Exhibit 2.1

STOCK PURCHASE AGREEMENT

This STOCK PURCHASE AGREEMENT (“Agreement”) is made and entered into as of June 1, 2007 (the “Closing Date”), by and among Natrol, Inc., a Delaware corporation (the “Buyer”), the shareholders listed on the signature page hereof (each a “Seller,” and collectively, the “Sellers”) and Medical Research Institute, a California corporation (the “Company”).

RECITALS

WHEREAS, the Sellers collectively own all of the issued and outstanding shares of the capital stock of the Company (the “Shares”).

WHEREAS, the Sellers desire to sell to the Buyer, and the Buyer desires to purchase from the Sellers, all of the issued and outstanding Shares upon the terms and conditions set forth herein.

AGREEMENT

NOW, THEREFORE, the Buyer, each Seller, and the Company, in consideration of the mutual promises hereinafter set forth and intending to be legally bound, do hereby promise and agree as follows:

ARTICLE 1
DEFINITIONS

For purposes of this Agreement, the following terms have the meanings specified or referred to in this Article I:

“Accounts Receivable” has the meaning set forth in Section 3.12.

“Adjustment Amount” has the meaning set forth in Section 2.3(a).

“ADR” has the meaning set forth in Section 11.6(a).

“Adverse Event Report” means the MedWatch Report (with CAERS #92818) received from the Department of Health and Human Services of the US Food and Drug Administration.

“Affiliate” means, with reference to any Person, any other Person that controls, is controlled by or is under common control with such first Person.  As used in this definition, “control” (including the terms “controlling,” “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities or other interests, by Contract or otherwise.

“Ajinomoto” means Ajinomoto Co., Inc., a corporation organized under the laws of Japan and its successors and assigns.

“Ajinomoto Payment” has the meaning set forth in Section 2.6.

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“Ajinomoto Payment Due Date” has the meaning set forth in Section 2.6.

“Ajinomoto Revenue” means net revenue received by the Company, Buyer or any of its Affiliates pursuant to any contemplated distribution agreement with Ajinomoto, or any Contract related thereto, for the sale of any product in which at least ten percent (10%) of the cost of the active ingredients in such product is attributable to Capsiate.

“Applicable Contract” means any Contract (including any amendment, supplement and modification thereto) (a) under which the Company is or may be entitled to receive revenues of more than $50,000 in any calendar year, (b) under which the Company may become subject to any obligation to pay a liability of more than $50,000 in any calendar year, (c) that cannot be canceled by the Company without penalty upon less than sixty (60) days notice, (d) with any employee, officer, director or independent contractor or with any labor union or other employee representative of a group of employees (including, without limitation, any collective bargaining agreement), (e) involving a share of revenue, profits, losses, costs or liabilities by the Company with any other Person including any joint venture, partnership or other agreement, (f) containing covenants that in any way purport to restrict the business activity of the Company or limit the freedom of the Company to engage in any line of business or to compete with any Person, (g) for the lease or license of tangible personal property to or from any Person providing for payments in excess of $50,000 per annum, (h)  relating to the acquisition, transfer, use, development, sharing or license of any technology or any Intellectual Property (other than “off the shelf” or “shrink wrap” software and the Company’s standard employee confidentiality and inventions assignment agreements), (i) under which the Company has created, incurred, assumed or guaranteed any indebtedness for borrowed money or any capitalized lease obligation or under which the Company has imposed or suffered the imposition of any Lien on any of the Company’s assets, tangible or intangible, (j) relating to the purchase or sale of any product or other asset by or to, or the performance of any services by or for, any Related Person, (k) relating to the acquisition, issuance or transfer of any capital stock or other equity securities of the Company, (l) between any strategic partner, distributor, customer, or supplier and the Company entered into on or after January 1, 2004 involving any obligation to pay more than $50,000 in any calendar year (whether such contracts are verbal or in written form), or (m) the breach or termination of which could reasonably be expected to result in a Material Adverse Effect.

“Asserted Liability” has the meaning set forth in Section 8.7(a).

“Baseline Working Capital” has the meaning set forth in Section 2.3(a).

“Base Payment” means an annual payment to be made to the Sellers during the Incentive Payment Period in accordance with Section 2.5(a)-(c) provided that EBIT equals or exceeds the low end of the EBIT Range for such year.

 “BSN Litigation” means the action entitled Medical Research Institute v. Bio-Engineered Supplements & Nutrition, Inc., d/b/a BSN, Inc.; Breakthrough Engineered Nutrition, Inc., d/b/a Delmar Labs, Inc.; NBTY, Inc.; NuPharma Solutions LLC; and Innovative Product Solutions Group, LLC, Case No. 6:05-CV-00417-LED (E.D. Tex.), including all counterclaims, appeals and related proceedings.

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

“Buyer Common Stock” means common stock of Natrol, Inc., par value $0.01 per share.

“Buyer Indemnified Persons” has the meaning set forth in Section 8.2.

“Catch-Up Payment” means the ability of the Sellers to earn an Incentive Payment if Year Three EBIT (as defined in Section 2.5(c)(i)) exceeds Nineteen Million Dollars ($19,000,000), in which case the amount of any such Catch-Up Payment shall be calculated as set forth in Section 2.5(c)(iii)).

“Cap” has the meaning set forth in Section 8.4(b).

“Capsiate” means the concentrated extract of the capsaicinoids which is purported to promote energy metabolism and decrease body fat.  Ajinomoto, the chief supplier of Capsiate, has a synthesized form of natural Capsiate.

“CE2 Claims” means any legal claim connected to, related to, or associated with either the Company’s agreement with Biovance Life Sciences, Inc. f/k/a ProNutrient Technologies, Inc. or sale and/or marketing of creatine ethyl-ester hydrochloride.

“Change of Control” means (a) any consolidation or merger of the Buyer with or into any other corporation or other entity or person, or any other corporate reorganization, other than any such consolidation, merger or reorganization in which the stockholders of the Buyer immediately prior to such consolidation, merger or reorganization, continue to hold at least a majority of the voting power of the surviving entity in substantially the same proportions (or, if the surviving entity is a wholly owned subsidiary, its parent) immediately after such consolidation, merger or reorganization, or (b) any other transaction or series of related transactions to which the Buyer is a party in which in excess of fifty percent (50%) of the Buyer’s voting power is transferred, provided that with respect to any transaction meeting the requirements of (a) and (b), above, that no Change of Control shall be deemed to exist if Wayne Bos, Buyer’s current President/Chief Executive Officer, and Craig Cameron, Buyer’s current Chief Operating Officer, continue to hold these management positions after such Change of Control transaction.

“Change of Control Arrangement” has the meaning set forth in Section 3.18(c).

“Claiming Party” has the meaning set forth in Section 8.7(a).

“Claims Notice” has the meaning set forth in Section 8.7(a).

“Closing Date” has the meaning set forth on the preamble of this Agreement.  The effective time of the closing shall be 12:01 am on the Closing Date.

“Closing Date Balance Sheet” has the meaning set forth in Section 2.3(d).

“Closing Date Cash Payment” has the meaning set forth in Section 2.3(b).

“Closing Date Promissory Notes” has the meaning set forth in Section 2.3(b).

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“Code” means the Internal Revenue Code of 1986, as amended through the date hereof or any successor law issued by the IRS.

“Company” has the meaning set forth in the preamble of this Agreement.

“Company IP” has the meaning set forth in Section 3.28(a).

“Company Financial Plan” has the meaning set forth in Section 5.4.

“Competing Business” has the meaning set forth in Section 3.32.

“Consent” means any approval, consent, ratification, waiver, or other authorization (including any Governmental Authorization).

“Contract” means any agreement, contract, subcontract, lease, note, mortgage, warranty, insurance plan, benefit plan, obligation, promise, understanding or undertaking (whether written or oral) that is legally binding.

“Deductible” has the meaning set forth in Section 8.4(a).

“Designated Earnout Payment Amount” means, with respect to each Seller Designee, the dollar amount obtained by multiplying the applicable percentage under the Designated Earnout Payment Amount Percentage heading on Exhibit A of the Seller Payment Agreement that is set forth adjacent to the Seller Designee’s name on Exhibit A to the Seller Payment Agreement by the amount of the Earnout Payment.

