ASSET PURCHASE AGREEMENT

Exhibit 10.1

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (this “ Agreement ”) is entered into as of July 29, 2009 (“Effective Date”), by and among PharmaCare US Inc., a Delaware corporation (“ PharmaCare US ”), and PharmaCare Laboratories Pty Ltd., an Australian company (“ PharmaCare Australia ”) (PharmaCare US and PharmaCare Australia may be referred to herein individually as “Buyer” and collectively as the “ Buyers ”), Real Health Laboratories, Inc., a California corporation (“ Seller ”) and a wholly-owned subsidiary of Natural Alternatives International, Inc., a Delaware corporation (“ Parent ”), and Parent. Buyers, Seller and Parent may be referred to herein individually as a “ Party ” and collectively as the “ Parties .”

WHEREAS, Buyers desire to purchase from Seller certain assets used in (and assume certain of the liabilities of Seller related to) Seller’s wholesale and direct-to-consumer vitamin and nutritional supplement business (the “ Business ”), which, for purposes of clarification, does not include any assets or business related to products manufactured, marketed, distributed or sold by Parent including, without limitation, under the Parent’s Dr. Cherry brand; and

WHEREAS, Seller desires to sell to Buyers such assets and assign to Buyers such liabilities on the terms set forth herein.

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.

Section 1. Definitions . The definitions of certain defined terms, not defined elsewhere in this Agreement, are:

“ Acquired Assets ” means all of Seller’s right, title, and interest in and to the following, and only the following, specified assets:

(a) the Acquired Intellectual Property; and

(b) the Acquired Inventory.

“ Acquired Intellectual Property ” means the Intellectual Property listed on Schedule 1 .

“ Acquired Inventory ” means the inventory of the Business listed on Schedule 2 , which schedule Buyers and Seller agree will be completed by Seller and delivered to Buyers within ten (10) business days after the Closing Date and will include all of the inventory of the Business and inventories related to open purchase orders as of the Closing Date.

“ Adverse Consequences ” 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’ fees and expenses.

“ Affiliate ” has the meaning set forth in Rule 12b-2 of the regulations promulgated under the Securities Exchange Act of 1934, as amended.

“ Assumed Liabilities ” means the following, and only the following, liabilities of the Seller:

provided , however , that the term “ Assumed Liabilities ” shall not include any of the Excluded Liabilities.

“ Closing Date Net Inventory Value ” means the Net Inventory Value, as of 12:01 a.m., San Diego time, on the Closing Date.

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

“ Confidentiality Agreement ” means that certain Mutual Confidentiality and Non-Disclosure Agreement entered into by and between Parent and Pharmacare Australia, effective as of February 24, 2009.

“ Excluded Liabilities ” means any liability or obligation of Seller other than those set forth in the definition of “Assumed Liabilities,” including: (a) 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 Seller, prior to the Closing Date; (b) any liability of Seller or any of Seller’s Affiliates for Taxes, including any liability of Seller or any of Seller’s Affiliates for Taxes as a result of Seller’s operation of the

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Business or Taxes payable by Seller or any of Seller’s Affiliates that will arise as a result of the sale of the Acquired Assets pursuant to this Agreement; (c) any liability of Seller or any of Seller’s Affiliates relating to payroll, vacation, sick leave, workers’ compensation, unemployment benefits, pension benefits, health care plans or benefits or other employee plans or benefits of any kind for Seller’s employees or former employees or both, in every case arising out of and relating to Seller’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’s Affiliates; (d) any liability of Seller under this Agreement or other document executed in connection with the transactions contemplated hereby; (e) any liability of Seller based upon Seller’s acts or omissions occurring after the Closing; (f) any liability of Seller or any of Seller’s Affiliates arising out of product returns in connection with discontinued product programs where Seller or its Affiliates has received notice from a customer as of the Closing Date that such customer intends to discontinue carrying such product and any liabilities related to any discount programs implemented by any such customer to liquidate any such product (“Discontinued Product Programs”); and (g) any amount remaining due and payable by Seller to third parties as of the Closing Date in connection with Seller’s acquisition of the Acquired Inventory, other than obligations of Seller related to open purchase orders for Acquired Inventory that are being assumed by Buyer.

