AGREEMENT AND PLAN OF MERGER

EXHIBIT 10.1

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

GFA HOLDINGS, INC.

SHAREHOLDERS’ REPRESENTATIVE

BSB ACQUISITION CO., INC.

AND

BOULDER SPECIALTY BRANDS, INC.

DATED AS OF SEPTEMBER 25, 2006

TABLE OF CONTENTS

 

 

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AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER is made and entered into as of September 25, 2006, by and among GFA Holdings, Inc., a Delaware corporation (the “ Company ”), TSG4, L.P., a Delaware limited partnership, in its capacity as representative of the shareholders of the Company (the “ Shareholders’ Representative ”), Boulder Specialty Brands, Inc., a Delaware corporation (“ Parent ”), and BSB Acquisition Co., Inc., a Delaware corporation and wholly-owned subsidiary of Parent (the “ Merger Subsidiary ”).

RECITALS:

A. Parent, the Merger Subsidiary and the Company desire to enter this Agreement pursuant to which Parent will acquire all of the issued and outstanding stock of the Company as a result of the merger of the Merger Subsidiary with and into the Company.

B. The Boards of Directors of Parent, the Merger Subsidiary and the Company have determined that it is advisable and in the best interests of Parent, the Merger Subsidiary and the Company, and their respective shareholders, that the Merger Subsidiary be merged with and into the Company.

C. The Boards of Directors of Parent, the Merger Subsidiary and the Company have each unanimously approved this Agreement and the transactions contemplated hereby and have agreed to recommend that their respective shareholders adopt and approve this Agreement.

In consideration of the premises, the mutual promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

1.1 Definitions . As used in this Agreement, the following terms have the meanings set forth below.

“ Adjusted Cash ” means (i) the amount of Cash held by the Company and GFA Brands as of the Cutoff Date minus (ii) the amount of Indebtedness of the Company and GFA Brands as of the Cutoff Date (as evidenced by payoff letters issued to the Company and GFA Brands by their lenders, which shall be delivered to Parent prior to the Cutoff Date). For the avoidance of doubt, “Adjusted Cash” may be a positive or negative number.

“ Affiliate ” of any particular Person means any other Person controlling, controlled by or under common control with such Person.

“ Affiliated Group ” means an affiliated group as defined in Section 1504 of the Code (or any analogous combined, consolidated or unitary group defined under any income Tax Law) of which the Company or GFA Brands is or has been a member.

“ Agreement ” means this Agreement and Plan of Merger, together with all schedules and exhibits attached hereto.

“ Assets ” means all assets owned or utilized by the Company or GFA Brands, including, without limitation, Leased Real Property, Personal Property, Inventory, Accounts, goodwill, Proprietary Rights and any asset listed on the June 30 Financial Statements or any subsequently delivered balance sheet of the Company or GFA Brands.

“ Audited Financial Statements ” means the June 30, 2006 audited financial statements, the December 31, 2005 audited financial statements, the audited financial statements for the three-month period ending March 30, 2004, and the stub period ending December 31, 2004, and the December 31, 2003 audited financial statements. For all purposes under this Agreement, Audited Financial Statements shall include a balance sheet and the related statements of operation, changes in stockholders’ equity and cash flows and any required footnotes and such other disclosure materials, in each case, to the extent required to be included in the Proxy Statement.

“ Bonus Payments ” means the amount of any bonus or severance obligations paid or payable by the Company, GFA Brands or the Surviving Corporation to any of their respective shareholders, directors, officers or employees in connection with the consummation of the transactions contemplated hereby including, without limitation, any bonus payable to New Industries Corporation pursuant to that certain Extended Transitional Services Agreement dated July 21, 2006, by and between GFA Brands and New Industries Corporation which shall include the Earnings Bonus and the Sales Bonus (as defined therein) and any amounts payable to Roger Ansley pursuant to that certain Letter Agreement by and between Roger Ansley and GFA Brands dated on or about July 21, 2006, which amount shall specifically include any amounts payable to or on behalf of Mr. Ansley by the Company or GFA Brands with respect to any Taxes incurred by Mr. Ansley in connection with any such bonus. In the event the Bonus Payments include any consideration other than cash payments and other than the grant, sale, issuance of or acceleration of vesting of equity interests in the Company prior to the Closing, the value of such consideration shall be included in the calculation of the Bonus Payments.

“ Boulder Common Stock ” shall mean the common stock, $0.0001 par value per share of the Parent, whose price is quoted on the Over the Counter Bulletin Board under the ticker symbol “BDSB.OB”.

“ Boulder Warrants ” shall mean the common stock purchase warrants of the Parent, whose price is quoted on the Over the Counter Bulletin Board under the ticker symbol “BDSBW.OB”.

“ Business ” means the Company’s and GFA Brands’ business of producing, marketing, distributing and selling functional food products under the trade names Smart Balance ^® and Earth Balance ^® and such other products produced, marketed, distributed or sold by the Company or GFA Brands as of the date hereof.

“ Cash ” means (i) cash on hand or in the bank less any outstanding checks and (ii) deposits in transit to the extent there has been a reduction of receivables on account thereof.

 

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“ Cash Consideration ” means Four Hundred Sixty-five Million Dollars ($465,000,000) plus Adjusted Cash minus any reductions pursuant to Sections 2.8(b), and 8.4, minus the Net Bonus Payments and, if applicable, reduced as provided for in Section 4.11(c). For purposes of the definition of “Cash Consideration”, the amount of the Net Bonus Payments shall be determined using Bonus Payments as calculated pursuant to Section 2.8(a) and as adjusted pursuant to Section 2.8(e) .

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

“ Company Stock ” means, collectively, the Class A-1 Common Stock, $0.001 par value, of the Company, the Class A-2 Common Stock, $0.001 par value, of the Company, and the Class L Common Stock, $0.001 par value, of the Company.

“ Contracts ” means with respect to any Person, all agreements, contracts, commitments, franchises, covenants, authorizations, understandings, licenses, mortgages, promissory notes, deeds of trust, indentures, leases, plans or other instruments, certificates or obligations, whether written or oral, to which said Person is a party, under which said Person has or may acquire any right or has or may become subject to any obligation or by which said Person, any of said Person’s outstanding shares of stock or any of its assets is bound.

“ DGCL ” means the Delaware General Corporation Law.

“ Effective Time ” means the effective time of the Merger pursuant to the application of Section 103(c)(3) of the DGCL.

“ Environmental Laws ” means all applicable Laws concerning public health and safety, the pollution or protection of the environment or the use, generation, transportation, storage, treatment, processing, disposal or release of Hazardous Substances, as the foregoing are enacted and in effect on the Closing Date, including, without limitation, the Federal Solid Waste Disposal Act, as amended, the Federal Clean Air Act, as amended, the Federal Clean Water Act, as amended, the Federal Resource Conservation and Recovery Act of 1976, as amended, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, the Toxic Substances Control Act, as amended, regulations of the Environmental Protection Agency, regulations of the Nuclear Regulatory Agency and regulations of any state or local department of natural resources or other environmental protection agency.

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

“ Financial Statements ” mean the Audited Financial Statements and the Unaudited Financial Statements.

“ GAAP ” means generally accepted accounting principles, consistently applied, in the United States.

“ GFA Brands ” means GFA Brands, Inc., a Delaware corporation and wholly owned subsidiary of the Company.

 

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“ Governmental Agency ” means any court, tribunal, administrative agency or commission, taxing authority or other governmental or regulatory authority, domestic or foreign, of competent jurisdiction, including, without limitation, agencies, departments, boards, commissions or other instrumentalities of any country or any political subdivisions thereof.

“ Governmental Licenses ” means all permits, licenses, franchises, orders, registrations, certificates, variances, approvals and other authorizations obtained from any Governmental Agency, including, without limitation, those listed on Schedule 5.11 attached hereto.

“ Hazardous Substances ” means any flammables, explosives, radon, radioactive materials, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous materials, hazardous wastes, hazardous or toxic substances, pollutants or contaminants or related materials regulated under, or as defined in any Environmental Law.

“ HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

“ Indebtedness ” means, with respect to any Person at any date, without duplication: (i) all obligations of such Person for borrowed money; (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments (including, without limitation, any shareholder notes, deferred purchase price obligations or earn-out obligations issued or entered into in connection with any acquisition undertaken by such Person); (iii) all obligations in respect of letters of credit and bankers’ acceptances issued for the account of such Person; (iv) all obligations of such Person under any capitalized lease; (v) all liabilities and obligations pursuant to any interest rate swap agreements; and (vi) any accrued interest, prepayment premiums, breakage fees, penalties or similar amounts related to any of the foregoing; provided that “Indebtedness” shall not include the Bonus Payments.

“ Inventory ” means all inventory used in the operation of the Business including, without limitation, all raw materials, work in process, finished goods and packaging materials.

“ Knowledge ” means (i) in the case of an individual, the actual knowledge of such individual, (ii) in the case of any Person other than an individual or the Company or GFA Brands, the actual knowledge of the Board of Directors and senior level management employees (or individuals serving in similar capacities) of such Person, and (iii) in the case of the Company or GFA Brands, the actual knowledge of Robert Harris and James Harris after reasonable inquiry of the sales managers and vice presidents of GFA Brands, including, without limitation, Bill Keane, Peter Dray, Howard Seiferas, David McCarty, Phil Rusert, Howard Lazar, Roger Ansley and Mark King, with respect to such matters that each such sales manager and vice president has responsibility.

“ Law ” or “ Laws ” means any and all federal, state, local or foreign laws, statutes, ordinances, codes, rules, regulations or Orders.

