Asset Purchase Agreement

Exhibit - 10.1

Asset Purchase Agreement

by and among

Viridian Packaging Solutions, LLC

and

Beutlich, L.P.

and

Frederic J. Beutlich

and

Zicam Swab Products, LLC

Dated as of October 31, 2005

TABLE OF CONTENTS

-i-

TABLE OF CONTENTS
(continued)

-ii-

TABLE OF CONTENTS
(continued)

-iii-

ASSET PURCHASE AGREEMENT

     THIS ASSET PURCHASE AGREEMENT (this “ Agreement ”) is dated as of October 31, 2005, by and among Viridian Packaging Solutions, LLC, an Illinois limited liability company (“ Seller ”), Beutlich, L.P., an Illinois limited partnership (“ Beutlich ”) (for purposes of Sections 2.1(b) and 2.4 , Article 4 , Sections 6.2 to 6.5 , Section 6.7 , Article 7 and Article 8 only), Frederic J. Beutlich, an individual residing in the State of Illinois (“ Frederic Beutlich ”) (for purposes of Sections 2.1(b) and 2.4 , Article 4 , Sections 6.2 to 6.5 , Article 7 and Article 8 only), and Zicam Swab Products, LLC, a Delaware limited liability company (“ Buyer ”). Seller, Buyer, Beutlich and Frederic Beutlich are sometimes referred to in this Agreement collectively as the “ Parties ” and each individually as a “ Party .”

RECITALS

     Seller wishes to sell, assign and transfer to Buyer, and Buyer wishes to purchase from Seller, as a going concern, Seller’s dry handle swab manufacturing business (the “ Business ”) and substantially all of the assets of Seller, owned individually or jointly by any of Seller, Beutlich, L.P., an Illinois limited partnership (“ Beutlich ”), Frederic Beutlich, Darrell W. Van Dyke or any Affiliate used in the conduct of the Business, and Buyer is further prepared to assume certain specified Liabilities of Seller related to the Business, for the consideration and upon the other terms and conditions set forth in this Agreement.

     NOW THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows:

ARTICLE 1
DEFINITIONS AND USAGE

     1.1 Definitions . Except as otherwise expressly provided herein or unless the context otherwise requires, initially capitalized terms used in this Agreement have the following meanings:

     “ Affiliate ” means with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such specified Person with the terms “control” and “controlled” meaning for purposes of this definition, the power to direct the management and policies of a Person, directly or indirectly, whether through the ownership of voting securities or partnership or other ownership interests, or by contract or otherwise.

     “ Agreement ” has the meaning set forth in the first paragraph of this Agreement, and includes the Schedules and Exhibits attached hereto and any amendment hereto.

     “ Applicable Law ” means any federal, state, local, municipal, foreign, international, multinational or other constitution, law, ordinance, principle of common law, code, regulation, statute or treaty.

     “ Assets ” has the meaning set forth in Section 2.1 .

     “ Assignment and Assumption Agreement ” has the meaning set forth in Section 2.6(a)(v) .

     “ Assumed Contracts ” has the meaning set forth in Section 2.1(a) .

     “ Assumed Liabilities ” has the meaning set forth in Section 2.3(a) .

     “ Beutlich ” has the meaning set forth in the Recitals to this Agreement.

     “ Beutlich Closing Documents ” has the meaning set forth in Section 4.2 .

     “ Beutlich License Agreement ” has the meaning set forth in Section 2.6(a)(vii) .

     “ Bill of Sale ” has the meaning set forth in Section 2.6(a)(iii) .

     “ Business ” has the meaning set forth in the Recitals to this Agreement.

     “ Business Day ” means any day other than a Saturday or Sunday or any other day on which banks in Arizona are permitted or required by Applicable Law to be closed.

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

     “ Buyer Closing Documents ” has the meaning set forth in Section 5.2 .

     “ Buyer Indemnified Persons ” has the meaning set forth in Section 7.2 .

     “ Closing ” has the meaning set forth in Section 2.5 .

     “ Closing Date ” has the meaning set forth in Section 2.5 .

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

     “ Confidential Information ” has the meaning set forth in Section 6.3(a) .

     “ Consent ” means any approval, consent, ratification, waiver or other authorization.

     “ Contemplated Transactions ” means the transactions contemplated by this Agreement to occur at Closing.

     “ Covered Swab Products ” has the meaning set forth in Section 2.4(c) .

     “ Damages ” has the meaning set forth in Section 7.2 .

     “ Effective Time ” means 12:01 a.m. (Phoenix time) on the Closing Date.

     “ Employee Plan ” means any employee benefit plan (within the meaning of Section 3(3) of ERISA) and each other employment, fringe benefit, or other retirement, bonus, deferred or incentive compensation plan, program, arrangement or agreement sponsored, maintained or contributed to or required to be contributed to by Seller or any ERISA Affiliate for the benefit of any current or former employee or director of Seller or any ERISA Affiliate.

