Lorvic Holdings, Inc. - Page 4

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                  In 1954, Charles Nemanick acquired an interest in Old                                 
            Lorvic, and assumed managerial responsibilities.  At some point,                            
            Charles Nemanick and family members acquired a controlling                                  
            interest in the company.   In 1979, Old Lorvic acquired                                     
            Scientific Associates, Inc. (SAI), a contract testing laboratory                            
            in St. Louis, Missouri, which had been providing a certain amount                           
            of services to Old Lorvic.  SAI was thereafter operated as a                                
            separate stand-alone business.                                                              
                 In March 1985, R.P. Scherer Corp. (Scherer), an                                       
            international developer of drug delivery systems and the world's                            
            largest producer of softgels for the pharmaceutical and                                     
            nutritional supplements industries, acquired Old Lorvic.  After                             
            the acquisition, Old Lorvic continued to operate, in practice, as                           
            an autonomous business.  At the time of purchase, Scherer was                               
            diversifying in order to expand its domestic earnings base.  In                             
            the foregoing transaction, Scherer paid approximately $5.8                                  
            million for the outstanding stock of Old Lorvic.  Scherer,                                  
            however, did not prepare a valuation of the assets it had                                   
            acquired through Old Lorvic.                                                                
                  The Stock Purchase Agreement (1985 Agreement) incorporated a                          
            covenant not to compete from Charles Nemanick and his son,                                  
            Richard S. Nemanick (Richard Nemanick).  Specifically, Article                              
            XIV of the 1985 Agreement declared:                                                         







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