“ Leased Real Property ” means all of the right, title and interest of the Company and/or GFA Brands under all leases, subleases, licenses, concessions and other agreements (written or oral), pursuant to which the Company or GFA Brands holds a leasehold or sub-leasehold estate

 

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in, or is granted the right to use or occupy, any land, buildings, improvements, fixtures or other interest in real property which is used in the operation of the Business or leased by the Company or GFA Brands.

“ Leases ” means those leases and subleases of the Leased Real Property set forth on Schedule 5.7(a) attached hereto.

“ Liability ” means, with respect to any Person, any liability, debt, loss, cost, expense, fine, penalty, obligation or damage of any kind, whether known, unknown, contingent, asserted, accrued, unaccrued, liquidated or unliquidated, or whether due or to become due.

“ Lien ” means any mortgage, pledge, security interest, conditional sale or other title retention agreement, encumbrance, lien, easement, option, debt, charge, claim or restriction of any kind.

“ Material Adverse Effect ” means any event, circumstance, change, occurrence or effect (collectively, “ Events ”) that, individually or in the aggregate, is materially adverse to the Business or the assets, liabilities, financial condition or operating results of the Company or GFA Brands; provided , however , that no Event will be deemed (either alone or in combination) to constitute, nor will be taken into account in determining whether there has been or may be, a Material Adverse Effect to the extent that it arises out of or relates to: (i) a general deterioration in the United States economy or in the industries in which the Company operates, including any deterioration in the business of any of the Company’s significant customers, suppliers or business partners, (ii) the outbreak or escalation of hostilities involving the United States, the declaration by the United States of a national emergency or war (whether or not declared) or the occurrence of any other calamity or crisis, including an act of terrorism, (iii) a natural disaster or any other natural occurrence beyond the control of the Company, (iv) the disclosure of the fact that Parent is the prospective acquirer of the Company, (v) the announcement or pendency of the transactions contemplated hereby, (vi) any change in accounting requirements or principles imposed upon the Company or any change in applicable laws, rules or regulations or the interpretation thereof, (vii) any action required by this Agreement or (viii) any action of the Company or GFA Brands between the date hereof and the Closing which requires the consent of Parent pursuant to the terms of this Agreement if Parent does not consent to the taking of said action.

“ Net Bonus Payments ” means an amount equal to sixty percent (60%) of the Bonus Payments.

“ Order ” means, with respect to any Person, any award, decision, decree, injunction, judgment, order or ruling directed to and naming such Person.

“ Paying Agent ” means a Person to be selected by Parent, to the reasonable satisfaction of the Company, to act as “Paying Agent” pursuant to Section 2.9(a) .

“ Permitted Liens ” means (i) landlords’, mechanics’, materialmens’, carriers’, workmens’, contractors’ and warehousemens’ Liens arising or incurred in the ordinary course of business and for amounts which are not delinquent and are not, individually or in the aggregate, material in nature, (ii) Liens for Taxes not yet due and payable or for Taxes that the Company is contesting in good faith, provided that a reserve for such contested Taxes is maintained by the Company, and (iii) applicable Laws.

 

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“ Per Share Cash Consideration ” means an amount equal to the Cash Consideration divided by the total number of shares of the Company Stock issued and outstanding as of the Effective Time.

“ Person ” means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated association, corporation, limited liability company, entity or governmental entity (whether federal, state, county, city or otherwise and including, without limitation, any instrumentality, division, agency or department thereof).

“ Personal Property ” means all tangible personal property owned or used by the Company and GFA Brands in the conduct of the Business, including, without limitation, all vehicles, fork lifts, trailers, machinery, equipment, racking, carts, spare parts, furniture, computer hardware, fixtures that are not affixed to real property, laboratory equipment and quality control testing equipment, accessories and tools, wherever located.

“ Proceeding ” means any action, arbitration, audit, complaint, investigation, litigation or suit (whether civil, criminal or administrative).

“ Proprietary Rights ” means: (i) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto and all foreign and domestic patents, patent applications and patent disclosures, together with all reissuances, continuations, continuations-in-part, divisionals, revisions, extensions and reexaminations thereof; (ii) all foreign and domestic trademarks, service marks, trade dress, logos and trade names and all goodwill associated therewith; (iii) all foreign and domestic copyrightable works, all foreign and domestic copyrights and all foreign and domestic applications, registrations and renewals in connection therewith; (iv) all trade secrets and confidential business information (including ideas, research and development, know-how, formulas, code books, recipes, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, blue prints, specifications, customer and supplier lists, pricing and cost information and business and marketing plans and proposals); and (v) all copies and tangible embodiments thereof in whatever form or medium.

“ Shareholders ” shall mean the shareholders of the Company.

“ Subsidiary ” means, with respect to any Person, any corporation, partnership, association or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (regardless of whether, at the time, stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof or (ii) if a partnership, association or other business entity, a majority of the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof.

 

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“ Tax ” means any foreign, federal, state or local income, gross receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer, real property gains, registration, value added, excise, natural resources, severance, stamp, occupation, premium, windfall profit, environmental, customs, duties, real property, personal property, capital stock, social security, unemployment, disability, payroll, license, employee or other withholding, or other tax, of any kind whatsoever, including any interest, penalties, fines or additions thereto or additional amounts in respect of any of the foregoing.

“ Tax Return ” means any return, declaration, report, claim for refund, information return or other document (including any related or supporting schedule, statement or information) filed or required to be filed in connection with the determination, assessment or collection of any Tax.

“ Unaudited Financial Statements ” mean the June 30, 2006 unaudited financial statements, the June 30, 2005 unaudited financial statements and to the extent required to be provided in connection with the Proxy Statement the September 30, 2006 unaudited financial statements and the September 30, 2005 unaudited financial statements. For all purposes under this Agreement, Unaudited Financial Statements shall include a balance sheet and the related statements of operation (for the quarter just ended and year-to-date), changes in stockholders’ equity and cash flows with limited footnotes and such other disclosure materials, in each case, to the extent required to be included in the Proxy Statement.

“ WARN Act ” means the Worker Adjustment Retraining and Notification Act of 1988, as amended, or any similar foreign, state or local law, regulation or ordnance.

1.2 Cross-References . Each of the following terms shall have the meaning specified in the Section of this Agreement set forth opposite such term:

 

 

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ARTICLE II

THE MERGER

2.1 The Merger . Upon the terms and subject to the conditions set forth herein and the applicable provisions of the DGCL, and on the basis of the representations, warranties, covenants and agreements contained herein, as of the Effective Time, the Merger Subsidiary shall be merged with and into the Company (the “ Merger ”), the separate corporate existence of the Merger Subsidiary shall cease and the Company shall continue as the surviving corporation. The Company, as the surviving corporation of the Merger, may be hereinafter referred to as the “ Surviving Corporation .”

2.2 Closing . The closing of the transactions contemplated by this Agreement (the “ Closing ”) shall take place at a mutually acceptable location commencing at 10:00 a.m. local time on the fifth business day following the satisfaction or waiver of all conditions of the parties to consummate the transactions contemplated by this Agreement (other than the conditions with respect to actions the respective parties will take at the Closing itself), or at such other place or on such other date as is mutually agreeable to Parent and Shareholders’ Representative. The date and time of the Closing are referred to herein as the “ Closing Date .”

2.3 Filing of Certificate of Merger . Subject to the conditions set forth herein, the Company and the Merger Subsidiary shall as soon as possible on the Closing Date or such other date as Parent and Shareholders’ Representative shall agree, cause the merger to be consummated by filing with the Delaware Division of Corporations a duly executed Certificate of Merger in the form attached hereto as Exhibit A (the “ Certificate of Merger ”).

2.4 Effect of Merger . At the Effective Time, the effect of the Merger shall be as provided herein and the applicable provisions of the DGCL. Without limiting the generality of the foregoing, all of the properties, rights, privileges, powers and franchises of the Company and the Merger Subsidiary shall vest in the Surviving Corporation and all of the debts, liabilities, duties and obligations of the Company and the Merger Subsidiary shall become the debts, liabilities, duties and obligations of the Surviving Corporation.

2.5 Effect on Stock . Upon the terms and conditions of this Agreement, at the Effective Time, as a result of the Merger and this Agreement and without the need for any further action on the part of the Merger Subsidiary, the Company or any of their respective shareholders, the following shall occur:

(a) Conversion of Company Stock . Immediately prior to the Effective Time, by action of the board of directors of the Company, each share of Class L Common Stock shall be converted into shares of Class A-1 Common Stock in accordance with the terms of the Amended and Restated Certificate of Incorporation of the Company. At the Effective Time, each share of the stock issued and outstanding immediately prior to the Effective Time, after giving effect to the conversion described in the preceding sentence, shall be automatically converted into the right to receive, subject to the terms and conditions of this Agreement, the Per Share Cash Consideration. Until properly delivered to Parent or the Surviving Corporation pursuant to Section 2.9 , any certificate evidencing shares of Company Stock (a “ Certificate ”) shall be deemed for all purposes to evidence only the right to receive the consideration described in this Section 2.5(a) .

 

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(b) Conversion of Merger Subsidiary Stock . Each share of the issued and outstanding common stock of the Merger Subsidiary immediately prior to the Effective Time shall be automatically converted into one (1) share of the validly issued, fully paid and non-assessable authorized Class A-1 Common Stock of the Surviving Corporation. Each stock certificate evidencing the common stock of the Merger Subsidiary shall evidence ownership of such shares of the Class A-1 Common Stock of the Surviving Corporation.

2.6 Organizational Documents. As of the Effective Time, the Certificate of Incorporation and the Bylaws of the Merger Subsidiary shall become the Certificate of Incorporation and the Bylaws of the Surviving Corporation.