     “ Encumbrance ” means any mortgage, pledge, lien, charge, hypothecation, security interest, encumbrance, adverse right, interest or claim, license, covenant, title defect, option, or right of first refusal, except for any liens for Taxes not yet due or delinquent or being contested in good faith by appropriate proceedings for which adequate reserves have been established and accrued on Seller’s financial statements in accordance with GAAP.

     “ Environment ” means soil, land surface or subsurface strata, surface waters, groundwaters, drinking water supply, stream sediments, ambient air (including indoor air), plant and animal life and any other environmental medium or natural resource.

     “ Environmental, Health and Safety Liabilities ” means any and all claims, costs, damages, expenses, Liabilities and/or other responsibilities or potential responsibilities arising from or under any Environmental Law or Occupational Safety and Health Law.

     “ Environmental Law ” means any Applicable Law that relates to protection of the Environment, to human health and safety, industrial hygiene, or to any Hazardous Activity or any use, handling of any kind, Environmental Release or transportation of any Hazardous Material, including any disclosure or reporting obligations to a Governmental Body or otherwise, any internal record-keeping, any permitting or registration, and any investigation or Remedial Action, and any other Applicable Law pertaining to the protection of the health and safety of employees or the public.

     “ Environmental Release ” means any release, spill, emission, leaking, pumping, pouring, dumping, emptying, injection, deposit, disposal, discharge, dispersal, leaching or migration on or into the Environment or into or out of any property.

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

     “ ERISA Affiliate ” means any Person, trade or business, whether or not incorporated, that together with Seller is or ever was deemed a “single employer” within the meaning of Section 4001(b)(1) of ERISA or Section 414 of the Code.

     “ Excluded Assets ” has the meaning set forth in Section 2.2 .

     “ Extension and Forbearance Agreement ” means that certain Second Forbearance Agreement dated _, 2005 among Harris, Seller, Beutlich, Frederic Beutlich and Darrell Van Dyke, as amended.

     “ Financial Statements ” has the meaning set forth in Section 3.4 .

     “ GAAP ” means generally accepted accounting principles as in effect in the United States of America, as determined by the Financial Accounting Standards Board from time to time, applied on a consistent basis as of the date of any application thereof.

     “ Governmental Authorization ” means any Consent, license, permission, registration or permit issued, granted, given or otherwise made available by or under the authority of any Governmental Body or pursuant to any Applicable Law.

     “ Governmental Body ” means any (i) nation, state, county, city, town, borough, village, district or other jurisdiction, (ii) federal, state, county, local, municipal, foreign or other government, (iii) governmental or quasi-governmental authority of any nature (including any agency, branch, department, board, commission, court, tribunal or other entity exercising governmental or quasi-governmental powers), (iv) body exercising, or entitled or purporting to exercise, any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power, (v) Indian tribal authority, or (vi) official of any of the foregoing.

     “ Gurnee Equipment ” has the meaning set forth in Section 6.7 .

     “ Gurnee Facility ” means the real property and improvements located at 760 Lakeside Drive, Gurnee, Illinois 60031 leased up to the date immediately preceding the Closing Date by Seller (as tenant) under the Gurnee Facility Lease.

     “ Gurnee Facility Lease ” means that certain lease dated June 11, 2001 between Gurnee Investors (as lessor) and Seller (as lessee) with respect to the Gurnee Facility, as such lease is amended and extended through the date of this Agreement.

     “ Harris ” has the meaning set forth in Section 2.4(b)(i) .

     “ Hazardous Activity ” means the distribution, generation, handling, importing, management, manufacturing, processing, production, refinement, Environmental Release, storage, transfer, transportation, treatment or use (including any withdrawal or other use of groundwater) of Hazardous Material in, on, under, about or from any facility or other real property owned, leased, operated or otherwise used by Seller or any Affiliate or agent thereof in connection with the conduct of the Business, or from any other asset of Seller or any Affiliate, into the Environment, beyond what is authorized by any Environmental Law relating to the Business or any asset of Seller or any Affiliate.

     “ Hazardous Material ” means any substance, material or waste which is regulated by any Governmental Body, including any material, substance or waste which is defined as a “hazardous waste,” “hazardous material,” “hazardous substance,” “extremely hazardous waste,” “restricted hazardous waste,” “contaminant,” “pollutant,” “toxic waste” or “toxic substance” under any provision of Environmental Law, and including petroleum, petroleum products, asbestos, presumed asbestos-containing material or asbestos-containing material, urea formaldehyde and polychlorinated biphenyls.

     “ Indemnified Person ” has the meaning set forth in Section 7.5(a) .

     “ Indemnifying Party ” has the meaning set forth in Section 7.5(a) .