“ GAAP ” means United States generally accepted accounting principles as in effect from time to time, consistently applied.

“ Intellectual Property ” means: (a) customer names and history, (b) vendor names, (c) product cost history, (d) product performance, (e) customer performance, (f) campaign performance, (g) URLs and any Internet addresses, (h) 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, (i) websites, graphics, designs, labels, packaging and other copyrightable works, copyrights, and applications, registrations, and renewals in connection therewith, (j) product specifications, trade secrets and confidential business information (including ideas, research and development, know-how, formulas, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information and business and marketing plans and proposals together with marketing material, point of sale material and television commercials), (k) advertising and promotional materials, (l) other proprietary rights, and (m) copies and tangible embodiments thereof (in whatever form or medium).

“ Knowledge ” means, with respect to any representation, warranty or statement of any Party in this Agreement that is qualified by such Party’s “knowledge,” 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 Ken Wolf or Mark LeDoux 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 Toby Browne or Michael Halter has Knowledge of that fact or other matter.

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“ Net Inventory Value ” means the amount equal to (a) the gross inventory value of the Acquired Inventory as set forth on the books and records of the Seller, which have been maintained in accordance with GAAP, less (b) any inventory reserve balance set forth on such books and records.

“ Person ” 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).

“ Restricted Business ” means the marketing and sale of the products included in Acquired Inventory; 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 (i) manufacturing any products for third parties, or (ii) manufacturing, distributing or selling any products being sold as of the Closing Date under the Dr. Cherry brand or any other nutritional supplements or other nutraceutical, nutritional or skin care products not included in Acquired Inventory. Notwithstanding the foregoing part (ii), the Parties agree that, during the Restricted Period (as hereinafter defined), neither Seller nor its Parent or Affiliates may create, distribute and sell a new brand of products not existing as of the Closing Date and comprised of products substantially similar to those included in Acquired Inventory.

“ Tax ” or “ Taxes ” 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 §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.

“ Tax Return ” 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.

Section 2. Basic Transaction .

(a) Purchase and Sale of Assets . On and subject to the terms and conditions of this Agreement, Buyers agree to purchase from Seller, and Seller agrees to sell, transfer, convey, and deliver to Buyers, all of the Acquired Assets at the Closing for the consideration specified below in this Section 2 .

(b) Assumption of Liabilities . On and subject to the terms and conditions of this Agreement, Buyers agree to assume and become responsible for all of the Assumed Liabilities at the Closing. Buyers 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.

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(c) Purchase Price .

(i) At the Closing, Buyer agrees to pay to Seller $500,000 (the “ Purchase Price ”) in United States dollars, by delivery of cash in such amount, payable by wire transfer or delivery of other immediately available funds. The Purchase Price is subject to adjustment as provided in Section 2(c)(ii) below.

(ii) Purchase Price Adjustments . No later than ten (10) business days after the Closing Date, Seller shall provide Buyers with a final copy of Schedule 2, setting forth the Acquired Inventory, and Exhibit D , which shall include a statement of the Closing Date Net Inventory Value based on such Schedule 2. The date such Schedule 2 and Exhibit D are provided by Seller to Buyers is referred to herein as the “ Schedule 2 Delivery Date .”

(A) If the Closing Date Net Inventory Value is less than $265,000, then the Purchase Price shall be decreased by an amount equal to the difference obtained by subtracting the amount of the Closing Date Net Inventory Value from $265,000, and Seller shall pay such difference to Buyers within five (5) business days after the Schedule 2 Delivery Date.

(B) If the Closing Date Net Inventory Value is greater than $315,000, then the Purchase Price shall be increased by an amount equal to the difference obtained by subtracting $315,000 from the amount of the Closing Date Net Inventory Value, and Buyers shall pay such difference to Seller within five (5) business days after the Schedule 2 Delivery Date.

(C) If, on the Closing Date, the Interbank Australian Dollar exchange rate relative to the U.S. Dollar, as reported in the Wall Street Journal, is less than 0.665 cents, the Purchase Price shall be adjusted such that the Purchase Price in U.S. Dollars is the equivalent of $714,286 Australian Dollars based on such Closing Date exchange rate.