2.7 Officers and Directors. As of the Effective Time, the officers and directors of the Merger Subsidiary shall become the officers and directors of the Surviving Corporation and shall serve as such until the expiration of their term of office or their earlier death, resignation or removal.

2.8 Closing .

(a) Cutoff Balance Sheet and Adjusted Cash . On a date mutually acceptable to the parties prior to Closing (the “ Cutoff Date ”) which is seven to ten (7-10) days prior to the Closing Date, the Shareholders’ Representative will deliver to Parent a certificate containing a consolidated balance sheet of the Company and GFA Brands as of the Cutoff Date (the “ Cutoff Date Balance Sheet ”), such other documentation regarding the financial condition of the Company and GFA Brands as Parent may reasonably request and the Shareholders’ Representative’s calculation of Adjusted Cash, the reasonably expected highest amount of the Bonus Payments and, based thereon, a calculation of the Cash Consideration. The Company shall provide such written back-up documentation as may be reasonably requested by Parent, and shall allow Parent access to its books and records, sufficient to allow Parent to verify the accuracy of the Cutoff Date Balance Sheet, the Company’s operation of the Business in the ordinary course and in accordance with this Agreement and the accuracy of the calculation of Adjusted Cash, the amount of the Bonus Payments and the calculation of Cash Consideration by the Shareholders’ Representative.

(b) Objection . In the event Parent objects to any matter in the calculation of Adjusted Cash, the Bonus Payments or Cash Consideration, Parent shall notify the Shareholders’ Representative of its objection at least one (1) day prior to Closing specifying the grounds for its objection in reasonable detail. Parent and the Shareholders’ Representative shall meet in a good faith attempt to resolve any objections. In the event Parent and the Shareholders’ Representative are unable to agree on the amount of Adjusted Cash, the Bonus Payments and Cash Consideration and the total amount in dispute exceeds Ten Million Dollars ($10,000,000.00), neither the Company, Parent nor the Merger Subsidiary shall be obligated to close the transactions

 

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contemplated hereby. In the event the total amount in dispute involves Ten Million Dollars ($10,000,000.00) or less, at Closing (i) Cash Consideration to be paid at Closing shall be equal to the lesser of the parties’ calculation of Cash Consideration; (ii) the difference between the parties’ calculation of Cash Consideration shall be deposited with an escrow agent mutually acceptable to the Shareholders’ Representative and Parent; (iii) in the event the parties are able to resolve any dispute, amounts held in escrow including interest thereon shall be distributed on the joint instructions of the Shareholders’ Representative and Parent; and (iv) in the event the parties are unable to resolve any dispute within ten (10) days after Closing, the parties shall submit unresolved disputes to arbitration pursuant to Section 8.5 hereof and the escrowed funds shall be distributed pursuant to the arbitrator’s decision.

(c) Parent’s Closing Deliveries . Subject to the conditions set forth in this Agreement, at the Closing, Parent shall deliver:

(i) the portion of Cash Consideration to be paid pursuant to Section 2.9 to the Shareholders or the Paying Agent, as applicable (subject to any reduction pursuant to Section 2.8(b) hereof);

(ii) to the recipients of the Bonus Payments, the portion of the Bonus Payments which by the terms of the agreements giving rise to such Bonus Payments are to be paid to such recipients contemporaneously with the Closing;

(iii) to an escrow agent mutually acceptable to the Shareholders’ Representative, Parent and the recipients of the Bonus Payments, the amount of the Bonus Payments (as calculated pursuant to Section 2.8(a) ) not due and payable at Closing. All interest earned on such escrowed amounts shall inure to the benefit of and be paid to Parent and Parent shall be solely liable for any Taxes that arise from such interest. If there is a dispute regarding the amount of the Bonus Payments the reasonably expected highest proposed amount of Bonus Payments not due and payable at the Closing shall be deposited into escrow to be disbursed pursuant to Section 2.8(e) hereof; and

(iv) all other items required to be delivered by Parent at Closing as specified in Section 3.1 hereof.

(d) Company and Shareholders’ Representative Closing Deliveries . Subject to the conditions set forth in this Agreement, at or prior to Closing, the Company and/or the Shareholders’ Representative shall deliver to Parent, the following items, in form and substance satisfactory in all reasonable respects to Parent and its counsel:

(i) the stock books, stock ledgers, minute books and corporate seals, if any, of the Company and GFA Brands and the stock certificate representing all of the issued and outstanding stock of GFA Brands; and

(ii) all other items specified in Section 3.2 to be delivered to Parent by the Company or the Shareholders’ Representative at the Closing.

 

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(e) Post-Closing Bonus Payment Adjustment .

(i) As soon as practical, the Parent shall deliver to the Shareholders’ Representative, audited financial statements of the Surviving Corporation for the fiscal year ending December 31, 2006, a calculation of EBITDA for the fiscal year ended December 31, 2006 and documentation representing Parent’s calculation of the final Bonus Payments and, based thereon, the final calculation of Cash Consideration. Out of the amount placed in escrow pursuant to Section 2.8(c)(ii) , (a) any increase in Cash Consideration as calculated pursuant to this Section 2.8(e)(i) from Cash Consideration as calculated pursuant to Section 2.8(a) shall be distributed to Shareholders entitled thereto pro rata in accordance with their relative ownership percentage of the Company pre-Closing, (b) the amount of the Bonus Payments due and payable after the Closing as calculated pursuant to this Section 2.8(e)(i) shall be distributed to recipients of the Bonus Payments as and when payable in accordance with the agreements pursuant to which such Bonus Payments are payable, and (c) the remaining amounts held in escrow shall be distributed to Parent.

(ii) To the extent that, pursuant to the terms of the applicable agreements, any portion of the Bonus Payments that has been placed into escrow is no longer payable to the recipients of the Bonus Payments, the calculation of Cash Consideration shall be adjusted accordingly and, out of the amount placed in escrow pursuant to Section 2.8(c)(ii) , (a) any increase in Cash Consideration as calculated pursuant to this Section 2.8(e)(ii) from Cash Consideration as calculated pursuant to this Section 2.8(e)(i) shall be distributed to the Shareholders entitled thereto pro rata in accordance with their relative ownership percentage of the Company pre-Closing, (b) the amount of the Bonus Payments due and payable shall be distributed to recipients of the Bonus Payments as and when payable in accordance with the agreements pursuant to which such Bonus Payments are payable, and (c) the remaining amounts held in escrow shall be distributed to Parent.

(iii) Distribution pursuant to Section 2.8(e)(i) and 2.8(e)(ii) shall be made, if any, on the later of (a) an agreement by the Shareholders’ Representative and Parent on the amount of the final Bonus Payments, or (b) order of a court of competent jurisdiction or of an arbitrator pursuant to Section 8.5 hereof.

2.9 Exchange of Certificates .

(a) Retention of Paying Agent; Development of Letter of Transmittal . Prior to the Closing, Parent and the Paying Agent will enter into a paying agent agreement in customary form which will provide for payment of the applicable portion of the Cash Consideration to the Shareholders pursuant to Section 2.5(a) not later than five (5) business days following receipt after the Closing by the Paying Agent of a letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, in the form attached hereto as Exhibit B (the “ Letter of Transmittal ”) and all Certificates representing shares of the Company Stock owned by said Shareholder, duly endorsed in blank or accompanied by a fully executed stock power transferring said shares of Company Stock to Parent.

 

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(b) Payment of Per Share Cash Consideration at Closing . At the Closing, but immediately after the Effective Time, Parent shall pay or shall cause the Surviving Corporation to pay, by wire transfer of immediately available federal funds, to each Shareholder who has (i) delivered to Parent a Letter of Transmittal at or prior to Closing and all of the representations and warranties contained in the Shareholder’s Letter of Transmittal are true and correct as of the Closing Date as if made as of the Closing Date, (ii) surrendered Certificates representing all shares of Company Stock held by such Shareholder at the Closing and (iii) provided Parent with wire transfer instructions no later than three (3) business days prior to the Closing, an amount equal to the Per Share Cash Consideration multiplied by the number of shares of Company Stock represented by the Certificates surrendered by said Shareholder at Closing. Upon surrender of a Certificate at the Closing for cancellation and payment pursuant to this Section 2.9(b) , such Certificate shall forthwith be canceled.

(c) Deposit of Cash Consideration with Paying Agent . On the Closing Date, Parent shall, or shall cause the Surviving Corporation to, deposit the Cash Consideration not paid to Shareholders pursuant to Section 2.9(b) with the Paying Agent, for exchange in accordance with Section 2.9(d) . Payments of such portion of the Cash Consideration shall be made by the Paying Agent to the Shareholders only against delivery of a Certificate, together with a Letter of Transmittal, duly completed and validly executed in accordance with the instructions thereto, as hereinafter provided.

(d) Post-Closing Exchange Procedures .

(i) On the first business day after the Effective Time, Parent shall instruct the Paying Agent to mail a Letter of Transmittal to each record holder of Certificates not delivered at the Closing.

(ii) Upon surrender of a Certificate for cancellation to the Paying Agent or to such other agent or agents as may be appointed by Parent, together with such Letter of Transmittal, duly completed and validly executed in accordance with the instructions thereto, and such other documents as may reasonably be required by the Paying Agent or such other agents, the holder of such Certificate shall be entitled to receive in exchange therefor an amount to which such holder is entitled pursuant to Section 2.5(a) and the Certificate so surrendered shall be canceled.