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

     “ Knowledge ” means, unless otherwise expressly provided herein:

          (a) when used to qualify a representation, warranty or other statement of Seller in this Agreement, (i) the actual (and not assumed, constructive or imputed)

knowledge of Frederic Beutlich, Manager and Member of Seller, or Darrell Van Dyke, Member of Seller, and (ii) the knowledge that Frederic Beutlich or Darrell Van Dyke could reasonably be expected to have as prudent and responsible managers of Seller’s assets and the Business, after having conducted a reasonably comprehensive inquiry or investigation with respect to the fact or matter that is the subject of such representation, warranty or other statement; and

          (b) when used to qualify a representation, warranty or other statement of Buyer in this Agreement, (i) the actual (and not assumed, constructive or imputed) knowledge of Carl J. Johnson, manager of Buyer, or William J. Hemelt, manager of Buyer, and (ii) the knowledge that Carl J. Johnson or William J. Hemelt could reasonably be expected to have as prudent and responsible managers of Buyer’s assets and business, after having conducted a reasonably comprehensive inquiry or investigation with respect to the fact or matter that is the subject of such representation, warranty or other statement.

          “ Letter of Intent ” means the letter of intent regarding the sale of the Assets, dated September 20, 2005, by and among Matrixx Initiatives, Inc. (Buyer’s parent), Seller, Beutlich and Frederic Beutlich.

          “ Liability ” means with respect to any Person (including any Party), any Liability of such Person of any kind, character or description, whether known or unknown, absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due, vested or unvested, executory, determined, determinable or otherwise, and whether or not the same is required to be accrued on the financial statements of such Person.

          “ Occupational Safety and Health Law ” means any Applicable Law designed to provide safe and healthful working conditions and to reduce occupational safety and health hazards, including the Occupational Safety and Health Act, and any program, whether governmental or private (such as those promulgated or sponsored by industry associations and insurance companies), designed to provide safe and healthful working conditions.

          “ Order ” means any order, injunction, judgment, decision, finding, decree, ruling, assessment or arbitration award of any Governmental Body or arbitrator.

          “ Party ” and “ Parties ” have the meanings set forth in the first paragraph of this Agreement.

          “ Patent License ” has the meaning set forth in Section 2.1(c) .

          “ Patent License Assignment ” has the meaning set forth in Section 2.6(a)(viii) .

          “ Payoff Letter ” has the meaning set forth in Section 2.4(b)(ii) .

          “ Permitted Encumbrance ” means (i) any statutory lien for current Taxes, assessments or other governmental charges not yet delinquent or the amount or validity of which is being contested in good faith by appropriate Proceedings (provided that any such contest is expressly disclosed by Seller in this Agreement or in the Financial Statements), or (ii) any zoning,

entitlement or other land use or environmental regulation by any Governmental Authority, provided that such regulation has not been breached by Seller in any material respect.

     “ Person ” means an individual, partnership, corporation, business trust, limited liability company, limited liability partnership, joint stock company, trust, unincorporated association, joint venture or other entity or a Governmental Body.

     “ Prairie Business ” means Prairie Business Capital, Inc.

     “ Proceeding ” means any action, arbitration, audit, hearing, investigation, complaint, claim, litigation (including pre-litigation proceedings) or suit (whether civil, criminal, administrative, judicial or investigative, whether formal or informal, whether public or private) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Body or arbitrator.

     “ Purchase Price ” has the meaning set forth in Section 2.4 .

     “ Releases ” has the meaning set forth in Section 2.6(a)(iii) .

     “ Remedial Action ” means all actions, including capital expenditures, required or voluntarily undertaken (i) to clean up, remove, treat or in any other way address any Hazardous Material or other substance, (ii) to prevent the Environmental Release or threat of Environmental Release or to minimize the further Environmental Release of any Hazardous Material or other substance so it does not migrate or endanger or threaten to endanger public health or welfare or the Environment, (iii) to perform pre-remedial studies and investigations or post-remedial monitoring and care, or (iv) to bring any property into compliance with Environmental Laws and environmental Governmental Authorizations.

     “ Representative ” means with respect to a particular Person, any director, officer, manager, employee, agent, consultant, advisor, accountant, financial advisor, legal counsel or other representative of that Person.

     “ Retained Employees ” has the meaning set forth in Section 6.1(a) .

     “ Retained Liabilities ” has the meaning set forth in Section 2.3(b) .

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

     “ Seller Closing Documents ” has the meaning set forth in Section 3.2 .

     “ Seller Indemnified Persons ” has the meaning set forth in Section 7.3 .

     “ Seller Intellectual Property ” has the meaning set forth in Section 3.23(a) .

     “ Side Letter Agreement ” has the meaning set forth in Section 2.6(a)(xiii) .

     “ Tangible Personal Property ” has the meaning set forth in Section 2.1(a) .

     “ Tax ” means any income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, property, environmental, windfall profit, customs, vehicle, airplane, boat, vessel or other title or registration, capital stock, franchise, employees’ income withholding, foreign or domestic withholding, social security, unemployment, disability, real property, personal property, sales, use, transfer, value added, alternative, add-on minimum and other tax, fee, assessment, levy, tariff, charge or duty of any kind whatsoever and any interest, penalty, addition or additional amount thereon imposed, assessed or collected by or under the authority of any Governmental Body or payable under any tax-sharing agreement or any other contract.

