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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>0001193125-08-171612.txt : 20080808
<SEC-HEADER>0001193125-08-171612.hdr.sgml : 20080808
<ACCEPTANCE-DATETIME>20080808133512
ACCESSION NUMBER:		0001193125-08-171612
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20080804
ITEM INFORMATION:		Entry into a Material Definitive Agreement
ITEM INFORMATION:		Completion of Acquisition or Disposition of Assets
ITEM INFORMATION:		Results of Operations and Financial Condition
ITEM INFORMATION:		Cost Associated with Exit or Disposal Activities
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20080808
DATE AS OF CHANGE:		20080808

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			NATURAL ALTERNATIVES INTERNATIONAL INC
		CENTRAL INDEX KEY:			0000787253
		STANDARD INDUSTRIAL CLASSIFICATION:	MEDICINAL CHEMICALS & BOTANICAL PRODUCTS [2833]
		IRS NUMBER:				841007839
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0630

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-15701
		FILM NUMBER:		081001646

	BUSINESS ADDRESS:	
		STREET 1:		1185 LINDA VISTA DR
		CITY:			SAN MARCOS
		STATE:			CA
		ZIP:			92069
		BUSINESS PHONE:		6197447340

	MAIL ADDRESS:	
		STREET 1:		1185 LINDA VISTA DRIVE
		CITY:			SAN MARCOS
		STATE:			CA
		ZIP:			92069

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	AMERICAN ACQUISITIONS INC
		DATE OF NAME CHANGE:	19860929
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>d8k.htm
<DESCRIPTION>FORM 8-K
<TEXT>
<HTML><HEAD>
<TITLE>Form 8-K</TITLE>
</HEAD>
 <BODY BGCOLOR="WHITE">

 <P STYLE="line-height:0px;margin-top:0px;margin-bottom:0px;border-bottom:0.5pt solid #000000">&nbsp;</P> <P
STYLE="line-height:3px;margin-top:0px;margin-bottom:2px;border-bottom:0.5pt solid #000000">&nbsp;</P> <P STYLE="margin-top:24px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="4"><B>UNITED STATES </B></FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="4"><B>SECURITIES AND EXCHANGE COMMISSION </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman"
SIZE="3"><B>Washington, D.C. 20549 </B></FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P><center> <P STYLE="line-height:6px;margin-top:0px;margin-bottom:2px;border-bottom:1pt solid #000000;width:21%">&nbsp;</P></center>
<P STYLE="margin-top:6px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="5"><B>FORM 8-K </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="3"><B>CURRENT REPORT </B>
</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="3"><B>pursuant to Section&nbsp;13 or 15(d) </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
FACE="Times New Roman" SIZE="3"><B>of the Securities Exchange Act of 1934 </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">DATE OF REPORT (Date of earliest event reported):
AUGUST&nbsp;4, 2008 </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">000-15701 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman"
SIZE="2">(Commission file number) </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="5"><B>NATURAL ALTERNATIVES INTERNATIONAL, INC. </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"
ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>(Exact name of registrant as specified in its charter) </B></FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center">

<TR>
<TD WIDTH="50%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="48%"></TD></TR>
<TR>
<TD VALIGN="top" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>Delaware</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>84-1007839</B></FONT></TD></TR>
<TR>
<TD VALIGN="top" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>(State of incorporation)</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>(IRS Employer Identification No.)</B></FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top" ALIGN="center"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>1185 Linda Vista Drive</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2"><B>San Marcos, California 92078</B></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>(760) 744-7340</B></FONT></TD></TR>
<TR>
<TD VALIGN="top" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>(Address of principal executive offices)</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>(Registrant&#146;s telephone number)</B></FONT></TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation
of the registrant under any of the following provisions: </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><FONT FACE="WINGDINGS">&#168;</FONT></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) </FONT></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>

<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><FONT FACE="WINGDINGS">&#168;</FONT></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) </FONT></TD></TR></TABLE> <P
STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><FONT FACE="WINGDINGS">&#168;</FONT></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) </FONT></TD></TR></TABLE> <P
STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><FONT FACE="WINGDINGS">&#168;</FONT></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) </FONT></TD></TR></TABLE> <P
STYLE="font-size:24px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="line-height:0px;margin-top:0px;margin-bottom:0px;border-bottom:0.5pt solid #000000">&nbsp;</P> <P
STYLE="line-height:3px;margin-top:0px;margin-bottom:2px;border-bottom:0.5pt solid #000000">&nbsp;</P>

<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">


<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><B>Item&nbsp;1.01</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B>Entry into a Material Definitive Agreement </B></FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">On August&nbsp;4, 2008,
Real Health Laboratories, Inc. (&#147;RHL&#148;), a California corporation and wholly owned subsidiary of Natural Alternatives International, Inc. (&#147;NAI&#148;), entered into an Asset Purchase Agreement with Miles Kimball Company
(&#147;Buyer&#148;) for the sale of RHL&#146;s assets related to its catalog and internet business conducted under the name &#147;As We Change.&#148; The sale closed on August&nbsp;4, 2008 for a cash purchase price of $2,000,000. The purchase price
is subject to certain post-closing adjustments based on a final accounting of the value of the assets sold to and the liabilities assumed by the Buyer at the closing. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2">The foregoing description of the Asset Purchase Agreement does not purport to be complete and is qualified in its entirety by the Asset Purchase Agreement attached hereto as Exhibit 10.1, which is incorporated herein
by reference. </FONT></P> <P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><B>Item&nbsp;2.01</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B>Completion of Acquisition or Disposition of Assets </B></FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">The information
provided in Item&nbsp;1.01 above is hereby incorporated by reference into this Item&nbsp;2.01. </FONT></P> <P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><B>Item&nbsp;2.02</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B>Results of Operations and Financial Condition </B></FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">On August&nbsp;5,
2008, NAI issued a press release announcing revenues for its fourth quarter ended June&nbsp;30, 2008. A copy of this press release is attached hereto as Exhibit 99.1. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2">The information in this report furnished pursuant to this Item&nbsp;2.02 and the press release exhibited hereto shall not be deemed to be &#147;filed&#148; for the purposes of Section&nbsp;18 of the Securities
Exchange Act of 1934 or otherwise subject to the liabilities of such Section&nbsp;18. The information in this report shall not be incorporated by reference into any filing of the registrant with the United States Securities and Exchange Commission,
whether made before or after the date hereof, regardless of any general incorporation language in such filings. </FONT></P> <P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><B>Item&nbsp;2.05</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B>Costs Associated with Exit or Disposal Activities </B></FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">As a result of
the sale of RHL&#146;s &#147;As We Change&#148; business described in Item 1.01 above, RHL currently plans to terminate approximately 30 employees that supported, either directly or indirectly, the &#147;As We Change&#148; business. The terminations
are expected to be substantially completed by September 30, 2008. NAI estimates that it will incur approximately $200,000 to $275,000 in severance and related payroll costs as a result of this action. </FONT></P> <P
STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><B>Item&nbsp;9.01</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B>Financial Statements and Exhibits </B></FONT></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">(b)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Pro forma financial information. </FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">As of the last business day of its most
recent second fiscal quarter, NAI met the requirements of a smaller reporting company. As a result, pursuant to Rule 8-05 of Regulation S-X, no pro forma financial information related to the sale of the &#147;As We Change&#148; business described in
Item 1.01 is presented. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">(d)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Exhibits. </FONT></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="84%" BORDER="0" ALIGN="center">

<TR>
<TD></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD WIDTH="94%"></TD></TR>
<TR>
<TD VALIGN="top" NOWRAP><FONT FACE="Times New Roman" SIZE="2">10.1</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Asset Purchase Agreement by and between RHL and Miles Kimball Company dated August&nbsp;4, 2008.</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top" NOWRAP><FONT FACE="Times New Roman" SIZE="2">99.1</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Press Release dated August&nbsp;5, 2008 of NAI.</FONT></TD></TR>
</TABLE>

<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>SIGNATURES </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2">Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. </FONT></P> <P
STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"><FONT FACE="Times New Roman" SIZE="2"><B>Natural Alternatives International, Inc.</B></FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
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<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Date: <B>August 8, 2008</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">By:</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT FACE="Times New Roman" SIZE="2">/s/ Randell Weaver</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B>Randell Weaver</B><B></B></FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2"><B>President</B></FONT></TD></TR>
</TABLE>
</BODY></HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>dex101.htm
<DESCRIPTION>ASSET PURCHASE AGREEMENT
<TEXT>
<HTML><HEAD>
<TITLE>Asset Purchase Agreement</TITLE>
</HEAD>
 <BODY BGCOLOR="WHITE">