“Designated Incentive Payment Amount” means, with respect to each Seller Designee, the dollar amount obtained by multiplying the applicable percentage under the Designated Incentive Payment Amount Percentage heading on Exhibit A of the Seller Payment Agreement that is set forth adjacent to the participants name on Exhibit A to the Seller Payment Agreement by the amount of the Incentive Payment applicable as of such Incentive Payment Due Date.

“Disclosure Schedule” means the Sellers’ disclosure schedule attached hereto, which shall be delivered by the Sellers to the Buyer concurrently with the execution and delivery of this Agreement.

“Disputed Payment Due Date” has the meaning set forth in Section 2.7(d).

“Earnout Payment” has the meaning set forth in Section 2.4.

“EBIT” means, for any consecutive twelve (12) month period during the Incentive Payment Period, the cumulative net income or loss of the Company (operating as a wholly-owned subsidiary of the Buyer) for such period plus interest and taxes allocable to the Company for such fiscal year, each of the foregoing items determined in accordance with GAAP consistently applied; provided, however, that if the Company’s Marketing Expenses exceeds fifteen percent (15%) of the Company’s net revenue for such fiscal year, fifty percent (50%) of the amount of the Company’s Marketing Expenses above fifteen percent (15%) of net revenue for such period (up to a cap of two and one half percent (2.5%) of net revenue for such period)

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shall be added to the EBIT for such fiscal year.  For the purposes hereof, the Company’s net revenue shall be the amount of net revenue allocable to the Company as calculated in accordance with GAAP.  Additionally, for purposes of calculating EBIT, there shall be no deductions for any (a) Earnout Payments, Catch-Up Payments, Incentive Payments, Ajinomoto Payments and/or Acceleration Payments paid or accrued hereunder; and (b) expenses to the extent paid for or indemnified by the Sellers hereunder; provided, however, that there shall be a deduction for (x) any and all costs and expenses directly related to the preparation of the Company’s Tax Returns as set forth in Article 9 and the Company’s Tax Returns from and after the Closing Date and all costs and expenses for any audit of the Company’s Financial Statements (but specifically excluding any costs and expenses associated with compliance with the Sarbanes-Oxley Act), each amount proportional to the Company’s net revenue as compared to the total consolidated net revenue of the Buyer; and (y) any expenses related to the provision of any services by the Buyer (e.g., legal services or logistics services) to the Company pursuant to an agreement between the Buyer and the Company which has been approved in writing by the Sellers’ Agent for such services.

“EBIT Range” means:

(a)       For the year ending on the first anniversary of the Closing Date, $5,000,000 to $10,000,000;

(b)       For the year ending on the second anniversary of the Closing Date, $6,500,000 to $13,000,000; and

(c)       For the year ending on the third anniversary of the Closing Date, $14,000,000 to $19,000,000.

“Employment Agreement” has the meaning set forth Section 6.3(f).

“Environmental Audit” means a review and investigation for purposes of determining whether the Company, the Real Estate and the Company’s assets are in compliance with all Environmental Laws and whether there exists any condition or circumstance which requires or may require a clean up, removal or other remedial action under Environmental Laws on the part of the Company.

“Environmental Claim” means any investigation, notice, violation, demand, allegation, action, suit, injunction, order, consent decree, penalty, fine, lien, proceeding or claim (whether administrative, judicial or private in nature) arising (a) pursuant to, or in connection with, an actual or alleged violation of any Environmental Law; (b) in connection with any Hazardous Substances; (c) from any abatement, removal, remedial, corrective or other response action in connection with Hazardous Substances, Environmental Law or other order of a Governmental Body; or (d) from any actual or alleged damage, injury, threat, or harm to health, safety, natural resources, wildlife or the environment.

“Environmental Law” means any of the federal, state, foreign and local statutory laws, ordinances, codes, rules, regulations, approvals or requirements of any Governmental Body, court orders, administrative orders, executive orders, consent decrees, injunctions, judgments, and common law pertaining to (a) health, safety, natural resources, wildlife or the environment,

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(b) the Occupational Safety and Health Administration, the U.S. Environmental Protection Agency, the Nuclear Regulatory Commission and any similar state agency or department, or (c) the management, manufacture, possession, presence, use, generation, transportation, treatment, storage, disposal, release, threatened release, abatement, removal, remediation or handling of, or exposure to, any petroleum products or Hazardous Substances and all amendments, modifications and additions thereto, in each case as amended to date including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, codified at 42 U.S.C. 9601 et seq., as amended by the Superfund Amendments and Reauthorization Act of 1986, the Solid Waste Disposal Act, codified at 42 U.S.C. 6901 et seq., as amended by the Resource Conservation and Recovery Act of 1976 and the Hazardous and Solid Waste Amendment of 1984 (“RCRA”), the Toxic Substances Control Act of 1976, codified at 15 U.S.C. 2601 et seq., the Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977, codified at 33 U.S.C. 1251 et seq., the Clean Air Act of 1966, codified at 42 U.S.C. 741 et seq., the Hazardous Materials Transportation Act, codified at 49, U.S.C. 651 et seq., the Oil Pollution Act of 1990, codified at 33 U.S.C. 2701 et seq., the Emergency Planning and Community Right-To-Know Act of 1986, codified at 42 U.S.C. 11001, et seq., the National Environmental Policy Act of 1969, codified at 42 U.S.C. 4321, et seq., the Occupational Safety and Health Act of 1970, and the Safe Drinking Water Act of 1974, codified at 42 U.S.C. 300(f), et seq., the Atomic Energy Community Act of 1955, the Atomic Testing Liability Act, the Atomic Energy Damages Act, the Atomic Energy Omnibus Act, the Atomic/Nuclear Waste Policy Act of 1982, the Atomic/Nuclear Waste Policy Amendments of 1987 or any similar, implementing or successor law.

“ERISA” means the Employee Retirement Income Security Act of 1974 or any successor law, and regulations and rules issued pursuant to that Act or any successor law.

“Escrow Agent” means an escrow agent to be selected prior to the Closing Date by mutual agreement of the parties to receive the Escrow Amount.

“Escrow Agreement” has the meaning set forth in Section 6.3(h).

“Escrow Amount” means an amount initially equal to Eight Hundred Thousand Dollars ($800,000).  If the requirements set forth in Section 2.4 of this Agreement are satisfied such that the Sellers become entitled to receive an Earnout Payment, the Escrow Amount shall be increased by an amount equal to ten percent (10%) of such Earnout Payment at such time as the Earnout Payment is paid to the Sellers.

“Estimated Purchase Price” has the meaning set forth in Section 2.3(c).

“Excess Payment” means an annual payment to be paid to the Sellers for an applicable Incentive Payment Period in the amount of twenty percent (20%) of the amount by which EBIT for such year exceeds the high end of the EBIT Range, provided that the high end of the EBIT Range for an applicable Incentive Payment Period, shall be determined by using the high end of the EBIT Range in accordance with the provisions of Section 2.5 (a), (b), or (c), as applicable.

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“Facilities” means any real property, leaseholds, or other interests currently or formerly owned or operated by the Company and any buildings, plants, structures, or equipment (including motor vehicles) currently or formerly owned or operated by the Company.

“Financial Statements” has the meaning set forth in Section 3.5.

“GAAP” means generally accepted United States accounting principles and practices recognized as such by the American Institute of Certified Public Accountants acting through its Accounting Principles Board or by the Financial Accounting Standards Board or through other appropriate boards or committees thereof and which are consistently applied for all periods so as to properly reflect the financial position, the result of operations and operating cash flow on a consolidated basis of the party, except that any accounting principle or practice required to be changed by the Accounting Principles Board or Financial Accounting Standards Board (or other board or committee) in order to continue as generally accepted accounting principles or practice may be so changed.

“GNC” means General Nutrition Centers, Inc., a Delaware corporation, General Nutrition Distribution, LP or any of their Affiliates.

“Governmental Authorization” means any approval, consent, license, permit, waiver, or other authorization issued, granted, given, or otherwise made available by or under the authority of any Governmental Body or pursuant to any Legal Requirement.