     “ Tax Return ” means any return (including any information return), report, statement, schedule, notice, form, declaration, claim for refund or other document or information filed with or submitted to, or required to be filed with or submitted to, any Governmental Body in connection with the determination, assessment, collection or payment of any Tax or in connection with the administration, implementation or enforcement of or compliance with any Applicable Law relating to any Tax.

     “ Termination Agreement ” has the meaning set forth in Section 2.6(a)(xii) .

     “ Third Party ” means a Person that is not a Party and is not an Affiliate of any Party.

     “ Third-Party Claim ” means any claim against any Indemnified Person by a Third Party, whether or not involving a Proceeding.

     “ Third-Party Manufacturer ” has the meaning set forth in Section 6.8 .

     “ Trade Secrets ” means all discoveries, concepts, ideas, research and development, know-how, formulae, inventions, compositions, manufacturing and production processes and techniques, technical data, procedures, designs, drawings, specifications, databases, and other proprietary and confidential information, including customer lists, supplier lists, pricing and cost information, and business and marketing plans and proposals of Seller, in each case excluding any rights in respect of any of the foregoing that comprise or are protected by copyrights or patents.

     “ Van Dyke Consulting Agreement ” has the meaning set forth in Section 2.6(b)(vi) .

     “ Viridian Patent ” has the meaning set forth in Section 2.1(b) .

         1.2 Usage .

     (a)  Interpretation . In this Agreement, unless a clear contrary intention appears:

     (i) the singular number includes the plural number and vice versa;

     (ii) reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are not prohibited by this Agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity or individually;

     (iii) reference to any gender includes the other gender and the neuter, as applicable;

     (iv) reference to any agreement, document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof;

     (v) reference to any Applicable Law means such Applicable Law as amended, modified, codified, replaced or reenacted, in whole or in part, and in effect from time to time, including rules and regulations promulgated thereunder, and reference to any section or other provision of any Applicable Law means that provision of such Applicable Law from time to time in effect and constituting the substantive amendment, modification, codification, replacement or reenactment of such section or other provision;

     (vi) “hereunder,” “hereof,” “hereto,” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Article, Section or other provision hereof or any Exhibit or Schedule attached hereto;

     (vii) “including” (and with correlative meaning “include” and “includes”) means including, without limiting the generality of any description preceding such term, and shall be deemed to be followed by the words “without limitation”;

     (viii) Article and Section headings are provided for convenience of reference only and shall not affect the construction or interpretation of any provision hereof;

     (ix) any references to “Article”, “Section”, “Schedule” or “Exhibit” followed by a number or letter or combination of the two refers to the corresponding Article, Section, Schedule or Exhibit of or to this Agreement;

     (x) “or” is used in the inclusive sense of “and/or”;

     (xi) with respect to the determination of any period of time, “from” means “from and including” and “to” means “to but excluding”; and

     (xii) references to documents, instruments or agreements shall be deemed to refer as well to all addenda, exhibits, schedules or amendments thereto.

     (b)  Construction . This Agreement was negotiated by the Parties with the benefit of legal representation on each side, and any rule of construction or interpretation otherwise requiring this Agreement to be construed or interpreted against any Party shall not apply to any construction or interpretation hereof.

ARTICLE 2
SALE AND PURCHASE OF ASSETS

     2.1 Sale of Assets . Upon the terms and subject to the conditions set forth in this Agreement, at the Closing, but effective as of the Effective Time, Seller shall sell, convey, assign, transfer and deliver to Buyer, and Buyer shall purchase and acquire from Seller, free and clear of any Encumbrance, other than Permitted Encumbrances, all right, title and interest in and to the following property and assets of Seller, wherever located, used in the conduct of the Business (collectively, the “ Assets ”):

     (a) machinery, equipment, spare parts, tools, furniture, office equipment, computer hardware and peripherals, supplies, materials, vehicles, trade fixtures and other items of tangible personal property of Seller, including those listed on Schedule 2.1(a) (the “ Tangible Personal Property ”);

     (b) all United States and foreign patents and applications therefor (including continuations, divisionals, provisionals continuations-in-part, or reissues of patent applications and patents issuing thereon) owned individually or jointly by any of Seller, Frederic Beutlich, Darrell W. Van Dyke, Beutlich (or Beutlich d/b/a Beutlich Pharmaceuticals, L.P.) or any Affiliate of any of the foregoing related to dry handle swab technology, including (i) United States Patent No. 6,516,947 entitled “Containers Having a Fracture Recess For Opening the Container” and all associated intellectual property and goodwill related thereto (the “ Viridian Patent ”), and (ii) United States Provisional Patent (Pending) No. 60/604,125 entitled “Machine and Process for Fusion Molding of Plastic Single-Use Containers”;