(iii) Earn-out . In addition to the Purchase Price, Seller shall receive from Buyers, as additional consideration for the transactions contemplated hereby, the amounts set forth below:

(A) Within forty five (45) days after the end of each of the three month periods ending on October 31, 2009, January 31, 2010, April 30, 2010 and July 31, 2010, Buyers shall calculate the Consolidated Brand Contribution Margin consistent with the method and presentation set forth in the Consolidated Budgeted Brand Contribution attached hereto as Exhibit H (“ Budgeted Brand Contribution ”) and submit a copy of such calculation to Seller. The calculation for the three month period ending July 31, 2010 shall also include a cumulative calculation for the period from August 1, 2009 through July 31, 2010. To the extent any expenditures of Buyers reflected on the Consolidated Brand Contribution Margin calculated by Buyers exceed the budgeted amounts for such expenditures as set forth on the Budgeted Brand Contribution, and such increases were authorized, initiated or otherwise within the control of Buyers, including any increases resulting from an increase in the number of employees, any change in the nature

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or amount of promotional activities undertaken, or any other change in the operation of the Business as conducted by Buyers, such excess amounts shall be added back to the Brand Contribution Margin such that the Brand Contribution Margin shall be calculated as if such excesses had not occurred.

(B) For each of the three month periods ending on October 31, 2009, January 31, 2010, and April 30, 2010, Buyers shall pay to Seller an amount equal to:

[A ÷ B] x $125,000 x 0.50

(C) For the three month period ending on July 31, 2010, Buyers shall pay to Seller an amount equal to:

[X ÷ Y] x $500,000 - Z

(D) The amounts due to Seller from Buyers in accordance with Section 2(c)(iii)(B) and Section 2(c)(iii)(C) shall be paid to Seller no later than sixty (60) days after the end of each such three month period.

(E) All computations in connection with the Consolidated Brand Contribution Margin for purposes of Section 2(c)(iii)(A) shall be done by Buyers in accordance with GAAP.

(F) Seller shall be entitled to have access to the books and records of Buyers and the work papers of Buyers prepared in connection with the preparation and calculation of the Consolidated Brand Contribution Margin and shall be entitled to discuss such books and records, work papers and calculation with Buyers and those persons responsible for the preparation thereof.

(d) The Closing . The closing of the transactions contemplated by this Agreement (the “ Closing ”) shall take place at the offices of K&L Gates LLP, 3580 Carmel Mt. Road, Suite 200, San Diego, California commencing at 9:00 a.m. local time on July 31, 2009 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 place, such other time or by such other method as the Parties may mutually determine (the “ Closing Date ”).

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(e) Deliveries at the Closing . At the Closing, (i) Seller will deliver to Buyers the various certificates, instruments, and documents referred to in Section 6(a) below; (ii) Buyers will deliver to Seller the various funds, certificates, instruments, and documents referred to in Section 6(b) below; (iii) Seller will execute, acknowledge (if appropriate), and deliver (A) to PharmaCare US an Assignment and Bill of Sale in the form of Exhibit A-1 , (B) to PharmaCare Australia an Assignment and Bill of Sale in the form of Exhibit A-2 , (C) to PharmaCare Australia a counterpart Trademark Assignment in the form attached hereto as Exhibit C , (D) to Buyers a counterpart Instrument of Assumption in the form attached hereto as Exhibit B , (E) to Buyers an Assignment and Assumption Agreement in the form attached hereto as Exhibit F , and (F) to Buyers such other instruments of sale, transfer, conveyance, and assignment as Buyers and their counsel may reasonably request; (iv) Buyers will execute and deliver to Seller a counterpart Instrument of Assumption in the form attached hereto as Exhibit B ; (v) PharmaCare Australia will execute and deliver to Seller a counterpart Trademark Assignment in the form attached hereto as Exhibit C ; (vi) Buyers will execute and deliver to Seller a counterpart Assignment and Assumption Agreement in the form attached hereto as Exhibit F ; (vii) Buyers will execute, acknowledge (if appropriate), and deliver to Seller such other instruments of assumption as Seller and its counsel may reasonably request; and (viii) Buyers will deliver to Seller the consideration specified in Section 2(c)(i) above (as may be adjusted pursuant to Section 2(c)(ii) ).