“Governmental Body” means any nation, state, county, city, town, village, district, or other jurisdiction of any nature; federal, state, local, municipal, foreign, or other government; governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal); multi-national organization or body; or any body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature.

“Hazardous Substances” means and includes any substance, chemical, compound, product, solid, gas, liquid, waste, by-product, material, pollutant or contaminant which is hazardous, toxic or otherwise harmful to health, safety, natural resources, wildlife or the environment including, without limitation, asbestos, PCB’s, radon and urea formaldehyde foam, petroleum and petroleum products, hazardous waste source, by-product or special nuclear material, and raw materials which include hazardous constituents, or any other similar substances, or materials which are now, or in the future, included under or regulated by any Environmental Law.

“Incentive Payment” has the meaning set forth in Section 2.5.

 Incentive Payment Period” means the period of time from the Closing Date until that date which is three (3) years from the Closing Date.

“Indemnifying Party” has the meaning set forth in Section 8.7(a).

“Independent Accounting Firm” means initially Gumbiner, Savett, Finkel, Fingleson and Rose, Inc.; provided, however, that if after the date of this Agreement such accounting firm is

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retained for auditing services by either the Buyer, the Company or any of their respective affiliates, the Buyer and the Sellers’ Agent shall, upon either party’s request, mutually select another independent public accounting firm.

“Intellectual Property Assets” has the meaning set forth in Section 3.28.

“Kathy Williams Claims” means any legal claims connected to, related to, or associated with the allegations set forth in a letter, dated as of April 20, 2007, from Kathy Williams regarding Minus 10.

“Iovate Litigation” means the action entitled Iovate Health Sciences Inc., et. al v. Bio-Engineered Supplements & Nutrition, Inc. et. al, Case No. 9:07-CV-46-RHC (E.D. Tex.), including all counterclaims, appeals and related proceedings.

“IRS” means the United States Internal Revenue Service or any successor agency, and, to the extent relevant, the United States Department of the Treasury.

“JAMS” has the meaning set forth in Section 11.6(a).

“Knowledge” means, (a) with respect to any individual, that such individual will be deemed to have “Knowledge” of a particular fact or other matter if such individual is actually aware of such fact or other matter; or (b) with respect to a Seller who is an executive officer of the Company, that such individual Seller will also be deemed to have “Knowledge” of a particular fact or other matter if such Seller could reasonably be expected to discover or otherwise become aware of such fact or other matter in the course of conducting a reasonable inquiry within the Company concerning the existence of such fact or other matter.

“Lease” means any lease covering any property upon which the Company conducts its business.

“Legal Requirement” means any federal, state, local, municipal, foreign, international, multinational, or other administrative order, constitution, law, ordinance, principle of common law, regulation, statute, or treaty.

“Lien” means any charge, claim, community property interest, condition, equitable interest, encumbrance, lien, mortgage, option, pledge, security interest, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income, or exercise of any other attribute of ownership except for Permitted Liens.

“Losses” has the meaning set forth in Section 8.2.

“Marketing Expense” means advertising and marketing expenditures on print, radio, television, event marketing, the internet, outdoor, mobile device and media advertising, and fifty percent (50%) of any expenses related to sampling programs, including one hundred percent (100%) of creative costs associated with delivery of all such media, but excludes all forms of promotional money (spiff), co-operative expenditures, promotions, discounts, coupons, price-offs, invoice discounts and salaries or other compensation paid to employees of the Company responsible for performing marketing or advertising services.

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“material” means the effect of which would be reasonably likely to (a) cause a loss of, (b) impose a cost to rectify, repair or complete, or (c) cause a decrease in the asset value of, Fifty Thousand Dollars ($50,000) or more to the Buyer.

“Material Adverse Effect” means a change, event, condition, circumstance, act, omission, occurrence or effect which, individually, or in the aggregate with other changes, events, conditions, circumstances, acts, omissions, occurrences or effects, adversely affects or would be reasonably likely to adversely affect the business, condition (financial or other), assets, liabilities, obligations or operations of the Company with an adverse financial consequence of Two Hundred Fifty Thousand Dollars ($250,000) or more to the Company; provided, however, that (i) any change in accounting requirements or principles generally applicable to any business entity, (ii) any effect arising out of or resulting from general industry, economic, regulatory or capital market conditions, (iii) any effect arising out of or resulting from acts of terrorism or war, or (iv) with respect to the Company, any actual adverse effect on the Company or its business arising out of or resulting from the public announcement of this Agreement or the taking of any action by Buyer or any of its Affiliates, in each case, shall not be deemed to have caused or constituted a Material Adverse Effect.

“Net Closing Payment” means the Purchase Price less the Escrow Amount and any expenses of the Company to be paid by the Sellers pursuant to Section 11.1(a).

“Noncompetition Agreement” has the meaning set forth in Section 6.3(g).

“Order” means any award, decision, injunction, judgment, order, ruling, subpoena, or verdict entered, issued, made, or rendered by any court, administrative agency, or other Governmental Body or by any arbitrator.

“Ordinary Course of Business” means, with respect to an action taken by any Person (a) an action that is consistent with the past practices of such Person and is taken in the ordinary course of the normal recurring operations of such Person and that would not be required to be authorized by the board of directors of such Person (or by any Person or group of Persons exercising similar authority); and (b) an action similar in nature and magnitude to actions customarily taken, without any authorization by the board of directors (or by any Person or group of Persons exercising similar authority), in the ordinary course of the normal day to day operations of other similarly situated and sized private-company Persons that are in the same line of business as such Person.

“Organizational Documents” means (a) the articles or certificate of incorporation and the bylaws of a corporation; (b) the partnership agreement and any statement of partnership of a general partnership; (c) the limited partnership agreement and the certificate of limited partnership of a limited partnership; (d) any charter or similar document adopted or filed in connection with the creation, formation, or organization of a Person; and (e) any amendment to any of the foregoing.

“Payment Dispute Notice” has the meaning set forth in Section 2.7(a).

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“Percentage Interest” means, with respect to each Seller, the ratio of the number of Shares owned by such Seller to the total number of Shares issued and outstanding.  Each Seller’s Percentage Interest is set forth opposite such Seller’s name on Schedule 3.1 attached hereto.

“Permitted Liens” means (a) liens for current taxes, water and sewage charges and other statutory liens and trusts not yet due and payable or that are being contested in good faith provided there are appropriate reserves maintained therefor, (b) carriers’, warehousemen’s, landlords’ and mechanics’ liens and other similar liens, (c) liens on personal property leased under operating leases, (d) liens, pledges or deposits incurred or made in connection with workmen’s compensation, unemployment insurance and other social security benefits, or securing the performance of bids, tenders, leases, contracts (other than for the repayment of borrowed money), statutory obligations, progress payments, surety and appeal bonds and other obligations of like nature, in each case incurred in the ordinary course of business, (e) pledges of or liens on manufactured products as security for any drafts or bills of exchange drawn in connection with the importation of such manufactured products in the ordinary course of business, (f) liens under Article 2 of the Uniform Commercial Code that are special property interests in goods identified as goods to which a contract refers, (g) liens under Article 9 of the Uniform Commercial Code that are purchase money security interests, and (h) such imperfections or minor defects of title, easements, rights-of-way and other similar restrictions (if any) as are insubstantial in character, amount or extent, do not materially detract from the value or interfere with the present or proposed use of the properties or assets of the party subject thereto or affected thereby, and do not otherwise adversely affect or impair the business or operations of such party.

“Person” means any individual, corporation (including any non-profit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, labor union, or other entity or Governmental Body.

“Prime Rate” means, as of any date, the latest prime rate as reported in the Wall Street Journal for the applicable date.

“Proceeding” means any action, arbitration, audit, hearing, investigation, litigation, or suit (whether civil, criminal, administrative, investigative, or informal) commenced, brought, conducted, or heard by or before, or otherwise involving, any Governmental Body or arbitrator.

“Proprietary Rights Agreement” has the meaning set forth in Section 3.18(b).

“Purchase Price” has the meaning set forth in Section 2.3.

“Purchase Price Dispute Notice” has the meaning set forth in Section 2.3(e).

“Purchase Price Statement” has the meaning set forth in Section 2.3(d).

“Real Estate” has the meaning set forth in Section 3.14.