(e) Remaining Funds . At any time following six (6) months after the Effective Time, the Surviving Corporation shall be entitled to require the Paying Agent to deliver to it any funds (including any interest received with respect thereto) which had been made available to the Paying Agent and which have not been disbursed to holders of Certificates pursuant to Section 2.9(d) . Thereafter such holders shall be entitled solely to look to the Surviving Corporation (subject to abandoned property, escheat or other similar Laws) only as a general creditor thereof with respect to the

 

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portion of the Cash Consideration payable upon surrender of their Certificates, without any interest thereon. Neither the Surviving Corporation nor the Paying Agent shall be liable to any Shareholder in respect of such Shareholder’s portion of the Cash Consideration that is delivered to a public official pursuant to and in accordance with any applicable abandoned property, escheat or similar Law.

(f) No Further Ownership Rights in Company Securities . The portion of the Cash Consideration paid upon the surrender for exchange of shares of Company Stock in accordance with the terms hereof shall be deemed to have been paid in full satisfaction of all rights pertaining to such shares of Company Stock, and there shall be no further registration of transfers on the records of the Company of shares of Company Stock which were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to the Surviving Corporation for any reason, they shall be canceled and exchanged as provided in this Section 2.9 .

(g) Investment of Cash Consideration . The Paying Agent shall invest any cash paid to it by Parent or Surviving Corporation, as directed by Parent, on a daily basis. Any interest and other income resulting from such investments shall be paid to Parent.

(h) Lost, Stolen or Destroyed Certificates . In the event any Certificates have been lost, stolen or destroyed, Parent shall cause the Paying Agent to pay the Per Share Cash Consideration applicable to such shares in exchange for such lost, stolen or destroyed Certificates, upon the making and delivery of an affidavit of that fact by the holder thereof in a form reasonably acceptable to Parent and if required by Parent: (i) in the case of a Shareholder that is an individual, the posting by such person of a bond in such amount as Parent may reasonably direct as indemnity against any claim that may be made against it or the Surviving Corporation with respect to such Certificate or ( ii ) in the case of a Shareholder that is not an individual and is financially capable of satisfying any post-closing indemnity claims, an agreement to indemnify against any claim that may be made against it or the Surviving Corporation with respect to such Certificate.

2.10 Withholding . Each of Parent and the Surviving Corporation shall be entitled to withhold, or cause the Paying Agent to withhold, from any consideration payable or deliverable pursuant to the terms of this Agreement to any Shareholder, such amounts as may be required to be withheld pursuant to any Law, including, without limitation, any amounts required to be withheld pursuant to the Code. To the extent any amounts are so withheld, such amounts shall be treated for all purposes under this Agreement as having been paid to the Shareholder to whom such amounts would have otherwise been paid.

2.11 Allocation of Amounts Paid By Parent . Payment of all amounts paid by Parent to the Shareholders’ Representative or the Paying Agent hereunder shall constitute payment and delivery to each of the Shareholders in satisfaction of all obligations of Parent and the Surviving Corporation to pay and deliver such amounts hereunder.

 

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2.12 Physical Inventory . Parent may, on the Closing Date or such other date or dates prior to Closing as shall be mutually agreeable to Shareholders’ Representative and Parent, conduct a physical inventory of the Inventory, including any Inventory that is not located at the Leased Real Property. Any physical inventory shall be conducted by or in the presence of representatives designated by the Shareholders’ Representative and Parent, respectively.

2.13 Optional Merger Consideration .

(a) Notwithstanding anything to the contrary contained elsewhere in this Agreement, TSG4 L.P., in its individual capacity as a Shareholder (“TSG4”) and Parent agree that in the event any of Parent’s current shareholders vote against the merger and elect to have their Boulder Common Stock converted into cash in accordance with Article XII of Parent’s Certificate of Incorporation (“ Boulder Certificate ”), Parent, at its option, may elect to pay up to Ten Million Dollars ($10,000,000) in Cash Consideration otherwise payable to TSG4 in newly issued Parent common stock (“Parent Common Stock”), in lieu of cash. The total amount of Parent Common Stock which Parent shall have the option to issue to TSG4 shall be equal to the number of shares calculated by dividing (A) the lesser of: (i) Ten Million Dollars ($10,000,000); and (ii) the aggregate per share conversion price as calculated pursuant to Article XII of the Boulder Certificate for all IPO Shares (as defined in the Boulder Certificate) which are timely and duly converted pursuant to Article XII of the Boulder Certificate (such lesser amount, the “ Conversion Amount ”) by (B) the common stock price per share to be paid by the purchasers of Parent Common Stock as finally determined pursuant to the PIPE Securities Purchase Agreement attached hereto as Exhibit H. Parent’s option hereunder shall apply to the first Ten Million Dollars ($10,000,000) of any IPO Shares converted pursuant to the Boulder Certificate. Parent agrees that any shares issued to TSG4 pursuant hereto shall be subject to the same demand registration rights and piggyback registration rights consistent with the registration rights granted to the purchasers of Parent Common Stock pursuant to the Registration Rights Agreement to be executed at the Closing by the purchasers of Parent Common Stock (including TSG4) pursuant to the PIPE Securities Purchase Agreement (the “Registration Rights Agreement”). Nothing in this Section 2.13 shall be deemed to alter or amend any other Shareholders’ (other than TSG4’s) right to receive in cash the Cash Consideration they may be entitled to pursuant to this Agreement. If Parent exercises its election under this Section 2.13 , Parent shall deliver, at Closing, to TSG4 (x) stock certificates for TSG4 representing the Parent Common Stock deliverable pursuant to this Section 2.13 which certificates shall bear appropriate restrictive legends, and (y) the Registration Rights Agreement which is attached as an exhibit to the Securities Purchase Agreement, executed by Parent.

(b) TSG4 represents to the Parent as follows:

(i) TSG4 is acquiring the Parent Common Stock for its own account, for investment and not with a view to the distribution thereof, nor with any present intention of distributing the same.

(ii) TSG4 understands that the Parent Common Stock that may be issued under this Section 2.13 has not been, and will not be, registered under the

 

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Securities Act, by reason of their issuance in a transaction exempt from the registration requirements of the Securities Act, and that they must be held indefinitely unless a subsequent disposition thereof is registered under the Securities Act or is exempt from registration.

(iii) TSG4 understands that the exemption from registration afforded by Rule 144 (the provisions of which are known to TSG4) promulgated under the Securities Act depends on the satisfaction of various conditions and that, if applicable, Rule 144 may only afford the basis for sales under certain circumstances and only in limited amounts.

(iv) TSG4 has had a reasonable time prior to the date hereof to ask questions and receive answers concerning the terms and conditions of the offering of the Parent Common Stock, and to obtain any additional information which the Parent possesses or could acquire without unreasonable effort or expense, and has generally such knowledge and experience in business and financial matters and with respect to investments in securities as to enable TSG4 to understand and evaluate the risks of such investment and form an investment decision with respect thereto.

(v) TSG4 is an “accredited investor,” as such term is defined in Rule 501 under the Securities Act.

(vi) TSG4 represents that from the date it was approached to participate in the transactions contemplated by this Agreement and continuing through the Effectiveness Date (as such term is defined in the Registration Rights Agreement), neither it nor, to its knowledge, its controlled subsidiaries have engaged in any purchases or sales with respect to, or made any Short Sales of, or granted any option for the purchase of or entered into any hedging or similar transaction with the same economic effect as a Short Sale of the Boulder Common Stock or Boulder Warrants, in each case, in violation of applicable Laws that would have adverse consequences to the Parent. For the purposes of this Agreement, “Short Sale” by TSG4 means a sale of Boulder Common Stock or Boulder Warrants that is marked as a short sale and that is executed at a time when TSG4 has no equivalent offsetting long position in the Boulder Common Stock or Boulder Warrants, exclusive of the Parent Common Stock that may be issued pursuant to this Agreement. For purposes of determining whether TSG4 has an equivalent offsetting long position in the Boulder Common Stock or Boulder Warrants, all Parent Common Stock that would be issuable upon exercise in full of all options, convertible Parent Common Stock, swaps, synthetic Parent Common Stock and other derivative Parent Common Stock then held by TSG4 (assuming that such options, convertible Parent Common Stock, swaps, synthetic Parent Common Stock or other derivative Parent Common Stock were then fully exercisable, notwithstanding any provisions to the contrary, and giving effect to any applicable exercise price adjustments scheduled to take effect in the future) shall be deemed to be held long by TSG4.

 

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(c) Parent represents to the TSG4 as follows:

(i) All of the shares of Parent Common Stock being delivered to the TSG4 pursuant to this Section 2.13 have been duly authorized, are validly issued, fully paid and nonassessable and none were issued in violation of the preemptive rights of any Person.

(d) The transfer restrictions are set forth as follows:

(i) Parent and TSG4 expressly acknowledge that the Parent Common Stock may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Parent Common Stock other than pursuant to an effective registration statement or an exemption from the registration requirements of the Securities Act, including pursuant to Section 4(2), Rule 144 or any other applicable exemption, to the Parent or to an Affiliate of TSG4 or in connection with a pledge as contemplated in Section 2.13(d)(ii) , the Parent may require the transferor thereof to provide to the Parent an opinion of counsel selected by the transferor and reasonably acceptable to the Parent, the form and substance of which opinion shall be reasonably satisfactory to the Parent, to the effect that such transfer does not require registration of such transferred Parent Common Stock under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of Section 2.13 of this Agreement and shall have the rights of TSG4 under Section 2.13 of this Agreement and the Registration Rights Agreement.