(f) Purchase Price Allocation . The Purchase Price shall be allocated among the Acquired Assets as mutually agreed by Buyers and Seller. It is intended that such allocation will comply with the requirements of Section 1060 of the Code. Buyers shall prepare and deliver Internal Revenue Service (“ IRS ”) Form 8594 to Seller within forty-five (45) days after the Closing Date to be filed with the IRS, subject to Seller’s review and approval which shall not be unreasonably withheld. Seller and Buyers 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 Section 2(f) . The Parties shall not take any action or position inconsistent with the obligations set forth in this Agreement. Seller agrees to indemnify and hold Buyers and their respective Affiliates harmless and Buyers hereby agree to indemnify and hold Seller and its Affiliates 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.

Section 3. Seller’s Representations and Warranties . Seller represents and warrants to Buyers that the statements contained in this Section 3 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 Section 3 ), except as set forth in the disclosure schedule accompanying this Agreement (the “ Disclosure Schedule ”). The Disclosure Schedule will be arranged in paragraphs corresponding to the lettered and numbered paragraphs contained in this Section 3 and the other sections of this Agreement pursuant to which disclosure is made or items are referred to in the Disclosure Schedule.

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(a) Organization of Seller . 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.

(b) Authorization of Transaction . Seller has full corporate power and authority to execute and deliver this Agreement and the documents contemplated hereby (the “ Transaction Documents ”) and to perform its obligations thereunder. This Agreement constitutes, and the other Transaction Documents to which Seller is a party 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’ rights generally. The execution, delivery and performance of the Transaction Documents to which Seller is a party by Seller have been duly authorized by all necessary action of Seller’s shareholder and board of directors.

(c) Non-contravention . Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby (including the assignments and assumptions referred to in Section 2 above), will (i) 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, except as set forth in Schedule 3(c) of Seller’s Disclosure Schedule, or any provision of the charter or bylaws of Seller, or (ii) except as set forth in Schedule 3(c) of Seller’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’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 Section 2 above).

(d) Brokers’ Fees . Except as set forth in Schedule 3(d) of Seller’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.

(e) Title to Assets . Except as set forth in Schedule 3(e) of Seller’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 Buyers, free and clear of any liens or other encumbrances or liabilities.

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(f) Selected Financial Data . Within ten (10) business days after the Closing Date, Seller shall prepare, deliver to Buyers and attach hereto as Exhibit D the following financial data (the “ Selected Financial Data ”):

(i) The Closing Date Net Inventory Value, which shall be deemed final and conclusive and binding upon the Seller and the Buyers for purposes of this Agreement; and

(ii) the obligations of Seller in respect of the Assumed Liabilities, as of the Closing Date.

Except as set forth on Schedule 3(f) of Seller’s Disclosure Schedule, the Selected Financial Data will fairly present the values, obligations and expenses set forth therein and will be based upon the books and records of Seller, which have been maintained in accordance with GAAP.

(g) Acquired Intellectual Property .

(i) Except as set forth on Schedule 3(g)(i) of Seller’s Disclosure Schedule, to Seller’s Knowledge: (a) no third party has interfered with, infringed upon, misappropriated, or violated the Acquired Intellectual Property; (b) no Acquired Intellectual Property interferes with, infringes upon or violates the intellectual property rights of any third-party; (c) no copyrighted or copyrightable material included in the Acquired Intellectual Property infringes upon or violates the copyrights of any third party; and (d) no know-how, process, or product included in the Acquired Intellectual Property violates any trade secret of any third party.

(ii) Schedule 3(g)(ii) of the Disclosure Schedule identifies: (a) 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) 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 Section 3(g)(ii) of the Disclosure Schedule, as well as each other item of Acquired Intellectual Property:

(A) Except as set forth on Schedule 3(g)(ii)(A) of Seller’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;

(B) Except as set forth on Schedule 3(g)(ii)(B) of Seller’s Disclosure Schedule, the item is not subject to any outstanding injunction, judgment, order, decree, ruling, or charge;

(C) Except as set forth on Schedule 3(g)(ii)(C) of Seller’s Disclosure Schedule, no action, suit, proceeding, hearing, charge, complaint, claim, or demand is pending nor, to Seller’s Knowledge, is threatened, nor has Seller received notice of the commencement of any