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2"><B>Exhibit 10.1 </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2"><B>ASSET PURCHASE AGREEMENT </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">This Asset Purchase Agreement (this &#147;<U>Agreement</U>&#148;) is
entered into as of August&nbsp;4, 2008 (&#147;Effective Date&#148;), by and between MILES KIMBALL COMPANY, a Wisconsin corporation (&#147;<U>Buyer</U>&#148;), and REAL HEALTH LABORATORIES, INC., a California corporation (&#147;<U>Seller</U>&#148;)
and a wholly-owned subsidiary of Natural Alternatives International, Inc., a Delaware corporation (&#147;<U>Parent</U>&#148;). Buyer and Seller may be referred to herein individually as a &#147;<U>Party</U>&#148; and collectively as the
&#147;<U>Parties</U>.&#148; </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">WHEREAS, Buyer desires to purchase from Seller certain assets used in (and assume certain of the liabilities
of Seller related to) the Seller&#146;s catalog and internet business conducted under the trademark &#147;As We Change&#148; (the &#147;<U>Business</U>&#148;); and </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">WHEREAS, Seller desires to sell to Buyer such assets and assign to Buyer such liabilities. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Now, therefore,
in consideration of the foregoing premises and the mutual promises herein made and the representations, warranties and covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Section 1. <U>Definitions</U>. The definition of certain defined terms, not defined elsewhere
in this Agreement, are: </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;<U>Acquired Assets</U>&#148; means all of Seller&#146;s right, title, and interest in and to the following,
and only the following, specified assets: </FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">(a)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">the Acquired Intellectual Property; </FONT></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">(b)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">the Acquired Inventory; and </FONT></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">(c)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">the Acquired Prepaid Catalog Expenses. </FONT></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;<U>Acquired
Intellectual Property</U>&#148; means the Intellectual Property listed on <U>Schedule 1</U>. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;<U>Acquired Inventory</U>&#148; means
the inventory of the Business that is listed on <U>Schedule 2</U> (subject to modification for final month-end adjustments), which includes all inventory of the Business and inventories related to open purchase orders as of the Closing Date.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;<U>Acquired Prepaid Catalog Expenses</U>&#148; means the unamortized expenses that are related to the production of catalogs for
post August&nbsp;4, 2008 future revenue streams. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;<U>Adverse Consequences</U>&#148; means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs, reasonable amounts paid in settlement, liabilities, obligations, taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys&#146; fees and expenses. </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;<U>Affiliate</U>&#148; has the meaning set forth in Rule 12b-2 of the regulations promulgated under
the Securities Exchange Act of 1934, as amended. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;<U>Assumed Liabilities</U>&#148; means the following, and only the following,
liabilities of the Seller: </FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">(a)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">all obligations of Seller for product returns under the Seller&#146;s return and exchange policies as such policies are disclosed on Schedule 3(i) of Seller&#146;s Disclosure
Schedule; </FONT></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">(b)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">all obligations of Seller under the deferred revenue, rewards club, program as such rewards club program is disclosed on Schedule 3(i) of Seller&#146;s Disclosure Schedule;
</FONT></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">(c)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">all obligations of Seller under the affiliate program, as such program is disclosed on Schedule 3(i) of Seller&#146;s Disclosure Schedule, for any sales that occur on or after the
Closing Date; and </FONT></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">(d)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">all obligations of Seller related to open purchase orders for Acquired Inventory. </FONT></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2"><U>provided</U>, <U>however</U>, that the term &#147;<U>Assumed Liabilities</U>&#148; shall not include any of the Excluded Liabilities. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman"
SIZE="2">&#147;<U>Cash</U>&#148; means cash and cash equivalents (including marketable securities and short-term investments). </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman"
SIZE="2">&#147;<U>Closing Date Net Asset Value</U>&#148; means the Net Asset Value, as of 12:01 a.m., San Diego time, on the Closing Date. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman"
SIZE="2">&#147;<U>Code</U>&#148; means the Internal Revenue Code of 1986, as amended. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;<U>Excluded Liabilities</U>&#148; means any
liability or obligation of Seller other than those set forth in the definition of &#147;Assumed Liabilities&#148;, including: (a)&nbsp;any liability arising out of or relating to the operation of the Business by Seller, including any liability
relating to products manufactured or distributed by or for the Seller prior to the Closing Date; (b)&nbsp;any liability of Seller or any of Seller&#146;s Affiliates for Taxes, including any liability of Seller or any of Seller&#146;s Affiliates for
Taxes as a result of Seller&#146;s operation of the Business or Taxes payable by Seller or any of Seller&#146;s Affiliates that will arise as a result of the sale of the Acquired Assets pursuant to this Agreement; (c)&nbsp;any liability of Seller or
any of Seller&#146;s Affiliates relating to payroll, vacation, sick leave, workers&#146; compensation, unemployment benefits, pension benefits, health care plans or benefits or other employee plans or benefits of any kind for Seller&#146;s employees
or former employees or both, in every case arising out of and relating to Seller&#146;s employment of such employees or former employees and including any liability of Seller under any employment, severance, retention or termination agreement with
any employee of Seller or any of Seller&#146;s Affiliates; (d)&nbsp;any liability of Seller under this Agreement or other document executed in connection with the transactions contemplated hereby; and (e)&nbsp;any liability of Seller based upon
Seller&#146;s acts or omissions occurring after the Closing. </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;<U>GAAP</U>&#148; means United States generally accepted accounting principles as in effect from
time to time, consistently applied. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;<U>Intellectual Property</U>&#148; means: (a)&nbsp;customer names and history, (b)&nbsp;vendor
names, (c)&nbsp;product cost history, (d)&nbsp;product performance, (e)&nbsp;customer performance, (f)&nbsp;campaign performance, (g)&nbsp;URLs and any Internet addresses, (h)&nbsp;hardcopy of historical catalogs, (i)&nbsp;telecom numbers,
(j)&nbsp;creative catalog and internet assets, (k)&nbsp;trademarks, service marks, trade dress, logos, slogans, trade names, Internet domain names and telephone numbers, together with translations, adaptations, derivations, and combinations thereof
and including goodwill associated therewith, and applications, registrations, and renewals in connection therewith, (l)&nbsp;websites, graphics, designs, labels, packaging and other copyrightable works, copyrights, and applications, registrations,
and renewals in connection therewith, (m)&nbsp;product specifications, and confidential business information (including ideas, research and development, know-how, technical data, designs, drawings, specifications, and business and marketing plans
and proposals), (n)&nbsp;advertising and promotional materials, (o)&nbsp;other proprietary rights, and (p)&nbsp;copies and tangible embodiments thereof (in whatever form or medium). </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;<U>Knowledge</U>&#148; means, with respect to any representation, warranty or statement of any Party in this Agreement that is qualified by such
Party&#146;s &#147;knowledge,&#148; the actual knowledge of such Party or such knowledge that a reasonably prudent officer, director, manager or employee should have if such Person duly performed his or her duties as an officer, director, manager or
employee of such Party with due care; provided, however, that the foregoing shall not be construed to create a duty or obligation on any Person to engage in or conduct any inquiry or investigation, and provided further that Seller will be deemed to
have Knowledge of a particular fact or other matter only if Randell Weaver, Ken Wolf or John Dullea has Knowledge of that fact or other matter, and Buyer will be deemed to have Knowledge of a particular fact or other matter only if Stan Krangle,
Dana Gilman or Vicki Updike has Knowledge of that fact or other matter. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;<U>Net Asset Value</U>&#148; means the difference between
(a)&nbsp;the sum of the Acquired Inventory (not including any Acquired Inventory that is one hundred and eighty (180)&nbsp;days old or more) and Acquired Prepaid Catalog Expenses, and (b)&nbsp;the amount of the Assumed Liabilities. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;<U>Person</U>&#148; means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust,
a joint venture, an unincorporated organization, any other business entity or a governmental entity (or any department, agency, or political subdivision thereof). </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%;padding-bottom:3px;line-height:95%; vertical-align:top"><FONT FACE="Times New Roman" SIZE="2">&#147;<U>Restricted Business</U>&#148; means the production of a lifestyle catalog that
substantially mirrors the As We Change<FONT FACE="Times New Roman" SIZE="1"><SUP>&reg;</SUP></FONT> catalog in terms of products offered, marketing methods used and customers targeted; provided, however, that the foregoing shall not be construed in
a manner such that it in any way limits or restricts the ability of Seller, its Parent or Affiliates from manufacturing, distributing or selling nutritional supplements or other nutraceutical, nutritional or skin care products, including by means of
the production of a lifestyle catalog offering such products. </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;<U>Tax</U>&#148; or &#147;<U>Taxes</U>&#148; means any federal, state, local, or foreign taxes,
charges, fees, imposts or other assessments, including those related to income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code &#167;59A),
customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or
other tax of any kind whatsoever, whether computed on a separate or consolidated, unitary or combined basis or in any other manner, including any interest, penalty, or addition thereto, whether disputed or not. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">&#147;<U>Tax Return</U>&#148; means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including
any schedule or attachment thereto, and including any amendment thereof. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Section 2. <U>Basic Transaction</U>. </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(a) <U>Purchase and Sale of Assets</U>. On and subject to the terms and conditions of this Agreement, Buyer agrees to purchase from
Seller, and Seller agrees to sell, transfer, convey, and deliver to Buyer, all of the Acquired Assets at the Closing for the consideration specified below in this <U>Section&nbsp;2</U>. </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(b) <U>Assumption of Liabilities</U>. On and subject to the terms and conditions of this Agreement, Buyer agrees to assume and become
responsible for all of the Assumed Liabilities at the Closing. Buyer will not assume or have any responsibility, however, with respect to any other obligation or liability of Seller not included within the definition of Assumed Liabilities.
</FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(c) <U>Purchase Price</U>. The Buyer agrees to pay to the Seller $2,000,000 (the &#147;<U>Purchase Price</U>&#148;) in
United States dollars, by delivery of cash in such amount, payable by wire transfer or delivery of other immediately available funds. Following the Closing, the Purchase Price is subject to adjustment as provided in <U>Section&nbsp;2(g)</U> below.
</FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(d) <U>The Closing</U>. The closing of the transactions contemplated by this Agreement (the &#147;<U>Closing</U>&#148;)
shall take place at the offices of Bell, Boyd&nbsp;&amp; Lloyd LLP, 3580 Carmel Mt. Road, Suite 200, San Diego, California commencing at 9:00 a.m. local time on the Effective Date following the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate the transactions contemplated hereby (other than conditions with respect to actions the respective Parties will take at the Closing itself) or at such other time or place as the Parties may mutually determine
(the &#147;<U>Closing Date</U>&#148;). </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(e) <U>Deliveries at the Closing</U>. At the Closing, (i)&nbsp;Seller will deliver
to Buyer the various certificates, instruments, and documents referred to in <U>Section&nbsp;6(a)</U> below; (ii)&nbsp;Buyer will deliver to Seller the various certificates, instruments, and documents referred to in <U>Section&nbsp;6(b)</U> below;
(iii)&nbsp;Seller will execute, acknowledge (if appropriate), and deliver to Buyer (A)&nbsp;an Assignment and Bill of Sale in the form of <U>Exhibit A</U>, (B)&nbsp;a counterpart Trademark Assignment in the form attached hereto as <U>Exhibit C</U>,
(C)&nbsp;a counterpart Instrument of Assumption in the form attached hereto as <U>Exhibit B</U>, and (C)&nbsp;such other instruments of sale, transfer, conveyance, and assignment as Buyer and its counsel may reasonably request; (iv)&nbsp;Buyer will
execute, acknowledge (if </FONT>
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<FONT FACE="Times New Roman" SIZE="2">appropriate), and deliver to Seller (A)&nbsp;a counterpart Instrument of Assumption in the form attached hereto as <U>Exhibit B</U>, (B)&nbsp;a counterpart
Trademark Assignment in the form attached hereto as <U>Exhibit C</U>, and (C)&nbsp;such other instruments of assumption as Seller and its counsel may reasonably request; and (v)&nbsp;Buyer will deliver to Seller the consideration specified in
<U>Section&nbsp;2(c)</U> above. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(f) <U>Purchase Price Allocation</U>. The Purchase Price is being allocated among the
Acquired Assets by the Parties as set forth on <U>Schedule 3</U>. Such allocation is intended to comply with the requirements of Section&nbsp;1060 of the Code. Buyer shall prepare and deliver Internal Revenue Service (&#147;<U>IRS</U>&#148;) Form
8594 to Seller within forty-five (45)&nbsp;days after the Closing Date to be filed with the IRS, subject to Seller&#146;s review and approval which shall not be unreasonably withheld. Seller and Buyer shall file Form 8594 with their respective
timely-filed Tax Returns consistent with such allocation. The Parties shall treat and report the transaction contemplated by this Agreement in all respects consistently for purposes of any federal, state or local Tax, including the calculation of
gain, loss and basis with reference to the Purchase Price allocation made pursuant to this <U>Section&nbsp;2(f)</U>. The parties shall not take any action or position inconsistent with the obligations set forth in this Agreement. Seller agrees to
indemnify and hold Buyer and its Affiliates harmless and Buyer hereby agrees to indemnify and hold Seller harmless, from and against any and all losses, liabilities and expenses (including additional income taxes and reasonable fees and
disbursements of counsel) that may be incurred by the indemnified party as a result of the failure of the indemnifying party so to report the sale and purchase of the Acquired Assets as required by applicable laws. </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(g) <U>Net Asset Value Adjustment</U>. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">(i) Within thirty (30)&nbsp;days of the Closing, the Seller shall deliver to the Buyer an unaudited statement of the Closing Date Net Asset Value (the &#147;<U>Closing Date Net Asset Value Statement</U>&#148;). If the
Closing Date Net Asset Value as shown on the Closing Date Net Asset Value Statement is less than $304,950, then the Purchase Price shall be decreased by an amount equal to the difference obtained by subtracting the amount of the Closing Date Net