“Registered Company IP” has the meaning set forth in Section 3.28(e).

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“Related Person” means, with respect to a particular individual (a) each other member of such individual’s Family; (b) any Person that is directly or indirectly controlled by such individual or one or more members of such individual’s Family; (c) any Person with respect to which such individual or one or more members of such individual’s Family serves as a director, officer, partner, executor or trustee (or in a similar capacity).  For purposes of this definition, the “Family” of an individual includes the individual’s spouse and issue and any other natural person who is related to the individual or the individual’s spouse within the second degree.

“Representative” means with respect to a particular Person, any director, officer, employee, agent, consultant, advisor, or other representative of such Person, including legal counsel, accountants, and financial advisors.

“Secretary’s Certificate” has the meaning set forth in Section 6.3(k).

“Section 338(h)(10) Election” has the meaning set forth in Section 9.3.

“Securities Act” means the Securities Act of 1933 or any successor law, and regulations and rules issued pursuant to that Act or any successor law.

“Selected Incentive Seller Designees”  has the meaning set forth in Section 2.5.

“Selected Seller Designee” has the meaning set forth in Section 2.4

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

“Sellers’ Agent” means Edward A. Byrd.

“Sellers’ Closing Documents” has the meaning set forth in Section 3.3(a).

“Seller Designees” shall mean such individuals designated by the Sellers that are entitled to receive a portion of the payments otherwise payable to such Sellers herein under pursuant to the terms of the Seller Payment Agreement.

“Seller Payment Agreement” means that certain agreement dated of even date herewith (previously provided to the Buyer) by and among the Sellers and certain individuals named therein relating to the allocation and payment to such individuals of certain of the Sellers’ proceeds payable hereunder.

“Seller’s Release” has the meaning set forth in Section 6.3(d).

“Shares” has the meaning set forth in the Recitals of this Agreement.

“Short Tax Period” has the meaning set forth in Section 9.1.

“Software” has the meaning set forth in Section 3.28(j).

“Spousal Consent” has the meaning set forth in Section 6.3(e).

“Stock Transfer Taxes” has the meaning set forth in Section 9.5.

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“Straddle Period” has the meaning set forth in Section 9.1(c).

“Straddle Returns” has the meaning set forth in Section 9.1(c).

“Subsidiary” means with respect to any Person (the “Owner”), any corporation or other Person of which securities or other interests having the power to elect a majority of that corporation’s or other Person’s board of directors or similar governing body, or otherwise having the power to direct the business and policies of that corporation or other Person (other than securities or other interests having such power only upon the happening of a contingency that has not occurred) are held by the Owner or one or more of its Subsidiaries.

“Tax” means all federal, state, county, local, foreign and other taxes or assessments, however denominated, including, without limitation, income, estimated income, business, occupation, franchise, property (real and personal), sales, employment, gross receipts, use, transfer, ad valorem, profits, license, capital, payroll, employee withholding, unemployment, excise, goods and services, severance, stamp and including interest, penalties and additions in connection therewith for which any Seller is or may be required to pay, withhold or collect, whether disputed or not.

“Tax Contest” means any audit, other administrative proceeding or inquiry or judicial proceeding involving Taxes.

“Tax Returns” means any report, declaration, return, information return, claim for refund or statement relating to Taxes, including any schedule or attachment thereto, and including any amendments thereof.

“Total Purchase Price” shall mean the aggregate of the following payments: Purchase Price, Earnout Payment, Incentive Payments, Excess Payment and Ajinomoto Payments.

“Trademarks” has the meaning set forth in Section 3.28(a).

“Trade Secrets” has the meaning set forth in Section 3.28(a).

“Treasury Regulations” means the United States Treasury regulations promulgated under the Code.

“Working Capital” has the meaning set forth in Section 2.3(a).

ARTICLE 2
SALE AND TRANSFER OF SHARES

2.1           Purchase of Shares.  Subject to the terms and conditions of this Agreement, the Sellers hereby sell and transfer the Shares to the Buyer, and the Buyer hereby purchases the Shares from the Sellers.

2.2           Consideration.  As consideration for the sale and transfer of the Shares, the Sellers shall receive (a) the Purchase Price as set forth in Section 2.3 below; (b) the opportunity to receive the Earnout Payment as set forth in Section 4 below; (c) the opportunity to receive

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Incentive Payments as set forth in Section 2.6 below; and (d) the opportunity to receive the Ajinomoto Payment as set forth in Section 2.6 below; provided, however, that (i) ten percent (10%) of the Purchase Price and of the Earnout Payment shall be deposited in escrow pursuant to the Escrow Agreement, and (ii) the aggregate sum of the Purchase Price, Earnout Payment, Incentive Payments, and Ajinomoto Payments paid to all Sellers shall not exceed Ninety Million Dollars ($90,000,000).

2.3           Purchase Price.

(a)           The purchase price for the Shares (the “Purchase Price”) shall be the sum of (i) Eight Million Dollars ($8,000,000) and (ii) the Adjustment Amount.  The “Adjustment Amount” (which may be a positive or negative number) will be equal to the difference between (i) the Company’s Working Capital calculated as of the Closing Date and (ii) the Company’s Baseline Working Capital (as defined below).  For purposes hereof: (i) ”Working Capital” means the sum of the current assets of the Company less the sum of the current liabilities of the Company, each determined in accordance with GAAP and (ii) “Baseline Working Capital” means Eight Million, Eight Hundred Twenty Six Thousand, Five Hundred Seventy Four Dollars ($8,826,574) (which is the Company’s average Working Capital amount for the three (3) months preceding the Closing Date).

(b)           The Purchase Price will be paid as follows.  On the Closing Date, the Buyer shall (i) pay five percent (5%) of the Net Closing Payment to the Sellers in cash (the “Closing Date Cash Payment”), allocated among the Sellers in accordance with the respective Percentage Interests of the Sellers; and (ii) deliver promissory notes in the form attached hereto as Exhibit 2.3(b) (the “Closing Date Promissory Notes”) to the Sellers, in an aggregate principal amount equal to ninety-five percent (95%) of the Net Closing Payment, allocated among the Sellers in accordance with their respective Percentage Interests.  The Closing Date Promissory Notes shall provide that the entire principal amount thereunder shall be due and payable in cash on the first business day after the Closing Date.  On the first business day following the Closing Date, the Buyer will also deliver Eight Hundred Thousand Dollars ($800,000) to the Escrow Agent to be held in escrow pursuant to the Escrow Agreement.

(c)           The Company has delivered to the Buyer the Company’s good-faith estimate of the Adjustment Amount no later than three (3) Business Days prior to the Closing Date, and such estimate is based on the Company’s books and records and other information then available.  The Buyer and the Sellers have in good faith estimated the Purchase Price paid on the Closing Date (the “Estimated Purchase Price”) based on the Company’s estimate of the Adjustment Amount, the Company’s books and records and other information then available.

(d)           The Buyer and the Sellers acknowledge and agree that the exact amount of the Purchase Price is not known as of the Closing Date and that the Estimated Purchase Price paid on the Closing Date is an estimate of the Purchase Price which may need to be adjusted subsequent to the Closing Date on the basis set forth herein.  Accordingly, as soon as practicable following the Closing Date, but in no event later than sixty (60) days after the Closing Date, the Buyer shall prepare and deliver to the Sellers’ Agent (i) a balance sheet of the Company as of the close of business on the day immediately prior to the Closing Date (the “Closing Date Balance Sheet”) prepared in accordance with GAAP, (ii) a determination of the Working Capital as of the

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Closing Date, (iii) the Adjustment Amount, and (iv) a statement setting forth the determination of the Purchase Price (the “Purchase Price Statement”).  The components of the Purchase Price shall be determined in accordance with GAAP.

