    (j) any
pending or threatened litigation against Seller or any Shareholder;

     

    (k) any
failure to pay or discharge when due any liabilities which arose out of the
ownership or operation of Seller’s Business;

     

    (l) any
change in any of the accounting principles adopted by Seller, or any change in
Seller’s policies, procedures, or methods with respect to applying such
principles;

     

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          12

          
            

          

        

        
           

        

      

    

    

    (m) any
transaction or Contract outside the ordinary course of business or involving an
amount in excess of $5,000;

     

    (n) any
termination of key personnel of Seller;

     

    (o) any
dividends or distributions paid to Shareholders or to any other Affiliates
of  Seller; or

     

    (p) any
action that if taken after the Effective Date would constitute a breach of any
of the covenants in Section 6.1 hereof.

     

     4.11. Legal
Proceedings.  Except as set forth on Schedule 4.11, there
is no action, suit, litigation, proceeding or investigation pending or, to the
Knowledge of Seller, threatened by or against Seller or any Shareholder (but in
the case of Shareholders, relating directly or indirectly to Seller’s Business
or the Acquired Assets or a Shareholder’s ownership interest in Seller and right
to enter into the transactions contemplated hereby), and neither Seller nor any
Shareholder has received any written or oral claim, complaint, incident, report,
threat or notice of any such proceeding or claim and neither Seller nor any
Shareholder is aware of any basis therefor.  Neither Seller nor any
Shareholder has received any opinion or memorandum or advice from legal counsel
to the effect that it is exposed, from a legal standpoint, to any liability or
claim relating to the Acquired Assets or to the business, prospects, financial
condition, operations, property or affairs of Seller’s
Business.  There are no outstanding orders, writs, judgments,
injunctions or decrees of any court, governmental agency or arbitration tribunal
against, involving or affecting Seller or the Acquired Assets, and to the
Knowledge of Seller there are no facts or circumstances which may result in the
institution of any such action, suit, claim or legal, administrative or
arbitration proceeding or investigation against, involving or affecting Seller,
the Acquired Assets or the transactions contemplated hereby.  Seller
is not in default with respect to any order, writ, injunction or decree known to
or served upon it from any court or any Federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign.

     

     4.12. Solvency and Value of
Transfer.  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 Seller or any Shareholder, and neither Seller nor any
Shareholder has taken any action in contemplation of, or which would constitute
the basis for, the institution of any such proceedings.  Neither
Seller nor any Shareholder is insolvent under any bankruptcy, receivership or
insolvency law, and since September 30, 2005 has been paying debts as they
become due and within vendor terms.  The value of the Purchase Price
is equal to the negotiated value of the Acquired Assets and the other rights
granted to Buyer herein, as indicated on Schedule
2.4.  As of the Closing Date, after the Purchase Price is paid
as provided for under this Agreement, the fair value of all of Seller’s assets
will be equal to or greater than the total amount of the retained debts of
Seller.  Seller’s sale of the Acquired Assets has not been undertaken
with the intention to hinder, delay or defraud Seller’s current or future
creditors.

     

          4.13. Compliance with FDA and FTC
Regulations.

          (a) Except as
disclosed in Schedule
4.13, to the Knowledge of Seller, Seller is in compliance with all
applicable laws, rules, regulations and orders administered or issued by the
United States Food and Drug Administration (“FDA”) or
any comparable governmental authority (“FDA Laws”)
and the United States Federal Trade Commission (“FTC”).

    

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          13

          
            

          

        

        
           

        

      

     

    (b) To the
Knowledge of Seller, Seller has all material authorizations, approvals,
licenses, permits, certificates, registration or exemptions for the FDA or other
comparable governmental authorities required to conduct its business and
produce, market, sell and distribute its products as currently conducted and as
contemplated to be conducted (“Registrations”).  To
the Knowledge of Seller, each of the Registrations is valid and is in full force
and effect.  To Seller’s Knowledge, neither the FDA nor any other
governmental authority is or may consider limiting, suspending, or revoking such
Registrations or changing the marketing classification or labeling of Seller’s
products.  There is no false or misleading information, or, to the
Knowledge of Seller, significant omission in any product application or other
submission of Seller to the FDA or any comparable governmental
authority.  To the Knowledge of Seller, Seller has fulfilled and
performed all material obligations under each Registration , and no event has
occurred or condition or state of facts exists that would reasonably be expected
to constitute a violation or cause revocation or termination of any such
Registration.  To Seller’s Knowledge, all third parties that are
manufacturers, contractors, or suppliers for the Seller are in compliance with
all applicable FDA Laws  insofar as they pertain to the manufacture of
products for the Seller.

     

    (c) To the
Knowledge of Seller, all products developed, manufactured, distributed or
marketed by or on behalf of Seller that are subject to the jurisdiction of the
FDA or any comparable governmental authority or the FTC have been and are being
developed, manufactured, distributed and marketed in compliance with FDA Laws
and marketed and sold in compliance with the requirements of the
FTC.

     

    (d) Seller
has not received any written notice during the past five (5) years from the
FD  or any comparable governmental authority nor the FTC or any
comparable governmental authority that alleges that Seller is not in compliance
in any respect with FDA Laws or the laws, rules, regulations and orders of the
FTC or any comparable governmental authority.  To the Knowledge of
Seller, Seller is not subject to any obligation arising under an administrative
or regulatory action or commitment made to the FDA, the FTC or any comparable
governmental authorities.  Seller has appropriately responded to all
observations made by the FDA during inspections and to all allegations made in
other correspondence from the FDA, the FTC or any comparable governmental
authorities.

     

    (e) No
product has been seized, withdrawn, detained or subject to a suspension of
manufacturing and, to the Knowledge of Seller, there are no facts or
circumstances likely to cause the FDA, the FTC or any comparable governmental
authorities to require (i) the seizure, recall, detention, safety alert or any
suspension of manufacturing, distribution or sale of any product, or (ii) a
change in the labeling of any product of Seller.  No proceedings in
the United States or any other jurisdiction seeking the withdrawal, recall,
suspension, or seizure of any product are pending or, to the Knowledge of
Seller, threatened against Seller.

     

    4.14. Compliance with
Laws.

        
(a) Schedule 4.14 lists
all claims, statements, and other matters (including, but not limited to, all
correspondence or communications with governmental agencies, intermediaries or
other relevant authorities) that involves, relates to or alleges any violation
of any applicable rule, regulation, policy or requirement of or related to (or
any irregularity with respect to) any activity, practice or policy of Seller or
Seller’s Business.  To Seller’s Knowledge, there are no such
violations or irregularities nor, to Seller’s Knowledge, are there any grounds
to anticipate the commencement of any investigation or inquiry, or the assertion
of any claim or demand by any government agency, intermediary or other relevant
authority with respect to any of the activities, practices, policies or claims
of Seller or Seller’s Business.    Seller is not currently
subject to any outstanding audit by any such government agency, intermediary or
other authority, and, to Seller’s Knowledge, there are no grounds to anticipate
any such audit in the foreseeable future.

    

     

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          14

          
            

          

        

        
           

        

      

    

     

               
(b) To
Seller’s Knowledge, Seller has not violated and is in compliance with all
applicable Laws.  Seller has not received any notice to the effect
that, or otherwise been advised that, it is not in compliance with any Laws, and
to Seller’s Knowledge no existing circumstances are likely to result in a
violation of any Law.

     

    (c) To
Seller’s Knowledge, Seller has complied with all Environmental Laws and Seller
has not received any notice alleging any violation of any Environmental Laws
with respect to Seller’s Business or the Acquired Assets.  Any past
noncompliance with Environmental Laws by or with respect to Seller’s Business is
identified by Seller on Schedule 4.14, and
has been resolved without any pending or threatened, ongoing or future
obligation, cost or liability.  To Seller’s Knowledge, there has been
no Release of Hazardous Materials in violation of any Environmental Law on the
Premises.  To Seller’s Knowledge, there is no asbestos or
asbestos-containing material on the Premises.  To Seller’s Knowledge,
neither the execution of this Agreement nor the consummation of the transactions
contemplated hereby will require any Remedial Action or notice to or consent of
any governmental authority or third party pursuant to any applicable
Environmental Law.

     

    (d) To
Seller’s Knowledge, Seller has complied with all applicable requirements of the
Occupational Safety and Health Act and all applicable state equivalents, and
with all applicable regulations promulgated under any such legislation, and with
all orders, judgments, and decrees of any tribunal under such legislation, that
apply to Seller’s Business, the Acquired Assets or the Premises, and, except as
set forth on Schedule
4.14, Seller has not received any notice alleging any violation
thereof.

     

     4.15. Employment
Matters.

     

    (a) Schedule 1.5 hereto
contains a true and accurate list of each Seller Employee, together with such
person’s position, date of hire, current salary, accrued paid time off, and
amount of any other accrued benefits to which such person may be entitled or for
which such person has made either written or oral claim to Seller, whether or
not such Seller Employee is designated as a Transferring
Employee.  Seller has paid or made provision for the payment of all
accrued benefits and wages for all Seller Employees through the Closing
Date.

     

    (b) Except as
indicated on Schedule
1.5, no Transferring Employee (i) has an employment agreement with
Seller, whether written or oral or (ii) has indicated that he or she
intends  to
terminate his or her employment with Seller or seek a material change in his or
her duties or status.  To Seller’s Knowledge, each Seller Employee,
including without limitation each Transferring Employee, who is required to be
licensed by applicable law is so licensed, and copies of such Licenses are
attached to Schedule
1.5 hereto.

     

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          15

          
            

          

        

        
           

        

      

    

     

     

    (c) Except as
listed on Schedule
4.15(c), (i) Seller is not a party to any collective bargaining contracts
or any other contracts, agreements or understandings with any labor unions or
other representatives of the Seller Employees (a “Labor
Contract”); (ii) Seller is not subject to any union organizing
activities; (iii) Seller has not breached or otherwise failed to comply with any
provision of any Labor Contract, and there are no grievances outstanding against
Seller under any Labor Contract; (iv) there are no unfair labor practice
complaints pending against Seller with respect to the Seller Employees before
the National Labor Relations Board or any current union representation questions
involving the Seller Employees; and (v) there is no strike, slowdown, work
stoppage or lockout or, to Seller’s Knowledge, threat thereof, by or with
respect to the Seller Employees.  The consent of any labor union which
is a party to any Labor Contract is not required to consummate the transactions
contemplated by this Agreement.

     

    (d) Buyer
shall not assume any liability or responsibility for any benefit or other
obligations arising out of or under any Employee Benefit Plan to which any
Transferring Employee or Seller Employee is or may be entitled to without regard
to whether such obligation or responsibility arises under the terms of such
Employee Benefit Plan or applicable Law.  Seller shall retain all
liability and responsibility for benefits, administration and compliance with
the terms of any and all Employee Benefit Plans and applicable Laws with regard
to any and all Employee Benefit Plans.

     

    (e) To
Seller’s Knowledge, no person employed by or affiliated with Seller has employed
or proposes to employ any trade secret or any information or documentation
proprietary to any former employer and, no person employed by or affiliated with
Seller has violated any confidential relationship which such person may have had
with any third party while working on behalf of Seller, and Seller has no reason
to believe that any such event could occur.

     

     4.16. Benefit Plan Compliance with
Provisions of Applicable Law.  Except as described in Schedule 4.16,
Seller, for the benefit of any of Seller Employees or Transferring Employees,
does not maintain or contribute to, nor have any liability or responsibility
with respect to any Employee Benefit Plan.  Seller has not incurred
any liability (other than normal claims for benefits under its welfare plans)
under any provision of ERISA or other applicable Law relating to any Employee
Benefit Plan.  Each Employee Benefit Plan has been established,
maintained and administered in compliance with its terms and complies, both in
form and operation, with the applicable provisions of ERISA (including without
limitation the funding and prohibited transactions provisions thereof), the
Code, and all other state and federal applicable Laws, except where any such
failure to comply would not, individually or in the aggregate, have a Seller
Material Adverse Effect.  No Employee Benefit Plan is funded through a
trust intended to be exempt from tax pursuant to Section 501 of the
Code.  Neither Seller nor any ERISA Affiliate has ever maintained or
contributed to any plan or arrangement subject to Title IV of ERISA or Section
412 of the Code, a multiemployer plan as described in Section 3(37) of ERISA or
a “multiple employer plan” as described in Section 3(40) of ERISA or Section
413(c) of the Code, and Seller has never had any liability with respect to any
such plan sponsored or maintained by an ERISA Affiliate.  No Employee
Benefit Plan provides benefits, including, without limitation, death or medical
benefits (through insurance or otherwise) with respect to employees or former
employees beyond their retirement or other termination of service other than
coverage mandated by applicable Law.  No Employee Benefit Plan which
is a group health plan, as described in Section 5000(b)(1) of the Code is
self-insured.  No Employee Benefit Plan liability, contingent or
otherwise, shall affect any of the Acquired Assets, including but not limited to
subjecting such Acquired Assets to attachment, forfeiture, seizure liquidation
or use as collateral.

     

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          16

          
            

          

        

        
           

        

      

    

     

     

     4.17. No Undisclosed
Liability.  Except as and to the extent of the amounts
specifically accrued or disclosed in the Financial Statements, Seller does not
have any liabilities or obligations of any nature whatsoever, due or to become
due, accrued, absolute, contingent or otherwise, required by GAAP to be
reflected on a balance sheet, except for such liabilities or obligations that
would not, individually or in the aggregate, cause a Seller Material Adverse
Effect.  Such liabilities and obligations were incurred in the
ordinary course of business and consistent with past practice.  To
Seller’s Knowledge, there is no basis for the assertion against Seller of any
liability or obligation required by GAAP to be fully and expressly accrued or
disclosed in the Financial Statements.  Seller has not incurred any
liabilities to customers or suppliers for discounts, returns, promotional
allowances or otherwise in connection with Seller’s Business or any liability
for rebates, refunds, allowances or returns for goods or services provided to,
by or for the account of Seller which have not been accrued or disclosed in the
Financial Statements.

     

     4.18. No
Brokers.  Neither Seller nor any Affiliate of Seller has
employed, either directly or indirectly, or incurred any liability to, any
broker, finder or other agent in connection with the transactions contemplated
by this Agreement.  Seller and its Affiliates agree to indemnify and
hold harmless Buyer for any claims brought by any broker, finder or other agent
claiming to have acted on behalf of Seller or an Affiliate of Seller in
connection with the purchase and sale of the Acquired Assets or Seller’s
Business.

     

     4.19. Taxes.  Seller
has filed, or has caused to be filed, on a timely basis and subject to all
permitted extensions, all Tax Returns with the appropriate governmental agencies
in all jurisdictions in which such Tax Returns are required to be filed, and all
such Tax Returns were correct and complete.  All Taxes that are shown
as due on such Tax Returns have been timely paid, or delinquencies cured with
payment of any applicable penalties and interest, as of the Closing
Date.  There are no Liens for Taxes on any Acquired Assets of Seller,
to the Knowledge of Seller no basis exists for the imposition of any Liens and
the consummation of the transactions contemplated by this Agreement will not
give rise to any Liens for Taxes on any Acquired Assets.  No
adjustment of or deficiency of any Tax or claim for additional Taxes has been
proposed, asserted, assessed or to the Knowledge of Seller threatened against
Seller or any member of any affiliated or combined group of which Seller is or
was a member or for which Seller could be liable, and to Seller’s Knowledge
there is no basis therefor.  Except as set forth on Schedule 4.19, Seller
has no dispute with any taxing authority as to Taxes of any
nature.  To Seller’s Knowledge, there are no audits or other
examinations being conducted or threatened, and there is no deficiency or refund
litigation or controversy in progress or threatened with respect to any Taxes
previously paid by Seller or with respect to any returns previously filed by
Seller or on behalf of Seller.  Seller has not made any extension or
waiver of any statute of limitations relating to the assessment or collection of
Taxes. There are in effect no powers of attorney or other authorizations to any
persons or representatives of Seller with respect to any Tax.  Buyer
shall have no liability for any Taxes related to the ownership or operation of
the Acquired Assets or the Seller’s Business for the periods prior to the
Closing Date.

     

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          17

          
            

          

        

        
           

        

      

    

     

     

     4.20. List of
Contracts.

     

    (a) For
purposes of this Agreement, “Contracts”
means all material agreements, contracts and commitments, written or oral, to
which Seller is a party or by which Seller or any of its properties, the
Acquired Assets or the Seller’s Business is bound including, without limitation:
(i) notes, loans, credit agreements, mortgages, indentures, security agreements,
operating leases, capital leases and other agreements and instruments relating
to the borrowing of money or extension of credit and any contract of suretyship
or guaranty; (ii) all employment and consulting agreements and arrangements, and
all bonus, compensation, pension, insurance, retirement, deferred compensation
and other plans, agreements, trusts, funds and other arrangements for the
benefit of employees; (iii) agreements, orders or commitments for the purchase
by Seller of inventories and supplies which involve annual purchases exceeding
$5,000; (iv) agreements, orders or commitments for the sale or lease to
customers of goods or services which involve annual sales exceeding $5,000; (v)
licenses of patents, copyrights, trademarks and other intangible property
rights; (vi) agreements or commitments for capital expenditures in excess of
$5,000 for any single project; (vii) any joint venture, partnership or other
agreement involving a share of profits or losses; (viii) any contract, agreement
or arrangements with any Affiliate; (ix) any agreement restricting competition
or the business activities of any person or entity; (x) any agreement for the
purchase or sale of any Acquired Asset; (xi) all leases of real property; and
(xii) any other agreements or obligations material to Seller’s Business or the
Acquired Assets.  Schedule 4.20 hereto
contains a complete and correct list of Contracts, including a complete
description for any oral Contracts.  Each Contract is separately
designated on Schedule
4.20 as either a Contract that Seller has agreed to assign and that Buyer
has agreed to assume (each, an “Assigned
Contract”) or as a Contract that shall be retained or terminated by
Seller, in its discretion and at its own expense (each, a “Retained
Contract”).