(ii) TSG4 agrees to the imprinting, so long as is required by this Section 2.13(d) of a legend on any of the Parent Common Stock in the following form:

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE ISSUER. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

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ARTICLE III

CONDITIONS TO CLOSING

3.1 Conditions to the Obligations of the Company . The obligations of the Company to consummate the transactions contemplated by this Agreement are subject to the satisfaction of the following conditions on or before the Closing Date:

(a) Each of the representations and warranties set forth in Article VI shall be true and correct in all respects, at and as of the date of this Agreement and as of the Closing Date as though then made and as though the Closing Date were substituted for the date of this Agreement throughout such representations and warranties (except that those representations and warranties that are made as of a specific date need only be true and correct in all respects as of such date), except where the failure of any such representations and warranties to be true and correct has not had, individually or in the aggregate, a material adverse effect on the ability of Parent or the Merger Subsidiary to consummate the transactions contemplated hereby;

(b) Parent and the Merger Subsidiary shall have each performed in all material respects all the covenants and agreements required to be performed by it under this Agreement prior to the Closing;

(c) Any applicable waiting period (and any extensions thereof) under the HSR Act relating to the transactions contemplated by this Agreement shall have expired or been terminated;

(d) No Proceeding before any Governmental Agency shall be pending which, if successful for the Governmental Agency, would result in an Order that would prevent the carrying out of this Agreement or any of the transactions contemplated hereby, or cause such transactions to be rescinded;

(e) Parent shall have delivered all of the Cash Consideration to the Shareholders’ Representative (for the benefit of the Shareholders) or the Paying Agent, as the case may be;

(f) Parent shall have delivered to Shareholders’ Representative an opinion of Davis & Kuelthau, s.c. dated the Closing Date, in a form reasonably acceptable to the Shareholders’ Representative’s counsel;

(g) On or prior to the Closing Date, Parent shall have delivered to the Shareholders’ Representative each of the following:

(i) certificate from an officer of Parent in the form set forth as Exhibit C attached hereto, dated as of the Closing Date, stating that the applicable preconditions specified in Section 3.1(a) and (b)  hereof have been satisfied;

(ii) certified copies of the resolutions duly adopted by the board of directors and shareholders of Parent and the Merger Subsidiary authorizing the execution, delivery and performance of this Agreement and the consummation of all transactions contemplated hereby; and

 

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(iii) copies of all consents, approvals, releases from and filings with, Governmental Agencies required in order to effect the transactions contemplated by this Agreement which Parent is responsible to obtain pursuant to the terms of this Agreement;

(h) All certificates, instruments and other documents required to effect the transactions contemplated hereby reasonably requested by the Shareholders’ Representative shall be reasonably satisfactory in form and substance to the Shareholders’ Representative; and

(i) The Company shall have obtained the approval of its shareholders with respect to the execution, delivery and performance of this Agreement and the consummation of all transactions contemplated hereby.

Any condition specified in this Section 3.1 may be waived by the Company; provided , however , that no such waiver will be effective unless it is set forth in a writing executed by the Company.

3.2 Conditions to Parent’s and the Merger Subsidiary’s Obligations . The obligations of Parent and the Merger Subsidiary to consummate the transactions contemplated by this Agreement are subject to the satisfaction of the following conditions on or before the Closing Date:

(a) Each of the representations and warranties set forth in Article V shall be true and correct in all respects, at and as of the date of this Agreement and as of the Closing Date as though then made and as though the Closing Date were substituted for the date of this Agreement throughout such representations and warranties (except that those representations and warranties that are made as of a specific date need only be true and correct in all respects as of such date), except where the failure of any such representations and warranties to be true and correct has not had, individually or in the aggregate, a Material Adverse Effect;

(b) Each of Shareholders’ Representative and the Company shall have performed in all material respects all of the covenants and agreements required to be performed by them under this Agreement prior to the Closing and in the event some of Parent’s shareholders elect to convert their IPO Shares into cash and Parent opts to pay a portion of the Cash Consideration otherwise due to TSG4 in Parent Common Stock, all of the representations and warranties of TSG4 contained in Section 2.13(b) shall be true and correct as of the Closing Date and TSG4 shall have complied with the provisions of Section 2.13(d) ;

(c) Any applicable waiting period (and any extensions thereof) under the HSR Act relating to the transactions contemplated by this Agreement shall have expired or been terminated;

 

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(d) No Proceeding before any Governmental Agency shall be pending which, if successful for the Governmental Agency, would result in a Order that would prevent the carrying out of this Agreement or any of the transactions contemplated hereby, declare unlawful the transactions contemplated hereby or cause such transactions to be rescinded;

(e) On or prior to the Closing Date, the Company and/or the Shareholders’ Representative shall have delivered to Parent each of the following:

(i) Certificates from an officer of the Company and an authorized representative of Shareholders’ Representative (on behalf of the Shareholders) in the form set forth as Exhibit D attached hereto, dated the Closing Date, stating that the applicable preconditions specified in Section 3.2(a) and (b)  hereof, have been satisfied, and certifying such other matters reasonably requested by Parent;

(ii) Certified copies of the resolutions duly adopted by the board of directors and shareholders of the Company and similar authorizing documents from the Shareholders’ Representative authorizing the execution, delivery and performance of this Agreement and the consummation of all transactions contemplated hereby, including, without limitation, the merger and the conversion of shares of Class L Common Stock of the Company into shares of Class A-1 Common Stock of the Company; and

(iii) The items required to be delivered pursuant to Section 2.8(d) hereof;

(f) Parent and the Merger Subsidiary shall have each obtained the approval of its shareholders with respect to the execution, delivery and performance of this Agreement and the consummation of all transactions contemplated hereby, which shall be deemed to have occurred if a majority of the shares of Parent Stock voted by the public stockholders of Parent vote in favor of the transactions contemplated hereby and, at or prior to such vote, public stockholders of Parent owning less than twenty percent (20%) of the shares exercise their conversion rights;

(g) Parent shall have obtained the Governmental Agency and third party consents, approvals and releases set forth on Schedule 3.2(g) , all of which are necessary in connection with the consummation of the transactions contemplated hereby;

(h) Parent shall have received written resignations of, and releases of all of the officers and directors of the Company and GFA Brands in the appropriate form attached hereto as Exhibit E ;

(i) During the thirty (30) day period following the execution of this Agreement, Parent shall have been afforded the opportunity to meet with key customers, suppliers, manufacturers and distributors of the Company and GFA Brands and Brandeis University, its Foundation and the Company’s and GFA Brands’ intellectual property attorneys;

 

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(j) Parent shall have received from TSG4, L.P. and its Affiliates and Fitness Foods, Inc., a release in the appropriate form attached hereto as Exhibit F ;

(k) Parent shall have received certified copies of the Certificate of Incorporation and bylaws of the Company and GFA Brands and certificates of good standing with respect to each jurisdiction in which the Company or GFA Brands is, or is required to be, qualified to do business, including, without limitation, those states listed on Schedule 5.1 and the Company shall have paid all fees and taxes associated therewith;

(l) The Shareholders’ Representative shall have delivered evidence satisfactory to Parent of the termination or revocation of all powers of attorney and other authorizations granted to any Person on behalf of the Company or GFA Brands;

(m) The Company shall have delivered to Parent an opinion of Ropes & Gray LLP dated the Closing Date, in a form reasonably acceptable to Parent’s counsel and capable of being relied on by providers of Debt Financing to Parent and investors in connection with the PIPE Transaction;

(n) During the period from the date of this Agreement to the Closing Date: (i) there shall not have occurred, and there shall not exist on the Closing Date, any condition or fact which has a Material Adverse Effect; and (ii) neither the Business nor the Assets shall have suffered a Material Adverse Effect by reason of any taking, condemnation, destruction or physical damage, whether or not insured against;

(o) The form and substance of all certificates, instruments, opinions or other documents delivered by or on behalf of Shareholders’ Representative or the Company to Parent under this Agreement shall be satisfactory in all reasonable respects to Parent and its counsel;

(p) Parent shall have obtained debt financing (“ Debt Financing ”) pursuant to (i) that certain Commitment Letter dated at or prior to the execution of this Agreement (the “ Commitment Letter ”), from Bank of America, N.A. and Banc of America Securities LLC in an amount of One Hundred Eighty Million Dollars ($180,000,000.00) which includes a revolving credit facility in an amount of Twenty Million Dollars ($20,000,000) (the “ Revolver ”) on such terms and conditions as are set forth in such Commitment Letter which is attached hereto as Exhibit G or (ii) commitments from substitute Debt Financing sources pursuant to Section 4.12 ;

(q) Parent shall have sold common stock and preferred stock in a PIPE transaction (the “ PIPE Transaction ”) sufficient to raise at least Two Hundred Forty-Six Million Dollars ($246,000,000.00) in gross proceeds pursuant to the fully executed and delivered Securities Purchase Agreement attached hereto as Exhibit H ;

(r) Parent’s shareholders shall have approved the amendment of Parent’s Certificate of Incorporation to authorize additional shares of Parent Stock sufficient to consummate the PIPE Transaction and necessary to fund any management stock incentive programs deemed appropriate by Parent;

 

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(s) The requisite percentage of the Shareholders shall have approved the merger contemplated hereby, and holders of no more than 2% of the outstanding shares of Common Stock entitled to vote on this Agreement and the transactions contemplated thereby shall have exercised and not withdrawn, abandoned or forfeited appraisal rights under the DGCL with respect to the Merger;

(t) Parent shall have received Letters of Transmittal (but not Certificates) from TSG4, L.P. and its Affiliates and Fitness Foods, Inc. within one (1) business day of the date hereof; and

(u) The Company will have obtained and delivered to Parent payoff letters and other necessary documentation to provide satisfactory evidence to Parent that the Company and GFA Brands will be released from all payment and other obligations in respect of the Indebtedness of the Company and GFA Brands and that all Liens will be released and terminated at or prior to Closing.