(e)           The Sellers’ Agent and his accountant shall have the right to review all records, work papers and calculations related to the Closing Date Balance Sheet, Closing Date Working Capital determination, Adjustment Amount and the Purchase Price Statement.  The Sellers’ Agent shall have thirty (30) days after delivery of the Purchase Price Statement in which to notify the Buyer in writing (such notice, a “Purchase Price Dispute Notice”) of any discrepancy in, or disagreement with, the items reflected on the Purchase Price Statement (and specifying the amount in dispute and setting forth in reasonable detail the basis for such discrepancy or disagreement), and upon agreement by the Buyer regarding the adjustment requested by the Sellers’ Agent, an appropriate adjustment shall be made thereto.  If  the Sellers’ Agent does not deliver a Purchase Price Dispute Notice to the Buyer during such thirty (30) day period, the Purchase Price Statement shall be deemed to be accepted in the form presented to the Sellers’ Agent.  If the Buyer and the Sellers’ Agent do not agree, within thirty (30) days after timely delivery of the Purchase Price Dispute Notice, to resolve any discrepancy or disagreement therein, the discrepancy or disagreement shall be submitted for review and final determination by the Independent Accounting Firm.  The review of the Independent Accounting Firm shall be limited to the discrepancies and disagreements set forth in the Purchase Price Dispute Notice, and the resolution of such discrepancies and disagreements and the determination of the Purchase Price by the Independent Accounting Firm shall be (i) in writing, (ii) made in accordance with GAAP, (iii) with respect to any specific discrepancy or disagreement, no greater than the higher amount calculated by the Buyer or the Sellers’ Agent, as the case may be, and no lower than the lower amount calculated by the Buyer or the Sellers’ Agent as the case may be, (iv) made as promptly as practical after the submission of such discrepancies and disagreements to the Independent Accounting Firm (but in no event later than thirty (30) days after the date of submission), and (v) final and binding upon, and non-appealable by, the parties hereto and their respective successors and assigns for all purposes hereof, and not subject to collateral attack for any reason absent manifest error or fraud.  All expenses and fees of the Independent Accounting Firm shall be borne one-half (1/2) by the Buyer, on the one hand, and one-half (1/2) by the Sellers, on the other hand; provided, however, that if the Independent Accounting Firm determines that the final amount owed by the Buyer is greater than 110% of the previously disputed amount that was proposed by the Buyer, the Buyer shall bear 100% of the expenses and fees of the Independent Accounting Firm.

(f)            If the Purchase Price as finally determined pursuant to Section 2.3(e) exceeds the Estimated Payment made to the Sellers pursuant to Section 2.3(c) above, the Buyer shall pay to the Sellers the amount of such excess (less ten percent (10%) to be paid to Escrow Agent) in proportion to their respective Percentage Interests by wire transfer or immediately available funds, and if such excess is not paid by the Buyer to the Sellers within ten (10) days thereof, such failure shall constitute a default hereunder and such unpaid amount shall bear interest from such tenth (10th) day at the rate of twelve percent (12%) per annum.  If the Purchase Price as finally determined pursuant to Section 2.3(e) is less than the Estimated Purchase Price paid to the Sellers pursuant to Section 2.3(c), above, the Sellers shall pay the amount of such excess to the Buyer in accordance with each Seller’s Percentage Interest by wire transfer or immediately available funds, and if such excess is not paid by the Sellers to the Buyer

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within ten (10) days thereof, such failure shall constitute a default hereunder and such unpaid amount shall bear interest from such tenth (10th) day at the Prime Rate.

2.4           Earnout Payment; Earnout Payment Bonus Amount.

(a)           In addition to the consideration described in Section 2.3, if the EBIT for the twelve (12) month period following the Closing Date (“Year One EBIT”) is equal to or greater than $2,500,000, the Buyer shall pay the Sellers less the amount to be paid to the Escrow Agent, on or before the date which is forty-five (45) days after the first anniversary date of the Closing Date (the “Earnout Payment Due Date”), an amount equal to (i) Year One EBIT multiplied by 1.875 (the “Earnout Payment”) less (ii) the Designated Earnout Payment Amount which shall be paid to the Selected Seller Designees (if any) on the Earnout Payment Due Date in accordance with Section 2.4(b); provided, however, that the aggregate of the Earnout Payment and Designated Earnout Payment Amounts to be paid shall not exceed an aggregate of $7,500,000.

(b)           Within two days prior to the Earnout Payment Due Date, Edward A. Byrd in his capacity as the “Representative” under the Seller Payment Agreement, shall notify the Buyer in writing which Seller Designees, if any, are entitled to receive the Designated Earnout Payment Amount under the terms of the Seller Payment Agreement (such Seller Designees shall be deemed the “Selected Seller Designees”) and shall provide the specific Earnout Payment amounts to be paid to each Seller and the Designated Earnout Payment Amount to be paid to each Selected Seller Designee along with their respective wire transfer instructions.  Upon receipt of such written notice, the Buyer shall pay the Designated Earnout Payment Amount less any applicable tax withholding amounts to the Selected Seller Designees on the Earnout Payment Due Date.  To the extent the Buyer pays any Designated Earnout Payment Amounts to the Selected Seller Designees, the Buyer shall effect, or cause the Company to effect, any required tax reporting, tax withholding and tax deposits in a manner consistent with any such payments.

(c)           All Taxes or other required payments  required to be made by employers in connection with payments to the Selected Seller Designees, and not recoverable through the withholding procedures, including but not limited to the employer’s share of FICA and Medicare taxes, shall be deducted from the amounts otherwise payable to the Sellers for the Earnout Payment, it being the parties’ intent that neither the Company nor the Buyer will incur any out-of-pocket costs in respect of any payments to the Selected Seller Designees (other than normal payroll processing costs.)

(d)           The parties acknowledge that the Buyer’s or the Company’s assumption of reporting and withholding obligations with respect to payments made to the Selected Seller Designees represents an accommodation to the Sellers for mutual convenience, and such assumption shall not be construed as any agreement, admission, or acknowledgement by  the Buyer  or the Company that such payments are obligations of, or compensation for services rendered to, the Buyer or the Company.  Notwithstanding the foregoing, the Buyer agrees to indemnify and hold the Sellers harmless against any losses (including taxes, penalties, and interest) as a result of any failure by the Buyer to withhold or deposit in a timely manner the correct amount of taxes with respect to payments made to the Selected Sellers Designees.

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2.5           Incentive Payments; Incentive Payment Bonus Amount.  In addition to the consideration described in Sections 2.3 and 2.4, the Buyer shall pay the Sellers, less any applicable Designated Incentive Payment Amounts pursuant to Section 2.5(d) below, on or before the date which is forty-five days (45) days after the first three (3) annual anniversary dates of the Closing Date (each, an “Incentive Payment Due Date”), additional consideration in the form of an “Incentive Payment” provided that the terms and conditions set forth below are met.  Each annual Incentive Payment may consist of a Base Payment, Excess Payment, and Catch-Up Payment, and shall be determined pursuant to the terms forth below and then allocated among the Sellers, subject to any applicable deductions for Designated Incentive Payment Amounts pursuant to Section 2.5(d) below, according to their Percentage Interests.  Any deductions of an Incentive Payment to account for the payment of a Designated Incentive Payment Amount in accordance with Section 2.5(d) below shall made on a pro rata basis in accordance with the Sellers’ Percentage Interests.  The Incentive Payments shall be calculated as described below, and illustrative examples which reflect the parties’ intent in calculating the Incentive Payments are set forth in Schedule 2.5 attached hereto.

(a)           Year One Incentive Payment.  The Incentive Payment for the twelve (12) month period ending on the first anniversary of the Closing Date (the “Year One Incentive Payment”) shall be calculated as follows:

(i)            If Year One EBIT is less than $5,000,000, the Year One Incentive Payment shall be zero.

(ii)           If Year One EBIT is equal to or greater than $5,000,000 but less than or equal to $10,000,000, the Buyer shall pay the Sellers a Base Payment in an amount between $5,000,000 and $21,500,000, prorated for the amount of Year One EBIT equal to or greater than $5,000,000 up to $10,000,000.

(iii)          If Year One EBIT exceeds $10,000,000, the Buyer shall pay the Sellers (A) a Base Payment of $21,500,000 plus (B) an Excess Payment in an amount equal to twenty percent (20%) of the amount by which Year One EBIT exceeds $10,000,000.

(b)           Year Two Incentive Payment.  The Incentive Payment for the twelve (12) month period ending on the second anniversary of the Closing Date (the “Year Two Incentive Payment”) shall be calculated as follows:

(i)            If EBIT for the twelve (12) month period ending on the second anniversary of the Closing Date (“Year Two EBIT”) is less than $6,500,000, the Year Two Incentive Payment shall be zero.