Asset Value from $304,950. If the Closing Date Net Asset Value as shown on the Closing Date Net Asset Value Statement is greater than $304,950, then the Purchase Price will be increased by an amount equal to the difference obtained by subtracting
$304,950 from the amount of the Closing Date Net Asset Value. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(ii) If the Buyer disagrees with the Closing Date Net Asset
Value as shown on the Closing Date Net Asset Value Statement, then as soon as practicable following the Closing Date (but not later than 30 days after the delivery thereof), the Buyer shall prepare and deliver to the Seller, its own statement of the
Net Asset Value as of 12:01 a.m., San Diego time, on the Closing Date (the &#147;<U>Buyer Closing Date Net Asset Value Statement</U>&#148; and the Closing Date Net Asset Value as reflected on the Buyer Closing Date Net Asset Value Statement being
referred to herein as the &#147;<U>Buyer Determined Closing Date Net Asset Value</U>&#148;). In preparing the Buyer Closing Date Net Asset Value Statement, the Buyer shall be entitled to have access to the books and records of the Seller and the
work papers of the Seller prepared in connection with the preparation of the Closing Date Net Asset Value Statement and shall be entitled to discuss such books and records and work papers with the Seller and those persons responsible for the
preparation thereof. In the event that in preparing the Buyer Closing Date Net Asset Value Statement the Buyer conducts a physical inventory, the Seller shall be entitled to have one or more </FONT>
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<FONT FACE="Times New Roman" SIZE="2">representatives present during the conduct of such physical inventory. In addition, if the Buyer does not object to the Closing Date Net Asset Value as shown
on the Closing Date Net Asset Value Statement within the 30-day period referred to above, the Closing Date Net Asset Value as reflected on the Closing Date Net Asset Value Statement as so prepared shall be deemed final and conclusive and binding
upon the Seller and the Buyer. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(iii) In the event the Seller does not agree with the Buyer Determined Closing Date Net
Asset Value as reflected on the Buyer Closing Date Net Asset Value Statement, the Seller shall so inform the Buyer in writing within 30 days after the Seller&#146;s receipt thereof, such writing to set forth the objections of the Seller in
reasonable detail. If the Seller and the Buyer cannot reach agreement as to any disputed matter relating to the Closing Date Net Asset Value within 15 days after notification by the Seller to the Buyer of a dispute, they shall forthwith refer the
dispute to a nationally recognized accounting firm mutually agreeable to the Seller and the Buyer for resolution, with the understanding that: (i)&nbsp;the Closing Date Net Asset Value, as finally determined by such firm, shall not be less than the
amount thereof shown in Buyer&#146;s Closing Date Net Asset Value Statement nor greater than the amount thereof shown in the Seller&#146;s objection delivered pursuant to this clause (iii); and (ii)&nbsp;such firm shall resolve all disputed items
within 20 days after such disputed items are referred to it. If the Buyer and the Seller are unable to agree on the choice of an accounting firm, then the Buyer and the Seller shall select a nationally recognized accounting firm by lot (after
excluding their respective regular outside accounting firms). The decision of any such accounting firm under this clause (iii)&nbsp;with respect to all disputed matters relating to the Closing Date Net Asset Value shall be deemed final and
conclusive and shall be binding upon the Seller and the Buyer. In addition, if the Seller does not object to the Buyer Determined Closing Date Net Asset Value within the 30-day period referred to above, the Buyer Determined Closing Date Net Asset
Value as reflected on the Buyer Closing Date Net Asset Value Statement as so prepared shall be deemed final and conclusive and binding upon the Seller and the Buyer. </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(iv) The Seller shall be entitled to have access to the books and records of the Buyer and the work papers of the Buyer prepared in
connection with the preparation of the Buyer Closing Date Net Asset Value Statement and shall be entitled to discuss such books and records and work papers with the Buyer and those persons responsible for the preparation thereof. The accounting firm
selected pursuant to <U>Section&nbsp;2(g)(iii)</U> shall be entitled to have access to the books and records of the Buyer and the Seller and the work papers of the Buyer and the Seller prepared in connection with the preparation of the Closing Date
Net Asset Value Statement and the Buyer Closing Date Net Asset Value Statement and shall be entitled to discuss such books and records and work papers with the Buyer and the Seller and those persons responsible for the preparation thereof.
</FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(v) </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:13%; text-indent:4%"><FONT FACE="Times New Roman"
SIZE="2">(A) If the Closing Date Net Asset Value as finally determined pursuant to this Section&nbsp;2(g) (the &#147;<U>Final Closing Date Net Asset Value</U>&#148;) exceeds $304,950 (such excess, if any, being referred to herein as the
&#147;<U>Finally Determined Excess</U>&#148;) then the Buyer shall pay such amount by wire transfer to an account designated by the Seller within five (5)&nbsp;business days after the date upon which the Closing Date Net Asset Value is deemed final
and conclusive pursuant hereto. </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:13%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(B) If the Final Closing Date Net Asset Value is less than $304,950 (such shortfall, if
any, being referred to herein as the &#147;<U>Finally Determined Shortfall</U>&#148;) then the Seller shall pay such amount by wire transfer to an account designated by the Buyer within five (5)&nbsp;business days after the date upon which the
Closing Date Net Asset Value is deemed final and conclusive pursuant hereto. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(vi) If the Final Closing Date Net Asset Value
is determined by an accounting firm under <U>Section&nbsp;2(g)(iii)</U>, and such determination results in a payment to the Seller, then the Buyer shall pay the aggregate fees and expenses of the accounting firm selected to finally determine the
Closing Date Net Asset Value. If the Final Closing Date Net Asset Value is determined by an accounting firm under <U>Section&nbsp;2(g)(iii)</U>, and such determination results in a payment to the Buyer that is greater than the payment that would
have been required to have been made to Buyer based on the Closing Date Net Asset Value Statement, or results in no payment to Buyer or Seller where a payment to Seller would have been required to have been made to Seller based on the Closing Date
Net Asset Value Statement, then the Seller shall pay the aggregate fees and expenses of the accounting firm selected to finally determine the Closing Date Net Asset Value. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Section 3. <U>Seller&#146;s Representations and Warranties</U>. Seller represents and warrants to Buyer that the statements contained in this
<U>Section&nbsp;3</U> are correct and complete as of the Effective Date and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the Effective Date throughout this
<U>Section&nbsp;3</U>), except as set forth in the disclosure schedule accompanying this Agreement (the &#147;<U>Disclosure Schedule</U>&#148;). The Disclosure Schedule will be arranged in paragraphs corresponding to the lettered and numbered
paragraphs contained in this <U>Section&nbsp;3</U> and the other sections of this Agreement pursuant to which disclosure is made or items are referred to in the Disclosure Schedule. </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(a) <U>Organization of Seller</U>. Seller is a corporation duly organized, validly existing, and in good standing under the laws of the
State of California, with full corporate power and authority to conduct the Business as now being conducted by it, and to own and use the properties it purports to own and use in the conduct of the Business. </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(b) <U>Authorization of Transaction</U>. Seller has full corporate power and authority to execute and deliver this Agreement and the
documents contemplated hereby (the &#147;<U>Transaction Documents</U>&#148;) and to perform its obligations thereunder. This Agreement constitutes, and the other Transaction Documents when executed will constitute, the valid and legally binding
obligation of Seller, enforceable against it in accordance with its terms and conditions, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws of general application
affecting enforcement of creditors&#146; rights generally. The execution, delivery and performance of the Transaction Documents by Seller have been duly authorized by all necessary action of Seller&#146;s shareholder and board of directors.
</FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(c) <U>Non-contravention</U>. Neither the execution and delivery of this Agreement, nor
the consummation of the transactions contemplated hereby (including the assignments and assumptions referred to in <U>Section&nbsp;2</U> above), will (i)&nbsp;violate any constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or court to which Seller or the Acquired Assets are subject or any provision of the charter or bylaws of Seller, or (ii)&nbsp;except as set forth in Schedule 3(c) of
Seller&#146;s Disclosure Schedule, conflict with, result in a material breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which Seller is a party or by which it is bound or to which any of the Acquired Assets is subject (or result in the imposition of any lien upon any of the Acquired Assets).
Except as set forth in Schedule 3(c) of Seller&#146;s Disclosure Schedule, the Seller does not need to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order for
the Parties to consummate the transactions contemplated by this Agreement (including the assignments and assumptions referred to in <U>Section&nbsp;2</U> above). </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(d) <U>Brokers&#146; Fees</U>. Except as set forth in Schedule 3(d) of Seller&#146;s Disclosure Schedule, Seller has no liability or
obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">(e) <U>Title to Assets</U>. Except as set forth in Schedule 3(e) of Seller&#146;s Disclosure Schedule, Seller has good title to the Acquired Assets, free and clear of any liens or restriction on transfer, and Seller
has the right to transfer the Acquired Assets to Buyer, free and clear of any liens. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(f) <U>Selected Financial Data</U>.
Attached hereto as <U>Exhibit D </U>are the following financial data (the &#147;<U>Selected Financial Data</U>&#148;): </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(i)
the value of the Acquired Inventory as of June&nbsp;30, 2008; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(ii) the value of the Acquired Prepaid Catalog Expenses as of
June&nbsp;30, 2008; and </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(iii) the obligations of the Seller in respect of the Assumed Liabilities, as of June&nbsp;30,
2008. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Except as set forth on Schedule 3(f) of Seller&#146;s Disclosure Schedule, the Selected Financial Data fairly present the values,
obligations and expenses set forth therein and are based upon the books and records of the Seller, which have been maintained in accordance with GAAP. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">(g) <U>Acquired Intellectual Property</U>. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(i) Except as set forth on Schedule 3(g)(i) of
Seller&#146;s Disclosure Schedule, to Seller&#146;s Knowledge: (a)&nbsp;no third party has interfered with, infringed upon, misappropriated, or violated the Acquired Intellectual Property; (b)&nbsp;no Acquired Intellectual Property interferes with,
infringes upon or violates the intellectual property rights of any third-party; (c)&nbsp;no copyrighted or copyrightable material included in the Acquired Intellectual Property infringes upon or violates the copyrights of any third party; and
(d)&nbsp;no know-how, process, or product included in the Acquired Intellectual Property violates any trade secret of any third party. </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(ii) <U>Schedule 3(g)(ii)</U> of the Disclosure Schedule identifies: (a)&nbsp;each
license, agreement, or other permission that Seller has granted to any third party with respect to any of the Acquired Intellectual Property (together with any exceptions); and (b)&nbsp;each license, agreement, or other permission that has been
granted to Seller with respect to any of the Acquired Intellectual Property. With respect to each item required to be disclosed on <U>Section&nbsp;3(g)(ii)</U> of the Disclosure Schedule, as well as each other item of Acquired Intellectual Property:
</FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:13%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(A) Except as set forth on Schedule 3(g)(ii)(A) of Seller&#146;s Disclosure Schedule, Seller possesses all right, title,
and interest in and to the item, free and clear of any lien, license, or other restriction, and Seller is not obligated to pay any royalties with respect thereto; </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:13%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(B) the item is not subject to any outstanding injunction, judgment, order, decree, ruling, or charge; </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:13%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(C) no action, suit, proceeding, hearing, charge, complaint, claim, or demand is pending nor, to Seller&#146;s Knowledge, is threatened,
nor has Seller received notice of the commencement of any investigation, that challenges the legality, validity, enforceability, use, or ownership of the item; </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:13%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(D) except as set forth in Schedule 3(g)(ii)(D) of Seller&#146;s Disclosure Schedule, the consummation of the transactions contemplated
hereby would not result in the loss or expiration of any domain name or registered trademark set forth in Schedule 3(g)(iv) of Seller&#146;s Disclosure Schedule; and </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:13%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(E) except as set forth in Schedule 3(g)(ii)(E) of Seller&#146;s Disclosure Schedule, all fictional names, trade marks, trade names and
service marks have been registered with the applicable governmental authority, including the United States Patent and Trademark Office, are currently in compliance with all applicable laws, and, to Seller&#146;s knowledge, are valid and enforceable.
</FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(iii) <U>Schedule 3(g)(iii)</U> of the Disclosure Schedule identifies each material item of Acquired Intellectual Property
that any third party owns and Seller uses pursuant to license, sublicense, agreement, or permission. Seller has delivered to Buyer correct and complete copies of all such licenses, sublicenses, agreements, and permissions (as amended to date). With
respect to each such item of used Intellectual Property required to be identified in <U>Schedule 3(g)(iii)</U> of the Disclosure Schedule Seller has not granted any sublicense or similar right with respect to the license, sublicense, agreement, or
permission. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(iv) <U>Schedule 3(g)(iv)</U> of the Disclosure Schedule identifies each material trademark and Internet domain
name used in the operation of the Business. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(v) Except as set forth on Schedule 3(g)(v) of Seller&#146;s Disclosure
Schedule, the Acquired Intellectual Property constitutes all of the material Intellectual Property used by Seller in the operation of the Business as currently conducted. </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(h) <U>Acquired Inventory</U>. The Acquired Inventory consists of materials and supplies,
manufactured and processed parts, work in process, and finished goods, all of which, to Seller&#146;s Knowledge, is fit for the purpose for which it was procured or manufactured, and none of which, to Seller&#146;s Knowledge, except as set forth on
Schedule 3(h) of Seller&#146;s Disclosure Schedule is damaged or defective. Inventory now on hand that was purchased after June&nbsp;30, 2008 was purchased in the ordinary course of business at a cost not exceeding market prices prevailing at the