Any condition specified in this Section 3.2 may be waived by Parent; provided , however , that no such waiver shall be effective unless it is set forth in a writing executed by Parent.

ARTICLE IV

COVENANTS PRIOR TO CLOSING

4.1 Affirmative Covenants . From the date hereof and prior to the Closing Date, except as otherwise provided herein, the Company shall, and shall cause GFA Brands to:

(a) Conduct the Business only in the usual and ordinary course of business in accordance with past custom and practice including, without limitation, maintaining appropriate levels of Inventory, paying all accounts payable within terms consistent with past practices and paying all Taxes of the Company and GFA Brands (including estimated Taxes as reasonably calculated by the Company and GFA Brands based on taxable income of GFA Brands without any deduction for the Bonus Payments) that are due and payable;

(b) Use its reasonable efforts to carry on the Business in the same manner as presently conducted and to keep its business organization and properties intact, including its and GFA Brands’ present business operations, physical facilities, working conditions and officers and employees;

(c) Permit Parent and its employees, agents, consultants, accountants and legal counsel, at the sole cost of Parent, to (i) have reasonable access to its and GFA Brands’ premises, books and records, during normal business hours and with prior written notice, provided that any inspections of the premises by Parent shall be conducted in a reasonable manner and at such reasonable times as shall not unreasonably disrupt the Company’s business, (ii) visit and inspect any of its and GFA Brands’ properties during normal business hours and with prior written notice, (iii) discuss its affairs, finances and accounts with its key employees; provided , however , that Parent shall coordinate all contact with any of the key employees through the Shareholders’ Representative or its designee, (iv) visit current key customers, suppliers,

 

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manufacturers and distributors of the Business and Brandeis University for a period of thirty (30) days following the date hereof (subject to advance notice and reasonable restrictions imposed by the Company) and visit any new key customers, suppliers, manufacturers and distributors of the Business (the Company shall inform Parent promptly of any such new relationship) for a period of thirty (30) days following the date Parent is informed of such new relationship (subject to advance notice and reasonable restrictions imposed by the Company), in each case such periods may be extended by mutual agreement of the Shareholders’ Representative and Parent, and (v) contact the Company’s and GFA Brand’s intellectual property attorneys to discuss matters related to any Proprietary Rights used in the Business, all of which shall be coordinated through the Company.

(d) Use reasonable commercial efforts to provide Parent with monthly consolidated interim financial statements of the Company and GFA Brands as soon as possible, but in any event within the following time periods: (i) for the months ending July 31, 2006 and August 31, 2006, on or before October 15, 2006; and (ii) for each month thereafter, within thirty (30) days after the end of each such month and consent to the use and publication of said financial statements in connection with Parent’s solicitation of proxies for the approval of the transactions contemplated by this Agreement and provide Parent with estimates of the Company’s and GFA Brands’ financial performance for each month as soon as possible, including, without limitation, estimates of monthly sales. In each case, these deliverables pursuant to this Section 4.1(d) shall be in the form and content as routinely provided by the Company;

(e) At or prior to Closing, pay all Indebtedness of the Company and GFA Brands and obtain the release of any guaranty by the Company or GFA Brands of any other Person’s obligations;

(f) Use reasonable commercial efforts to, on or before September 26, 2006, deliver to Parent consolidated Audited Financial Statements of GFA Brands’ predecessor companies, GFA Brands, Inc., an Ohio corporation, and Fitness Foods, Inc., a Delaware corporation (the “ Predecessor Companies ”) for the fiscal year ending December 31, 2003. The Company shall use reasonable commercial efforts to, on or before September 26, 2006, deliver to Parent (i) consolidated Unaudited Financial Statements of the Company and GFA Brands for the six (6) month period ending June 30, 2006 and June 30, 2005 to the extent required to be included in the Proxy Statement and (ii) consolidated Audited Financial Statements of the Predecessor Companies for the three (3) month period ending March 30, 2004. The Company shall use reasonable commercial efforts to, on or before October 30, 2006, deliver to Parent consolidated Audited Financial Statements of the Company and GFA Brands for the current fiscal year through June 30, 2006 (the “ June 30 Financial Statements ”). If the Proxy Statement is not cleared to mail by the SEC by November 14, 2006, the Company shall use reasonable commercial efforts to deliver as soon as possible to Parent consolidated Unaudited Financial Statements of the Company and GFA Brands for the nine-month period ending September 30, 2006, to the extent such Financial Statements are required to be included in the Proxy Statement. All of the Financial Statements which are required to be included in the Proxy Statement shall comply with the requirements of Regulation S-X;

 

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(g) Absent extenuating circumstances, make advertising, marketing, coupon and trade promotion expenditures or bookings of at least Twenty-seven Million Eight Hundred Thousand Dollars ($27,800,000) for the 2006 fiscal year, subject to pre-emption by the networks, and the Company shall notify Parent of any planned or contemplated expenditures in excess of said business plan and budget;

(h) Within seven (7) business days from the date hereof, arrange for representatives of Parent to meet with all key employees of the Business;

(i) Provide, and shall cause GFA Brands and its and GFA Brands’ respective officers, directors, employees, accountants, consultants, legal counsel, agents and other representatives to provide, all reasonable cooperation (including with respect to timeliness) in connection with the arrangement of the Debt Financing as may be reasonably requested by Parent, including (i) participation in meetings, drafting sessions and due diligence sessions, (ii) promptly furnishing Parent and the providers of Debt Financing with financial and other pertinent information regarding the Company and GFA Brands as may be reasonably requested by Parent, (iii) assisting in the preparation of an offering document for the Debt Financing and materials for rating agency presentations, (iv) reasonably cooperating with the marketing efforts of Parent and its sources for the Debt Financing and (v) providing documents as may be reasonably requested by Parent; provided, that such requested cooperation shall not unreasonably interfere with the ongoing operations of the Company and shall not include the approval or execution of any agreements, documents or instruments in connection with the Debt Financing;

(j) Take reasonable steps to cooperate with Parent and its accountants to prepare for the audit of the Company and GFA’s December 31, 2006 financial statements by the Parent’s accountants after the Closing Date; and

(k) Advise Parent periodically on the status of key relationships including, without limitation, contract negotiations with key suppliers, distributors and customers.

4.2 Negative Covenants . From the date hereof and prior to the Closing Date, except as set forth in Schedule 4.2 or as otherwise provided herein, neither the Company nor GFA Brands shall, without the prior written consent of Parent:

(a) Sell, lease, assign, license or transfer any of the Assets or any portion thereof with a value in excess of One Hundred Thousand Dollars ($100,000.00) in the aggregate (other than sales of inventory in the ordinary course of business or sales of obsolete assets) or mortgage, pledge or subject them to any Lien, except for Permitted Liens;

(b) Increase the compensation (including bonuses) or benefits of any employee, officer or director, or make, grant or promise any other change in employment terms for any employee, officer or director, other than routine wage increases, sales bonuses and benefit plan adjustments in the ordinary course of business consistent with past custom and practice;

 

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(c) Borrow any amount or incur, assume or voluntarily become subject to any monetary Liabilities in excess of One Hundred Thousand Dollars ($100,000), except (i) current liabilities incurred in the ordinary course of business; (ii) liabilities under Contracts entered into in the ordinary course of business consistent with past custom and practice; or (iii) borrowings from banks (or similar financial institutions) necessary to meet ordinary working capital requirements and included in the calculation of Adjusted Cash;

(d) Create, incur or assume any Indebtedness involving more than $500,000 other than Indebtedness that is incurred in the ordinary course of business (provided that all such Indebtedness is included in the calculation of Adjusted Cash) including borrowings from banks (or similar financial institutions) necessary to meet ordinary working capital requirements, or guaranty the Indebtedness or Liability of any Person;

(e) Declare, set aside or pay any dividend or distribution of property to any shareholder of the Company or GFA Brands with respect to its equity or purchase, redeem or otherwise acquire any of its equity or any warrants, options or other rights to acquire its equity, or make any other payment to any shareholder of the Company, other than cash dividends paid to Shareholders prior to the Cutoff Date;

(f) Amend or authorize the amendment of its certificate of incorporation or bylaws;

(g) Issue, deliver, sell, authorize, pledge or otherwise encumber, or agree to any of the foregoing, with respect to, any shares of its capital stock or any securities convertible or exchangeable for shares of its capital stock, or subscriptions, rights, warrants or options to acquire any shares of its capital stock or any securities convertible or exchangeable for shares of its capital stock, or enter into any other agreement or commitment of any kind obligating it to issue any such shares or convertible or exchangeable securities;

(h) Modify, amend, renew, replace or terminate any Material Contract other than in the ordinary course of business; provided , however , that in no event shall the Company or GFA Brands (i) modify, amend, renew or replace any Material Contract identified on Schedule 4.2(h) other than as permitted by Schedule 4.2(h) if such modification, amendment, renewal or replacement causes the Material Contract identified on Schedule 4.2(h) to not be terminable at will or to require more than 90 days advance notice to terminate (to the extent such Material Contract did not contain such provisions prior to its modification, amendment, renewal or replacement), in either case without penalty, (ii) modify, amend, renew or replace any Material Contract identified on Schedule 4.2(h) which does not currently offer exclusive rights to the other party (other than the Company or GFA Brands) in any manner which grants exclusive rights to any Person other than the Company or GFA Brands, or (iii) modify, amend, renew or replace any Material Contract identified on Schedule 4.2(h) that requires increased payment from, or decreased payments to, the Company or GFA Brands in an amount excess of One Million Dollars ($1,000,000) in any twelve (12) month period;

 

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(i) Other than new Contracts entered into in the ordinary course of business and consistent with past practice, enter into any new Contract that grants exclusive rights to any Person (other than the Company or GFA Brands) in the industrial, food service or international markets;

(j) (i) Sell, transfer or license to any Person any Property Rights owned by or licensed to the Company or GFA Brands, or (ii) amend or modify any existing license of Proprietary Rights held by the Company or GFA Brands including without limitation the license from Brandeis University;

(k) Enter into any settlement, compromise or consent with respect to any material Proceeding except the Company and GFA Brands may settle the Proceeding involving C.F. Sauer Co. or any of its Affiliates provided such settlement is consistent with the terms set forth on Schedule 4.2 ; or

(l) Make any capital expenditures in excess of Two Hundred Thousand ($200,000.00) with respect to the Business, except for expenditures in the ordinary course of business.