     

    (b) Seller is
not in default under the terms of any Contract, except where such default would
not have, individually or in the aggregate, a Seller Material Adverse
Effect.  No event has occurred that would constitute a default by
Seller under any Contract, nor has Seller received any notice of any default
under any Contract.  To the Knowledge of Seller, the counterparties to
the Contracts are not in default under the terms thereof, nor has any event
occurred that would constitute a default by any such counterparty under any
Contract, nor has Seller received any notice of any such counterparty’s default
under any Contract.

     

    (c) Seller
has made no prepayments or deposits under any Contract except as set forth on
Schedule
4.20.

     

    (d) The
Contracts are valid and binding obligations and in full force and effect and
have been entered into in the ordinary course of business, consistent with past
practice.  Seller has not received any notice from any other party to
a Contract of the termination or threatened termination thereof, nor any claim,
dispute or controversy thereon, and has no Knowledge of the occurrence of any
event which would allow any other party to terminate any Contract, nor has
Seller received notice of any asserted claim of default, breach or violation of,
any Contract and to Seller’s Knowledge there is no basis therefore.

     

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          18

          
            

          

        

        
           

        

      

    

     

     

    (e) Except
for any Third Party Consents which are not obtained, the consummation of the
transactions contemplated by this Agreement will not constitute a default under
any Contract (including without limitation, the Assigned Contracts) nor will it
trigger any other provision in a Contract that would result in a material change
in such Contract, including without limitation the requirement for a transfer
fee or new deposit, acceleration of any rights of the other party such Contract,
imposition of material obligations, or termination thereof.

     

     4.21. Real
Properties.  Schedule 4.21 sets
forth a true and complete description of all real property used in connection
with the Seller’s Business (the “Premises”).  Seller
has sufficient title to those Premises which it owns, if any, and has the right
to use those Premises which it leases from third parties, to conduct Seller’s
Business as currently conducted.  Seller holds the Premises free and
clear of all claims or rights of any third parties and, except as set forth on
Schedule 4.21,
the possession of the Premises by Seller has not been disturbed and no claim has
been asserted against Seller adverse to its rights in such
Premises.  To Seller’s Knowledge, all improvements, fixtures and all
structures on the Premises and the current uses of the Premises conform to all
applicable federal, state and local laws, building, health and safety and other
ordinances, laws, rules and regulations.  To Seller’s Knowledge,
applicable zoning laws permit the presently existing improvements and the
conduct and continuation of Seller’s Business as being conducted on the
Premises.

     

     4.22. Financing
Statements.  There are no financing statements under the
Uniform Commercial Code which name Seller as debtor or lessee filed in any
state, except as set forth on Schedule
4.22.  Except for those no longer in effect, Seller has not
signed any financing statement or any security agreement under which a secured
party thereunder may file any such financing statement.

     

     4.23. Transactions With
Affiliates.  Except as set forth on Schedule 4.23, no
Shareholder, corporate member, director, officer or employee of Seller or member
of the family of any such person, or any corporation, partnership, trust or
other entity in which any such person, or any member of the family of any such
person, has a substantial interest or is an officer, director, trustee, partner
or holder of any equity interest, is a party to any transaction with Seller,
including any contract, agreement or other arrangement providing for the
employment of, furnishing of goods or services by, rental of real or personal
property from or to or otherwise requiring payments or involving other
obligations to any such person or firm.

     

     4.24. Insurance.  Seller
is, and will through the Closing Date be, insured with responsible insurers
(including without limitation general liability insurance coverage of the
Acquired Assets and Premises and professional liability coverage) against risks
normally insured against by similar businesses under similar
circumstances.  Schedule 4.24
correctly describes, by type, carrier, policy number, limits, premium and
expiration date, the insurance coverage carried by Seller, which insurance will
remain in full force and effect in accordance with policy terms, with respect to
all events occurring prior to the Closing Date.  Schedule 4.24 also
states whether each such policy is carried on a “claims made” or “occurrence”
basis.  All such insurance policies are owned by and payable solely to
Seller.  Seller has not failed to give any notice or present any claim
under any such policy or binder in due and timely fashion, has not received
notice of cancellation or non-renewal of any such policy or binder and is not
aware of any threatened or proposed cancellation or non-renewal of any such
policy or binder.  There are no outstanding claims under any such
policy which have gone unpaid for more than thirty (30) days, or as to which the
insurer has disclaimed liability.

     

            
4.25. Intellectual
Property.  Schedule 4.25 sets
forth a list of Intellectual Property owned, controlled or used by Seller,
together in each case with a brief description of the nature of such
right.  To Seller’s Knowledge, all Seller-owned fictitious or assumed
business names, patents, copyrights and trademarks listed in Schedule 4.25 are
valid and in full force and all applications listed therein as pending have been
prosecuted in good faith as required by law and are in good
standing.  To Seller’s Knowledge, there has been no infringement by
Seller or any of its Affiliates with respect to any Intellectual Property rights
of others.  To Seller’s Knowledge, Seller owns or possesses adequate
licenses or other rights to use all Intellectual Property necessary or desirable
to conduct Seller’s Business as conducted, none of which rights will be impaired
by the consummation of the transactions contemplated by this Agreement, and all
of the rights of Seller thereunder will be enforceable by Buyer immediately
after Closing without the consent or agreement of any other
party.  None of the Intellectual Property listed in Schedule 4.25 is
involved in any interference or opposition proceeding, and there has been no
written notice received by Seller or any other indication that any such
proceeding will hereafter be commenced.  Seller has not granted any
person or entity any right to use any of the Intellectual Property for any
purpose.  Schedule 4.25 sets
forth all Intellectual Property necessary or desirable to conduct Seller’s
Business that constitute Shared Assets, as well as a description of such Shared
Assets.  Seller represents and warrants that it has sufficient rights
to transfer its interest in the Shared Assets to Buyer, and that upon,
consummation of the transactions contemplated hereby, Seller shall have
transferred to Buyer all of Seller’s ownership interest in the Share
Assets.

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          19

          
            

          

        

        
           

        

      

    

     

     

     

    ARTICLE
V

     

    REPRESENTATIONS
AND WARRANTIES OF BUYER

     

    Buyer
hereby represents, warrants and covenants to Seller and Shareholders, as of the
Effective Date and as of the Closing Date, as follows:

     

     5.1. Organization, Good Standing
and Qualification.  Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Nevada.  Buyer has all requisite corporate power and authority to own
and operate its properties and to carry on its business as now conducted, to
enter into this Agreement and to carry out and perform its obligations under the
Acquisition Agreements to which Buyer is a party.

     

     5.2. Authorization; Binding
Obligation.  Buyer has the corporate power and authority to
execute and deliver this Agreement, and to carry out the transactions
contemplated hereby.  The execution and delivery by Buyer of the
Acquisition Agreements to which Buyer is a party and all of the documents and
instruments required thereby and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all requisite
corporate action on the part of Buyer, and copies of the corporate minutes
approving such transactions have been provided to Seller.  The
Acquisition Agreements to which Buyer is a party and each of the other documents
and instruments required hereby have been duly executed and delivered by Buyer
and constitute the valid and binding obligations of Buyer, enforceable against
Buyer in accordance with their respective terms except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other Laws of
general application affecting enforcement of creditors’ rights generally and
(ii) as limited by Laws relating to the availability of specific performance,
injunctive relief or other equitable remedies.

     

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          20

          
            

          

        

        
           

        

      

    

     

     

     5.3. Legal
Proceedings.  There are no actions, suits, litigation, or
proceedings pending or to Buyer’s knowledge, threatened against Buyer which
would reasonably be expected to materially and adversely affect Buyer’s ability
to perform its obligations under this Agreement or the consummation of the
transactions contemplated by this Agreement.

     

     5.4. No
Brokers.  Buyer has not employed, either directly or
indirectly, or incurred any liability to, any broker, finder or other agent in
connection with the transactions contemplated by this
Agreement.  Buyer agrees to indemnify Seller for any claims brought by
any broker, finder or other agent claiming to have acted on behalf of Buyer in
connection with this sale.

     

     5.5. No
Violation.  The execution, delivery, compliance with and
performance by Buyer of the Acquisition Agreements to which Buyer is a party and
each of the other documents and instruments delivered in connection therewith do
not and will not (a) violate or contravene the organizational certificates,
documents and agreements, as amended to date, of Buyer, (b) violate or
contravene any law, statute, rule, regulation, order, judgment or decree to
which Buyer is subject, or (c) conflict with or result in a breach of or
constitute a default by any party under any contract, agreement, instrument or
other document or contract to which Buyer is a party or by which Buyer or any of
its assets or properties are bound.

     

     5.6. Consents and
Approvals.

     

    (a) Governmental Consents and
Approvals.  No registration or filing with, or consent or
approval of, or other action by, any federal, state or other governmental agency
or instrumentality on the part of Buyer is or will be necessary for the valid
execution, delivery and performance by Buyer of this Agreement or any other
Acquisition Agreement, except for such registrations, filings, consents,
approvals or other actions that, if not made or obtained, would not have a
material adverse effect on the business, operations or financial condition of
Buyer, or would not prevent the parties from consummating the transactions
contemplated herein and under the other Acquisition Agreements.

     

    (b) Third Party
Consents.  No consent, approval or authorization of any
non-governmental third party on the part of Buyer is required in order for Buyer
to consummate the transactions or perform the related covenants and agreements
contemplated hereby, except for such consents, approvals or authorizations that,
if not obtained, would not have a material adverse effect on the business,
operations or financial condition of Buyer, or would not prevent the parties
from consummating the transactions contemplated herein and under the other
Acquisition Agreements.

     

     5.7. Commission Documents,
Financial Statements.  The Common Stock of the Company is
registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and, except
as disclosed on Schedule
5.7 hereto, the Company has timely filed all reports, schedules,
forms, statements and other documents required to be filed by it with the
Commission pursuant to the reporting requirements of the Exchange Act of 1934,
as amended (the “Exchange
Act”), including pursuant to Sections 13, 14 or 15(d) thereof (all of the
foregoing and all exhibits included therein and financial statement and
schedules thereto, including filings incorporated by reference therein being
referred to herein as the “Commission
Documents”).  At the times of their respective filings, the
Form 10-Q for the fiscal quarters ended June 30, 2008 and March 31, 2008
(collectively, the “Form
10-Q”) and the Form 10-KSB for the fiscal year ended December 31, 2007
(the “Form
10-K”) complied in all material respects with the requirements of the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and, to the Knowledge of the Company, the Form 10-Q and Form 10-K at
the time of their respective filings did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.  As of their respective
dates, the financial statements of the Company included in the Commission
Documents complied as to form and substance in all material respects with
applicable accounting requirements and the published rules and regulations of
the Commission or other applicable rules and regulations with respect
thereto.  Such financial statements, together with the related notes
and schedules thereto, have been prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the Notes thereto or (ii) in the case
of unaudited interim statements, to the extent they may not include footnotes or
may be condensed or summary statements), and fairly present in all material
respects the financial position of the Company and its Subsidiaries as of the
dates thereof and the results of operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments).

     

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          21

          
            

          

        

        
           

        

      

    

     

     

     5.8. Issuance of
Securities.  The Shares to be issued at the Closing have been
duly authorized by all necessary corporate action and, when paid for and issued
in accordance with the terms hereof, and subject to and in reliance on the
representations, warranties and covenants of the Purchasers made herein, the
Shares will be validly issued, fully paid and nonassessable and free and clear
of all liens, encumbrances and rights of refusal of any kind (except as
contemplated herein and in the Stock Rights and Restriction
Agreement).

     

     5.9. No
Brokers.  Buyer has not employed, either directly or
indirectly, or incurred any liability to, any broker, finder or other agent in
connection with the transactions contemplated by this
Agreement.  Buyer agrees to indemnify and hold harmless Seller and
Shareholders for any claims brought by any broker, finder or other agent
claiming to have acted on behalf of Buyer in connection with the purchase and
sale of the Acquired Assets or Seller’s Business.

     

     5.10. No Implied Representations
or Warranties; Due Diligence.  Buyer acknowledges and agrees
that neither Seller nor Shareholders are making any representations or
warranties whatsoever, express or implied, regarding the transactions
contemplated herein and hereby except those representations and warranties
explicitly set forth in this Agreement and in the other Acquisition
Agreements.  Without limiting the generality of the foregoing: (i) and
notwithstanding any otherwise express representations and warranties made by
Seller and Shareholders in Article 4, neither Seller nor Shareholders makes
any representation or warranty to Buyer with respect to any projections,
estimates or budgets delivered to or made available to Buyer or its
representatives of future revenues, expenses
or expenditures or future results of operations; or (ii)  and except as
expressly covered by representations or warranties contained in Article 4
and in the other Acquisition Agreements, neither Seller nor Shareholders makes
any representation or warranty to Buyer with respect to, any other information
or documents (financial or otherwise) made available to Buyer, its
representatives or their counsel, accountants or advisers with respect to Seller
or Shareholders.

     

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          22

          
            

          

        

        
           

        

      

    

     

    ARTICLE
VI

    COVENANTS

     

     6.1. Conduct of Seller’s Business
Pending Closing.  Seller and Shareholders agree that, between
the Effective Date and the Closing Date, unless Buyer shall consent in writing,
(i) Seller’s Business shall be conducted only in, and none of Seller or any
Shareholder shall not take any action except in, the ordinary course of business
consistent with past practice, (ii) Seller and Shareholders shall use reasonable
efforts to keep available the services of Seller Employees and to preserve the
current relationships of Seller’s Business with such of the customers,
suppliers, contractors and other persons with which Seller has significant
business relations in order to preserve substantially intact Seller’s Business,
and (iii) Seller and Shareholders shall preserve intact the Acquired
Assets.  By way of amplification and not limitation, between the
Effective Date and the Closing Date, Shareholders shall not and Seller shall
not, and shall neither cause nor permit any of Seller’s Affiliates, officers,
directors, employees and agents to, directly or indirectly, do, or agree to do,
any of the following with respect to Seller’s Business or the Acquired Assets,
without the prior written consent of Buyer:

     

    (a) Sell,
pledge, dispose of, grant, transfer, lease, license, guarantee, encumber, or
authorize the sale, pledge, disposition, grant, transfer, lease, license,
guarantee or encumbrance of Seller’s Business, or any capital stock of
Seller (including any capital stock held by any Shareholder), or any of the
Acquired Assets except in the ordinary course of business and in a manner
consistent with past practice; provided, however, that the
aggregate amount of any such sale or disposition (other than a sale or
disposition of products or other inventory in the ordinary course of business
consistent with past practice, as to which there shall be no restriction on the
aggregate amount), or pledge, grant, transfer, lease, license, guarantee or
encumbrance of such property or assets shall not exceed $5,000;

     

    (b) Acquire
(including, without limitation, by merger, consolidation or acquisition of stock
or assets) for or in connection with Seller’s Business any interest in any
corporation, partnership, other business organization, person or any division
thereof or any assets, other than (i) acquisitions of any assets in the
ordinary course of business consistent with past practice that are not, in the
aggregate, in excess of $5,000, or (ii) purchases of inventory for resale
(whether for cash or pursuant to an exchange) in the ordinary course of business
and consistent with past practice;

     

    (c) Incur any
indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse, or otherwise as an accommodation become responsible for,
the obligations of any person for borrowed money;

     

    (d) Enter
into, amend, terminate, cancel or make any material change in any Contract or
Personal Property Lease;

     

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          23

          
            

          

        

        
           

        

      

    

    

    (e) Make or
authorize any capital expenditure, dividends or distributions;

     

    (f) Increase
the compensation payable or to become payable to any Seller Employee, except for
increases in the ordinary course of business in accordance with past practices
in salaries or wages of such employees, or grant any rights to severance or
termination pay to, or enter into any employment or severance agreement with,
any Seller Employee, or establish, adopt, enter into or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, pension, retirement,
deferred compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any Seller
Employee;

     

    (g) Modify
any material accounting policies, procedures or methods;

     

    (h) Waive,
release, assign, settle or compromise any claims or litigation involving amounts
in excess of $5,000 or any agreements as to
or limiting in any way the conduct of Seller’s Business;

     

    (i) Authorize
or enter into any formal or informal agreement or otherwise make any commitment
to do any of the foregoing;

     

    (j) Take any
action that could result in the representations and warranties set forth in
Article IV becoming materially false or inaccurate;

     

    (k) Take any
action or fail to take any action that could result in a Seller Material Adverse
Effect; or

     

    (l) Permit or
cause any of Seller’s Affiliates to do any of the foregoing or agree or commit
to do any of the foregoing.

     

     6.2. Notice by Seller of Certain
Events.  Seller and Shareholders shall give prompt written
notice to Buyer of (a) any notice or other communication from any person
alleging that the consent of such person is or may be required in connection
with the consummation of the transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental entity in
connection with the transactions contemplated by this Agreement; (c) any
actions, suits, claims, investigations or proceedings commenced or, to the best
of Seller’s Knowledge, threatened against, relating to or involving or otherwise
affecting Seller, Seller’s Business or the Acquired Assets or the transactions
contemplated by this Agreement; (d) the occurrence of a breach or default
or event that, with notice or lapse of time or both, could become a breach or
default under this Agreement or any Contract or Personal Property Lease; and
(e) any Seller Material Adverse Effect or change, event or circumstance
which is likely to delay or impede the ability of Seller to consummate the
transactions contemplated by this Agreement or to fulfill its obligations set
forth herein.