time of purchase. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(i) <U>Product Warranty; Product Liability</U>. </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%;padding-bottom:3px;line-height:95%; vertical-align:top"><FONT FACE="Times New Roman" SIZE="2">(i) Except as set forth in Schedule 3(i) of Seller&#146;s Disclosure Schedule,
substantially all of the products manufactured, sold, leased, and delivered by Seller in the operation of the Business have conformed in all material respects with all applicable contractual commitments and all express and implied warranties, and
Seller has no material liability (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due) for replacement or repair
thereof or other damages in connection therewith. Substantially all of the products manufactured, sold, leased, and delivered by Seller in the operation of the Business are subject to the terms and conditions of sale or lease as set forth in
Schedule 3(i) of Seller&#146;s Disclosure Schedule, the most recently distributed As We Change<FONT FACE="Times New Roman" SIZE="1"><SUP>&reg;</SUP></FONT> catalog as of the Closing Date, and on the Business&#146; website as of the Closing Date.
Except as set forth in Schedule 3(i) of Seller&#146;s Disclosure Schedule, Seller provides no standard terms and conditions of sale or lease (including guaranties, warranties or indemnities) relating to the products manufactured, sold, leased or
delivered in Seller&#146;s operation of that portion of the Business being sold by Seller hereunder. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(ii) Seller has no
material liability (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due) arising out of any injury to
individuals or property as a result of the ownership, possession, or use of any product manufactured, sold, leased, or delivered by Seller in its operation of that portion of the Business conducted with the Acquired Assets. </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(j) <U>Solvency</U>. Seller is not now insolvent and will not be rendered insolvent by any of the transactions contemplated hereby. As
used in this <U>Section&nbsp;3(j)</U>, &#147;insolvent&#148; means that the sum of the debts and other probable liabilities of Seller exceed the present fair saleable value of Seller&#146;s assets. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Section 4. <U>Buyer&#146;s Representations and Warranties</U>. Buyer represents and warrants to Seller that the statements contained in this
<U>Section&nbsp;4</U> are correct and complete as of the Effective Date and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the Effective Date throughout this
<U>Section&nbsp;4</U>). </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(a) <U>Organization of Buyer</U>. Buyer is a corporation duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its incorporation, with full corporate power and authority to conduct its business as now being conducted by it and to own and use the properties it purports to own and use. </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(b) <U>Authorization of Transaction</U>. Buyer has full corporate power and authority to
execute and deliver the Transaction Documents and to perform its obligations thereunder. This Agreement constitutes, and the other Transaction Documents when executed will constitute, the valid and legally binding obligation of Buyer, enforceable
against it in accordance with its terms and conditions, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws of general application affecting enforcement of creditors&#146;
rights generally. The execution, delivery and performance of the Transaction Documents by Buyer have been duly authorized by all necessary action of Buyer&#146;s shareholders and board of directors. </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(c) <U>Non-contravention</U>. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated
hereby (including the assignments and assumptions referred to in <U>Section&nbsp;2</U> above), will (i)&nbsp;violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which Buyer is subject or any provision of its charter or bylaws or (ii)&nbsp;conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right
to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which Buyer is a party or by which it is bound or to which any of its assets are subject. Buyer
does not need to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order for the Parties to consummate the transactions contemplated by this Agreement (including
the assignments and assumptions referred to in <U>Section&nbsp;2</U> above). </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(d) <U>Brokers&#146; Fees</U>. Buyer has no
liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">Section 5. <U>Post-Closing Covenants</U>. The Parties agree as follows with respect to the period following the Closing: </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">(a) <U>General</U>. Each Party shall, at the request of any other Party from time to time and at any time, whether on or after the Closing Date, and without further consideration except as provided in
Section&nbsp;5(b) hereof, execute and deliver such deeds, assignments, transfers, assumptions, conveyances, powers of attorney, receipts, acknowledgments, acceptances and assurances as may be reasonably necessary to procure for the Party so
requesting, and its successors and assigns, or for aiding and assisting in collecting and reducing to possession, any and all of the Acquired Assets, or for the assumption of the Assumed Liabilities, or to otherwise satisfy and perform the
obligations of the Parties hereunder. Without limiting the generality of the foregoing, Seller shall, upon the request of Buyer, in a timely manner on and after the Closing Date execute and deliver to Buyer such other documents, releases,
assignments and other instruments as may be reasonably required to effectuate completely the transfer and assignment to Buyer of, and to vest fully in Buyer, Seller&#146;s rights to, the Acquired Assets. </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(b) <U>Transition</U>. </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(i) Seller will not take any action that is designed to or could reasonably be anticipated to discourage any lessor, licensor, customer,
supplier, or other business associate of Seller from maintaining the same business relationships with Buyer after the Closing as it maintained with Seller with respect to the Business prior to the Closing. </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(ii) Seller will, on behalf of Buyer, fulfill customer orders until August&nbsp;15, 2008, and respond to customer service calls until
August&nbsp;25, 2008, in each case in accordance with past practice of Seller unless otherwise mutually agreed by Seller and Buyer. For such services, Buyer will compensate Seller in the amount of $20,000, which amount shall be due and payable at
the Closing, plus any reasonable out of pocket expenses incurred by Seller in the performance of such services including, without limitation, the costs incurred by Seller to ship customer orders on behalf of Buyer from and after the Closing Date.
Attached hereto as Exhibit F is the transition schedule mutually agreed upon by Buyer and Seller, which schedule may be changed or modified upon the approval of both Buyer and Seller. </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(iii) Seller agrees it will keep the Business&#146; existing bank account open for a period of one month after the Closing Date and in the
event it receives any monies, payments or deposits after the Closing that relate to any sales or other operations of the Business after the Closing and properly belonging to Buyer, Seller shall deposit or maintain such amounts received in such
account and shall remit such amounts to Buyer on a monthly basis or more frequently as mutually agreed by Buyer and Seller. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman"
SIZE="2">(c) <U>Non-Competition</U>. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(i) In consideration of the Purchase Price and the assumption by Buyer of the Assumed
Liabilities, for a period of two (2)&nbsp;years from the Closing Date (the &#147;Restricted Period&#148;), Seller and its Affiliates shall not: </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:13%; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">(A) engage in the Restricted Business; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:13%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(B) directly or indirectly through another entity
induce or attempt to induce any customer, supplier, licensee, licensor, franchisee or other business relation of Buyer or any of its Affiliates to cease doing Restricted Business with Buyer or any of its Affiliates, or in any way interfere with the
Restricted Business relationship between any such customer, supplier, licensee or business relation of Buyer or any of its Affiliates (including making any negative statements or communications about the Restricted Business of Buyer or any of its
Affiliates); </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:13%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(C) directly or indirectly through another entity solicit, induce or conspire with or attempt to solicit,
induce, or conspire with any employee or officer of Buyer or any of its Affiliates to leave the employ of Buyer or any of its Affiliates, or to compete against the Buyer or any of its Affiliates in the Restricted Business, or in any way interfere
with the relationship between Buyer or any of its Affiliates and any employee or officer thereof; or </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:13%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(D) divert or attempt to divert any or all of Buyer&#146;s customers&#146; or
suppliers&#146; Restricted Business with Buyer from Buyer in violation of this Agreement or applicable law (including the violation of any trade secrets law). </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(ii) The covenants in this <U>Section&nbsp;5(c)</U> are severable and separate, and the unenforceability of any specific covenant in this
<U>Section&nbsp;5(c)</U> is not intended by any Party to, and shall not, affect the provisions of any other covenant in this <U>Section&nbsp;5(c)</U>. If any court of competent jurisdiction shall determine that the scope, time, or territorial
restrictions set forth in this <U>Section&nbsp;5(c)</U> are unreasonable as applied to Seller, the Parties acknowledge their mutual intention and agreement that those restrictions be enforced to the fullest extent the court deems reasonable, and
that they thereby shall be reformed to that extent as applied to Seller. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(iii) All of the covenants in this
<U>Section&nbsp;5(c)</U> are intended by each Party hereto to be, and shall be construed as, an agreement independent of any other provision in this Agreement and the existence of any claim or cause of action of Seller against Buyer, whether
predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by Buyer of any covenant in this <U>Section&nbsp;5(c)</U>. It is specifically agreed that the time periods specified in <U>Section&nbsp;5(c)(i)</U> shall be
computed by excluding from that computation any time during which Seller is in violation of any provision of <U>Section&nbsp;5(c)(i)</U>. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">(iv) Buyer and Seller hereby agree that this <U>Section&nbsp;5(c)</U> is a material and substantial part of this Agreement, and absent Seller agreeing to be bound by this <U>Section&nbsp;5(c)</U>, Buyer would not have
consummated the transactions contemplated herein. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(v) The parties hereto agree that money damages would not necessarily be
an adequate remedy for any breach of this <U>Section&nbsp;5(c)</U>. Because of the difficulty in measuring the economic losses that may be incurred by Buyer as a result of any breach by Seller of the covenants in this <U>Section&nbsp;5(c)</U> and
because of the immediate and irreparable damage that could be caused to Buyer for which it would have no other adequate remedy, Seller agrees that Buyer may enforce the provisions of this <U>Section&nbsp;5(c)</U> by any equitable or legal means,
including seeking an appropriate injunction or restraining order against Seller if a breach of any of those provisions occurs. Therefore, in the event of a breach of this <U>Section&nbsp;5(c)</U>, Buyer or its successors or assigns may, in addition
to other rights and remedies existing in their favor, apply to any court of competent jurisdiction for specific performance and/or injunctive or other relief (temporary and/or permanent), in order to enforce, or prevent any violations of, the
provisions hereof. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(vi) In the event of any breach by Seller or any of its Affiliates of the terms of this
<U>Section&nbsp;5(c)</U>, Seller shall reimburse Buyer for its reasonable attorneys&#146; fees, court costs and other expenses it incurs in enforcing the provisions of this <U>Section&nbsp;5(c)</U>. </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(d) <U>Preservation of Records</U>. Seller shall, and shall cause its Affiliates to, preserve and keep the financial records held by it
relating to the Business for a period of three (3)&nbsp;years from the Closing Date and shall make such records available to Buyer as may be reasonably required by Buyer in connection with, among other things, the conduct by the Buyer of the
Business conducted with the Acquired Assets, any insurance claims, governmental investigations, or securities offerings and shall permit Buyer to make and keep copies of such records, at Buyer&#146;s sole cost and expense. </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(e) <U>Assignment and Assumption of Certain Contracts</U>. Buyer shall have five
(5)&nbsp;business days following the Closing Date to notify Seller in writing whether Buyer desires Seller to assign Seller&#146;s rights and interest in, and Buyer to assume Seller&#146;s obligations under, one or more of the contracts set forth on
<U>Exhibit G</U> attached hereto. In the event Buyer elects to assume one or more of such contracts, Buyer and Seller shall execute an Assignment and Assumption Agreement in the form attached hereto as <U>Exhibit H</U> with respect to the contracts
to be assigned and assumed. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Section 6. <U>Conditions to Obligation to Close</U>. </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(a) <U>Conditions to Buyer&#146;s Obligation</U>. The obligation of Buyer to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the following conditions: </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(i) the representations and warranties
set forth in <U>Section&nbsp;3</U> above shall be true and correct in all material respects (except for those representations and warranties qualified by &#147;material,&#148; which shall be true and correct in all respects) at and as of the Closing
Date; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(ii) Seller shall have performed and complied with all of its covenants hereunder in all material respects (other
than those covenants contained in <U>Section&nbsp;2(e)</U> which shall have been complied with in all respects) through the Closing; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman"
SIZE="2">(iii) no action, suit, or proceeding shall be pending before any court or quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction or before any arbitrator wherein an unfavorable injunction, judgment,
order, decree, ruling, or charge would (A)&nbsp;prevent consummation of any of the transactions contemplated by this Agreement, (B)&nbsp;cause any of the transactions contemplated by this Agreement to be rescinded following consummation or
(C)&nbsp;adversely affect the right of Buyer to own the Acquired Assets (and no such injunction, judgment, order, decree, ruling, or charge shall be in effect); </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(iv) Seller shall have received the consent of Wells Fargo Bank, National Association identified in Schedule 3(c) of Seller&#146;s
Disclosure Schedule and such consent shall be in full force and effect; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(v) Seller shall have delivered to Buyer a
certificate, executed by an authorized officer of Seller, to the effect that each of the conditions specified above in <U>Section&nbsp;6(a)(i)-(iv)</U>&nbsp;is satisfied in all respects; </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(vi) Buyer shall have received from counsel to Seller an opinion in form and substance as set forth in <U>Exhibit E</U> attached hereto,
addressed to Buyer; and </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(vii) all actions to be taken by Seller in connection with consummation of the transactions
contemplated hereby and all certificates, opinions, instruments, and other documents required to effect the transactions contemplated hereby will be reasonably satisfactory in form and substance to Buyer. </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Buyer may waive any condition specified in this <U>Section&nbsp;6(a)</U> if it executes a writing so