4.3 Notice of Developments .

(a) The Company and the Shareholders’ Representative shall promptly notify Parent in the event said party becomes aware of any breach of any of the representations or warranties contained in, or of any development causing a breach of, any of the representations and warranties in Articles V below. Any notice required pursuant to this Section 4.3(a) shall be in writing and shall describe the breach or development in reasonable detail. No written notice delivered after the date hereof, whether pursuant to this Section 4.3(a) or otherwise shall, or be deemed to, amend the Schedules attached hereto, qualify the representations and warranties contained in this Agreement or prevent or cure any misrepresentation or breach of warranty.

(b) Parent will give prompt written notice to the Shareholders’ Representative if it becomes aware of any material adverse development causing a breach of any of the representations and warranties in Article VI below. No disclosure by Parent pursuant to this Section 4.3(b) shall be deemed to prevent or cure any misrepresentation or breach of warranty.

4.4 Exclusivity . From and after the date hereof (and, with respect to the Shareholders’ Representative, from and after the date of effectiveness of Shareholder approval of this Agreement) until the earlier of (a) the Closing or (b) the termination of this Agreement pursuant to Section 7.1 hereof (“ Exclusivity Period ”), neither the Company, GFA Brands nor the Shareholders’ Representative (acting in any capacity, including individually on its own behalf) shall solicit, negotiate, act upon or entertain in any way an offer from any other Person to purchase all or any part of the securities or assets of the Company or GFA Brands (other than sales of assets in immaterial amounts or in the normal and ordinary course of business of the Company), or furnish any information to any other Person in that regard. The Company will promptly (within 24 hours) notify Parent upon receipt of any unsolicited offer to purchase any

 

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such securities, assets, or any portion thereof, and further will notify Parent of the proposed terms and conditions thereof. In addition, the Company, GFA Brands and the Shareholders’ Representative will immediately terminate and cease any existing discussions, negotiations, or other activities with respect to the sale of any securities or all or any material part of the assets of the Company or GFA Brands other than sales of assets in the normal and ordinary course of business consistent with past practices. The Company hereby represents and warrants that neither it nor GFA Brands is obligated to sell to or discuss with any other potential purchaser the sale of all or any portion of the securities or all or any material part of the assets of the Company or GFA Brands, other than sales of assets in the normal and ordinary course of business consistent with past practices. During the Exclusivity Period, Parent will not solicit, negotiate, investigate, act upon or entertain in any way the purchase of any business (other than the Company). In addition, Parent will, and will cause its respective officers, directors, affiliates and agents to, immediately terminate and cease any existing discussions, negotiations, or other activities with respect to the purchase of any securities or all or any material part of the assets of any other business (other than the Company).

4.5 HSR Act Filing . Each party hereto (a) shall make an appropriate filing pursuant to the HSR Act with respect to the transactions contemplated hereby within one (1) business day following SEC approval of the Proxy Statement, (b) shall cooperate and coordinate such filing with the other party including, without limitation, requesting an early termination of the waiting period, and (c) agrees that each party hereto will be responsible for any filing fee due with respect to such HSR Act filings.

4.6 Termination of Advisory Agreement . At or prior to the Closing, the Company shall terminate that certain Management Agreement, dated March 2004, by and among the Company and Mason Sundown Management, LLC, and all other Contracts of the Company or GFA Brands with any officer, director, shareholder or employee of the Company or GFA Brands, or any member of their respective families or any Affiliate thereof (other than the Extended Transitional Services Agreement with New Industries Corporation, the Lease of the Company’s New Jersey offices with The Woodland Company, employment agreements with Guy Bradley and Valerie Blowers, the Sale Bonus Agreement with Roger Ansley, and the Company’s, and/or GFA Brands’ rights under the Non-Competition, Confidentiality and IP Assignment Agreements with James and Robert Harris and the Executive Stock Agreements with Howard Lazar, Phil Rusert, Mark King, Peter Dray, Howard Seiferas, Bill Keane, and Roger Ansley) and the Company or GFA Brands shall have paid all amounts due thereunder or any amounts due the Company or GFA Brands shall have been paid. Notwithstanding anything to the contrary contained elsewhere in this Section 4.6 , in consideration of Mason Sundown Management, LLC assisting the Company and GFA Brands in the preparation of the Financial Statements, Parent agrees to pay to Mason Sundown Management, LLC at the Closing a one time fee of Three Hundred and Seventy Thousand Dollars ($375,000).

4.7 Consents . As soon as reasonably practical after the execution and delivery of this Agreement, the Company shall give any notices to those Persons entitled to such notice and obtain, prior to the Closing Date, all material consents and authorizations of other Persons necessary to consummate, or required in connection with, the transactions contemplated hereby.

 

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4.8 Estoppel Certificate . The Company shall obtain estoppel certificates in a form and substance reasonably satisfactory to Parent from the owners of the Leased Real Property.

4.9 Publicity . The Company acknowledges that certain information relating to Parent which may be acquired by the Shareholders or the Company in connection with the transaction, as well as the fact that discussions between the Company and Parent are taking place, constitutes material and non-public information about Parent. Except as provided in Section 4.10 or as required by federal securities Laws or other applicable Laws as reasonably determined by Parent and counsel for Parent and except for such disclosures necessary to allow Parent to obtain the Debt Financing and to consummate the PIPE Transaction, no party will make any public announcement or disclosure of the transaction contemplated hereby, without the consent of Parent or the Shareholders’ Representative, as the case may be, except for public announcements previously made in accordance with this Section 4.9 and except for the notification of key customers, suppliers, manufacturers and distributors of the Business and Brandeis University by the Company of the transaction contemplated by this Agreement (but consistent with the agreed upon press release), provided such notifications may not be made prior to the agreed upon first public announcement of the transaction contemplated hereby, and in connection with the visits contemplated by Section 4.1(c). As a condition to the disclosure of information in accordance with this Section 4.9 in connection with obtaining the Debt Financing and the consummation of the PIPE Transaction, Parent shall obtain the agreement of each recipient of such information to maintain the confidentiality of such information on terms satisfactory to the Company. The Company and Parent will jointly determine and cooperate in preparing and disseminating press releases upon execution of this Agreement. At least five (5) days prior to Closing, Parent shall prepare a draft Form 8-K announcing the Closing, together with, or incorporating by reference, the financial statements prepared by the Company and Company’s accountant, and such other information that may be required to be disclosed with respect to the Merger in any report or form to be filed with the SEC (“ Merger Form 8-K ”), which shall be in a form reasonably acceptable to the Company and in a format acceptable for EDGAR filing. Prior to Closing, Parent and the Company shall prepare the press release announcing the consummation of the Merger hereunder (“ Press Release ”). Simultaneously with the Closing, Parent shall file the Merger Form 8-K with the SEC and distribute the Press Release.

4.10 Proxy Statement; Parent Stockholders’ Meeting .

(a) As promptly as practicable after the execution of this Agreement Parent will prepare, and in no event later than ten (10) days after Parent’s receipt of all of the Financial Statements required to be included in the Proxy Statement as of such date, Parent will file the Proxy Statement with the SEC. The Company shall use reasonable commercial efforts to obtain on or before the filing of the Proxy Statement with the SEC, “comfort” letters from McGladrey & Pullen which are customary in scope with respect to the Parent’s use of certain of the Financial Statements and other financial information of the Company and GFA Brands in the Proxy Statement and other required securities filings. Prior to filing, the Company shall be given the reasonable opportunity to review and comment the Proxy Statement, including without limitation those portions involving disclosure of the Company, GFA Brands and the Predecessor Companies. Parent will respond to any comments of the SEC and use its commercially reasonable efforts to mail the Proxy Statement to its shareholders at the earliest practicable time.

 

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As promptly as practicable after the execution of this Agreement, the Company and Parent will each prepare and file any other filings required under the Securities Exchange Act of 1934 (the “ Exchange Act ”), the Securities Act of 1933 (the “ Securities Act ”) or any other federal, foreign or state blue sky laws relating to the Merger and the transactions contemplated by this Agreement (collectively, the “ Other Filings ”). Subject to the Company’s right to review and comment on the Proxy Statement set forth above, the Company hereby consents to the disclosure of information regarding the Company, GFA Brands and the Business, as well as the terms of the transactions contemplated hereby in the Proxy Statement and the Other Filings. Each party will notify the other promptly upon the receipt of any comments from the SEC and of any request by the SEC or any other Governmental Agency for amendments or supplements to the Proxy Statement or any Other Filing or for additional information and will supply the other party with copies of all correspondence between such party or any of its representatives, on the one hand, and the SEC or other Governmental Agency, on the other hand, with respect to the Proxy Statement, the Merger or any Other Filing. The Proxy Statement and the Other Filings will comply in all material respects with all applicable requirements of Law. Whenever any event occurs which is required to be set forth in an amendment or supplement to the Proxy Statement or any Other Filing, the Company or Parent, as the case may be, will promptly inform the other of such occurrence and cooperate in filing with the SEC or any other Governmental Agency and/or mailing to shareholders of the Company and Parent, such amendment or supplement. The proxy materials will be sent to the shareholders of Parent for the purpose of soliciting proxies from holders of Parent Stock to vote in favor of the adoption of this Agreement (“ Parent Shareholder Approval ”) at the Parent Shareholders’ Meeting. Such proxy materials shall be in the form of a proxy statement to be used for the purpose of soliciting such proxies from holders of Parent Stock (the “ Proxy Statement ”).