     (c) all rights of Seller in, to and under the Settlement and License Agreement dated November 25, 2003, by and among Seller, Zila, Inc., Zila Swab Technologies, Inc., Beutlich Pharmaceuticals (or Beutlich d/b/a Beutlich Pharmaceuticals, L.P.) and Darrell W. Van Dyke (the “ Patent License ”);

     (d) Seller’s rights, as of the Effective Time, under the contracts and agreements listed on Schedule 2.1(d) (collectively, the “ Assumed Contracts ”);

     (e) approximately five thousand one hundred fifty (5,150) pounds of packaged, unused, white polypropylene compound, as described on that certain purchase order issued by Beutlich to Marval Industries on May 17, 2005;

     (f) one thousand (1,000) molded, uncrimped, unfilled swab tubes included in Seller work in process located at the Gurnee Facility;

     (g) all Governmental Authorizations of Seller and all pending applications therefor or renewals thereof relating to the Business or any of the Assets, in each case to the extent transferable to Buyer;

     (h) originals or copies of all data and records (whether in print, electronic other format), related to the operations of the Business and/or the ownership of the Assets, including client and customer lists and records, referral sources, research and development

reports and records, production reports and records, service and warranty records, equipment logs, operating guides and manuals, financial and accounting records, creative materials, advertising materials, promotional materials, studies, reports, correspondence and other similar documents and records and, subject to Applicable Laws, copies of all personnel records;

     (i) all other intangible rights and property of Seller that relate to the Business, including going concern value and goodwill; and

     (j) all claims of Seller against Third Parties relating to the Assets or the Business, whether choate or inchoate, known or unknown, contingent or non-contingent.

     2.2 Excluded Assets . Notwithstanding anything to the contrary contained in Section 2.1 or elsewhere in this Agreement, the following assets of Seller (collectively, the “ Excluded Assets ”) are not part of the sale and purchase contemplated hereunder, are excluded from the Assets and shall remain the property of Seller, after the Closing:

     (a) all cash, cash bonds, cash equivalents and short-term investments of Seller and its Affiliates;

     (b) any Employee Plan assets of Seller;

     (c) Seller’s rights under any contract or agreement not listed on Schedule 2.1(d) ;

     (d) the articles of organization, operating agreement, minute books and other documents relating to the organizational existence of Seller as a limited liability company;

     (e) the other property and assets (if any) listed on Schedule 2.2(e) ; and

     (f) any and all claims Seller has or may have against Western Research Laboratories, Inc., Alliance Laboratories, Inc. and any of its Affiliates, owners, directors or agents, including copies of documents related to such claims.

     2.3 Liabilities .

     (a)  Assumed Liabilities . On the Closing Date, but effective as of the Effective Time, Buyer shall assume and agree to fully satisfy and discharge in accordance with their respective terms the following Liabilities of Seller (the “ Assumed Liabilities ”):

          (i) Seller’s obligations under the Patent License and the Assumed Contracts, but only to the extent that such obligations accrue or arise on or after the Effective Time and are not based on or do not result from any Liability (including based on any breach by Seller) arising before the Effective Time; and

          (ii) the specific payment obligations of Seller set forth on Schedule 2.3(a)(ii) .

     (b)  Retained Liabilities . The Retained Liabilities shall remain the exclusive responsibility of, and shall be retained, paid, performed and discharged exclusively by, Seller. “ Retained Liabilities ” shall mean every Liability of Seller other than the Assumed Liabilities.

     2.4 Purchase Price . In consideration for the Assets and the Business, and for the covenants and obligations of Seller, Beutlich and Frederic Beutlich hereunder and under the Seller Closing Documents, the purchase price for the Assets (the “ Purchase Price ”) shall be comprised of the following amounts and credits either previously paid or to be paid at the Closing by Buyer or its parent, Matrixx Initiatives, Inc., to or for the account of Seller, Beutlich or Frederic Beutlich:

          (a) Seller, Beutlich and Frederic Beutlich hereby acknowledge that Buyer has paid the following amounts to the following payees:

          (i) payment of $25,000 to Harris, NA (“ Harris ”) on Seller’s behalf pursuant to the Extension and Forbearance Agreement; and

          (ii) payment of $18,307 to Beutlich as reimbursement of Beutlich’s payment to Seller’s factor, Prairie Business, in respect of all amounts owing by Seller to Prairie Business.