     

     6.3. Consents and
Approvals.

     

    (a) Third Party
Consents.  Seller shall use reasonable best efforts to obtain
prior to the Closing Date all Third Party Consents which the parties mutually
agree should be obtained as set forth on Schedule 6.3(a) (the
“Required
Consents”).  Those Third Party Consents that the parties agree
not to obtain also shall be set forth on Schedule 6.3(a).  If a Third
Party Consent (including any Required Consent) is not obtained and delivered at
Closing, (i) neither this Agreement nor any action taken hereunder shall be
deemed to constitute an assignment of any such Acquired Asset or any Contract if
such assignment or attempted assignment would constitute a breach of any
Contract or result in the loss or diminution of any rights thereunder or
acceleration of any obligations thereunder, and (ii) Seller shall cooperate with
Buyer in any reasonable arrangement proposed by Buyer designed to provide Buyer
with the benefits of such Acquired Asset and Contract as to which such Third
Party Consent relates, including enforcement by Seller, for the account and
benefit of Buyer, of any and all rights of Seller against any other person
arising out of the breach or cancellation of any such Contract by such other
person or otherwise.  This Section 6.3(a) shall not relieve Buyer of
its obligations to perform or assume any Assumed Liability or to comply with
this Section 6.3.  Until such time that a Required Consent is obtained
or Buyer notified Seller that it no longer requires that such Required Consent
to be obtained, Seller shall use commercially reasonable best efforts, at its
own expense, to obtain (and Buyer shall use commercially reasonable efforts to
assist Seller, at Buyer’s expense, to obtain) such Required
Consent.  With respect to each Third Party Consent (including any
Required Consent) that is not obtained, Seller agrees that it shall work with
Buyer to take all such reasonable action (e.g., acceptance by Buyer of an
appointment as agent-in-fact, subcontractor, joint venturer or assignee for
Seller and/or Shareholders) and do or cause to be done such things as shall be
reasonable or proper to assure that (i) Buyer will receive all of the rights and
benefits of Seller associated with such Acquired Asset or Contract to which such
Third Party Consent relates (including, without limitation, any rights to
payments thereunder) (the “Unassigned
Rights”), and (ii) Buyer shall assume and be responsible for all of the
obligations and liabilities associated with such Acquired Asset or Contract to
which such Third Party Consent relates which would have been an Assumed
Liability if it had been assigned to Buyer (the “Unassigned
Obligations”).  Buyer shall indemnify, defend and hold Seller
and the Shareholders harmless from any Losses arising out of or related to
Buyer’s failure to perform any of the Unassigned Obligations (except for those
Unassigned Obligations that Buyer is unable to perform due to the acts or
omissions of Seller, and except for those Unassigned Obligations that are
materially changed to the detriment of Buyer due to the acts or omissions of
Seller).  Seller, jointly, and each Shareholder, severally, shall
indemnify, defend and hold Buyer harmless from any Losses arising out of or
related to Seller’s acts or omissions with respect to the Unassigned Rights and
Unassigned Obligations.  Seller covenants and agrees that it shall not
agree to any modification of any Unassigned Rights or Unassigned Obligation with
out the express written consent of Buyer.  Seller further acknowledges
and agrees that Buyer shall not be obligated to perform any Unassigned
Obligations that are materially changed to the detriment of Buyer due to the
acts or omissions of Seller, but rather, shall be entitled to cause such
Unassigned Obligation to revert to Seller.  The indemnification
obligations set forth in this Section 6.3(a) shall be subject to the terms and
provisions of Article IX hereof.

     

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          24

          
            

          

        

        
           

        

      

    

     

     

    (b) Cooperation.  Buyer
and Seller shall continue after the Closing Date to pursue the Third Party
Consents to the extent not previously obtained in connection with the
consummation of the transactions contemplated hereunder.  Each of the
parties hereto shall, from time to time after the Closing Date, upon the request
of any other party hereto and at the expense of such requesting party, duly
execute, acknowledge and deliver all such further instruments and documents
reasonably required to further effectuate the interests and purposes of this
Agreement.

     

            
6.4 Inventory.  Seller
shall ensure that, as of the Closing Date and thereafter, the Product Inventory
shall be available for prompt delivery to Buyer or Buyer’s customers upon
receipt of orders therefore.

     

     6.5. Payments;
Collections.

     

    (a) Seller
shall pay to Buyer all cash received from any source relating to services
provided at or with respect to the Seller’s Business on and subsequent to the
Closing Date, to the extent relating to post-Closing
transactions.  Such payments shall be made within thirty (30) days
after receipt of such payments by Seller, and a copy of the remittance advice
shall accompany such payments.

     

    
      
        
          
             

            4416103v.8 

          

           

        

        
          25

          
            

          

        

        
           

        

      

    

     

    (b) The
amount of accounts receivable billed by Seller in the operation of the Business
on or prior to the Closing Date (the "Seller Accounts
Receivable") shall be an Excluded Asset.  For a period of one
hundred eighty (180) days following the Closing Date (the "Collection
Period"), Buyer will collect all Seller Accounts Receivable in accordance
with its normal collection procedures.  Payments on Seller Accounts
Receivable collected by Buyer during the Collection Period shall be remitted to
Seller on the fifteenth day and the last day of each month during the Collection
Period.  On the 180th day following the Closing Date, Buyer's
obligation to collect Seller Accounts Receivable shall terminate and any
remaining uncollected Seller Accounts Receivable shall become the sole
responsibility of Seller.  Buyer shall not terminate the Transferring
Employee in charge of managing the Seller Accounts Receivable without “cause”
for a period of at least one hundred eighty (180) days following the Closing
Date.

     

    (c) If
revenue is received by either Buyer or Seller from persons owing amounts both
for pre-Closing and post-Closing periods, such revenue shall be allocated among
Buyer and Seller in the manner specified in the remittance advice accompanying
each such payment.  If such allocation is not specified in any
remittance advice, the amount of such payment shall be allocated first to
pre-Closing amounts due and shall be remitted to Seller.

     

     6.6. Preservation of and Access
to Certain Records.

     

    (a) After
Closing, Seller shall keep and preserve all records of Seller’s Business as of
Closing which are not delivered to Buyer by Seller and which are required to be
kept and preserved by applicable Law or in connection with any claim or
controversy pending at Closing involving the Seller’s Business.  For
such period as is required by Law from and after the Closing Date, Seller shall
retain and make available to representatives of Buyer, including its counsel and
accountants, upon reasonable notice, during regular business hours and at
mutually agreeable times, full and complete access to, and copies of (at sole
cost of Buyer), any such records of Seller’s Business prior to the Closing Date
and access to such of Seller’s personnel as may be reasonably necessary for
Buyer to comply with applicable Law or to resolve any such pending
dispute.  Notwithstanding the foregoing, should Seller wish to destroy
such records or any portion thereof, Seller shall first notify Buyer of its
intent and Buyer shall have thirty (30) days following its receipt of such
notice to notify Seller of its intent to reclaim any such records in whole or in
part.  Buyer shall take possession of such records no later than ten
(10) days following Buyer’s delivery of such notice of intent.

     

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          26

          
            

          

        

        
           

        

      

    

    

    (b) Seller
shall reasonably cooperate and shall cause its auditors to reasonably cooperate
with all reasonable requests of Buyer and its auditors necessary to audit all
previously unaudited periods for activities of Seller (the “Seller Audits”), for
the purpose of enabling Buyer to make periodic reports pursuant to the
Securities Exchange Act of 1934, as amended (the “Securities
Exchange Act”), or to make a public offering of its securities under the
Securities Act of 1933, as amended (the “Securities
Act”), or for other reasonable business purposes, and Seller shall permit
the historical financial statements of Seller to be included (if required by the
rules and regulations of the Securities and Exchange Commission (the “Commission”)
in any of Buyer’s filings with the Commission under either the Securities
Exchange Act or the Securities Act and in any prospectus used in connection with
any offering of Buyer’s securities.  Buyer shall be responsible for
all costs associated with the conduct of the Seller Audits, and shall pay all
such costs directly or promptly reimburse Seller for any such costs paid by
Seller.  Seller acknowledges and agrees that such audits are necessary
for Buyer’s compliance with federal and state securities Laws and financial and
tax reporting requirements, and agree that Seller’s failure to reasonably
cooperate would cause Buyer irreparable harm, and therefor will not contest
Buyer in seeking a temporary restraining order, preliminary injunction and other
available equitable relief in the event of a breach of these provisions, in
addition to any and all other available remedies including
damages.  For a period of five (5) years after the Closing Date or
longer if required by applicable Law, Seller shall retain all books and records
relating to Seller’s Business or the Acquired Assets not transferred to Buyer
hereunder, shall afford access to such records to Buyer upon its reasonable
request and to any employees of Seller with knowledge related to such
records.  Seller shall give Buyer at least thirty (30) days prior
written notice of its intention to destroy any such books and records and shall
provide Buyer the opportunity to take possession of such books and records,
after which Seller may destroy such records if Buyer does not take
possession.

     

     6.7. Maintenance of Insurance
Coverage.  For a period of at least 30 days from and after the
Closing Date, Seller shall continue its currently existing professional and
general liability insurance coverages and, if allowed by the insurers, include
Buyer as a loss payee/additional insured. The cost of such insurance shall be
paid by Buyer (or reimbursed by Buyer to Seller if Seller pays the insurers).
Buyer shall secure its own coverage after said period and shall include Seller
as a loss payee/additional insured if allowed by Seller's carriers.

     

     6.8. Supply, License and
Transition Services Agreement.  Buyer and Complete Nutrition,
Inc., a Nebraska corporation, shall enter into a Supply, License and Transition
Services Agreement in the form attached hereto as Exhibit G (the “Services
Agreement”), dated and effective as of the Closing Date.

     

    ARTICLE
VII

    CONFIDENTIALITY

     

     7.1. Confidentiality.

     

    (a) The
parties agree that (i) all information not disclosed to the public by Seller
regarding Seller’s Business which is compiled by, obtained by, or furnished to
Buyer or any of its agents or employees in the course of its due diligence
review of Seller’s Business is acknowledged to be confidential information,
trade secrets and the exclusive property of Seller through the Closing Date, and
of Buyer thereafter, and (ii) all information not disclosed to the public by
Buyer regarding Buyer’s business or operations is acknowledged to be
confidential information, trade secrets and the exclusive property of Buyer
(collectively, “Confidential
Information”).

     

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          27

          
            

          

        

        
           

        

      

    

     

    (b) The term
“Confidential Information” shall include the terms of this Agreement and the
transactions contemplated hereby.  Each of the parties hereto agrees
not to divulge, directly or indirectly, any Confidential Information of the
other party in any manner contrary to the interests of such party, use or cause
or suffer to be used any Confidential Information in competition with such
party.  Each of the parties acknowledges that the breach or threatened
breach of the provisions of this Section would cause irreparable injury to the
other party that could not be adequately compensated by money
damages.  Accordingly, a party may obtain a restraining order and/or
injunction prohibiting a breach or threatened breach of the provisions of this
Section, in addition to any other legal or equitable remedies that may be
available.  If requested by legal process to disclose any Confidential
Information of another party, the party in receipt of such request shall
promptly give notice thereof to the other party so that such party may, at its
own cost and expense, seek an appropriate protective order or, in the
alternative, waive compliance to the extent necessary to comply with such
request if a protective order is not obtained.  If a protective order
or waiver is granted, the party subject to such legal process may disclose the
Confidential Information to the extent required by such court order or as may be
permitted by such waiver.  Notwithstanding any part of the foregoing,
Buyer shall be permitted to disclose Confidential Information, including without
limitation a copy of this Agreement and the Assignment and Assumption and Bill
of Sale, for the purpose of complying with Commission and other government
filing requirements, and for the purpose of issuing a press release about the
transaction following the Closing Date.

     

    (c) The term
“Confidential Information” does not include information that (i) is at the time
of disclosure or later becomes generally known to the public or within the
industry or segment of the industry to which such information relates without
violation by a party of any of its obligations hereunder and not through any
action by any of its directors, officers, employees and agents which, if
committed by such party, would have constituted a violation by it of any of its
obligations hereunder; (ii) at the time of disclosure to the other party was
already known by such other party; or (iii) after the time of the disclosure to
the other party, is received by such party from a third party which is under no
confidentiality obligation with respect thereto.

     

    

    ARTICLE
VIII

    CONDITIONS
PRECEDENT TO BUYER’S PERFORMANCE AND TO SELLER’S PERFORMANCE

     

     8.1. Conditions to Buyer’s
Obligations.  The obligations of Buyer under this Agreement are
subject to the satisfaction of the following conditions on or prior to the
Closing Date, all or any of which may be waived in writing by
Buyer:

     

    (a) All
representations and warranties made by Seller and the Shareholders in this
Agreement and in any written statements delivered to Buyer under this Agreement
shall be true and correct in all material respects as of the Effective Date and
as of the Closing Date as though made on such dates.

     

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          28

          
            

          

        

        
           

        

      

    

    

    (b) Seller
and the Shareholders shall have performed, satisfied and complied in all
material respects with all obligations and covenants required by this Agreement
to be performed or complied with by them on or prior to the Closing
Date.

     

    (c) As of the
Closing Date, there shall not have occurred any Seller Material Adverse Effect
since the date of the Interim Financial Statements.

     

    (d) Seller
and the Shareholders shall have delivered to Buyer all documents required to be
delivered by them, and all such documents shall have been properly executed by
each of them, if applicable.  Such documents shall include, without
limitation:

     

    (i) A
corporate good standing certificate for Seller from the State of Nebraska, dated
no more than ten (10) days prior to the Closing Date;

     

    (ii) Evidence
of maintenance of the insurance coverage required by Section 6.7 of this
Agreement; and

     

    (iii) Such
other documents and instruments, each in a form reasonably satisfactory to Buyer
and its counsel, as may be reasonably requested by Buyer in order to carry out
the transaction contemplated by this Agreement and to vest good and marketable
title in the Acquired Assets in Buyer, free and clear of all Liens.

     

    (e) Seller
shall have executed and delivered to Buyer the Bill of Sale in the form attached
hereto as Exhibit
A, dated and effective as of the Closing Date.

     

    (f) Each
Shareholder shall have executed and delivered to Buyer the Stock Rights and
Restriction Agreement in the form attached hereto as Exhibit C, dated and
effective as of the Closing Date.

     

    (g) Seller
and Shareholders shall have executed and delivered to Buyer the Security
Agreement in the form attached hereto as Exhibit D, dated and
effective as of the Closing Date.

     

    (h) Seller
shall have executed and delivered to Buyer a Proprietary Information
Non-Competition and Non-Solicitation Agreement in the form attached hereto as
Exhibit E-1
(the “Seller
Non-Competition Agreement”), dated and effective as of the Closing
Date.

     

    (i) Ryan Zink
shall have executed and delivered to Buyer a Proprietary Information
Non-Competition and Non-Solicitation Agreement in the form attached hereto as
Exhibit E-2
(the “Zink
Non-Competition Agreement”), dated and effective as of the Closing
Date.

     

    (j) Cory
Wiedel shall have executed and delivered to Buyer a Proprietary Information
Non-Competition and Non-Solicitation Agreement in the form attached hereto as
Exhibit E-3
(the “Wiedel
Non-Competition Agreement” and collectively with the Seller
Non-Competition Agreement and the Zink Non-Competition Agreement, the “Non-Competition
Agreements”), dated and effective as of the Closing Date.

     

    (k) [Reserved.]

     

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          29

          
            

          

        

        
           

        

      

    

    

    (l) Seller
shall have delivered to Buyer an Assignment and Assumption of Lease and Landlord
Consent, in the form attached hereto as Exhibit F and dated
and effective as of the Closing Date, duly executed by Seller (the “Lease
Assignment”).

     

    (m) Complete
Nutrition, Inc. shall have delivered to Buyer the Services Agreement in the form
attached hereto as Exhibit G, dated and
effective as of the Closing Date.

     

    (n) Buyer
shall have received payment and release letters, together with UCC-3 termination
statements, from all parties having financing statements filed against the
Acquired Assets in form and substance satisfactory to Buyer.

     

    (o) Buyer
shall have received all approvals, consents and clearances from governmental
authorities and others in connection with the transactions contemplated by this
Agreement deemed necessary by Buyer, including transfer to or receipt by Buyer
of all Licenses for Buyer to own and operate Seller’s Business after the Closing
Date.

     

    (p) Buyer
shall have received a certificate of an authorized officer of Seller certifying
as of the Effective Date and as of the Closing Date: (i) the accuracy of
Seller’s and Shareholders’ representations and warranties as set forth in
Article IV hereof, and (ii) compliance with Seller’s and Shareholders’ covenants
as set forth in this Agreement.

     

    (q) Buyer
shall have received a certificate of the Secretary of Seller certifying as of
the Closing Date (A) true and complete copies of the Articles of Incorporation
(and any amendments thereto) of Seller as in effect as of the Closing Date and
certified as of a recent date by the Secretary of State of Nebraska, (B) a true
and complete copy of the bylaws of Seller as in effect as of the Closing Date,
(C) a certificate of each Secretary of State certifying the good standing of
Seller in its state of formation and all states in which it is qualified to do
business (or where by the nature of its business and activities, the failure to
so qualify, individually or in the aggregate, would have a Seller Material
Adverse Effect); (D) true and complete copies of the resolutions of the Board of
Directors of Seller and the Shareholders authorizing the execution, delivery and
performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby, and (E) incumbency matters.

     

    (r) Seller
shall have delivered to Buyer, before the Closing Date, a detailed listing of
the Fixed Assets to be included in the Acquired Assets as of the Closing Date,
dated as of the most recent month ended before the Closing Date, which listing
shall be certified as true and complete by Seller’s Chief Executive Officer and
shall include each individually capitalized fixed asset included in the Acquired
Assets, together with Seller’s original cost, in-service date, estimated useful
life, and current net book value for each asset included
thereon.  Such listing shall reflect depreciation and amortization on
a GAAP basis, and not on a federal income tax basis.