stating at or prior to the Closing. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(b) <U>Conditions to Seller&#146;s Obligation</U>. The obligation of Seller to
consummate the transactions to be performed by it in connection with the Closing is subject to satisfaction of the following conditions: </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">(i) the representations and warranties set forth in <U>Section&nbsp;4</U> above shall be true and correct in all material respects (except for those representations and warranties qualified by &#147;material,&#148;
which shall be true and correct in all respects) at and as of the Closing Date; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(ii) Buyer shall have performed and
complied with all of its covenants hereunder in all material respects (other than those covenants contained in <U>Section&nbsp;2(e)</U> which shall have been complied with in all respects) through the Closing; </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(iii) no action, suit, or proceeding shall be pending before any court or quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling, or charge would (A)&nbsp;prevent consummation of any of the transactions contemplated by this Agreement or (B)&nbsp;cause any
of the transactions contemplated by this Agreement to be rescinded following consummation (and no such injunction, judgment, order, decree, ruling, or charge shall be in effect); </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(iv) Buyer shall have delivered to Seller a certificate, executed by an authorized officer of Buyer, to the effect that each of the
conditions specified above in <U>Section&nbsp;6(b)(i)-(iii)</U>&nbsp;is satisfied in all respects; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(v) Seller shall have
received the consent of Wells Fargo Bank, National Association identified in Schedule 3(c) of Seller&#146;s Disclosure Schedule and such consent shall be in full force and effect; </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(vi) all actions to be taken by Buyer in connection with consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions contemplated hereby will be reasonably satisfactory in form and substance to Seller; and </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(vii) Buyer shall have paid the Purchase Price to Seller. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">Seller may waive any condition specified in this <U>Section&nbsp;6(b)</U> if it executes a writing so stating at or prior to the Closing. </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Section 7. <U>Remedies for Breaches of This Agreement</U>. </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(a) <U>Survival of Representations and Warranties</U>. All of the representations and warranties of Buyer and Seller contained in this
Agreement shall survive the Closing and continue in full force and effect for a period of one year from the Effective Date; <U>provided</U>, <U>however</U>, that the representations and warranties contained in Sections 3(d), 3(e) and 4(d) shall
survive the Closing and continue in full force and effect for a period of three years from the Effective Date. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(b)
<U>Indemnification Provisions for Buyer&#146;s Benefit</U>. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(i) In the event Seller breaches any of its representations,
warranties, and covenants contained in this Agreement, and, provided that Buyer makes a written claim for indemnification against Seller pursuant to <U>Sections 7(d)</U> and <U>9(g)</U> below within the survival period (if there is an applicable
survival period pursuant to <U>Section&nbsp;7(a)</U> above), then Seller agrees to indemnify Buyer from and against the entirety of any Adverse Consequences Buyer may suffer (including any Adverse Consequences Buyer may suffer after the end of any
applicable survival period) resulting from, arising out of, relating to, in the nature of, or caused by the breach. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(ii)
Seller agrees to indemnify Buyer from and against the entirety of any Adverse Consequences Buyer suffers resulting from, arising out of, relating to, in the nature of, or caused by any liability of Seller that is not an Assumed Liability.
</FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(c) <U>Indemnification Provisions for Seller&#146;s Benefit</U>. </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(i) In the event Buyer breaches any of its representations, warranties, and covenants contained in this Agreement, and, provided that
Seller makes a written claim for indemnification against Buyer pursuant to <U>Sections 7(d)</U> and <U>9(g)</U> below within the survival period (if there is an applicable survival period pursuant to <U>Section&nbsp;7(a)</U> above), then Buyer
agrees to indemnify Seller from and against the entirety of any Adverse Consequences Seller may suffer (including any Adverse Consequences Seller may suffer after the end of any applicable survival period) resulting from, arising out of, relating
to, in the nature of, or caused by the breach. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(ii) Buyer agrees to indemnify Seller from and against the entirety of any
Adverse Consequences Seller suffers resulting from, arising out of, relating to, in the nature of, or caused by any Assumed Liability or by Buyer&#146;s acts or omission occurring after the Closing. </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(d) <U>Limitations</U>. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">(i) Notwithstanding the foregoing, no indemnification for any Adverse Consequences shall be made pursuant to this <U>Section&nbsp;7</U> if and to the extent that such Adverse Consequences were taken into account in
determining whether or not any adjustment would be made to the Purchase Price pursuant to <U>Section&nbsp;2(c)</U> or <U>Section&nbsp;2(g)</U> (whether or not any such adjustment was, in fact, made) or the amount of any such adjustment. </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(ii) Notwithstanding any other provision of this Agreement: (i)&nbsp;the liability of
Seller or Buyer for any Adverse Consequences shall be limited to direct Adverse Consequences and shall not include incidental, consequential or punitive damages (whether arising in tort, contract or otherwise, including the negligence or gross
negligence of any of the Parties and whether or not foreseeable), unless such damages arise as a result of fraud or willful misconduct; and (ii)&nbsp;the obligations of Seller or Buyer for Adverse Consequences, whether pursuant to the indemnity
obligations of this Section&nbsp;7 or otherwise, arising, directly or indirectly, from or in connection with, this Agreement or the transactions contemplated hereby, shall in no event exceed in the aggregate the Purchase Price, as such Purchase
Price may be adjusted as provided herein. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(iii) Notwithstanding any other provision of this Agreement, for purposes of this
Section&nbsp;7, a Party shall not be deemed to have breached any representation, warranty, covenant or obligation if (i)&nbsp;the other Party, prior to the Closing, had Knowledge of the breach, or facts and circumstances constituting or resulting in
a breach, of such representation, warranty, covenant or obligation, and (ii)&nbsp;the non-breaching Party did not notify the breaching Party of the breach and consummated the transactions contemplated by this Agreement notwithstanding the
non-breaching Party&#146;s Knowledge of the breach. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(e) <U>Matters Involving Third Parties</U>. </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(i) If any third party notifies any Party (the &#147;<U>Indemnified Party</U>&#148;) with respect to any matter (a &#147;<U>Third-Party
Claim</U>&#148;) that may give rise to a claim for indemnification against the other Party (the &#147;<U>Indemnifying Party</U>&#148;) under this <U>Section&nbsp;7</U>, then the Indemnified Party shall promptly notify the Indemnifying Party thereof
in writing; <U>provided</U>, <U>however</U>, that no delay on the part of the Indemnified Party in notifying the Indemnifying Party shall relieve the Indemnifying Party from any obligation hereunder unless (and then solely to the extent) the
Indemnifying Party is thereby actually and materially prejudiced. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(ii) The Indemnifying Party will have the right to assume
the defense of the Third-Party Claim with counsel of its choice reasonably satisfactory to the Indemnified Party at any time within 15 business days after the Indemnified Party has given notice of the Third-Party Claim; <U>provided</U>,
<U>however</U>, that the Indemnifying Party must conduct the defense of the Third-Party Claim actively and diligently thereafter in order to preserve its rights in this regard; and provided further that the Indemnified Party may retain separate
co-counsel at its sole cost and expense and participate in the defense of the Third-Party Claim. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(iii) So long as the
Indemnifying Party has assumed and is conducting the defense of the Third-Party Claim in accordance with <U>Section&nbsp;7(e)(ii)</U> above, (A)&nbsp;the Indemnifying Party will not consent to the entry of any judgment on or enter into any
settlement with respect to the Third-Party Claim without the prior written consent of the Indemnified Party (not to be unreasonably withheld) 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 (B)&nbsp;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 unreasonably withheld). </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(iv) In the event the Indemnifying Party does not assume and conduct the defense of the
Third-Party Claim in accordance with <U>Section&nbsp;7(e)(ii)</U> above, however, (A)&nbsp;the Indemnified Party may defend against, and consent to the entry of any judgment on or enter into any settlement with respect to, the Third-Party Claim in
any manner it reasonably may deem appropriate (and the Indemnified Party need not consult with, or obtain any consent from, the Indemnifying Party in connection therewith) and (B)&nbsp;the Indemnifying Party will remain responsible for any Adverse
Consequences the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third-Party Claim to the fullest extent provided in this <U>Section&nbsp;7</U>. </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(f) <U>Exclusive Remedy</U>. Buyer and Seller acknowledge and agree that the foregoing indemnification provisions in this
<U>Section&nbsp;7</U> shall be the exclusive remedy of Buyer and Seller with respect to the transactions contemplated by this Agreement; <U>provided that</U>, in the case of fraud or willful misrepresentation or breach, the foregoing indemnification
provisions shall not be exclusive, but shall be in addition to any other rights or remedies to which Buyer and Seller or their respective assigns, as the case may be, may be entitled at law or in equity. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Section 8. <U>Termination</U>. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman"
SIZE="2">(a) <U>Termination of Agreement</U>. The Parties may terminate this Agreement as provided below: </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(i) Buyer and
Seller may terminate this Agreement by mutual written consent at any time prior to the Closing; </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(ii) Buyer may terminate
this Agreement by giving written notice to Seller at any time prior to the Closing (A)&nbsp;in the event Seller has breached any material representation, warranty, or covenant contained in this Agreement in any material respect, Buyer has notified
Seller of the breach, and the breach has continued without cure for a period of 10 days after the notice of breach or (B)&nbsp;if the Closing shall not have occurred on or before August&nbsp;4, 2008, by reason of the failure of any condition
precedent under <U>Section&nbsp;6(a)</U> hereof (unless the failure results primarily from Buyer itself breaching any representation, warranty, or covenant contained in this Agreement); and </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:8%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(iii) Seller may terminate this Agreement by giving written notice to Buyer at any time prior to the Closing (A)&nbsp;in the event Buyer
has breached any material representation, warranty, or covenant contained in this Agreement in any material respect, Seller has notified Buyer of the breach, and the breach has continued without cure for a period of 10 days after the notice of
breach or (B)&nbsp;if the Closing shall not have occurred on or before August&nbsp;4, 2008, by reason of the failure of any condition precedent under <U>Section&nbsp;6(b)</U> hereof (unless the failure results primarily from Seller itself breaching
any representation, warranty, or covenant contained in this Agreement). </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(b) <U>Effect of Termination</U>. If any Party
terminates this Agreement pursuant to <U>Section&nbsp;8(a)</U> above, all rights and obligations of the Parties hereunder shall terminate without any liability of any Party to the other Party (except for any liability of any Party then in breach);
<U>provided</U>, <U>however</U>, that the covenants contained in <U>Sections 9(a) and 9(p)</U>, below, and in that certain Mutual Confidentiality and Non-Disclosure Agreement effective as of August&nbsp;10, 2007, by and between Parent and Blyth,
Inc., an Affiliate of Buyer (&#147;<U>Confidentiality Agreement</U>&#148;), shall survive termination. </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Section 9. <U>Miscellaneous</U>. </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(a) <U>Press Releases and Public Announcements</U>. No Party shall issue any press release or public announcement relating to the subject
matter of this Agreement without the prior written approval of the other Party, which approval shall not be unreasonably withheld; <U>provided</U>, <U>however</U>, that any Party may make any public disclosure it believes in good faith is required
by applicable law or any listing or trading agreement concerning its publicly traded securities (in which case the disclosing Party will advise the other Party prior to making the disclosure). Notwithstanding the foregoing, Buyer is hereby advised
by Seller and acknowledges that within four (4)&nbsp;business days after the Effective Date, Parent will file a Current Report on Form 8-K with the United States Securities and Exchange Commission disclosing the entry into this Agreement, the
Parties, the terms of this Agreement and the transactions contemplated hereby and such other information as it believes in good faith is required by applicable law to be disclosed in such report, and Seller hereby agrees it will provide a copy of
such Form 8-K to Buyer prior to its filing and allow Buyer a reasonable opportunity to review and comment upon the disclosures set forth therein. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">(b) <U>No Third-Party Beneficiaries</U>. This Agreement shall not confer any rights or remedies upon any Person other than the Parties and their respective successors and permitted assigns. Nothing in this Agreement
is intended to relieve or discharge the obligation or liability of any third Person to any Party to this Agreement, nor shall any provision give any third Person any right of subrogation or action over or against any Party to this Agreement.
</FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(c) <U>Entire Agreement</U>. This Agreement (including the documents referred to herein) constitutes the entire agreement
between the Parties and supersedes any prior understandings, agreements, or representations by or between the Parties, written or oral, express or implied, to the extent they relate in any way to the subject matter hereof. Each Party acknowledges
that no representation, warranties, inducements, promises or agreement, oral or otherwise, have been made by any Party, or anyone acting on behalf of any Party, which are not embodied herein. </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(d) <U>Succession and Assignment</U>. This Agreement shall be binding upon and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. No Party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other Party; <U>provided</U>, <U>however</U>, that Buyer may
(i)&nbsp;assign any or all of its rights and interests hereunder to one or more of its Affiliates and (ii)&nbsp;designate one or more of its Affiliates to perform its obligations hereunder (in any or all of which cases Buyer nonetheless shall remain
responsible for the performance of all of its obligations hereunder). </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(e) <U>Counterparts</U>. This Agreement may be
executed in one or more counterparts (including by means of electronic transmission), each of which shall be deemed an original but all of which together will constitute one and the same instrument. </FONT></P>