          (b) At the Closing, Buyer shall pay or credit to or for the account of Seller the following amounts:

          (i) payment of $25,000 to Beutlich in reimbursement of Beutlich’s payment of such amount to Harris pursuant to the Extension and Forbearance Agreement;

          (ii) payment of $622,468.87 to Harris on behalf of Seller, Frederic Beutlich and Darrell Van Dyke, which amount is equal to the total amount owing by such Persons pursuant to Harris’ payoff letter dated October 27, 2005;

          (iii) payment of $11,587 to Beutlich in respect of amounts paid by Beutlich to Marval Industries on Seller’s behalf for the approximately five thousand one hundred fifty (5,150) pounds of white polypropylene compound included in the Assets;

          (iv) credit to Seller of $198,666, which amount represents the net amount of (A) the outstanding balance of Matrixx Initiatives, Inc.’s prepayment for finished dry handle swab product inventories plus the amount that Matrixx Initiatives, Inc. was required to pay a third-party contractor to finish packaging and shipping Seller’s last batch of finished dry handle swab product inventories (based on Seller’s failure to do so), minus (B) the amount owing by Matrixx Initiatives, Inc. to Seller or Prairie Business for finished swab products delivered but not invoiced by Seller; and

     (v) credit to Seller of $8,874, which amount represents the value of swab product materials previously supplied by Matrixx Initiatives, Inc. to Seller and subsequently used by Seller in performing its obligations under its Contract Manufacturing Agreement with Beutlich.

     (c) Following the Closing Date, Buyer hereby agrees to pay the following amounts to Beutlich (if applicable, but without duplication and not to exceed an aggregate amount of $200,000.00), based on the volume of dry handle swab products produced by or on behalf of Buyer based on the Viridian Patent or the Patent License (the “ Covered Swab Products ”) during the two-year period immediately following Buyer’s initial production of its dry handle swab products:

The Parties acknowledge and agree that the volume of Covered Swab Products produced by Buyer shall be determined in Buyer’s sole discretion, and Buyer shall not have any minimum production obligation with respect to the Covered Swab Products. Buyer will pay the aggregate amount payable pursuant to this Section 2.4(c) to Beutlich within forty-five (45) days after the second (2 ^nd ) anniversary of Buyer’s initial production of the Covered Swab Products. Notwithstanding the foregoing, (x) such aggregate amount payable shall be subject to set-off by Buyer in respect of any indemnification claim that is made by Buyer against Seller, Beutlich and/or Frederic Beutlich under Section 7.2 or the Side Letter Agreement prior to such payment date to the extent that such indemnification claim has not been satisfied or otherwise settled before such payment date, and (y) to the extent Buyer pays any amount to Sharper Automation either at or in connection with Closing in respect of amounts owing by Seller to Sharper Automation, Buyer shall be entitled to set off and deduct such amount from any payment required to be made by Buyer to Beutlich pursuant to this Section 2.4(c) . From the Closing Date until the first to occur of (i) the date on which Buyer has fully paid all amounts payable by it pursuant to this Section 2.4(c) , or (ii) ninety (90) days after the second (2 ^nd ) anniversary of Buyer’s initial production of the Covered Swab Products, Beutlich shall have the right to inspect Buyer’s relevant books and records related to Buyer’s production (if any) of Covered Swab Products to verify Buyer’s compliance with its payment obligations under this Section 2.4(c) ; provided, however that such inspection shall occur only at Buyer’s offices during normal business hours and shall not be undertaken more than once in any calendar year.

     2.5 Closing . The consummation by the Parties of the Contemplated Transactions (the “ Closing ”) shall take place at the offices of Snell & Wilmer, L.L.P. located at One Arizona Center, Phoenix, Arizona 85004, commencing at 10:00 a.m. (Phoenix time) on the

date of this Agreement (the “ Closing Date ”) or at such other location and at such other time as Seller and Buyer may agree.

     2.6 Closing Obligations . At or before the Closing:

     (a) Seller shall deliver to Buyer:

     (i) a copy, certified by a manager of Seller, of the joint resolution of the members and manager of Seller authorizing and approving Seller’s execution and delivery of this Agreement, the sale of the Assets by Seller to Buyer and the consummation of the Contemplated Transactions;

     (ii) a certificate of good standing of Seller issued by the Illinois Secretary of State, dated not more than ten (10) days before the Closing Date;

     (iii) a general release with respect to the Assets, substantially in the form attached hereto as Exhibit A (the “ Release ”), duly executed by Beutlich and Frederic Beutlich;

     (iv) a general bill of sale for all of the Assets that are Tangible Personal Property substantially in the form attached hereto as Exhibit B (the “ Bill of Sale ”), duly executed by Seller;

     (v) an assignment of all of the Assets that are intangible personal property substantially in the form attached hereto as Exhibit C , which assignment shall also contain Buyer’s undertaking to assume the Assumed Liabilities (the “ Assignment and Assumption Agreement ”), duly executed by Seller;

     (vi) an assignment of the Viridian Patent, substantially in the form attached hereto as Exhibit D (the “ Patent Transfer ”), duly executed by Seller, Beutlich and Darrell W. Van Dyke;

     (vii) a license agreement with respect to Beutlich’s rights under the Viridian Patent after the Closing Date, substantially in the form attached hereto as Exhibit E (the “ Beutlich License Agreement ”), duly executed by Beutlich;

     (viii) an assignment of the Patent License, substantially in the form attached hereto as Exhibit F , (the “ Patent License Assignment ”), duly executed by Seller and Beutlich;