(b) As soon as practicable following its approval by the SEC, Parent shall distribute the Proxy Statement to the holders of Parent Stock and, pursuant thereto, shall call the Parent Shareholders’ Meeting in accordance with the DGCL and, subject to the other provisions of this Agreement, solicit proxies from such holders to vote in favor of the adoption of this Agreement and the approval of the Merger and the other matters presented to the shareholders of Parent for approval or adoption at the Parent Shareholders’ Meeting.

(c) Parent shall comply with all applicable provisions of and rules under the Exchange Act and all applicable provisions of the DGCL in the preparation, filing and distribution of the Proxy Statement, the solicitation of proxies thereunder and the calling and holding of the Parent Shareholders’ Meeting. Without limiting the foregoing, Parent shall ensure that the Proxy Statement does not, as of the date on which it is distributed to the holders of Parent Stock, and as of the date of the Parent Shareholders’ Meeting, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.

 

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(d) Parent, acting through its board of directors, shall include in the Proxy Statement the recommendation of its board of directors that the holders of Parent Stock vote in favor of adoption of this Agreement and shall otherwise use reasonable best efforts to obtain the Parent Shareholder Approval.

4.11 Company Shareholder Approval .

(a) The Company will (i) use its commercially reasonable efforts to obtain the approval of its shareholders of the adoption, execution and delivery of this Agreement and the consummation of the transactions contemplated hereby and the approval of the Merger, and (ii) shall obtain and deliver to Parent Letters of Transmittal from TSG4, L.P. and its Affiliates and Fitness Foods, Inc., in each case within one (1) business day after the date hereof.

(b) The Company will use its commercially reasonable efforts to obtain and deliver to Parent Letters of Transmittal from all other Shareholders within ten (10) business days of the date hereof.

(c) If, prior to the Cutoff Date, the Company has not obtained the affirmative vote of Shareholders holding more than seventy five percent (75%) of the voting power of all of the Common Stock approving (in a vote separate from the vote approving the Merger) payment of all of the Bonus Payments that would be “excess parachute payments” under Section 280G of the Code, after adequate disclosure to the Shareholders of all material facts concerning the Bonus Payments and the payment thereof, including, without limitation, the identity of the Persons to receive the Bonus Payments, the event or events triggering the payment of the Bonus Payments, and the type and estimated amount (or the formula for determining the amount and the information to be used in the formula) of the Bonus Payments, which vote shall determine the right of the recipients to receive the Bonus Payments, all in accordance with the requirements of Code Section 280G(b)(5)(B), then the Cash Consideration shall be reduced by an amount equal to 40% of the portion of the Bonus Payments which constitute an “excess parachute payment.” Prior to any Shareholder vote or written consent concerning the matters described in this Section 4.11(c) , the Company shall provide to Parent drafts of all materials to be distributed to the Shareholders including proposed resolutions, and allow Parent a reasonable opportunity to review and comment on same.

4.12 Substitute Financing .

(a) Parent and its Affiliates will use its commercially reasonable efforts to perform all obligations required to be performed by them in accordance with and pursuant to the Commitment Letter in connection with the Debt Financing and pursuant to the Securities Purchase Agreement in connection with the PIPE Transaction (together, the “ Financing Commitment ”), will use commercially reasonable efforts to maintain the same in full force and effect, and will not materially amend, terminate or waive any provisions under such Financing Commitment without the prior written consent of the Shareholders’ Representative. Parent will from time to time provide such information as the Shareholders’ Representative may reasonably request regarding the status such financings and related negotiations.

 

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(b) Parent will provide prompt written notice to the Shareholders’ Representative following its receipt of notification by any financing source under the Financing Commitment or in connection with any substitute debt or equity financing of such source’s refusal or intended refusal to provide the financing described in the Financing Commitment and, in each case, the stated reasons therefor (if any). In any such event, Parent will use commercially reasonable efforts to arrange substitute financing on equivalent economic terms as promptly as practicable.

4.13 Copies of Tax Returns . The Company shall provide Parent with copies of all state and federal income Tax Returns filed by the Company or GFA Brands subsequent to the date hereof reasonably promptly following said filing and shall provide Parent with written notice of all estimated state and federal income Tax payments made by the Company or GFA Brands after the date hereof, which such notice shall include the amount of such payment and the date on which such payment was made. At least ten (10) days prior to the Closing Date, the Company shall have prepared and filed applicable state and federal income tax returns for 2004 and 2005.

4.14 Other Actions . The Company and Parent shall further cooperate with each other and use their respective reasonable best efforts to take or cause to be taken all actions, and do or cause to be done all things, necessary, proper or advisable on its part under this Agreement and applicable Laws to consummate the Merger and the other transactions contemplated hereby as soon as practicable, including preparing and filing as soon as practicable all documentation to effect all necessary notices, reports and other filings and to obtain as soon as practicable all consents, registrations, approvals, permits and authorizations necessary or advisable to be obtained from any Person (including the respective independent accountants of the Company and Parent) and/or any Governmental agency in order to consummate the Merger or any of the other transactions contemplated hereby. Subject to applicable Laws relating to the exchange of information and the preservation of any applicable attorney-client privilege, work-product doctrine, self-audit privilege or other similar privilege, each of the Company and Parent shall have the right to review and comment on in advance, and to the extent practicable each will consult the other on, all the information relating to such party that appears in any filing made with, or written materials submitted to, any Person and/or any Governmental Agency in connection with the Merger and the other transactions contemplated hereby. In exercising the foregoing right, each of the Company and Parent shall act reasonably and as promptly as practicable.

4.15 Required Information . In connection with the preparation of the Merger Form 8-K, Press Release and the Proxy Statement, and for such other reasonable purposes, the Company and Parent each shall, upon request by the other, furnish the other with all information concerning themselves, their respective directors, officers and shareholders and such other matters as may be reasonably necessary or advisable in connection with the Merger, or any other statement, filing, notice or application made by or on behalf of the Company and Parent to any Person and/or any Governmental Agency in connection with the Merger and the other transactions contemplated hereby. Each party warrants and represents to the other party, and

 

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only the other party, that all such information shall be true and correct in all material respects and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading. Notwithstanding anything to the contrary contained in Section 4.10, neither party may file, amend, supplement or distribute the Proxy Statement or Other Filing containing information concerning any other party hereto or its respective directors, officers ad shareholders without the prior consent of such other party.

4.16 Trust Fund . Parent shall make appropriate arrangements to have the Trust Fund made available to Parent immediately upon the Closing.

4.17 FIRPTA Certificates . The Company shall provide Parent with a certificate, dated as of the Closing Date, meeting the requirements of Treasury Regulations Section 1.1445-2(c).

4.18 Citigroup Agreement . Without the consent of the Shareholders’ Representative, Parent shall not amend or modify that certain Engagement Letter with Citigroup Global Markets, Inc., dated June 16, 2006, as amended by that certain letter agreement dated August 31, 2006.

ARTICLE V

REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY AND GFA BRANDS

As a material inducement to Parent and the Merger Subsidiary to enter into this Agreement, the Company represents and warrants to Parent as follows:

5.1 Organization and Power; Subsidiaries and Investments . Each of the Company and GFA Brands is a corporation duly organized, validly existing and in good standing under the laws of Delaware. The Company and GFA Brands are each qualified to do business as foreign entities and are in good standing in the jurisdictions listed on the attached Schedule 5.1 , which jurisdictions constitute all of the jurisdictions in which the ownership of properties or the conduct of the Business requires the Company or GFA Brands to be so qualified except where the failure to be qualified would not result in the Company incurring any material Liability. The Company and GFA Brands have all requisite power and authority to own their assets and carry on their business as now conducted. The Company has all requisite power and authority to execute and deliver this Agreement and the other agreements contemplated hereby and to perform its obligations hereunder and thereunder. The certificate of incorporation and bylaws of the Company and GFA Brands which have previously been furnished to Parent reflect all amendments thereto and are correct and complete in all respects. Except for GFA Brands, the Company has no Subsidiaries and neither the Company nor GFA Brands owns or controls (directly or indirectly) any partnership interest, joint venture interest, equity participation or other security or interest in any Person.

5.2 Authorization . The execution, delivery and performance by the Company of this Agreement, the other agreements contemplated hereby and each of the transactions contemplated hereby or thereby have been duly and validly authorized by the Company and no other act or proceeding on the part of the Company, its boards of directors or shareholders is

 

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necessary to authorize the execution, delivery or performance by the Company of this Agreement or any other agreement contemplated hereby or the consummation of any of the transactions contemplated hereby or thereby. This Agreement has been duly executed and delivered by the Company and this Agreement constitutes, and the other agreements contemplated hereby upon execution and delivery by the Company will each constitute, a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms.

5.3 Capitalization . Schedule 5.3 attached hereto accurately sets forth the authorized and outstanding equity of the Company and GFA Brands and the name and number of shares held by each shareholder thereof. All of the issued and outstanding shares of the Company and GFA Brands have been duly authorized, are validly issued, fully paid and nonassessable and none were issued in violatio