(ii)           If Year Two EBIT is equal to or greater than $6,500,000 but less than or equal to $13,000,000, the Buyer shall pay the Sellers a Base Payment in an amount between $2,500,000 and $21,500,000, prorated for the amount of Year Two EBIT equal to or greater than $6,500,000 up to $13,000,000.

(iii)          If the Year Two EBIT exceeds $13,000,000, the Buyer shall pay the Sellers (A) a Base Payment of $21,500,000 plus (B) an Excess Payment in an amount equal to twenty percent (20%) of the amount by which the Year Two EBIT exceeds $13,000,000.

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(c)           Year Three Incentive Payment.  The Incentive Payment for the twelve (12) month period ending on the third anniversary of the Closing Date (the “Year Three Incentive Payment”) shall be calculated as follows:

(i)            If EBIT for the twelve (12) month period ending on the third anniversary the Closing Date (“Year Three EBIT”) is less than $14,000,000, the Year Three Incentive Payment shall be zero.

(ii)           If Year Three EBIT is equal to or greater than $14,000,000 but less than or equal to $19,000,000, the Buyer shall pay the Sellers a Base Payment in an amount between $4,000,000 and $21,500,000, prorated for the amount of Year Three EBIT equal to or greater than $14,000,000 up to $19,000,000.

(iii)          If Year Three EBIT exceeds $19,000,000, the Buyer shall pay the Sellers (A) a Base Payment of $21,500,000 plus (B) a Catch Up Payment.  To determine the amount of the Catch Up Payment, the Sellers will be credited for that portion of Year Three EBIT which exceeds $19,000,000 so as to increase the amount of Base Payment which Sellers would otherwise have been entitled to earn in Year Two.  If the addition of the excess Year Three EBIT to Year Two EBIT results in Year Two EBIT greater than $13,000,000, the amount by which Year Two EBIT, as so supplemented, exceeds $13,000,000 shall be applied to Year One EBIT.  The Catch Up Payment for Year Two and, if applicable, Year One, shall be calculated such that the Sellers receive the greater of the amount payable to the Sellers if the excess Year Three EBIT which is carried back to the prior year(s) is used to (1) increase the Base Payment for such year or (2) determine an Excess Payment for such year; provided, however, that if the Sellers received any Excess Payments in any prior year, the amount of all such Excess Payments shall be deducted from the amount of the Catch-Up Payment.

(iv)          If Year Three EBIT exceeds an amount such that the aggregate sum of the Purchase Price, Earnout Payment, and Incentive Payments paid to all Sellers following the Year Three Incentive Payment exceeds $80,000,000 in accordance with Section 2.5(c)(iii), then the Buyer shall pay the Sellers an Excess Payment in an amount equal to twenty percent (20%) of the amount by which Year Three EBIT, Year Two EBIT, and Year One EBIT, in the aggregate exceeds $42,000,000; provided, however, that the aggregate sum of the Purchase Price, Earnout Payment, all other Incentive Payments, Excess Payment and Ajinomoto Payments shall not exceed $90,000,000.

(d)           Within two days prior to the Incentive Payment Due Date, Edward A. Byrd in his capacity as the “Representative” under the Seller Payment Agreement, shall notify the Buyer in writing which Seller Designees, if any, are entitled to receive the Designated Incentive Payment Amount under the terms of the Seller Payment Agreement (such Seller Designees shall be deemed the “Selected Incentive Seller Designees”) and shall provide the specific Incentive Payment amounts to be paid to each Seller and the Designated Incentive Payment Amount to be paid to each Selected Incentive Seller Designee along with their respective wire transfer instructions.  Upon receipt of such written notice, the Buyer shall pay the Designated Incentive Payment Amount less any applicable tax withholding amounts to the Selected Incentive Seller Designees on the Incentive Payment Due Date.  To the extent the Buyer pays any Designated Incentive Payment Amounts to the Selected Incentive Seller Designees, the

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Buyer shall effect, or cause the Company to effect, any required tax reporting, tax withholding and tax deposits in a manner consistent with any such payments.

(e)           All Taxes or other required payments  required to be made by employers in connection with payments to the Selected Seller Designees, and not recoverable through the withholding procedures, including but not limited to the employer’s share of FICA and Medicare taxes, shall be deducted from the amounts otherwise payable to the Sellers for the Incentive Payment, it being the parties’ intent that neither the Company nor the Buyer will incur any out-of-pocket costs in respect of any payments to the Selected Seller Designees (other than normal payroll processing costs.)

(f)            The parties acknowledge that the Buyer’s or the Company’s assumption of reporting and withholding obligations with respect to payments made to the Selected Seller Designees represents an accommodation to the Sellers for mutual convenience, and such assumption shall not be construed as any agreement, admission, or acknowledgement by  the Buyer  or the Company that such payments are obligations of, or compensation for services rendered to, the Buyer or the Company.  Notwithstanding the foregoing, the Buyer agrees to indemnify and hold the Sellers harmless against any losses (including taxes, penalties, and interest) as a result of any failure by the Buyer to withhold or deposit in a timely manner the correct amount of taxes with respect to payments made to the Selected Sellers Designees.

2.6           Ajinomoto Payments.  In addition to the consideration described in Sections 2.3, 2.4, and 2.5, the Buyer shall pay the Sellers less the amount to be paid to the Escrow Agent, on or before the date which is forty-five days (45) days after the fourth and fifth annual anniversary dates of the Closing Date (each, an “Ajinomoto Payment Due Date”), additional consideration in the form of a cash payment to the Sellers pursuant to the terms set forth below (each, an “Ajinomoto Payment”) which shall be allocated among the Sellers in accordance with their Percentage Interests; provided, however, that the aggregate sum of the Purchase Price, Earnout Payment, Incentive Payments, Excess Payment, and Ajinomoto Payments paid to all Sellers shall not exceed $90,000,000.

(a)           Year Four Ajinomoto Payment.  If Ajinomoto Revenue during the twelve (12) month period ending on the fourth anniversary of the Closing Date exceeds Two Hundred Million Dollars ($200,000,000), the Buyer shall make an Ajinomoto Payment in the aggregate amount of Ten Million Dollars ($10,000,000).

(b)           Year Five Ajinomoto Payment.  If Ajinomoto Revenue during the twelve (12) month period ending on the fifth anniversary of the Closing Date exceeds Three Hundred Million Dollars ($300,000,000), the Buyer shall make an Ajinomoto Payment to the Sellers in the aggregate amount of Fifteen Million Dollars ($15,000,000).

2.7           Payment Calculation Disputes.

(a)           On or before the date which is forty-five (45) days after the first, second, and third annual anniversary dates of the Closing Date, the Buyer shall prepare and deliver to the Sellers’ Agent (i) the financial statements of the Company for the preceding twelve (12) month period, (ii) a determination of EBIT for such period, (iii) the calculation of the Earnout Payment,

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if any, and (v) the calculation of the Incentive Payment, if any, and all records, work papers and calculations related to the foregoing.