     (ix) UCC Termination Statements and any other documents required for the discharge and release of all Encumbrances over the Assets by Harris NA (f/k/a/ Harris Palatine, NA) (“ Harris ”);

     (x) a consulting agreement between Buyer and Darrell W. Van Dyke, substantially in the form attached hereto as Exhibit G (the “ Van Dyke Consulting Agreement ”), duly executed by Darrell Van Dyke;

     (xi) evidence of payoff of all amounts owing by Seller to Prairie Business, and UCC Termination Statements and any other documents required for the discharge and release of all Encumbrances over the Assets by Prairie Business;

     (xii) a letter agreement between Seller and Matrixx Initiatives, Inc. confirming the termination of the Supply Agreement dated November 19, 2004 between such parties as of the Closing Date (the “ Termination Agreement ”) in form and substance reasonably acceptable to Seller and Buyer, duly executed by Seller;

     (xiii) a letter agreement among Beutlich, Frederic Beutlich and Buyer with respect to certain post-Closing protections afforded Buyer by Beutlich and Frederic Beutlich (the “ Side Letter Agreement ”) in form and substance reasonably acceptable to Beutlich, Frederic Beutlich and Buyer, duly executed by Beutlich and Frederic Beutlich;

     (xiv) an opinion of Drews & Associates, P.C., Seller’s counsel, in form and substance reasonably acceptable to Buyer;

     (xv) originals or copies of all books and records of Seller with respect to the Assets and/or the Business, other than the minute books and other documents relating to the organizational existence of Seller as a limited liability company or books and records that relate to non-Business matters; and

     (xvi) such other documents as Buyer may reasonably request for the purposes of properly documenting and giving effect to the Contemplated Transactions to occur at the Closing.

     (b) Buyer shall deliver to or for the account of Seller, Beutlich, Frederic Beutlich and/or Darrell Van Dyke (as applicable):

     (i) a copy, certified by a manager of Buyer of the resolution of the directors of Buyer authorizing and approving Buyer’s execution and delivery of this Agreement and the consummation of the Contemplated Transactions;

     (ii) a certificate of good standing of Buyer issued by the Delaware Secretary of State, dated not more than ten (10) days before the Closing Date;

     (iii) evidence reasonably acceptable to Seller of payment of the amounts set forth in Sections 2.4(b)(i) and 2.4(b)(ii) by wire transfer of immediately available U.S. funds;

     (iv) a written instrument substantially in the form attached hereto as Exhibit H (the “ Credit Instrument ”) evidencing Buyer’s credit to Seller of the amounts set forth in Sections 2.4(b)(iii) and 2.4(b)(v) ;

     (v) the Assignment and Assumption Agreement, duly executed by Buyer;

     (vi) the Van Dyke Consulting Agreement, duly executed by Buyer;

     (vii) the Termination Agreement, duly executed by Buyer;

     (viii) the Side Letter Agreement, duly executed by Buyer;

     (ix) an opinion of Snell & Wilmer L.L.P., Buyer’s counsel, in form and substance reasonably acceptable to Seller; and

     (x) such other documents as Seller may reasonably request for the purposes of properly documenting and giving effect to the Contemplated Transactions to occur at the Closing.

     2.7 Purchase Price Allocation . Seller and Buyer shall each be entitled to prepare and rely on its own allocation of the Purchase Price for all Tax purposes and in all filings, declarations and reports with the IRS in respect thereof, provided that each such Party’s allocation shall be consistent with the requirements of Section 1060 of the Code, the Treasury regulations thereunder and any similar provision of state, local or foreign law, as appropriate.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER

     In order to induce Buyer to enter into this Agreement and consummate the Contemplated Transactions, Seller hereby represents and warrants to Buyer as follows:

     3.1 Organization and Good Standing . Seller is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Illinois, with full limited liability company 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 of its obligations under the agreements to which it is a party. Seller does not own any asset or conduct any business outside the State of Illinois.

     3.2 Enforceability; Authority . This Agreement constitutes the legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a Proceeding at law or in equity). Upon the execution and delivery by Seller of the Bill of Sale, the Assignment and Assumption Agreement, the Patent Transfer, the Extension and Forbearance Agreement, the Beutlich License Agreement, the Patent License Assignment, the Termination Agreement and each other agreement and instrument to be executed and delivered by Seller at the Closing (collectively, the “ Seller Closing Documents ”), the Seller Closing Documents shall constitute the legal, valid and binding obligation of Seller,

enforceable against Seller in accordance with their respective terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a Proceeding at law or in equity). Seller has all limited liability company power and authority to execute and deliver this Agreement and the Seller Closing Documents and to perform its obligations under this Agreement and the Seller Closing Documents. Neither the execution and delivery of this Agreement by Seller nor the consummation or performance of any of the Contemplated Transactions shall, directly or indirectly (with or without notice or lapse of time):