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<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(f) <U>Headings</U>. 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. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(g) <U>Notices</U>. All
notices, requests, demands, claims, and other communications hereunder shall be in writing. Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given on receipt as shown by written or electronic records and
either (i)&nbsp;delivered personally to the recipient, (ii)&nbsp;sent to the recipient by reputable overnight courier service (charges prepaid), (iii)&nbsp;sent to the recipient by facsimile transmission or electronic mail, or (iv)&nbsp;mailed to
the recipient by certified or registered mail, return receipt requested and postage prepaid, and addressed to the intended recipient as set forth below: </FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="86%" BORDER="0" ALIGN="center">

<TR>
<TD WIDTH="10%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="88%"></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">If to Seller:</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">Real Health Laboratories, Inc.</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">c/o Natural Alternatives International, Inc.</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">1185 Linda Vista Drive</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">San Marcos, CA 92078</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">Attention: Randell Weaver</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">Fax: (760)591-9637</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Copy to:</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">Bell, Boyd &amp; Lloyd LLP</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">3580 Carmel Mountain Rd., Ste. 200</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">San Diego, CA 92130</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">Attention: David A. Fisher</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">Fax: (858) 509-7461</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top" NOWRAP><FONT FACE="Times New Roman" SIZE="2">If to Buyer:</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">Miles Kimball Company</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">250 City Center</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">Oshkosh, WI 54910</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">Attention: Stan Krangle</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">Fax: (920) 231-6775</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Copy to:</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">Blyth, Inc.</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">One East Weaver Street</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">Greenwich, CT 06831</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">Attention: Michael Novins</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">Fax: (203) 552-9168</FONT></TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Any Party may change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Party notice in the manner herein set forth. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(h)
<U>Governing Law</U>. This Agreement shall be governed by and construed in accordance with the domestic laws of the State of California without giving effect to any choice or conflict of law provision or rule (whether of California or any other
jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of California. </FONT></P>