     

     8.2. Conditions to Seller’s
Obligations.  The obligations of Seller under this Agreement
are subject to the satisfaction of the following conditions, on or prior to the
Closing Date, all or any of which may be waived in writing by
Seller:

     

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          30

          
            

          

        

        
           

        

      

    

    

        (a) All
representations and warranties made by Buyer in this Agreement and in any
written statements delivered to Seller under this Agreement shall be true and
correct in all material respects as of the Effective Date and as of the Closing
Date as though made on such date.

     

    (b) Buyer
shall have performed, satisfied and complied in all material respects with all
obligations and covenants of Buyer required by this Agreement to be performed or
complied with by it on or prior to the Closing Date.

     

    (c) Buyer
shall have delivered to Seller all documents required to be delivered by Buyer,
and all such documents shall have been properly executed by Buyer, if
applicable.

     

    (d) Buyer
shall have delivered to Seller a corporate good standing certificate from the
Secretary of State of the State of Nevada dated no more than ten (10) days prior
to the Closing Date.

     

    (e) Buyer
shall have delivered to Seller a certificate signed by an authorized officer of
Buyer certifying, as of the Effective Date and as of the Closing Date, (i) the
accuracy of Buyer’s representations and warranties as set forth in Article V
hereof, and (ii) compliance with Buyer’s covenants as set forth in this
Agreement.

     

    (f) Buyer
shall have executed and delivered the Bill of Sale in the form attached hereto
as Exhibit A,
dated and effective as of the Closing Date.

     

    (g) Buyer
shall have delivered a stock certificate (or certificates) representing the
Shares, appropriately legended and duly executed and issued by
Buyer.

     

    (h) Buyer
shall have executed and delivered to Seller the Notes, in the forms attached
hereto as Exhibits
B-1 , B-2 and B-3, dated and
effective as of the Closing Date.

     

    (i) Buyer
shall have executed and delivered the Stock Rights and Restriction Agreement in
the form attached hereto as Exhibit C, dated and
effective as of the Closing Date.

     

    (j) Buyer
shall have executed and delivered the Security Agreement in the form attached
hereto as Exhibit
D, dated and effective as of the Closing Date.

     

    (k) Buyer
shall have executed and delivered the Non-Competition Agreements in the form
attached hereto as Exhibits E-1, E-2 and E-3, each dated and
effective as of the Closing Date.

     

    (l) Buyer
shall have executed and delivered the Zink Employment Agreement in the form
attached hereto as Exhibit F, dated and
effective as of the Transfer Date applicable to Mr. Zink.

     

    (m) Buyer
shall have delivered to Buyer an Assignment and Assumption of Lease and Landlord
Consent, in the form attached hereto as Exhibit F and dated
and effective as of the Closing Date, duly executed by Buyer (the “Lease
Assignment”).

     

    (n) Buyer
shall have delivered to Complete Nutrition, Inc., a Nebraska corporation the
Services Agreement in the form attached hereto as Exhibit G, dated and
effective as of the Closing Date.

     

    
      8.3 
No Injunction or
Action.  The obligations of both Buyer and Seller under this
Agreement are conditioned upon there being, as of the Closing Date, no
preliminary or permanent injunction or other order, decree or ruling issued by a
court of competent jurisdiction or by a governmental agency concerning this
Agreement which would make illegal or otherwise prevent consummation of this
Agreement in accordance with its terms, and no proceeding or action brought by
any governmental authority seeking the foregoing shall be
pending.

    

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          31

          
            

          

        

        
           

        

      

    

    

     

    ARTICLE
IX

    SURVIVAL
OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

     

     9.1. Survival of Representations
and Warranties.  All Buyer, Seller and Shareholder
representations and warranties contained in this Agreement or any other
agreement, schedule, certificate, instrument or other writing delivered by
Buyer, Seller or Shareholder in connection with this transaction shall survive
for eighteen (18) months after the Closing Date.  If a party hereto
determines that there has been a breach by any other party hereto of any such
representation or warranty and notifies the breaching party in writing
reasonably promptly after learning of such breach, such representation or
warranty and liability therefor shall survive with respect to the specified
breach until such breach has been resolved, but no party shall have any
liability after such eighteen (18) month period for any matters not specified in
a writing delivered within such eighteen (18) month
period.  Notwithstanding any term in this Section 9.1, (i) the
applicable statute of limitations shall be the survival period for any matter
relating to (1)  fraud or willful, intentional or reckless
misrepresentation or willful omission of a material fact in connection with this
Agreement or the Acquisition Agreements and the transactions contemplated hereby
or thereby, (2) any liability relating to personal injury, or (3) any alleged or
actual violation of the representations and warranties made in any of the
following sections of this Agreement:  Section 4.19 - “Taxes”, and
(ii) the survival period for all covenants and any alleged or actual violation
of the representations and warranties made in any of the following Sections of
this Agreement shall survive indefinitely: contained in Section 4.1
“Organization, Good Standing and Qualification”, Section 4.2 “Authorization;
Binding Obligation”, Section 4.6 “Ownership; No Subsidiaries”, Section 5.1
“Organization, Good Standing and Qualification” and Section 5.2 “Authorization;
Binding Obligation”.

     

     9.2. Indemnification by Seller
and Shareholders.  Subject to the provisions of Section 9.4
below (and in addition to the indemnification obligations of Seller and
Shareholders set forth in Section 6.3(a), which obligations shall be subject to
the provisions of this Article IX), Seller agrees unconditionally and jointly
and severally, and Shareholders agree unconditionally and severally (in
proportion to the stock ownership of each in Seller as of immediately prior to
the Closing), to indemnify, defend and hold Buyer and its shareholders,
directors, officers, employees, agents, representatives, Affiliates, successors
and permitted assigns (collectively, the “Buyer Indemnified
Parties”) harmless, on demand, from and against the
following:

     

    (a) Any and
all Losses of every kind, nature or description which arise out of or result
from or as a consequence of (i) the breach of any representation or warranty
made by or on behalf of Seller or the Shareholders in this Agreement (including
the Exhibits and Schedules hereto) or in any of the Acquisition Agreements; or
(ii) any failure by Seller or any Shareholder to perform, comply with or observe
any one or more of their covenants, agreements or obligations contained in this
Agreement or in any other agreement, instrument or document delivered to Buyer
in connection with this Agreement or any of the transactions contemplated by
this Agreement;

     

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          32

          
            

          

        

        
           

        

      

    

     

     

    (b) Any and
all Losses which may at any time or from time to time arise out of or result
from or as a consequence of (i) the provision, delivery or sale by Seller or its
Affiliates at any time prior to the Closing Date of any services; (ii) the
production, provision, marketing or sale by Seller or its Affiliates at any time
prior to the Closing Date of any property, products, materials or supplies of
any kind (except for Losses incurred as a result of customer product returns as
contemplated by Section 1.3(ii)); (iii) any Excluded Liability; (iv) any failure
by Seller or any Shareholder to comply with the provisions of this Agreement;
(v) the marketing and/or sale of products by Seller at any time prior to the
Closing Date containing allegedly harmful components or substances (e.g.,
ephedrine); and (vi) the failure by Seller to discharge any obligations of
Seller which were incurred by Seller on account of the period prior to the
Closing Date (except for the Assumed Liabilities).

     

     9.3. Indemnification by
Buyer.  Subject to the provisions of Section 9.4
below  (and in addition to the indemnification obligations of Buyer
set forth in Section 6.3(a), which obligations shall be subject to the
provisions of this Article IX), Buyer agrees unconditionally to indemnify,
defend and hold Seller and Shareholders (collectively, the “Seller
Indemnified Parties”) harmless, on demand, from and against any and all
of the following:

     

    (a) Any and
all Losses of every kind, nature or description which arise out of or result
from or as a consequence of (i) any false, incorrect or misleading
representation or warranty or breach thereof made by or on behalf of Buyer in
this Agreement (including the Exhibits and Schedules hereto) or in any of the
Acquisition Agreements; or (ii) any failure by Buyer to perform, comply with or
observe any one or more of its covenants, agreements, or obligations contained
in this Agreement or in any other agreement, instrument or document delivered to
Seller in connection with this Agreement or any of the transactions contemplated
by this Agreement; and

     

    (b) Any and
all Losses which may at any time or from time to time arise out of or result
from or as a consequence of (i) the provision, delivery or sale by Buyer at any
time on or after the Closing Date of any services; (ii) the production,
provision or sale by Buyer at any time on or after the Closing Date of any
property, products, materials or supplies of any kind; (iii) any Assumed
Liability or Unassigned Obligation; (iv) any failure by Buyer to comply with the
provisions of this Agreement; and (v) relating to, or the failure by Buyer to
discharge, any obligations of Buyer which were incurred by Buyer on or after the
Closing Date (except for the Excluded Liabilities).

     

     9.4. Indemnification
Process.  Any party seeking indemnification under this Article
IX (an “Indemnified
Party”) shall give each party from whom indemnification is being sought
(each, an “Indemnifying
Party”) notice of any matter which such Indemnified Party has determined
has given rise to or could give rise to a right of indemnification under this
Agreement, stating the amount of the loss, if known, and method of computation
thereof, and containing a reference to the provisions of this Agreement in
respect of which such right of indemnification is claimed or
arises.  The obligations and liabilities of an Indemnifying Party
under this Article IX with respect to Losses arising from claims of any third
party which are subject to the indemnification provided for in this Article IX
(“Third
Party Claims”) shall be governed by and contingent upon the following
additional terms and conditions:

     

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          33

          
            

          

        

        
           

        

      

    

    

       
(a) If any
Indemnified Party shall receive notice of any Third Party Claim, the Indemnified
Party shall give the Indemnifying Party notice of such Third Party Claim within
thirty (30) days of the receipt by the Indemnified Party of such notice; provided, however, that the
failure to provide such notice shall not release the Indemnifying Party from any
of its obligations under this Article IX except to the extent the Indemnifying
Party is materially prejudiced by such failure.

     

    (b) If the
Indemnifying Party acknowledges in writing its obligation to indemnify the
Indemnified Party hereunder against any losses that may result from such Third
Party Claim, then the Indemnifying Party shall be entitled to assume and control
the defense of such Third Party Claim at its expense and through counsel of its
choice if it gives notice of its intention to do so to the Indemnified Party
within thirty (30) days of the receipt of such notice from the Indemnified
Party; provided, further however, that
if it would be detrimental to the defense of the Indemnified Party for the same
counsel to represent both the Indemnified Party and the Indemnifying Party, then
the Indemnified Party shall be entitled to retain one counsel, with payment of
such counsel to be indemnifiable if the Indemnifying Party is ultimately
determined to be liable.

     

    (c) In the
event the Indemnifying Party exercises the right to undertake any such defense
against any such Third Party Claim as provided above, the  Indemnified
Party shall cooperate with the Indemnifying Party in such defense and make
available to the Indemnifying Party, at the Indemnifying Party’s expense, all
witnesses, pertinent records, materials and information in the Indemnified
Party’s possession or under the Indemnified Party’s control relating thereto as
is reasonably required by the Indemnifying Party.  Similarly, in the
event the Indemnifying Party declines to take such defense and the Indemnified
Party is, directly or indirectly, conducting the defense against any such Third
Party Claim, the Indemnifying Party shall cooperate with the Indemnified Party
in such defense and make available to the Indemnified Party, at the Indemnifying
Party’s expense, all such witnesses, records, materials and information in the
Indemnifying Party’s possession or under the Indemnifying Party’s control
relating thereto as is reasonably required by the Indemnified
Party.

     

    (d) If the
Indemnifying Party shall have failed to assume the defense of any claim in
accordance with the provisions of this article, then the Indemnified Party shall
have the absolute right to control the defense of such claim and, if and when it
is finally determined that the Indemnified Party is entitled to indemnification
from the Indemnifying Party hereunder, the fees and expenses of the Indemnified
Party’s counsel shall be borne by the Indemnifying Party and paid by the
Indemnifying Party to the Indemnified Party within five (5) business days of the
rendering of such final determination, but the Indemnifying Party shall be
entitled, at its own expense, to participate in (but not control) such
defense.

     

    (e) So long
as the Indemnifying Party has assumed and is conducting the defense of the Third
Party Claim in accordance with Section 9.4(b) above, (i) the Indemnifying Party
will not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably provided that the Indemnified
Party is completely released from all claims) unless the judgment or proposed
settlement involves only the payment of money damages by the Indemnifying Party
and does not impose an injunction or other equitable relief upon the Indemnified
Party, and (ii) the Indemnified Party will not consent to the entry of any
judgment or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnifying Party (not to be withheld
unreasonably).

     

             9.5. Limitations on
Indemnification.

    
 

    
      
        
          
             

            4416103v.8 

          

           

        

        
          34

          
            

          

        

        
           

        

      

    

     

    (a) Threshold
Amount.  Except as otherwise provided in Section 9.5(c) below,
none of Seller nor the Shareholders will have any liability to the Buyer
Indemnified Parties pursuant to the indemnification obligations of Section 9.2 above,
and Buyer will not have any liability to the Seller Indemnified Parties pursuant
to the indemnification obligations of Section 9.3 above, as
the case may be, for Losses payable pursuant to their respective indemnification
obligations until the total of all such Losses incurred by the Indemnified Party
pursuant to this Agreement collectively exceeds $20,000 in the aggregate (the
“Threshold
Amount”), and then (subject to the terms of this Section 9.5) such
indemnification by the Indemnifying Party shall apply only to such Losses in
excess of the Threshold Amount incurred pursuant to this Agreement.

     

    (b) Cap.  Except
as otherwise provided in Section 9.5(c) below,
(i) neither Seller nor the Shareholders (in the aggregate) will have any
liability to the Buyer Indemnified Parties pursuant to the indemnification
obligations of Section
9.2 above, to the extent that the total of all Losses paid by the Seller
or the Shareholders exceed, in the aggregate, any unpaid portion of the Earnout
Amount or any amount outstanding under the Installment Note (i.e., the indemnity
cap will be reduced with each payment by Buyer to Seller on the Earnout Amount
or on the Installment Note) and (ii) Buyer will not have any liability to the
Seller Indemnified Parties pursuant to the indemnification obligations of Section 9.3 above to
the extent that the total of all Losses paid by Buyer exceed Seven Hundred
Thousand Dollars ($700,000) in the aggregate.

     

    (c) Fraud and Other
Exceptions.  The limitation on the indemnification
responsibilities of the parties set forth in Sections 9.5(a) and 9.5(b) shall
not apply to (i) any fraud or intentional breach by Seller, the Shareholders or
Buyer, as the case may be of any term or provision of this Agreement or the
other Acquisition Agreements (or any other agreement entered into in connection
herewith), (ii) breach by Seller or a Shareholder of a representation or
warranty contain in any of Sections 4.1, 4.2, 4.6 or 4.19 hereof, (iii) breach
by Buyer of a representation or warranty contained in any of Sections 5.1, 5.2
or 5.8 hereof, (iv) payment obligations related to the Excluded Liabilities, (v)
Buyer’s obligation to pay the Purchase Price, Buyer’s payment obligations
arising after the Closing related to any Assumed Liability or Unassigned
Obligations, Buyer’s payment obligations under Section 2.2, or any
other payment obligations of Buyer under the Acquisition Agreements, (vi) Buyer
and Seller’s obligations under Section 6.3, (vii)
Losses arising from or related to any of the Non-Competition Agreements, (viii)
Losses asserted by any third party arising from or related to the production,
promotion, marketing, provision, or sale by Seller or any of its Affiliates of
products of any property, products, materials or supplies of any kind
(including, without limitation, production and sale of ephedrine), or (ix) any
breach of Buyer’s, Seller’s or any Shareholder’s obligations under the Stock
Rights and Restriction Agreement or the Services Agreement.

     

    (d) Offset.  In
addition to any other rights or remedies available to Buyer herein, Buyer shall
be entitled to offset such amounts to which it is entitled under this Article IX
against, at its option, any future Earn-Out Amounts payable by Buyer, or against
any amounts outstanding under the Installment Note (the “Offset
Amounts”), but only following a final determination of indemnification by
a court of competent jurisdiction.  If Buyer elects to exercise this
offset right at any time or from time to time, Buyer shall deliver prior notice
to Seller and the Shareholders in person or in writing by certified mail,
nationally recognized overnight courier or by facsimile or other electronic
transmission (receipt of transmission confirmed).  The Shareholders
shall have the right, but not the obligation, to pay Buyer the Offset Amounts in
cash.

     

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          35

          
            

          

        

        
           

        

      

    

     

     

    (e) Exclusive
Remedy.  Except as contemplated under Section 7.1(b) of
this Agreement and except with respect to specific performance and other
equitable remedies under the Non-Competition Agreements, the Zink and Jacobs
Employment Agreements, the Stock Rights and Restriction Agreement, the Services
Agreement and the Lease Assignment, the right of the parties to assert
indemnification claims and receive indemnity payments under this Agreement is
the sole and exclusive right and remedy exercisable by the parties with respect
to any Losses arising out of any breach by any party of any representation,
warranty, covenant or agreement of such party set forth in this Agreement or
otherwise relating to the contemplated transactions.  No party will
have any other remedy (statutory, equitable, common law or otherwise) against
any other party with respect to such matters, and all such other remedies are
hereby waived.