(b)           On or before the date which is forty-five (45) days after the fourth and fifth annual anniversary dates of the Closing Date, the Buyer shall prepare and deliver to the Sellers’ Agent (i) the amount of the Ajinomoto Revenues, if any, and (ii) the calculation of the Ajinomoto Payment, if any, and all records, work papers and calculations related to the foregoing

(c)           The Sellers’ Agent shall have thirty (30) days after delivery of the information set forth in Sections 2.7(a) and 2.7(b) above in which to notify the Buyer in writing (such notice, a “Payment Dispute Notice”) of any disagreement with the Buyer’s calculation of EBIT, the Ajinomoto Revenue, the Earnout Payment, Incentive Payment or the Ajinomoto Payment, as applicable (and specifying the amount in dispute and setting forth in reasonable detail the basis for such discrepancy or disagreement), and upon agreement by the Buyer regarding the adjustment requested by the Sellers’ Agent, an appropriate adjustment shall be made thereto.  If the Sellers’ Agent does not deliver a Payment Dispute Notice to the Buyer during such thirty (30) day period, EBIT, the Ajinomoto Revenue, the Earnout Payment, Incentive Payment and/or Ajinomoto Payment calculations determined by the Buyer for the preceding twelve (12) month period shall be deemed to be accepted by the Sellers’ Agent.  If the Buyer and the Sellers’ Agent do not agree, within thirty (30) days after timely delivery of the Payment Dispute Notice, to resolve any discrepancy or disagreement therein, the discrepancy or disagreement shall be submitted for review and final determination by the Independent Accounting Firm.  The review of the Independent Accounting Firm shall be limited to the discrepancies and disagreements set forth in the Payment Dispute Notice and the resolution of such discrepancies and disagreements, and the determination of the EBIT, Ajinomoto Revenue, Earnout Payment, Incentive Payment or the Ajinomoto Payment, as applicable, by the Independent Accounting Firm, shall be (i) in writing, (ii) made in accordance with GAAP, (iii) with respect to any specific discrepancy or disagreement, no greater than the higher amount calculated by the Buyer or the Sellers’ Agent, as the case may be, and no lower than the lower amount calculated by the Buyer or the Sellers’ Agent, as the case may be, (iv) made as promptly as practicable after the submission of such discrepancies and disagreements to the Independent Accounting Firm (but in no event later than thirty (30) days after the date of submission), and (v) final and binding upon, and non-appealable by, the parties hereto and their respective successors and assigns for all purposes hereof, and not subject to collateral attack for any reason absent manifest error or fraud.  All expenses and fees of the Independent Accounting Firm shall be borne one-half (1/2) by the Buyer on the one hand, and one-half (1/2) by the Sellers, on the other hand; provided, however, that if the Independent Accounting Firm determines that the final amount owed by the Buyer is greater than 110% of the previously disputed amount that was proposed by the Buyer, the Buyer shall bear 100% of the expenses and fees of the Independent Accounting Firm.

(d)           On the tenth (10th) Business Day following a final determination by the Independent Accounting Firm (the “Disputed Payment Due Date”), the parties will make settlement payments, if necessary, in the amounts to be determined by the Independent Accounting Firm.  Payments to the Sellers, if required, will be allocated in accordance with each Seller’s Percentage Interest and payments to the Buyer, if required, must be made by each Seller

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in accordance with such Seller’s Percentage Interest.  All such payments must be made in immediately available funds.  If any such settlement payment is not paid on the Disputed Payment Due Date, such failure shall constitute a default hereunder and such unpaid amount shall bear interest from such date at the Prime Rate.

2.8           Failure to Make Timely Payments.  If the Buyer fails to deliver any payment as set forth in Sections 2.4, 2.5, or 2.6, within one hundred twenty (120) days of an Earnout Payment Due Date, Incentive Payment Due Date or Ajinomoto Payment Due Date, as applicable, the Buyer shall issue to the Sellers an aggregate amount of Buyer Common Stock equal to (a) the amount of the Earnout Payment, Incentive Payment or Ajinomoto Payment due to the Sellers on the Earnout Payment Due Date, Incentive Payment Due Date or Ajinomoto Payment Due Date, as applicable, divided by (b) the average closing price of Buyer Common Stock on the NASDAQ Global Market or any other exchange on which Buyer Common Stock is publicly traded for the ten (10) trading days immediately preceding the Earnout Payment Due Date, Incentive Payment Due Date or Ajinomoto Payment Due Date, as applicable.  To the extent any such Buyer Common Stock is issued to the Sellers in accordance with the terms of this Section 2.8, the Sellers shall have the registration rights set forth on Exhibit 2.8 attached hereto with respect to such Buyer Common Stock.  Notwithstanding the foregoing, the Buyer shall, prior to the issuance of any Buyer Common Stock, obtain the prior approval of its stockholders if in the opinion of the Buyer such approval is legally required, including any requirement of an exchange on which Buyer Common Stock is listed; provided that in the event of any inability of the Buyer to obtain such approval, the parties agree that Buyer shall nonetheless be obligated to pay any payments set forth in Sections 2.4, 2.5, or 2.6, plus interest on the unpaid amount accruing at the greater of (i) ten percent (10%) per annum or (ii) the then-prevailing Prime Rate plus five percent (5%) per annum.  If the amount of any such payment is the subject of a dispute pursuant to Section 2.7, the Buyer’s obligation to issue Buyer Common Stock to the Sellers shall not be triggered until one hundred twenty (120) days following the Disputed Payment Due Date.  Any Buyer Common Stock delivered to the Sellers pursuant to this Section 2.8 shall be distributed among the Sellers according to their Percentage Interests.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLERS

The Sellers jointly and severally represent and warrant to the Buyer as follows:

3.1           Title to Shares.  Each Seller is the sole lawful beneficial and record owner of the respective number of Shares set forth opposite his name on Schedule 3.1 attached hereto and such Shares represent the ownership percentages in all of the capital stock of the Company as provided on Schedule 3.1.  Each Seller hereby delivers to the Buyer good and marketable title to such Shares free and clear of all Liens.

3.2           Organization and Good Standing.

(a)           The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of California.  The Company is duly qualified to do business as a foreign corporation and is in good standing under the laws of each state or other jurisdiction in which either the ownership or use of the properties owned or used by it, or the

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nature of the activities conducted by it, requires such qualification. Part 3.2 of the Disclosure Schedule contains a complete and accurate list of other jurisdictions in which the Company is authorized to do business.  The Company has full corporate power and authority to conduct its business as it is now being conducted, to own or use the properties and assets that it purports to own or use, and to perform all its obligations under the Applicable Contracts.

(b)           The Company has delivered to the Buyer copies of the Organizational Documents of the Company, as currently in effect.

3.3           Authority; No Conflict.

(a)           This Agreement constitutes the legal, valid, and binding obligation of the Company and the Sellers, enforceable against the Company and the Sellers in accordance with its terms except as may be limited by (i) bankruptcy, insolvency, or other similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity (whether enforcement is sought at law or in equity).  The documents set forth in Section 6.3 (collectively, the “Sellers’ Closing Documents”), constitute the legal, valid, and binding obligations of the Sellers, enforceable against each Seller a party thereto in accordance with their respective terms except as may be limited by (i) bankruptcy, insolvency, or other similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity (whether enforcement is sought at law or in equity).  Each of the Company and each Seller has the absolute and unrestricted right, power, authority, and capacity to execute and deliver this Agreement and the Sellers’ Closing Documents to which it is a party and to perform its obligations under this Agreement and such Sellers’ Closing Documents.

(b)           Except as set forth in Part 3.3 of the Disclosure Schedule, neither the execution and delivery of this Agreement nor the consummation or performance of any of the transactions contemplated herein will, directly or indirectly (with or without notice or lapse of time):

(i)            Contravene, conflict with, or result in a violation of (A) any provision of the Organizational Documents of the Company, or (B) any resolution adopted by the board of directors or the shareholders of the Company;

(ii)           Contravene, conflict with, or result in a violation of, or give any Governmental Body or other Person the right to challenge any of the transactions contemplated herein or to exercise any remedy or obtain any relief under, any Legal Requirement or any Order to which the Company or any Seller, or any of the assets owned or used by the Company, may be subject;

(iii)          Contravene, conflict with, or result in a violation of any of the terms or requirements of, or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental  Authorization that is held by the Company or that otherwise relates to the business of, or any of the assets owned or used by, the Company;

(iv)          Cause the Buyer or the Company to become subject to, or to become liable for the payment of, any Tax;

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(v)           Materially contravene, conflict with, or result in a material violation or breach of any provision of, or give any Person the right to declare a material default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate, or adversely modify, any Applicable Contract; or

(vi)          Result in the imposition or creation of any Lien upon or with respect to any of the assets owned or used by the Company.

(c)           Except as set forth in Part 3.3 of the Disclosure Schedule, neither the Company nor any Seller is or will be required to give any notice to or obtain any Consent from any Person in connection with the execution and delivery of this Agreement or the consummation or performance of any of the transactions contemplated herein.