<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(i) <U>Amendments and Waivers</U>. No amendment of any provision of this Agreement shall
be valid unless the same shall be in writing and signed by Buyer and Seller. No waiver by any Party of any provision of the Agreement or any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall
be valid unless the same shall be in writing and signed by the Party making such waiver nor shall such waiver be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way
any rights arising by virtue of any prior or subsequent such occurrence. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(j) <U>Severability</U>. Any term or provision of
this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(k) <U>Expenses</U>. Each of Buyer and Seller shall bear its own costs
and expenses (including legal fees and expenses) incurred in connection with this Agreement and the transactions contemplated hereby. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">(l) <U>Construction</U>. The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word &#147;including&#148; shall mean including without limitation. </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(m) <U>Incorporation of Exhibits and Schedules</U>. The Exhibits and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(n) <U>Attorneys&#146; Fees</U>. If any Party brings a suit or other proceeding against
another Party as a result of any alleged breach or failure by the other Party to fulfill or perform any covenants or obligations under this Agreement, then the prevailing Party obtaining final judgment in such action or proceeding shall be entitled
to receive from the non-prevailing Party the prevailing Party&#146;s reasonable attorneys&#146; fees incurred by reason of such action or proceeding and all costs associated with such action or proceeding incurred by the prevailing Party, including
the costs of preparation and investigation. The term &#147;prevailing party&#148; shall mean the Party that is entitled to recover its attorneys&#146; fees, costs and expenses in the proceeding under applicable law or the Party designated as such by
the court or arbitrator. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(o) <U>Time of Essence</U>. With regard to all dates and time periods set forth or referred to in
this Agreement, time is of the essence. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(p) <U>Confidentiality</U>. Subject to Section&nbsp;9 (a), Seller hereby agrees not
to disclose, disseminate or publish Confidential Information (as such term is defined in the Confidentiality Agreement) concerning the Business, whether or not such Confidential Information has heretofore been disclosed to Blyth, Inc. or Buyer, and
shall treat any such information in accordance with the terms of the Confidentiality Agreement. </FONT></P>