     

    ARTICLE
X

    MISCELLANEOUS

     

     10.1. Termination.  This
Agreement may be terminated and the transaction contemplated hereby may be
abandoned at any time prior to the Closing Date as follows:

     

    (a) By mutual
written consent of Buyer and Seller;

     

    (b) By either
Buyer or Seller, if Closing shall not have occurred on or before ___________,
2008; provided, however, that the right to terminate this Agreement under this
Section 10.1(b) shall not be available to the party whose failure to fulfill any
obligation under this Agreement shall have been the cause of, or resulted in,
the failure of Closing to occur on or before such date;

     

    (c) By either
Buyer or Seller, if any final and nonappealable order or other legal restraint
or prohibition preventing the consummation of the transaction contemplated by
this Agreement shall have been issued by any governmental authority or any Law
shall have been enacted or adopted that enjoins, prohibits or makes illegal
consummation of the transaction;

     

    (d) By Buyer,
upon a breach of, or failure to perform in any material respect (which breach or
failure cannot be or has not been cured within thirty (30) days after the giving
of notice of such breach or failure), any representation, warranty, covenant or
agreement on the part of Seller or Shareholder set forth in this Agreement, such
that a condition set forth in Section 8.1 would not be satisfied;
or

     

    (e) By
Seller, upon a breach of, or failure to perform in any material respect (which
breach or failure cannot be or has not been cured within thirty (30) days after
the giving of notice of such breach or failure), any representation, warranty,
covenant or agreement on the part of Buyer set forth in this Agreement, such
that a condition set forth in Section 8.2 would not be satisfied.

     

        10.2 Notice of Termination;
Effect of Termination.  In the event of termination of this
Agreement by either Buyer or Seller pursuant to Section 10.1 (b), (c), (d) or
(e) hereof, the terminating party shall give prompt written notice thereof to
the nonterminating party.  In the event of termination of this
Agreement pursuant to Section 10.1, this Agreement shall be of no further
effect, there shall be no liability under this Agreement on the part of either
Buyer or Seller and all rights and obligations of each party hereto shall cease,
provided, however, that nothing herein shall relieve any party from liability
for the breach of any of its representations and warranties or the breach of any
of its covenants or agreements set forth in this Agreement.

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          36

          
            

          

        

        
           

        

      

    

     

     10.3. Expenses.  Each
of the parties hereto shall pay its own fees, costs and expenses incurred in
connection with the negotiation, preparation, execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby.

     

     10.4. Entire Subject Matter;
Amendment.  This Agreement, together with its Schedules and
Exhibits and all ancillary agreements and exhibits and schedules thereto to be
delivered at Closing, contains the entire understanding of the parties with
respect to the subject matter hereof and supersedes all prior agreements, either
oral or written.  The Agreement may not be amended, or any term or
condition waived, unless signed by the party to be charged or making the
waiver.  Each party to this Agreement acknowledges that no
representations, inducements, promises, or agreements, orally or otherwise, have
been made by other party(ies), or by anyone acting on behalf of any party, that
are not embodied herein, and that no other agreement, statement, or promise not
contained in this Agreement shall be valid or binding.

     

     10.5. Assignment.  No
party hereto shall assign or otherwise transfer this Agreement or any of its
rights hereunder, or delegate any of its obligations hereunder, without the
prior written consent of the other party; provided, however, that Buyer
shall be permitted, without the consent of Seller, to assign or otherwise
transfer this Agreement or any of its rights hereunder:  (a) upon the
purchase or sale of all or substantially all of the assets or stock of Buyer or
the transfer (by operation of law or otherwise) of the ownership or control of
Buyer to the purchaser of such assets or stock or the transferee of such
interests; (b) upon the purchase, transfer or sale of all or substantially all
of the Acquired Assets purchased from Seller by Buyer pursuant to this Agreement
to the purchaser or transferee of such Acquired Assets; or (c) to any Affiliate
of Buyer; provided, however, that in any
such event, Buyer shall remain liable for its performance under this
Agreement.  In addition to the foregoing, Buyer shall be entitled to
(i) assign all of its rights, title and interest in and to the Acquired Assets
and Unassigned Rights, and all of its duties and obligations under the Assumed
Liabilities and Unassigned Obligations to NDS Nutrition Products, Inc., a
Florida corporation and wholly owned subsidiary of Buyer (“Buyer
Sub”), and (ii) assign all of its, rights and obligations under this
Agreement and the other Acquisition Agreements to Buyer Sub; provided, however, that in any
case, Buyer shall remain liable for its performance under this Agreement and the
other Acquisition Agreements and all of its duties and obligations under the
Assumed Liabilities and Unassigned Obligations.  Subject to the
foregoing, this Agreement and the rights and obligations set forth herein shall
inure to the benefit of, and be binding upon the parties hereto, and each of
their respective successors, heirs and assigns.

     

    
       10.6. Counterparts.  This
Agreement may be executed in two or more counterparts, any one of which need not
contain the signatures of all parties, but all of which counterparts when taken
together will constitute one and the same agreement.

       

       10.7. Governing Law; Submission to
Jurisdiction.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Nebraska applicable to
contracts made and to be performed in that State by residents of that
State.  Except with respect to disputes that are to be resolved in
accordance with Section 2.2(d), each
party hereto submits to the jurisdiction of any state or federal court sitting
in Douglas County, Nebraska in any action or proceeding arising out of or
relating to this Agreement or any of the agreements or transactions contemplated
hereby and agrees that all claims in respect of the action or proceeding may be
heard and determined there.  Each party also agrees not to bring any
action or proceeding arising out of or relating to this Agreement or any of the
or any of the agreements or transactions contemplated hereby in any other
court.  Each party waives any defense of inconvenient forum to the
maintenance of any action or proceeding so brought and waives any bond, surety
or other security that might be required of any other party.  Each
party agrees that a final judgment in any action or proceeding so brought will
be conclusive and may be enforced by suit on the judgment or in any other manner
provided by law or in equity.

    

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          37

          
            

          

        

        
           

        

      

    

     

     10.8. Schedules and
Exhibits.  The Schedules and Exhibits attached hereto are an
integral part of this Agreement.  All exhibits and schedules attached
to this Agreement are incorporated herein by this reference and all references
herein to this “Agreement” shall mean this Asset Purchase Agreement together
with all such exhibits and schedules, and all ancillary agreements and exhibits
and schedules thereto to be delivered at Closing.

     

     10.9. Severability.  Any
provision hereof which is held to be prohibited or unenforceable in any
jurisdiction will, as to such jurisdiction, be adjusted rather than avoided, if
possible, in order to achieve the intent of the parties to this Agreement to the
extent possible without in any manner invalidating the remaining provisions
hereof.

     

     10.10. Notices.  All
notices or other communications required or permitted hereunder shall be in
writing and shall be deemed properly given three (3) business days after being
sent by registered or certified mail, postage prepaid, to the parties at the
address listed below.  Any party may also give any notice or other
communication hereunder using any other means (including messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice or other
communication shall be deemed to have been duly given unless and until it
actually is delivered to the individual for whom it is intended.

     

    
      
        
          
             

            4416103v.8 

          

           

        

        
          38

          
            

          

        

        
           

        

      

    

     

    
      	
                  If to
      Seller:

               

               

               

               

               

               

            	
                  NDS
      Nutritional Products, Inc.

            
	
              11011
      Q Street, Suite 106A

            
	
              Omaha,
      NE  68137

            
	
              Attn:
      Ryan Zink

            
	
              Fax:  ____________________

            
	
              Email:  rzink@ndsnutrition.com

               

            
	
              With
      a copy to:

               

               

               

               

               

               

               

            	
              Koley
      Jessen P.C., L.L.O.

            
	
              One
      Pacific Place, Suite 800

            
	
              1125
      South 103 Street

            
	
              Omaha,
      NE  68124-1079

            
	
              Attention:  Michael
      M. Hupp

            
	
              Fax:  (402)
      390-9005

            

    

    
      	
               

                  It to
      Shareholders:

               

               

               

            	
                  

                  Ryan
      Zink

            
	
              500
      Fort Street

            
	
              Papillion,
      NE  68046

            
	
              Email:  rzink@ndsnutrition.com

            
	 
      	
               

                  And

               

            
	
              Cory
      Wiedel

            
	
              4629
      S. 187th
      St.

            
	
              Omaha,
      NE 68135

            
	
              Email:  cjwiedel@ndsnutrition.com

               

            
	
               

              If
      to Buyer:

            	
               

                        
       Bond Laboratories, Inc.

            
	 
      	
              777
      South Highway 101, Suite 215

            
	
                        
       Solana Beach, CA  92075

            
	
              Attention:
      Chief Executive Officer

            
	
              Fax:  (858)
      847-9090

            
	
              Email:  sdlandow@bond-labs.com

            
	
               

              With
      a copy to:

               

               

               

               

               

            	
               

              Mintz
      Levin Cohn Ferris Glovsky & Popeo, P.C.

            
	
              3580
      Carmel Mountain Road, Suite 300

            
	
              San
      Diego, California 92130

            
	
              Attention:  Micha
      “Mitch” Danzig

            
	
              Fax:  (858)
      314-1501

            
	
              Email:  mdanzig@mintz.com

            

    

    

    

     10.11. Representation by
Counsel.  Each party hereto acknowledges that it has been
advised by legal and any other counsel retained by such party in its sole
discretion.  Each party acknowledges that such party has had a full
opportunity to review this Agreement and all related exhibits,
schedules and
ancillary agreements and to negotiate any and all such documents in its sole
discretion, without any undue influence by any other party hereto or any third
party.

     

     10.12. Construction.  The
parties have participated jointly in the negotiations and drafting of this
Agreement and in the event of any ambiguity or question of intent or
interpretation, no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement.

     

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

     

     10.14. Waivers.  No
waiver by any party, whether express or implied, of its rights under any
provision of this Agreement shall constitute a waiver of the party’s rights
under such provisions at any other time or a waiver of the party’s rights under
any other provision of this Agreement.  No failure by any party to
take any action against any breach of this Agreement or default by another party
shall constitute a waiver of the former party’s right to enforce any provision
of this Agreement or to take action against such breach or default or any
subsequent breach or default by the other party.  To be effective any
waiver must be in writing and signed by the waiving party.

     

    
      
        
          
            
               

              4416103v.8 

            

             

          

          
            39

            
              

            

          

          
             

          

        

      

    

     10.15. Attorney’s
Fees.  Subject to the provisions of Section 2.2(d), in the
event that any suit or action is instituted to enforce any provision in this
Agreement, to the extent permitted by law the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.

     

     10.16. No Consequential
Damages.  Notwithstanding anything to the contrary elsewhere in
this Agreement, no party (or its Affiliates) shall, in any event, be liable to
any other party (or its Affiliates) for any consequential, special, exemplary or
punitive damages, including loss of future revenue or income, or loss of
business reputation or opportunity, relating to the breach or alleged breach or
nonperformance or alleged nonperformance of this Agreement, except to the extent
such damages are recovered by a third party and such recovery constitutes
indemnifiable Losses.

     

    

     

    [Remainder
of Page Intentionally Left Blank - Signature Page to Follow]

     

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          40

          
            

          

        

        
           

        

      

    

    

    THEREFORE, the parties hereto
have executed, or caused this Asset Purchase Agreement to be executed by their
duly authorized representatives, as of the date first written
above.

    

    
      	
              BUYER:

               

            	
              SELLER:

               

            
	
              BOND
      LABORATORIES, INC.

               

                

              ________________________

              By:
      Scott Landow

              Its:
      Chief Executive Officer

               

            	
              NDS
      NUTRITIONAL PRODUCTS, INC.

               

               

              ________________________

              By:

              Its:

               

            
	
               

              SHAREHOLDERS:

               

            	 
      
	
              CORY
      WIEDEL

               

                

              By:
      ________________________

               

               

            	
              RYAN
      ZINK

               

               

              By:  ________________________

               

            

    

    

    

    
      
        
          
            [SIGNATURE
PAGE TO ASSET PURCHASE AGREEMENT]

            4416103v.8 

          

           

        

        
           

          
            

          

        

        
           

        

      

    

    

    TABLE
OF EXHIBITS AND SCHEDULES

    

    

      
        	
                Exhibit
      A

              	
                –

              	
                Assignment
      and Assumption and Bill of Sale

              
	
                Exhibit
      B-1

              	
                –

              	
                Secured
      Promissory Note (Installment)

              
	
                Exhibit
      B-2

              	
                –

              	
                Secured
      Promissory Note (FAP)

              
	
                Exhibit
      B-3

              	
                –

              	
                Secured
      Promissory Note (Component Inventory)

              
	
                Exhibit
      C

              	
                –

              	
                Stock
      Rights and Restriction Agreement

              
	
                Exhibit
      D

              	
                –

              	
                Security
      Agreement

              
	
                Exhibit
      E-1

              	
                –

              	
                Seller
      Non-Competition Agreement

              
	
                Exhibit
      E-2

              	
                –

              	
                Zink
      Non-Competition Agreement

              
	
                Exhibit
      E-3

              	
                –

              	
                Wiedel
      Non-Competition Agreement

              
	
                Exhibit
      F

              	
                –

              	
                Lease
      Assignment

              
	
                Exhibit
      G

              	
                –

              	
                Services
      Agreement

              
	 
      	 
      	 
      
	
                Schedule
      1.0

              	
                –

              	
                Table
      of Definitions

              
	
                Schedule
      1.1

              	
                –

              	
                Acquired
      Assets

              
	
                Schedule
      1.2

              	
                –

              	
                Excluded
      Assets/Product Inventory

              
	
                Schedule
      1.3

              	
                –

              	
                Purchase
      Orders

              
	
                Schedule
      1.5

              	
                –

              	
                Seller
      Employees/Transferring Employees

              
	
                Schedule
      2.1(iii)

              	
                –

              	
                Fixed
      Assets

              
	
                Schedule
      2.1(v)

              	
                –

              	
                Component
      Inventory

              
	
                Schedule
      2.4

              	
                –

              	
                Allocation
      of Purchase Price

              
	
                Schedule
      4.1

              	
                –

              	
                Foreign
      Qualification

              
	
                Schedule
      4.3(a)

              	
                –

              	
                Governmental
      Approvals

              
	
                Schedule
      4.3(b)

              	
                –

              	
                Third
      Party Consents

              
	
                Schedule
      4.5

              	
                –

              	
                Licenses
      and Permits

              
	
                Schedule
      4.6

              	
                –

              	
                Owners
      and Subsidiaries

              
	
                Schedule
      4.7

              	
                –

              	
                Assets
      Not Presently Owned but to be Conveyed at Closing

              
	
                Schedule
      4.8

              	
                –

              	
                Personal
      Property Leases

              
	
                Schedule
      4.9

              	
                –

              	
                Financial
      Statements

              
	
                Schedule
      4.10

              	
                –

              	
                Absence
      of Certain Events

              
	
                Schedule
      4.11

              	
                –

              	
                Legal
      Proceedings

              
	
                Schedule
      4.13

              	
                –

              	
                Compliance
      with FDA and FTC Regulations

              
	
                Schedule
      4.14

              	
                –

              	
                Compliance
      with Laws

              
	
                Schedule
      4.15(d)

              	
                –

              	
                Labor
      Contracts

              
	
                Schedule
      4.16

              	
                –

              	
                Benefit
      Plan Compliance

              
	
                Schedule
      4.19

              	
                –

              	
                Tax
      Disputes

              
	
                Schedule
      4.20

              	
                –

              	
                Contracts

              
	
                Schedule
      4.21

              	
                

                  –

                

              	
                Real
      Property

              
	Schedule
      4.22     	--	   
      Financing Statements
	
                Schedule
      4.23

              	
                –

              	
                Affiliate
      Transactions

              
	
                Schedule
      4.24

              	
                –

              	
                Insurance

              
	
                Schedule
      4.25

              	
                –

              	
                Intellectual
      Property

              
	
                Schedule
      5.7

              	
                –

              	
                Commission
      Documents; Financial Statements

              
	
                Schedule
      6.3(a)

              	
                –

              	
                Required
      Consents

              

      

    

    
      
        
          
            4416103v.8 

          

           

        

        
           

          
            

          

        

        
           

        

      

    

    

    EXHIBIT
A

    

    ASSIGNMENT
AND ASSUMPTION

    AND
BILL OF SALE

    

    This
Assignment and Assumption and Bill of Sale (the “Agreement”),
is made and entered into this 1st day of October, 2008 by and among NDS
Nutritional Products, Inc., a Nebraska corporation (“Seller”),
and Bond Laboratories, Inc., a Nevada corporation (“Buyer”).

     

    RECITALS

     

    WHEREAS, Seller, Buyer, Ryan
Zink and Cory Wiedel (together, the “Shareholders”)
are parties to an Asset Purchase Agreement effective as of October 1, 2008 (the
“Purchase
Agreement”), whereby (i) Seller has agreed to sell, convey, transfer,
assign and deliver to Buyer the Acquired Assets (as defined in the Purchase
Agreement), and (ii) Seller has agreed to assign and Buyer has agreed to assume,
the Assumed Liabilities (as defined in the Purchase Agreement); and

     

    WHEREAS, all capitalized terms
not defined herein shall have the meanings ascribed to such terms in the
Purchase Agreement.

     

    NOW, THEREFORE, pursuant to
the Purchase Agreement, and in consideration of the mutual promises, covenants
and agreements therein and hereinafter set forth and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:

     

    1. Bill of
Sale.

     

    (a) Seller
hereby sells, conveys, transfers, assigns and delivers to Buyer,  its
successors and assigns, free and clear of any pledge, lien, option, security
interest, mortgage or other encumbrance, and Buyer does hereby acquire from
Seller, all right, title and interest in, to and under the Acquired
Assets.  The Acquired Assets shall include all rights, privileges,
hereditaments and appurtenances belonging, incident or appertaining to the
Acquired Assets.

     

    (b) Notwithstanding
anything contained herein, Buyer is not purchasing from Seller any Excluded
Assets.

     

    (c) It is
understood by both Seller and Buyer that, contemporaneously with the execution
and delivery of this Agreement, Seller may be executing and delivering to Buyer
certain further assignments and other instruments of transfer which in
particular cover certain of the property and assets described herein or in the
Purchase Agreement, the purpose of which is to supplement, facilitate and
otherwise implement the transfer intended hereby.