     (a) breach or otherwise conflict with any provision of the operating agreement or other organizational documents of Seller or contravene any resolution adopted by the members or managers of Seller;

     (b) breach or otherwise conflict with any Applicable Law or Order to which Seller or any of the Assets may be subject or give any Governmental Body or other Person the right to challenge any of the Contemplated Transactions or to exercise any remedy or obtain any relief under any Applicable Law or any Order to which Seller or any of the Assets may be subject;

     (c) breach or otherwise 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 or being applied for by or on behalf of Seller or that otherwise relates to any of the Assets;

     (d) breach or otherwise conflict with any provision of, or give any Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or payment under, or to cancel, terminate or modify, any contract or agreement to which Seller is a party or by which Seller is bound; or

     (e) result in the imposition or creation of any Encumbrance on any Asset.

     3.3 Notices and Consents . Except as set forth on Schedule 3.3 , Seller is not required to give any notice to, or obtain any Consent from, any Person in connection with the execution and delivery of this Agreement and the consummation of the Contemplated Transactions.

     3.4 Financial Statements . Seller has delivered to Buyer, Seller’s unaudited financial statements for the fiscal year ended December 31, 2004 and for each completed interim period in which Seller was in operation since December 31, 2004 (the “ Financial Statements ”). The Financial Statements fairly present in all material respects the financial condition and results of operations of Seller as at the respective dates of and for the periods referred to therein. The Financial Statements have been prepared from and are in accordance in all material respects with the accounting records of Seller, fairly present in all material respects the financial condition, results of operations of Seller as of the respective dates of

and for the periods referred to therein, all in accordance with GAAP (except for the absence of notes thereto and, in the case of the interim, unaudited financial statements, subject to normal year-end adjustments that are not material in the aggregate), and reflect the consistent application of such accounting principles throughout the periods involved, except as disclosed in the notes thereto.

     3.5 Sufficiency of Assets . Except for the Excluded Assets, the Assets constitute all of the assets, tangible and intangible, necessary to operate the Business in the manner presently operated by Seller.

     3.6 Books and Records . The books of account and other financial records of Seller relating to the Assets and the Business, all of which have been made available to Buyer, are complete and correct in all material respects, represent actual, bona fide transactions, and have been maintained in accordance with sound business practices.

     3.7 Title to Assets; Encumbrances . Except for the Encumbrances listed on Schedule 3.7 , all of which shall be discharged by Seller before or in connection with the Closing, and except for the Permitted Encumbrances, Seller holds all legal and beneficial right, title and interest in and to the Assets, free and clear of any Encumbrance. The consummation of the Contemplated Transactions shall vest in Buyer at the Closing all legal and beneficial right, title and interest in and to the Assets, free and clear of any Encumbrance.

     3.8 Condition of Equipment . Except as disclosed on Schedule 3.8 , to the Knowledge of Seller, (i) each item of equipment included in the Tangible Personal Property and each item of equipment under any lease included in the Assumed Contracts is in good repair and good operating condition, ordinary wear and tear excepted, is suitable for immediate use in the ordinary course of business and is free from apparent defects, and (ii) no such item of Tangible Personal Property is in need of repair or replacement other than as part of routine maintenance in the ordinary course of business. All Tangible Personal Property is in the possession of Seller.

     3.9 Real Property .

     (a) Seller does not own, nor since the date of Seller’s organization, has it ever owned, any fee simple interest in real property. The Gurnee Facility Lease is the only real property in which Seller currently holds a leasehold interest, and Seller has provided Buyer with a complete copy of the Gurnee Facility Lease, including all amendments thereto.

     (b) Seller has a valid and enforceable leasehold interest under the Gurnee Facility Lease, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a Proceeding at law or in equity). The Gurnee Facility Lease is in full force and effect, and, except as set forth on Schedule 3.9(b) (i) Seller is not in default thereof, (ii) no condition exists that with notice or lapse of time, or both, would constitute a default by

Seller under the Gurnee Facility Lease, and (iii) no other party to the Gurnee Facility Lease is in default thereof or has exercised any termination right with respect thereto.

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

     (d) Seller has not made any alteration or caused any damage to the Gurnee Facility (ordinary wear and tear excepted) that was not Consented to by the applicable Third Party landlord and that has resulted in or could reasonably be expected to result in any claim by such landlord against Seller (or, following the Closing, against Buyer) for repair, replacement, remediation, reimbursement or other remedies available to such landlord under the Gurnee Facility Lease or pursuant to Applicable Law.

     (e) The use by Seller of the Gurnee Facility Lease for the various purposes for which the Gurnee Facility is presently being used is permitted as of right under all Applicable Laws (including zoning laws).

     (f) Seller does not currently have, nor has it had within the past twelve (12) months, any ongoing dispute or disagreement with any Third Party landlord in respect of any obligation of either party under the Gurnee Facility Lease where such dispute has not been fully resolved and settled as of the date hereof.

     3.10 No Undisclosed Liabilities . Seller does not have any Liability in respect of