3.4         Capitalization.  The authorized equity securities of the Company consist of (a) Five Million (5,000,000) shares of preferred stock, no par value per share, of which no shares are issued and outstanding, and (b) Fifteen Million (15,000,000) shares of common stock, no par value per share, of which Nine Million, Two Hundred Thousand (9,200,000) shares are issued and outstanding and constitute the Shares.  No legend or other reference to any purported Lien appears upon any certificate representing equity securities of the Company.  All of the outstanding equity securities of the Company have been duly authorized and validly issued and are fully paid and nonassessable, and are held of record by the respective Sellers as set forth on Schedule 3.1 attached hereto.  There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other Contracts or commitments that could require the Company to issue, sell, or otherwise become obligated to issue any capital stock.  There are no outstanding or authorized stock appreciation, phantom stock, profit participation, or similar rights with respect to the Company.  There are no voting trusts, proxies, or other agreements or understandings with respect to the voting of the capital stock of the Company.  There are no Contracts restricting or otherwise relating to the management of the Company, the voting rights or dividend rights of any Seller, or the disposition of the Shares of each Seller.  There are no Contracts otherwise granting any Person any right in respect of any of the Shares and there are no existing restrictions on the transfer of the Shares.  None of the outstanding equity securities or other securities of the Company was issued in violation of the Securities Act or any other Legal Requirement.  The Company does not own, nor does the Company have any Contract to acquire, any equity securities or other securities of any Person (other than Company) or any direct or indirect equity or ownership interest in any other business.

3.5         Financial Statements.  The Sellers have delivered to the Buyer unaudited balance sheets, statements of income and changes in shareholders’ equity of the Company (collectively, the “Financial Statements”) for each of the fiscal years 2004 through 2006 and the fiscal quarter ended March 31, 2007.  Such Financial Statements fairly present in all material respects the financial condition and the results of operations, changes in shareholders’ equity, and cash flow of the Company as at the respective dates of and for the periods referred to in such Financial Statements, all in accordance with GAAP, subject, in the case of the December 31, 2006 financial statements, to normal recurring year-end adjustments (the effect of which will not, individually or in the aggregate, be materially adverse).  The Financial Statements reflect the consistent application of such accounting principles throughout the periods involved, and no

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financial statements of any Person other than the Company are required by GAAP to be included in the consolidated Financial Statements of the Company.

3.6         Books and Records.  The books of account, minute books, stock record books, and other records of the Company, all of which have been made available to the Buyer, are complete and correct in all material respects. The minute books of the Company contain accurate and materially complete records of all meetings held of, and corporate action taken by, the shareholders, the boards of directors, and committees of the boards of directors of the Company, and no meeting of any such shareholders, board of directors, or committee has been held for which minutes have not been prepared and are not contained in such minute books. As of the date hereof, all of those books and records are in the possession of the Company.

3.7         Title to Assets; Liens.

(a)           The Company owns all the properties and assets (whether real, personal, or mixed and whether tangible or intangible) that it purports to own located in the facilities owned or operated by the Company or reflected as owned in the books and records of the Company, including all of the properties and assets reflected in the Financial Statements (except for assets held under capitalized leases disclosed in Part 3.7(a) of the Disclosure Schedule and personal property sold since the date of the most recent Financial Statements in the Ordinary Course of Business), and all of the properties and assets purchased or otherwise acquired by the Company since the date of the Financial Statements (except for personal property acquired and sold since the date of the most recent Financial Statements in the Ordinary Course of Business and consistent with past practice), which subsequently purchased or acquired properties and assets (other than inventory and short-term investments) are listed in Part 3.7(a) of the Disclosure Schedule.

(b)           Except as set forth in Part 3.7(b) of the Disclosure Schedule, all material properties and assets reflected in the Financial Statements are free and clear of all Liens with the exception of Permitted Liens.

3.8         Names.  Part 3.8 of the Disclosure Schedule lists all names (whether legal, trade or d/b/a) used by the Company since January 1, 2001.

3.9         Products.

(a)           Except as set forth in Part 3.9(a) of the Disclosure Schedule: (i) no claim for product liability has been asserted against the Company and, to the Seller’s knowledge, no event has occurred which would be reasonably likely to give rise to the assertion of any such claim; (ii) there is no material deficiency or inadequacy in the manufacture, design or formulation of any of the products of the Company which would be reasonably likely to result in any such claim; and (iii) all products sold by the Company have been manufactured in material compliance with all applicable manufacturing and quality control procedures as required by any applicable Legal Requirements, including, without limitation, all applicable labeling, false advertising or consumer protection laws in existence on the Closing Date, including by way of example, California’s Proposition 65 (California Health and Safety Code Sections 25249.6 et. seq.).

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(b)           Except as set forth in Part 3.9(b) of the Disclosure Schedule: (i) all products and services sold by the Company (and the delivery thereof) have been  produced, sold and/or delivered in material conformity with all applicable contractual commitments and all applicable expressed or implied warranties and all applicable Legal Requirements; and (ii) no liability for any warranty claims exists for the repair, replacement or return thereof or other damages in connection with such services, sales or deliveries, except for any such claims incurred in the Ordinary Course of Business consistent in amount and character with past experience of the Company and as disclosed to Buyer prior to the date hereof.  Part 3.9(b) of the Disclosure Schedule also sets forth a complete list of all material product returns since January 1, 2004, current return authorizations, a description of each such returned product or return authorization, its dollar value, and the reason for return.

3.10       Inventory.  Part 3.10 of the Disclosure Schedule sets forth a complete list of all inventory of the Company, current as of three (3) days prior to the Closing Date, which list includes the following information for each item of inventory: (a) item description; (b) quantity; (c) batch number; (d) value; (e) expiration date; and (f) location.  All such inventory, whether or not reflected in the Financial Statements, consists of a quality and quantity usable and salable in the Ordinary Course of Business, except for obsolete items and items of below-standard quality, all of which have been written off or written down to net realizable value in the Financial Statements or on the accounting records of the Company as of the Closing Date, as the case may be. All inventories not written off have been priced at the lower of cost or market on a first in, first out basis.  Except as set forth on Part 3.10 of the Disclosure Schedule, all inventory has a shelf life of at least eighteen (18) months, and the quantities of each item of inventory (whether raw materials, work-in-process, or finished goods) are, to the Seller’s Knowledge, adequate and reasonable in the present circumstances of the Company.

3.11       Customers; Suppliers; Agents.  Part 3.11 of the Disclosure Schedule sets forth, with respect to the period from January 1, 2004 through December 31, 2006, a list of (a) the customer name and dollar amount derived from each of the five (5) largest (based on dollar amounts purchased from the Company) customers of the Company; (b) the supplier name and dollar amount purchased from the ten (10) largest (based on dollar amounts purchased by the Company) suppliers of the Company and (c) the top (10) largest (based upon dollar amounts of revenue generated by such entities) agents or intermediaries who transact business with the Company.  Neither the Company nor any Seller has any reason to believe or has received any notice or indication of the intention of any of the customers, suppliers or third parties to any Applicable Contracts of the Company to cease doing business or reduce in any respect the business transacted with the Company (including discontinuing any item for sale) or to terminate or modify any agreements with the Company (whether upon consummation of the transactions contemplated hereby or otherwise).  Part 3.11 of the Disclosure Schedule sets forth, with respect to the period from January 1, 2006 to December 31, 2007, all special or other promotions and retail co-operative promotion programs of the Company relating to the sale, marketing or distribution of the Company’s products.

3.12       Accounts Receivable.  All accounts receivable of the Company that are reflected on the Financial Statements or on the accounting records of the Company as of the Closing Date (collectively, the “Accounts Receivable”) represent valid obligations arising from sales actually made or services actually performed in the Ordinary Course of Business.  The

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Accounts Receivable will be collectible net of the respective reserves shown on the Financial Statements or on the accounting records of the Company as of the Closing Date (which reserves are reasonable and calculated consistent with past practice and, in the case of the reserve as of the Closing Date, do not represent a material adverse change in the composition of such Accounts Receivable in terms of aging).  There is no contest, claim, or right of set-off, other than returns in the Ordinary Course of Business, under any Contract with any obligor of an Accounts Receivable relating to the amount or validity of such Accounts Receivable.  Part 3.12 of the Disclosure Schedule contains a complete and accurate list of all Accounts Receivable as of the date of the most recent Financial Statements, which list sets forth the aging of such Accounts Receivable.