     

    (d) Seller
does hereby irrevocably constitute and appoint Buyer, its successors and
assigns, its true and lawful attorney, with full power of substitution, in its
name or otherwise, and on behalf of Seller, or for its own use, to claim,
demand, collect and receive at any time and from time to time any and all
Acquired Assets, properties, claims, accounts and other rights, tangible or
intangible, hereby sold, transferred, conveyed, assigned and delivered, or
intended so to be, and to prosecute the same at law or in equity and, upon
discharge thereof, to complete, execute and deliver any and all necessary
instruments of satisfaction and release.

     

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          1

          
            

          

        

        
           

        

      

    

     

    2. Assignment and Assumption of
Assumed Liabilities.

     

    (a) Seller
hereby assigns to Buyer, its successors and assigns, and Buyer hereby assumes,
in accordance with the terms and conditions of the Purchase Agreement, the
Assumed Liabilities.  Notwithstanding anything in this Agreement to
the contrary, except as specifically set forth in the Purchase Agreement, Buyer
shall not assume nor be deemed to have assumed any debt, claim, obligation or
other liability of Seller or any Affiliate of Seller, whether known or unknown,
accrued or unaccrued, fixed or contingent, natural or unnatural, whether arising
out of occurrences, events or actions prior to, at or after the Closing
Date.

     

    (b) In the
event that Seller and/or Buyer determines after execution of this Agreement that
one or more contracts or agreements between Seller and any third party necessary
to operate the Acquired Assets was not designated as an Assigned Contract or an
Assigned Personal Property Lease (each an “Omitted
Agreement”), and the parties consent in writing to the assignment and
assumption of such Omitted Agreement, which consent shall not be unreasonably
withheld, then, such Omitted Agreement shall be deemed assigned by Seller to
Buyer as of 12:01 a.m. on the Closing Date.

     

    (c) Seller
hereby authorizes and directs all obligors under any Assigned Contracts and
Assigned Personal Property Leases included in the Assumed Liabilities, to
deliver any warrants, checks, drafts or payments to be issued or paid to Seller
pursuant to the Assigned Contracts or the Assigned Personal Property Leases to
Buyer (to the extent payable to Buyer as contemplated by the Purchase
Agreement); and Seller further authorizes Buyer to receive such warrants,
checks, drafts or payments from such obligors and to endorse Seller’s name on
them and to collect all funds due or to become due under the Assigned Contracts
and the Assigned Personal Property Leases.

     

    (d) Any
payment that may be received by Seller to which Buyer is entitled by reason of
this Agreement or the Purchase Agreement shall be received by Seller as trustee
for Buyer, and will be immediately delivered to Buyer without commingling with
any other funds of Seller.

     

    (e) Notice of
the assignment under this Agreement may be given at the option of either party
to all parties to the Assigned Contracts and the Assigned Personal Property
Leases (other than Seller) or to such parties’ duly authorized
agents.

     

    (f) The
assumption by Buyer of any Assumed Liabilities shall not enlarge the rights of
any third party with respect to any Assumed Liabilities, nor shall it prevent
Buyer, with respect to any party other than Seller, from contesting or disputing
any Assumed Liability.

     

    (g) Seller
hereby appoints Buyer, its successors and assigns, as the true and lawful
attorney-in-fact of Seller, with full power of substitution, having full right
and authority, in the name of Seller, to collect or enforce for the account of
Buyer, liabilities and obligations of third parties under the Assumed
Liabilities; to institute and prosecute all proceedings they may deem proper in
order to enforce any claim to obligations owed under the Assumed Liabilities, to
defend and compromise any and all actions, suits or proceedings in respect of
the Assumed Liabilities, and to do all such acts in relation to the Assumed
Liabilities that Buyer may deem advisable.  Seller agrees that the
above-stated powers are coupled with an interest and shall be irrevocable by
Seller.

     

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          2

          
            

          

        

        
           

        

      

    

     

    3. Consummation of Purchase
Agreement.  This Agreement is intended to evidence the
consummation of the assignment by Seller and assumption by Buyer of the Assumed
Liabilities and the sale by Seller and the purchase by Buyer of the Acquired
Assets contemplated by the Purchase Agreement.  Buyer and Seller by
their execution of this Agreement each hereby acknowledges and agrees that
neither the representations and warranties nor the rights and remedies of any
party under the Purchase Agreement shall be deemed to be enlarged, modified or
altered in any way by this Agreement.  Any inconsistencies or
ambiguities between this Agreement and the Purchase Agreement shall be resolved
in favor of the Purchase Agreement.

     

    4. Binding
Effect.  This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns.

     

    5. Further
Assurances.  After the Closing Date, each party will from time
to time, at the other party’s request and without further cost to the party
receiving the request, execute and deliver to the requesting party such other
instruments and take such other action as the requesting party may reasonably
request so as to enable it to exercise and enforce its rights under and fully
enjoy the benefits and privileges with respect to this Agreement and to carry
out the provisions and purposes hereof.

     

    6. Governing
Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of Nebraska applicable to agreements made
and to be performed in that State without giving effect to conflicts of
law  principles.

     

    7. Counterparts.  This
Agreement may be signed in any number of counterparts and all such counterparts
shall be read together and construed as one and the same document.

     

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          3

          
            

          

        

        
           

        

      

    

    

    IN WITNESS WHEREOF, the
undersigned have caused this Assignment and Assumption and Bill of Sale to be
duly executed on their behalf on the day and year first above
written.

     

    
      	
               

              BUYER:

               

            	
               

              SELLER:

               

            
	
              BOND
      LABORATORIES, INC.

               

               

              ________________________

              By:
      Scott Landow

              Its:
      Chief Executive Officer

               

               

            	
              NDS
      NUTRITIONAL PRODUCTS, INC.

               

               

              ________________________

              By:

              Its:

               

               

            

    

    

    

    

    
      
        
          
            4416103v.8 

          

           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Schedule
1.0

    

    TABLE
OF DEFINITIONS

     

    “Acquired
Assets” has the meaning set forth in Section 1.1 hereof.

     

    “Acquisition
Agreements” means this Agreement, the Bill of Sale, the Notes, the Stock
Rights and Restriction Agreement, the Security Agreement, the Non-Competition
Agreements, the Zink and Jacobs Employment Agreement (and other employment
agreements of Transferring Employees), the Services Agreement, the
Lease Assignment and all other agreements executed in connection with this
Agreement and in connection with Closing.

     

    “Actual Quarterly
Earn-Out Payment” has the meaning set forth in Section 2.2(a)
hereof.

     

    “Affiliates”
has the meaning set forth in Rule 501 of Regulation D under the Securities Act
of 1933, as amended and includes the Shareholders.

     

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

     

    “Assumed
Liabilities” has the meaning set forth in Section 1.3
hereof.

     

    “Auditor”
has the meaning set forth in Section 2.2(d) hereof.

     

    “Assumed
PTO” has the meaning set forth in Section 1.5 hereof.

     

    “Bill of
Sale” has the meaning set forth in Section 1.7 hereof.

     

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

     

    “Buyer Indemnified
Parties” has the meaning set forth in Section 9.2 hereof.

     

    “Cash Purchase
Price” has the meaning set forth in Section 2.1(i) hereof.

     

    “Closing”
has the meaning set forth in the first sentence of Article III of this
Agreement.

     

    “Closing Balance
Sheets” has the meaning set forth in Section 6.5(a) hereof.

     

    “Closing
Date” has the meaning set forth in Article III of this
Agreement.

     

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

     

    “Commission”
means the U.S. Securities and Exchange Commission.

     

    “Commission
Documents” has the meaning set forth in Section 5.7 hereof.

     

    “Component
Inventory” has the meaning set forth in Section 2.1(v)
hereof.

     

    “Component
Inventory Note” has the meaning set forth in Section 2.1(v)
hereof.

     

    

    
      
        
          
             

            4416103v.8 

          

           

        

        
          1

          
            

          

        

        
           

        

      

    

    

    “Confidential
Information” has the meaning set forth in Section 7.1
hereof.

     

    “Contract”,
“Assigned
Contract” and “Retained
Contract” have the meanings set forth in Section 4.20
hereof.

     

    “Earn-Out
Amount” has the meaning set forth in Section 2.1(iv) hereof.

     

    “Earn-Out
Materials” has the meaning set forth in Section 2.2(b)
hereof.

     

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

     

    “Employee Benefit
Plans” means any “employee benefit plan” as defined in Section 3(3) of
ERISA and all bonus, stock or other security option, stock or other security
purchase, stock or other security appreciation rights, incentive, deferred
compensation, retirement or supplemental retirement, severance, golden
parachute, vacation, cafeteria, dependent care, medical care, employee
assistance program, education or tuition assistance programs, insurance and
other similar fringe or employee benefit plans, programs or arrangements, and
any current or former employment or executive compensation or severance
agreements or any other plan or arrangement to provide compensation or benefits
to any individual, written or otherwise, which has ever been sponsored or
maintained or entered into for the benefit of, or relating to, any present or
former employee or director of Seller or any ERISA Affiliate, without regard to
whether such individual is a Seller Employee or a Transferring
Employee.

     

    “Environmental
Laws” means all Laws relating to hazardous waste, infectious medical and
radioactive waste, and other environmental matters, including, without
limitation, the Resource Conservation and Recovery Act, the Clean Air Act and
the Comprehensive Environmental Response Compensation and Liability Act, and any
regulations issued thereunder.

     

    “Equity Purchase
Price” has the meaning set forth in Section 2.1(vi) hereof.

     

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

     

    “ERISA
Affiliate” means any entity (whether or not incorporated) that together
with Seller is a member of:  (i) a controlled group of corporations
within the meaning of Section 414(b) of the Code; (ii) a group of trades or
business under common control within the meaning of Section 414(c) of the Code;
(iii) an affiliated service group within the meaning of Section 414(m) of the
Code; or (iv) any other person or entity treated as an Affiliate of Seller under
Section 414(o) of the Code.

     

    “Exchange
Act” has the meaning set forth in Section 5.7 hereof.

     

    “Excluded
Assets” has the meaning set forth in Section 1.2 hereof.

     

    “Excluded Assets
Schedule” shall also be referred to herein as Schedule 1.2
hereof.

     

    “Excluded
Liabilities” has the meaning set forth in Section 1.4
hereof.

     

    “FAP Note”
has the meaning set forth in Section 2.1(iii) hereof.

     

    

    
      
        
          
             

            4416103v.8

          

           

        

        
          2

          
            

          

        

        
           

        

      

    

    

    “Final Balance
Sheets” has the meaning set forth in Section 6.6(b) hereof.

     

    “Financial
Statements” has the meaning set forth in Section 4.9 hereof.

     

    “Fixed
Assets” has the meaning set forth in Section 2.1(iii)
hereof.

     

    “Form 10-K”
has the meaning set forth in Section 5.7 hereof.

     

    “Form 10-Q”
has the meaning set forth in Section 5.7 hereof.

     

    “GAAP”
means accounting principles generally accepted in the United States of America,
consistently applied.

     

    “Governmental
Approval” has the meaning set forth in Section 4.3(a)
hereof.

     

    “GP Adjustment
Amount” has the meaning set forth in Section 2.2(a) hereof.

     

    “GP Objection
Notice” has the meaning set forth in Section 2.2(b) hereof.

     

    “GP Objection
Period” has the meaning set forth in Section 2.2(b) hereof.

     

    “GP Period”
has the meaning set forth in Section 2.2(a) hereof.

     

    “GP Quarterly
Target” has the meaning set forth in Section 2.2(a) hereof.

     

    “Gross
Profits” means, with respect to the Seller’s Business only, net sales
(i.e., gross sales less (i) product returns that represent more than 25% of the
product amount purchased by the applicable customer, and (ii) discounts) less
costs of goods sold (but specifically excluding any costs of goods sold relating
to shipping expenses, distribution, rebates, samples or inventory adjustments),
determined in accordance with GAAP, applied in a manner consistent with Seller’s
past practices with respect to Seller’s Business.

     

    “Hazardous
Material” means (i) petroleum and petroleum products, by-products or
breakdown products, radioactive materials, asbestos-containing materials and
polychlorinated biphenyls; (ii) infectious medical waste; and (iii) any other
chemical, material or substance, all of which are defined or regulated as toxic
or hazardous or as a pollutant, contaminant or waste under any applicable
Environmental Law.

     

    “Indemnified
Party” has the meaning set forth in Section 9.4 hereof.

     

    “Indemnifying
Party” has the meaning set forth in Section 9.4 hereof.

     

    “Installment
Note” has the meaning set forth in Section 2.1(ii) hereof.

     

    “Intellectual
Property” means all recipes, patents, inventions, know-how, show-how,
designs, trade secrets, copyrights, trademarks, trade names, service marks,
fictitious and assumed business names, Internet domain names, manufacturing
processes, software, formulae, trade secrets, technology or the like, and all
applications for any of the foregoing.

     

    

    
      
        
          
             

            4416103v.8

          

           

        

        
          3

          
            

          

        

        
           

        

      

    

    

    “Interim Financial
Statements” has the meaning set forth in Section 4.9 hereof.

     

    “Jacobs Employment
Agreement” has the meaning set forth in Section 8.1(l)
hereof.

     

    “Knowledge of the
Company” or “Company’s
Knowledge” means the actual knowledge, after due inquiry, of those
officers of the Buyer required to file statements relating to their ownership of
the Company’s securities pursuant to Section 16 of the Exchange Act

     

    “Knowledge of
Seller” or “Seller’s
Knowledge” means the actual knowledge, after due inquiry, of Cory Wiedel
and Ryan Zink.

     

    “Labor
Contract” has the meaning set forth in Section 4.15(d)
hereof.

     

    “Law” or
“Laws”
means any and all federal, state, and local statutes, codes, licensing
requirements, ordinances, laws (including bulk sales laws), rules, regulations,
decrees or orders of any foreign, federal, state or local government and any
other governmental department or agency, and any judgment, decision, decree or
order of any court or governmental agency, department or authority.

     

    “Lease
Assignment” has the meaning set forth in Section 8.1(n)
hereof.

     

    “Licenses”
means licenses, permits, consents, approvals, authorizations, registrations,
qualifications and certifications of any governmental or administrative agency
or authority (whether federal, state or local).

     

    “Liens”
means any lien, claim, security interest, mortgage, pledge, restriction,
covenant, charge or encumbrance of any kind or character, direct or indirect,
whether accrued, absolute, contingent or otherwise, but excluding (a)
mechanic’s, materialmen’s and similar liens that are being contested in good
faith and for which the particular entity has provided adequate reserves; (b)
liens for Taxes not yet due and payable or for Taxes that the taxpayer is
contesting in good faith through appropriate proceedings; and (c) purchase money
liens and liens securing rental payments under capital lease
arrangements.

     

    “Losses”
means losses, damages, liabilities, actions, suits, proceedings, claims,
demands, taxes, sanctions, deficiencies, assessments, judgments, costs,
interest, penalties and expenses (including without limitation reasonable
attorneys’ fees).

     

    “Non-Competition
Agreements” has the meaning set forth in Section 8.1(j)
hereof.

     

    “Notes” has
the meaning set forth in Section 2.1(v).

     

    “Offset
Amounts” has the meaning set forth in Section 9.5(d) hereof.

     

    “Payroll
Transition Period” has the meaning set forth in Section 6.9
hereof.

     

    “Person”
means any natural person, corporation, general partnership, limited partnership,
limited liability company, proprietorship or other business organization, trust,
union, or association.

     

    

    
      
        
          
             

            4416103v.8

          

           

        

        
          4

          
            

          

        

        
           

        

      

    

    

    “Personal Property
Leases”, “Assigned Personal
Property Leases” and “Terminated
Personal Property Leases” have the meanings set forth in Section 4.8
hereof.

     

    “Premises”
has the meaning set forth in Section 4.21 hereof.

     

    “Product
Inventory” has the meaning set forth in Section 1.2 hereof.

     

    “PTO” means
accrued vacation and other payable time off.

     

    “Purchase
Price” has the meaning set forth in Section 2.1(vi) hereof.

     

    “Release”
means disposing, discharging, injecting, spilling, leaking, leaching, dumping,
emitting, escaping, emptying, seeping, placing and the like into or upon any
land, water or air, or otherwise entering into the environment.

     

    “Remedial
Action” means all action to (i) clean up, remove or treat Hazardous
Materials in the environment; (ii) restore or reclaim the environment or natural
resources; (iii) prevent the Release of Hazardous Materials so that they do not
migrate or endanger or threaten to endanger public health or the environment; or
(iv) perform remedial investigations, feasibility studies, corrective actions,
closures and post-remedial or post-closure studies, investigations, operations,
maintenance and monitoring on, about or in the Premises.

     

    “Securities
Act” means the Securities Act of 1933, as amended.

     

    “Security
Agreement” has the meaning set forth in Section 2.1 hereof.

     

    “Securities
Exchange Act” means the Securities Exchange Act of 1934, as
amended.

     

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

     

    “Seller
Employees” has the meaning set forth in Section 1.5 hereof.

     

    “Seller
Licenses” has the meaning set forth in Section 4.5 hereof.

     

    “Seller Material
Adverse Effect” means any event, circumstance, change or effect that
individually or in the aggregate with all other events, circumstances, changes
or effects, is reasonably expected to be materially adverse to the condition
(financial or otherwise), properties, assets, liabilities, businesses,
operations, or results of operations of Seller’s Business or the Acquired Assets
or to Seller’s ability to perform its obligations as contemplated in this
Agreement.

     

    “Seller’s
Business” has the meaning set forth in the Recitals of this
Agreement.