<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the Effective Date. </FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P><DIV ALIGN="right">
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="40%" BORDER="0">

<TR>
<TD WIDTH="6%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="92%"></TD></TR>
<TR>
<TD VALIGN="top" COLSPAN="3"><FONT FACE="Times New Roman" SIZE="2">MILES KIMBALL COMPANY</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">By:</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT FACE="Times New Roman" SIZE="2">/s/ Stan Krangel</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">Stan Krangel, President</FONT></TD></TR>
<TR>
<TD HEIGHT="16" COLSPAN="3"></TD></TR>
<TR>
<TD VALIGN="top" COLSPAN="3"><FONT FACE="Times New Roman" SIZE="2">REAL HEALTH LABORATORIES, INC.</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">By:</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT FACE="Times New Roman" SIZE="2">/s/ Randell Weaver</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">Randell Weaver, Chief Executive Officer</FONT></TD></TR>
</TABLE></DIV>
</BODY></HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>3
<FILENAME>dex991.htm
<DESCRIPTION>PRESS RELEASE
<TEXT>
<HTML><HEAD>
<TITLE>Press Release</TITLE>
</HEAD>
 <BODY BGCOLOR="WHITE">

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2"><B>Exhibit 99.1 </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center">

<IMG SRC="g69619logo001.jpg" ALT="LOGO"> </P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>Natural Alternatives International, Inc. </B></FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px;padding-bottom:3px;line-height:95%; vertical-align:top" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>Announces Sale of &#147;As We Change<FONT FACE="Times New Roman"
SIZE="1"><SUP>&reg;</SUP></FONT>&#148; Assets and Provides Fourth </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>Quarter Revenue Update </B></FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px;padding-bottom:3px;line-height:95%; vertical-align:top"><FONT FACE="Times New Roman" SIZE="2"><B>SAN MARCOS, CALIF,</B> August&nbsp;5, 2008 /PRNewswire/ &#151;Natural Alternatives International, Inc.
(&#147;NAI&#148;) (Nasdaq-GM: NAII), a leading formulator, manufacturer and marketer of customized nutritional supplements, today announced that is has sold the &#147;As We Change<FONT FACE="Times New Roman" SIZE="1"><SUP>&reg;</SUP></FONT>&#148;
catalog and internet business of Real Health Laboratories, Inc., its wholly owned subsidiary, for $2.0 million subject to certain adjustments. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">NAI also
announced that total revenues, including revenues from the &#147;As We Change&#148; business, for the fourth quarter of its fiscal year ended June&nbsp;30, 2008 were approximately $25.2 million, an increase of $3.3 million or 15.1% from $21.9
million for the third quarter ended March&nbsp;31, 2008 and an increase of $1.1 million or 4.6% from $24.1 million for the fourth quarter of the fiscal year ended June&nbsp;30, 2007. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2">Private label contract manufacturing revenues were approximately $20.7 million in the fourth quarter of fiscal 2008 compared to $18.0 million in the third quarter of fiscal 2008, an increase of $2.7 million or 15.0%.
Compared to the fourth quarter of fiscal 2007 private label contract manufacturing revenues increased by approximately $600,000 or 3.0% from $20.1 million </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px;padding-bottom:3px;line-height:95%; vertical-align:top"><FONT FACE="Times New Roman" SIZE="2">President Randell Weaver stated, &#147;We are pleased to complete the sale of our &#147;As We Change&#148; catalog
and internet business for $2.0 million in cash. The sale of this business should allow us to better maintain focus on our core business, private label contract manufacturing, and will provide liquidity that should allow us to make additional
investments in our core business while maintaining our strong balance sheet. We have taken steps to significantly reduce operating expenses in our private label contract manufacturing business as well as our remaining branded products businesses,
&#147;Real Health Laboratories&#148; and &#147;Dr. Cherry Pathway to Healing<FONT FACE="Times New Roman" SIZE="1"><SUP>&reg;</SUP></FONT>.&#148; </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">1 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Chairman and Chief Executive Officer Mark LeDoux added, &#147;We are extremely pleased with the growth in our fourth
quarter revenues, particularly the contract manufacturing revenues. We believe our commitment to Good Manufacturing Practices has paid dividends as we have seen revenues from new customers grow. We are also pleased we have been able to attract top
tier customers and potential customers who recognize the value in our state of the art facilities and our commitment to quality manufacturing.&#148; </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">NAI,
headquartered in San Marcos, California, is a leading formulator, manufacturer and marketer of nutritional supplements and provides strategic partnering services to its customers. Our comprehensive partnership approach offers a wide range of
innovative nutritional products and services to our clients including: scientific research, clinical studies, proprietary ingredients, customer-specific nutritional product formulation, product testing and evaluation, marketing management and
support, packaging and delivery system design, regulatory review and international product registration assistance. For more information about NAI, please see our website at www.nai-online.com. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">This press release contains forward-looking statements within the meaning of Section&nbsp;21E of the Securities Exchange Act of 1934 that are not historical facts and
information. These statements represent our intentions, expectations and beliefs concerning future events, including, among other things, our expectations and beliefs with respect to future financial and operating results, including the amount of
our future revenue and profits and our future financial condition, our ability to implement our strategic plans, to expand and invest in our core business, to reduce operating expenses, and to develop, maintain or increase sales to new and existing
customers. We wish to caution readers these statements involve risks and uncertainties that could cause actual results and outcomes for future periods to differ materially from any forward-looking statement or views expressed herein. NAI&#146;s
financial performance and the forward-looking statements contained herein are further qualified by other risks including those set forth from time to time in the documents filed by us with the Securities and Exchange Commission, including our most
recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">SOURCE &#150; Natural Alternatives International, Inc. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">CONTACT &#150; Randell Weaver, President, Natural Alternatives International, Inc., </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2">760-736-7700 or <U>investor@nai-online.com</U>. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">2 </FONT></P>

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end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