     

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

     

    “Shares”
has the meaning set forth in Section 2.1(vi) hereof.

     

    “Stock Rights and
Restriction Agreement” has the meaning set forth in Section 2.1(vi)
hereof.

     

    

    
      
        
          
             

            4416103v.8

          

           

        

        
          5

          
            

          

        

        
           

        

      

    

    

    “Target Quarterly
Earn-Out Payment” has the meaning set forth in Section 2.2(a)
hereof.

     

    “Taxes”
means all taxes of any type or nature whatsoever, including without limitation,
income, gross receipts, excise, franchise, property, value added, import duties,
employment, payroll, sales and use taxes and any additions to tax and any
interest or penalties thereon.

     

    “Tax
Returns” means any and all returns, declarations, reports, claims for
refunds and information returns or statements relating to Taxes, required to be
filed by Seller for itself and for the Employee Benefit Plans of Seller,
including all schedules or attachments thereto and including any amendment
thereof.

     

    “Third Party
Claims” has the meaning set forth in Section 9.4 hereof.

     

    “Third Party
Consent” has the meaning set forth in Section 4.3(b) hereof.

     

    “Threshold
Amount” has the meaning set forth in Section 9.5(a) hereof.

     

    “Transferring
Employees” has the meaning set forth in Section 1.5 hereof.

     

    “Transition
Services” has the meaning set forth in Section 6.9 hereof.

     

    “Wiedel
Non-Competition Agreement” has the meaning set forth in Section 8.1(j)
hereof.

     

    “Year-End
Financial Statements” has the meaning set forth in Section 4.9
hereof.

     

    “Zink Employment
Agreement” has the meaning set forth in Section 8.1(k)
hereof.

     

    “Zink
Non-Competition Agreement” has the meaning set forth in Section 8.1(i)
hereof.

     

    

    

    

    

    

    

    

    

    

    

    
      
        
          
             

            4416103v.8

          

           

        

        
          6ex101.htm

    Exhibit
10.1

    

    Supplemental
Agreement No. 29

    

    to

    

    Purchase
Agreement No. 1977

    

    between

    

    The
Boeing Company

    

    and

    

    American
Airlines, Inc.

    

    Relating
to Boeing Model 737-800 Aircraft

    

    

    THIS SUPPLEMENTAL AGREEMENT, entered
into as of July 29, 2008, (Supplemental Agreement Number 29) by and between THE
BOEING COMPANY, a Delaware corporation with offices in Seattle, Washington,
(Boeing) and AMERICAN AIRLINES, INC., a Delaware corporation with offices in
Fort Worth, Texas, together with its successors and permitted
assigns (Customer);

    

    WHEREAS,
Boeing and Customer entered into Purchase Agreement No. 1977 dated October 31,
1997, relating to Boeing Model 737-823 aircraft, as amended and
supplemented (the Purchase Agreement).  Capitalized terms used herein
without definitions shall have the meanings specified therefore in such Purchase
Agreement;

    

    WHEREAS,
pursuant to Letter Agreement No. 6-1162-AKP-075 titled Aircraft Purchase Rights
and Substitution Rights (the “Rights Letter”), Boeing and Customer have agreed
to, among other things, the treatment of aircraft Purchase Rights;

    

    WHEREAS,
pursuant to Purchase Agreement No. 1977 Supplement Agreement No. 19 (“SA 19”),
Boeing and Customer have agreed to, among other things, [CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT];

    

    WHEREAS,
pursuant to Letter Agreement No. 6-1162-LAJ-936, Boeing and Customer have agreed
to, among other things [CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT];

    

    WHEREAS,
Customer wishes to [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT];

    

    WHEREAS,
Customer wishes to [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT];

    

    WHEREAS,
pursuant to Section 6 of SA 19, as revised in Table 1(R3) in SA 26, Customer
wishes to [CONFIDENTIAL PORTION
OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT]; and

    

    

    WHEREAS,
Customer and Boeing wish to amend the Purchase Agreement by consolidating Table
1(R4) and Table 1A(R7) into Tables 1, 1A and 1B, with respect to [CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT].

    

    NOW
THEREFORE, in consideration of the mutual covenants herein contained, the
parties agree to amend the Purchase Agreement as follows:

    

    
      	
              1.  

            	
              Table of Contents,
      Articles, Tables and Exhibits, and Letter
    Agreements:

            

    

    

    1.1 The Table
of Contents dated June 2008 of the Purchase Agreement is removed, in its
entirety, and replaced with the Table of Contents attached hereto and hereby
made a part of the Purchase Agreement;

    

    1.2 The Table
1(R4) and Table 1A(R7) to the Purchase Agreement are removed, in their entirety,
and replaced with the Tables 1, 1A and 1B attached hereto and hereby made a part
of the Purchase Agreement with respect to [CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT];

    

    1.3 Attachment
B(R9) to the Rights Letter is removed, in its entirety, and replaced with
Attachment B attached hereto and hereby made part of the Purchase Agreement. The
revised numbers of certain Customer MADP rights, pursuant to this Supplemental
Agreement  Number 29, are reflected in the attached Attachment
B;

    

    1.4 Attachment
C(R4) to the Rights Letter is removed, in its entirety, and replaced with the
Attachment C attached hereto and hereby made part of the Purchase Agreement. The
revised numbers of certain Customer QADP rights, pursuant to this Supplemental
Agreement  Number 29, are reflected in the attached Attachment C;
and

    

    1.5 Supplement
Exhibit BFE1(R9) is removed, in its entirety, and replaced with Supplement
Exhibit BFE1 attached hereto and hereby made part of the Purchase Agreement. The
updated on-dock dates for all contracted firm Aircraft thru December 2013 are
reflected in the attached Supplement Exhibit BFE1.

    

    
      	
              2.  

            	
              Advance Payments for
      Aircraft.

            

    

    

    Customer
and Boeing each agree that due at the signing of this Agreement, Customer owes
Boeing a total of [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT].

    

    The
Purchase Agreement will be deemed to be amended to the extent provided herein
and as so amended will continue in full force and effect.  In the
event of any inconsistency between the above provisions and the provisions
contained in the referenced exhibits to this Supplemental Agreement, the terms
of the exhibits will control.

    

    EXECUTED
IN DUPLICATE as of the day and year first above written.

    

    THE
BOEING
COMPANY                                                                                     AMERICAN
AIRLINES, INC.

    

    

    

    By:                                               By:                                             

    

    

    
      	
               
      

            	
              Its:
         Attorney-In-Fact    

            	
              Its: VP Corporate
      Development and Treasurer

            

    

    

    
      
        
          P.A.
No. 1977                                                         
SA-29

          AAL Page

          

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    TABLE OF
CONTENTS

    

    

     SA

    ARTICLES NUMBER

    

    1.                   Quantity,
Model and
Description                                                                                              SA21

    

    2.                   Delivery
Schedule

    

    3.                   Price

    

    4.                   Payment

    

    5.                   Miscellaneous

    

    

    TABLE

    

    
      	
               
      

            	
              1

            	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT] 

            	
              SA29

            

    

    

    
      	
               
      

            	
              1A

            	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT] 

            	
              SA29

            

    

    

    
      	
               
      

            	
              1B

            	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT] 

            	
              SA29

            

    

    

    EXHIBITS

    

    
      	
              A.  

            	
              Aircraft
      Configuration

            

    

    

       A1                      Aircraft
Configuration SA28

    

    B.                   Aircraft
Delivery Requirements and Responsibilities

    

    C.                   Defined
Terms

    

    

    SUPPLEMENTAL
EXHIBITS

    

       AE1                                                                                                                             Escalation
Adjustment Airframe and Optional FeaturesSA20

    

    BFE1                   BFE
Variables SA29

    

    CS1                   Customer
Support Variables

    

    SLP1                   Service
Life Policy Components

    

    EE1                   Engine
Escalation, Engine Warranty and Patent Indemnity

    

    LETTER
AGREEMENTS

    

    6-1162-AKP-070                                   Miscellaneous
Commitments for Model 737, 757,

    767 and 777 Aircraft

    

    6-1162-AKP-071                                   Purchase
Obligations

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    6-1162-AKP-074R2                                   Business
Considerations

    

    6-1162-AKP-075                                   Aircraft
Purchase Rights and Substitution Rights

    - Attachment A

    - Attachment B SA29

    - Attachment C SA29

    

    6-1162-AKP-076                                   Aircraft
Performance Guarantees

    

    6-1162-AKP-077                                   Spares
Matters

    

    6-1162-AKP-078                                   Model
737 Miscellaneous Commitments

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    6-1162-AKP-080                                   Installation
of Cabin Systems Equipment

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    6-1162-AKP-082                                   Confidentiality

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    6-1162-AKP-117                                   Delivery
Schedule

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]SA28

    

    

    
      
        
          PA No.
1977                                                               
 SA29

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Table
1 to

    Purchase
Agreement No. 1977

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    
      
        
          PA No.
1977                                                               
 SA29

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Table
1 to

    Purchase
Agreement No. 1977

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    

    
      
        
          PA No.
1977                                                               
 SA29

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Table
1 to

    Purchase
Agreement No. 1977

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    
      
        
          PA No.
1977                                                               
 SA29

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Table
1 to

    Purchase
Agreement No. 1977

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    

    

    
      
        
          PA No.
1977                                                               
 SA29

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Table
1 to

    Purchase
Agreement No. 1977

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    

    
      
        
          PA No.
1977                                                               
 SA29

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Table
1A to

    Purchase
Agreement No. 1977

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    

    
      
        
          PA No.
1977                                                               
 SA29

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Table
1A to

    Purchase
Agreement No. 1977

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    

    
      
        
          PA No.
1977                                                               
 SA29

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Table
1A to

    Purchase
Agreement No. 1977

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    

    
      
        
          PA No.
1977                                                               
 SA29

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Table
1B to

    Purchase
Agreement No. 1977

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    
      
        
          PA No.
1977                                                               
 SA29

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Table
1B to

    Purchase
Agreement No. 1977

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    

    
      
        
          PA No.
1977                                                               
 SA29

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Attachment
B to Letter Agreement 6-1162-AKP-075

    

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    

    
      
        
          PA No.
1977                                                               
 SA29

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Attachment
B to Letter Agreement 6-1162-AKP-075

    

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    

    
      
        
          PA No.
1977                                                               
 SA29

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Attachment
C to Letter Agreement 6-1162-AKP-075

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    
      
        
          PA No.
1977                                                               
 SA29

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Attachment
C to Letter Agreement 6-1162-AKP-075

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    

    

    

    
      
        
          PA No.
1977                                                               
 SA29

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    BUYER
FURNISHED EQUIPMENT VARIABLES

    

    between

    

    THE
BOEING COMPANY

    

    and

    

    AMERICAN
AIRLINES, INC.

    

    

    Supplemental
Exhibit BFE1 to Purchase Agreement Number 1977

    

    

    

    
      
        
          P.A. No.
1977                                                           
BFE1

          SA29 AAL

          BOEING
PROPRIETARY 

          

        

         

      

      
         

        
          

        

      

      
         

        
          BOEING
PROPRIETARY 

          

        

      

    

    BUYER
FURNISHED EQUIPMENT VARIABLES

    

    relating
to

    

    BOEING
MODEL 737 AIRCRAFT

    

    

    This
Supplemental Exhibit BFE1 contains vendor selection dates, on-dock dates and
other variables applicable to the Aircraft.

    

    

    1.           Supplier
Selection.

    

    Customer will:

    

    1.1           Select
and notify Boeing of the suppliers and part numbers of the following BFE items
by the following dates:

    

    Galley
System                                                                           Complete

    

    Galley
Inserts                                                                           Complete

    

    Seats
(passenger)                                                                Complete

    

    Cabin Systems
Equipment                                                                           Complete

    

    Miscellaneous Emergency
Equipment                                                                Complete

    

    Cargo Handling
Systems                                                                Complete

    

    

    For a new
certification, supplier requires notification [CONFIDENTIAL PORTION OMITTED AND
FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT]to

    Cargo
Handling System on-dock date.

    

    

    
      
        
          P.A. No.
1977                                                        
BFE1-

          SA29 
AAL

          BOEING
PROPRIETARY 

          

        

         

      

      
         

        
          

        

      

      
         

        
          BOEING
PROPRIETARY 

          

        

      

    

    

    

    

    2.           On-dock
Dates

    

     On
or before [CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT], Boeing will provide to
Customer a BFE Requirements On-Dock/Inventory Document (BFE Document) or an
electronically transmitted BFE Report which may be periodically revised, setting
forth the items, quantities, on-dock dates and shipping instructions relating to
the in-sequence installation of BFE.  For planning purposes, a
preliminary BFE on-dock schedule is set forth below:

    

    

    Item                                                              Preliminary On-Dock
Dates

    

    
      	 
      	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	 
      	
              Aircraft

            	
              Aircraft

            
	
              Seats

            	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	
              Galleys/Furnishings

            
	
              Antennas
      & Mounting Equipment

            
	
              Avionics

            
	
              Cabin
      Systems Equipment

            
	
              Miscellaneous
      Emergency Equipment

            
	
              Textiles/Raw
      Material

            
	
              Cargo
      Systems

            	 
      
	
              Provision
      Kits

            	 
      	 
      
	
              Winglets

            	 
      	 
      

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    Item                                                              Preliminary On-Dock
Dates

    

    
      	 
      	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	 
      	
              Aircraft

            	
              Aircraft

            
	
              Seats

            	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	
              Galleys/Furnishings

            
	
              Antennas
      & Mounting Equipment

            
	
              Avionics

            
	
              Cabin
      Systems Equipment

            
	
              Miscellaneous
      Emergency Equipment

            
	
              Textiles/Raw
      Material

            
	
              Cargo
      Systems

            	 
      	 
      
	
              Provision
      Kits

            	 
      	 
      
	
              Winglets

            	 
      	 
      

    

    

    

    

    

    Item                                                              Preliminary On-Dock
Dates

    

    
      	 
      	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	 
      	
              Aircraft

            	
              Aircraft

            
	
              Seats

            	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	
              Galleys/Furnishings

            
	
              Antennas
      & Mounting Equipment

            
	
              Avionics

            
	
              Cabin
      Systems Equipment

            
	
              Miscellaneous
      Emergency Equipment

            
	
              Textiles/Raw
      Material

            
	
              Cargo
      Systems

            
	
              Provision
      Kits

            
	
              Winglets

            	 
      

    

    

    

    

    

    

    

    

    

    Item                                                              Preliminary On-Dock
Dates

    

    
      	 
      	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	 
      	
              Aircraft

            	
              Aircraft

            
	
              Seats

            	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	
              Galleys/Furnishings

            
	
              Antennas
      & Mounting Equipment

            
	
              Avionics

            
	
              Cabin
      Systems Equipment

            
	
              Miscellaneous
      Emergency Equipment

            
	
              Textiles/Raw
      Material

            	 
      
	
              Cargo
      Systems

            	 
      
	
              Provision
      Kits

            	 
      
	
              Winglets

            	 
      	 
      

    

    

    

    

    

    Item                                                              Preliminary On-Dock
Dates

    

    
      	 
      	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	 
      	
              Aircraft

            	
              Aircraft

            
	
              Seats

            	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	
              Galleys/Furnishings

            
	
              Antennas
      & Mounting Equipment

            
	
              Avionics

            
	
              Cabin
      Systems Equipment

            
	
              Miscellaneous
      Emergency Equipment

            
	
              Textiles/Raw
      Material

            
	
              Cargo
      Systems

            
	
              Provision
      Kits

            	 
      	 
      
	
              Winglets

            	 
      	 
      

    

    

    

    

    

    

    

    

    

    Item                                                              Preliminary On-Dock
Dates

    

    
      	 
      	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	 
      	
              Aircraft

            	
              Aircraft

            
	
              Seats

            	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	
              Galleys/Furnishings

            
	
              Antennas
      & Mounting Equipment

            
	
              Avionics

            
	
              Cabin
      Systems Equipment

            
	
              Miscellaneous
      Emergency Equipment

            
	
              Textiles/Raw
      Material

            
	
              Cargo
      Systems

            
	
              Provision
      Kits

            	 
      
	
              Winglets

            	 
      

    

    

    

    

    

    

    

    

    Item                                                              Preliminary On-Dock
Dates

    

    
      	 
      	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	 
      	
              Aircraft

            
	
              Seats

            	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	
              Galleys/Furnishings

            
	
              Antennas
      & Mounting Equipment

            
	
              Avionics

            
	
              Cabin
      Systems Equipment

            
	
              Miscellaneous
      Emergency Equipment

            
	
              Textiles/Raw
      Material

            
	
              Cargo
      Systems

            
	
              Provision
      Kits

            	 
      
	
              Winglets

            	 
      

    

    

    
      
        
          P.A. No.
1977                                                        
BFE1-

          SA29 
AAL

          BOEING
PROPRIETARY 

          

        

         

      

      
         

        
          

        

      

      
         

        
          BOEING
PROPRIETARY 

          

        

      

    

    Item                                                              Preliminary On-Dock
Dates

    

    
      	 
      	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	 
      	
              Aircraft

            	
              Aircraft

            
	
              Seats

            	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	
              Galleys/Furnishings

            
	
              Antennas
      & Mounting Equipment

            
	
              Avionics

            
	
              Cabin
      Systems Equipment

            
	
              Miscellaneous
      Emergency Equipment

            
	
              Textiles/Raw
      Material

            
	
              Cargo
      Systems

            
	
              Provision
      Kits

            	 
      	 
      
	
              Winglets

            	 
      	 
      

    

    

    

    

    

    

    

    Item                                                              Preliminary On-Dock
Dates

    

    
      	 
      	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	 
      	
              Aircraft

            	
              Aircraft

            
	
              Seats

            	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	
              Galleys/Furnishings

            
	
              Antennas
      & Mounting Equipment

            
	
              Avionics

            
	
              Cabin
      Systems Equipment

            
	
              Miscellaneous
      Emergency Equipment

            
	
              Textiles/Raw
      Material

            
	
              Cargo
      Systems

            	 
      
	
              Provision
      Kits

            	 
      
	
              Winglets

            	 
      	 
      

    

    

    

    

    

    

    

    Item                                                              Preliminary On-Dock
Dates

    

    
      	 
      	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	 
      	
              Aircraft

            	
              Aircraft

            
	
              Seats

            	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	
              Galleys/Furnishings

            
	
              Antennas
      & Mounting Equipment

            
	
              Avionics

            
	
              Cabin
      Systems Equipment

            
	
              Miscellaneous
      Emergency Equipment

            
	
              Textiles/Raw
      Material

            
	
              Cargo
      Systems

            	 
      	 
      
	
              Provision
      Kits

            	 
      	 
      
	
              Winglets

            	 
      	 
      

    

    

    

    

    

    Item                                                              Preliminary On-Dock
Dates

    

    
      	 
      	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	 
      	
              Aircraft

            	
              Aircraft

            
	
              Seats

            	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	
              Galleys/Furnishings

            
	
              Antennas
      & Mounting Equipment

            
	
              Avionics

            
	
              Cabin
      Systems Equipment

            
	
              Miscellaneous
      Emergency Equipment

            
	
              Textiles/Raw
      Material

            
	
              Cargo
      Systems

            
	
              Provision
      Kits

            	 
      
	
              Winglets

            	 
      	 
      

    

    

    

    

    

    

    

    

    

    Item                                                              Preliminary On-Dock
Dates

    

    
      	 
      	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	 
      	
              Aircraft

            	
              Aircraft

            
	
              Seats

            	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	
              Galleys/Furnishings

            
	
              Antennas
      & Mounting Equipment

            
	
              Avionics

            
	
              Cabin
      Systems Equipment

            
	
              Miscellaneous
      Emergency Equipment

            
	
              Textiles/Raw
      Material

            
	
              Cargo
      Systems

            
	
              Provision
      Kits

            	 
      
	
              Winglets

            	 
      

    

    

    

    

    

    Item                                                              Preliminary On-Dock
Dates

    

    
      	 
      	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	 
      	
              Aircraft

            
	
              Seats

            	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	
              Galleys/Furnishings

            
	
              Antennas
      & Mounting Equipment

            
	
              Avionics

            
	
              Cabin
      Systems Equipment

            
	
              Miscellaneous
      Emergency Equipment

            
	
              Textiles/Raw
      Material

            
	
              Cargo
      Systems

            
	
              Provision
      Kits

            
	
              Winglets

            	 
      

    

    

    

    

    

    
      	
              3.  

            	
              Additional
      Delivery Requirements

            

    

    

    Customer
will insure that Customer’s BFE suppliers provide sufficient information to
enable Boeing, when acting as Importer of Record for Customer’s BFE, to comply
with all applicable provisions of the U.S. Customs Service.

    
      
        
          P.A. No.
1977                                                        
BFE1-

          SA29 
AAL

          BOEING
PROPRIETARY 

          

        

         

      

      
         

        
          

        

      

      
         

        
          American
Airlines, Inc.

          6-1162-CLO-1034  Page
16

        

      

    

    6-1162-CLO-1034

    

    

    American
Airlines, Inc.

    P.O. Box
619616

    Dallas-Fort
Worth Airport, Texas  75261-9616

    

    

    Subject:                      Installation
of Cabin Systems Equipment

    

    
      	
              Reference:

            	
              Purchase
      Agreement No. 1977 (the Purchase Agreement) between The Boeing Company
      (Boeing) and American Airlines, Inc.  (Customer) relating to
      Model 737-823 aircraft (the
Aircraft)

            

    

    

    

    This
Letter Agreement amends and supplements the Purchase Agreement.  All
terms used but not defined in this Letter Agreement have the same meaning as in
the Purchase Agreement.

    

    Customer
has requested that Boeing install in the Aircraft the in-flight entertainment
and cabin communications systems (IFE/CCS) described in Attachment A to
this Letter Agreement.

    

    Because
of the complexity of the IFE/CCS, special attention and additional resources
will be required during the development, integration, certification, and
manufacture of the Aircraft to achieve proper operation of the IFE/CCS at the
time of delivery of the Aircraft.  To assist Customer, Boeing will
perform the functions of project manager (the Project Manager) as set forth in
Attachment B.

    

    1.                Responsibilities.

    

    1.1                Customer
will:

    

    1.1.1                Provide
Customer's IFE/CCS system requirements to Boeing;

    

    1.1.2                Customer
has already selected the IFE/CCS suppliers (Suppliers).

    1.1.3                Promptly
after selecting Suppliers, participate with Boeing in meetings with Suppliers to
ensure that Supplier's functional system specifications meet Customer and
Boeing's respective requirements.  Such functional systems
specifications define functionality to which Boeing will test prior to delivery
but is not a guarantee of functionality at delivery;

    

    1.1.4                Select
Supplier part numbers;

    

    1.1.5                Negotiate
and obtain agreements on product assurance, product support following Aircraft
delivery (including spares support), and any other special business arrangements
directly with Suppliers;

    

    1.1.6                Provide
pricing information for part numbers selected above to Boeing by a mutually
selected date;

    

    1.1.7                Negotiate
and obtain agreements with any required service providers; and

    

    1.1.8                Include
in Customer's contract with any seat supplier a condition obligating such seat
supplier to enter into and comply with a Boeing approved bonded stores
agreement.  This bonded stores agreement will set forth the procedures
concerning the use, handling and storage for the Boeing owned IFE/CCS equipment
during the time such equipment is under the seat supplier's
control.

    

    

    

    1.2                Boeing
will:

    

    1.2.1                Perform
the Project Manager functions stated in Attachment B;

    

    1.2.2                Provide
Aircraft interface requirements to Suppliers;

    

    1.2.3                Assist
Suppliers in the development of their IFE/CCS system specifications and approve
such specifications;

    

    1.2.4                Negotiate
terms and conditions (except for price, product assurance, product support
following Aircraft delivery and any other special business arrangements) and
enter into contracts with Suppliers and manage such contracts for the
IFE/CCS;

    

    1.2.5                Coordinate
the resolution of technical issues with Suppliers;

    

    1.2.6                Ensure
that at time of Aircraft delivery the IFE/CCS configuration meets the
requirements of the Options contained in Attachment A to this Letter Agreement
as such Attachment A may be amended from time to time; and

    

    1.2.7                Obtain
FAA certification of the Aircraft with the IFE/CCS installed
therein.

    

    2.                Software.

    

    IFE/CCS systems may contain software
of the following two types.

    

    2.1                Systems
Software.  The software required to operate and certify the
IFE/CCS systems on the Aircraft is the Systems Software and is part of the
IFE/CCS.

    

    2.2                Customer's
Software.  The software accessible to the Aircraft passengers
which controls Customer's specified optional features is Customer's Software and
is not part of the IFE/CCS.

    

    2.2.1             Customer
is solely responsible for specifying Customer's Software functional and
performance requirements and ensuring that Customer's Software meets such
requirements.  Customer and Customer's Software supplier will have
total responsibility for the writing, certification, modification, revision, or
correction of any of Customer's Software.  Boeing will not perform the
functions and obligations described in paragraph 1.2 above, nor the Project
Manager's functions described in Attachment B, for Customer's
Software.

    

    2.2.2             The
omission of any Customer's Software or the lack of any functionality of
Customer's Software will not be a valid condition for Customer's rejection of
the Aircraft at the time of Aircraft delivery.

    

    2.2.3             Boeing
has no obligation to approve any documentation to support Customer's Software
certification.  Boeing will only review and operate Customer's
Software if in Boeing's reasonable opinion such review and operation is
necessary to certify the IFE/CCS system on the Aircraft.

    

    2.2.4                      Boeing
will not be responsible for obtaining FAA certification for Customer's
Software.

    

    3.                Changes.

    

    3.1                After
Boeing and Supplier have entered into a contract for the purchase of the
IFE/CCS, changes to such contract may only be made by Boeing.  Any
Customer request for changes to the IFE/CCS specification after the
Boeing/Supplier contract has been signed must be made in writing directly to
Boeing.  Boeing shall respond to such request by Customer in a timely
manner.  If such change is technically feasible and Boeing has the
resources and time to incorporate such change, then Boeing shall negotiate with
the Supplier to incorporate such change into the contract for the
IFE/CCS.  Any Supplier price increase resulting from such a change
will be negotiated between Customer and Supplier.

    

    3.2                Boeing
and Customer recognize that the developmental nature of the IFE/CCS may require
changes to the IFE/CCS or the Aircraft in order to ensure (i) compatibility of
the IFE/CCS with the Aircraft and all other Aircraft systems, and (ii) FAA
certification of the Aircraft with the IFE/CCS installed therein.  In
such event Boeing will notify Customer and recommend to Customer the most
practical means for incorporating any such change.  If within 15 days
after such notification Customer and Boeing through negotiations cannot mutually
agree on the incorporation of any such change or alternate course of action,
then the remedies available to Boeing in Paragraph 6 shall apply.

    

    3.3                The
incorporation into the Aircraft of any mutually agreed change to the IFE/CCS may
result in Boeing adjusting the price of the Options contained in
Attachment A to this Letter Agreement.

    

    3.4                Boeing's
obligation to obtain FAA certification of the Aircraft with the IFE/CCS
installed is limited to the IFE/CCS as described in Attachment A, as
Attachment A may be amended from time to time.

    

    4.                Supplier
Defaults.

    

    Boeing shall notify Customer in a
timely manner in the event of a default by a Supplier under the Supplier's
contract with Boeing.  Within 15 days of Customer's receipt of such
notification, Boeing and Customer shall agree through negotiations on an
alternative Supplier or other course of action.  If Boeing and
Customer are unable to agree on an alternative Supplier or course of action
within such time, the remedies available to Boeing in Paragraph 6 shall
apply.

    

    5.                Exhibits B and C to the
AGTA.

    

    IFE/CCS is deemed to be BFE for the
purposes of Exhibit B, Customer Support Document, and Exhibit C, the Product
Assurance Document, of the AGTA.

    

    6.                [CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT].

    

    [CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT]:

    

    6.1                [CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT]; or

    

    6.2                [CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT].

    

    6.3                [CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT].

    

    7.           Advance
Payments.

    

    7.1           [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT])

    .

    

    7.2           Aircraft
Price.  [CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT].

    

    8.                Customer's Indemnification
of Boeing.

    

    [CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT].

    

    
      
        
          P.A. No.
1977

          Cabin_Systems_Equipment 

          BOEING
PROPRIETARY 

          

        

         

      

      
         

        
          

        

      

      
         

        
          American
Airlines, Inc.

          6-1162-CLO-1034  Page
16

        

      

    

    
      	
              9.  

            	
              Title and Risk of
      Loss.

            

    

    

    Title and
risk of loss of IFE/CCS equipment will remain with Boeing until the Aircraft
title is transferred to Customer.

    

    If the
foregoing correctly sets forth your understanding of our agreement with respect
to the matters treated above, please indicate your acceptance and approval
below.

    

    

    Very
truly yours,

    

    THE
BOEING COMPANY

    

    

    By                                          

    

    Its           Attorney-In-Fact           

    

    

    ACCEPTED
AND AGREED TO this

    

    Date:
                               ,
2008

    

    AMERICAN
AIRLINES, INC.

    

    

    By                                          

    

    Its                                          

    

    

    
      
        
          P.A. No.
1977

          Cabin_Systems_Equipment 

          BOEING
PROPRIETARY 

          

        

         

      

      
         

        
          

        

      

      
         

        
          Attachment A
to

           

          Letter
Agreement No. 6-1162-CLO-1034

           

          Page

           

        

      

    

    Attachment
A

    Cabin Systems
Equipment

    

    

    

    The following Options describe the
items of equipment that under the terms and conditions of this Letter Agreement
are considered to be IFE/CCS.  Each such Option is fully described in
Option Document /document number/ as described in Exhibit A to the Purchase
Agreement.  Final configuration will be based on Customer acceptance
of any or all Options listed below.

    

    Option Request Number and
Title

    

    2451B815K32  IN-FLIGHT
ENTERTAINMENT - POWER DISTRIBUTION PANEL WIRING -  INSTALLATION FOR
ADDITIONAL CAPACITY

    

    2454B491A36  IN-SEAT
POWER OUTLETS - INSTALLATION - PC POWER 110 VAC 60 HZ  - 112 OUTLETS -
ASTRONICS - BFE/SPE

    

    2454B491A37  MP
- IN-SEAT POWER OUTLETS - INSTALLATION - PC POWER 110 VAC 60 HZ  - 112
OUTLETS - ASTRONICS - BFE

    

    4420B650Z01  IFE
SYSTEM - TERMINAL DATA LOADER (TDL) PARTIAL PROVISIONS - SYSTEM CONTROLLER
ANALOG (SC-A) SERVER BASED SYSTEM

    

    4420B650Z06  MP
- IFE SYSTEM - INSTALLATION OF PARTIAL PROVISIONS - TERMINAL DATA LOADER
(TDL)  - SYSTEM CONTROLLER ANALOG (SC-A) SERVER BASED
SYSTEM

    

    4420C583K97  IN
FLIGHT ENTERTAINMENT - PARTIAL PROVISIONS FOR A SERVER BASED SYSTEM - SYSTEM
CONTROLLER-ANALOG ON E8 WITH LEGACY AUDIO AND VIDEO - G7 BITE PANEL PROVISIONS -
PANASONIC

    

    4420C583K98  IN
FLIGHT ENTERTAINMENT - ADDITIONAL PARTIAL PROVISIONS FOR A SERVER BASED SYSTEM -
SYSTEM CONTROLLER-ANALOG ON E8 WITH LEGACY AUDIO AND VIDEO - G7 BITE PANEL - 160
PAX - PANASONIC - BFE/SPE

    

    4420C583K99  MP
- IN FLIGHT ENTERTAINMENT -  REPLACEMENT - BITE PANEL TO CLOSET G7 -
PANASONIC - CSE

    

    

    

    

    
      
        
          P.A. No.
1977Cabin_Systems_Equipment 

          BOEING
PROPRIETARY 

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Attachment
B

    Project
Manager

    

    

    

    This
Attachment B describes the functions that Boeing will perform as Project
Manager to support (i) the development and integration of the IFE/CCS and (ii)
the FAA certification of the IFE/CCS when installed on the
Aircraft.

    

    1.           Project
Management

    

    Boeing will perform the following
functions for the IFE/CCS.  Boeing will have authority to make
day-to-day management decisions, and decisions on technical details which in
Boeing's reasonable opinion do not significantly affect form, fit, function,
cost or aesthetics.  Boeing will be responsible for:

    

    
      	
               
      

            	
              A.

            	
              Managing
      the development of all program
schedules;

            

    

    

    
      	
               
      

            	
              B.

            	
              Evaluating
      and approving Supplier's program management and developmental
      plans;

            

    

    

    
      	
               
      

            	
              C.

            	
              Defining
      program metrics and status
requirements;

            

    

    

    
      	
               
      

            	
              D.

            	
              Scheduling
      and conducting program status
reviews;

            

    

    

    
      	
               
      

            	
              E.

            	
              Scheduling
      and conducting design and schedule reviews with Customer and
      Suppliers;

            

    

    

    F.       Monitoring
compliance with schedules;

    

    
      	
               
      

            	
              G.

            	
              Evaluating
      and approving any recovery plans or plan revisions which may be required
      of either Suppliers or Customer;

            

    

    

    
      	
               
      

            	
              H.

            	
              Leading
      the development of a joint IFE/CCS project management plan (the Program
      Plan) and;

            

    

    

    
      	
               
      

            	
              I.

            	
              Managing
      the joint development of the System
  Specification

            

    

    

    2.           System
Integration

    

    Boeing's performance as Project Manager
will include the functions of systems integrator (Systems
Integrator).  As Systems Integrator Boeing will perform the following
functions:

    

    
      	
               
      

            	
              A.

            	
              As
      required, assist Suppliers in defining their system specifications for the
      IFE/CCS, approve such specifications and develop an overall system
      functional specification;

            

    

    

    
      	
               
      

            	
              B.

            	
              Coordinate
      Boeing, Customer and Supplier teams to ensure sufficient Supplier and
      Supplier sub system testing and an overall cabin system acceptance test
      are included in the Program Plan;
and

            

    

    

    
      	
               
      

            	
              C.

            	
              Organize
      and conduct technical coordination meetings with Customer and Suppliers to
      review responsibilities, functionality, Aircraft installation requirements
      and overall program schedule, direction and
  progress.

            

    

    

    3.           Seat
Integration

    

    
      	
               
      

            	
              A.

            	
              Boeing
      will coordinate the interface requirements between seat suppliers and
      Suppliers.  Interface requirements are defined in Boeing
      Document Nos. D6-36230, "Passenger Seat Design and Installation";
      D6-36238, "Passenger Seat Structural Design and Interface Criteria";
      D222W232, "Seat Wiring and Control Requirements"; and D222W013-4, "Seat
      Assembly Functional Test Plan".

            

    

    

    
      	
               
      

            	
              B.

            	
              The
      Suppliers will be required to coordinate integration testing and provide
      seat assembly functional test procedures for seat electronic parts to seat
      suppliers and Boeing, as determined by
Boeing.

            

    

    

    
      	
               
      

            	
              C.

            	
              The
      Suppliers will assist the seat suppliers in the preparation of seat
      assembly functional test plans.

            

    

    

    

    

    
      
        
          P.A. No.
1977Cabin_Systems_Equipment 

          BOEING
PROPRIETARY

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00148-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00148-of-00352.parquet"}]]