AGREEMENT AND PLAN OF MERGER

Exhibit 2

AGREEMENT AND PLAN OF MERGER

among

AMERICAN FINANCIAL GROUP, INC.,

GREAT AMERICAN FINANCIAL RESOURCES, INC.

and

GAFRI ACQUISITION CORP.

Dated as of May 17, 2007

Table of Contents

							Page
Article I       DEFINITIONS							1
		Section 1.1		Definitions			1
Article II     THE MERGER							6
		Section 2.1		The Merger			6
		Section 2.2		Closing			6
		Section 2.3		Effective Time			6
Article III     EFFECTS OF THE MERGER							7
		Section 3.1		Effects of the Merger			7
		Section 3.2		Certificate of Incorporation			7
		Section 3.3		Bylaws			7
		Section 3.4		Officers			7
		Section 3.5		Directors			7
		Section 3.6		Conversion of Treasury Stock and Parent Owned Stock			7
		Section 3.7		Conversion of GAFRI Common Stock			7
		Section 3.8		Option Consideration			8
		Section 3.9		Cancellation of the Common Stock of GAC			8
		Section 3.10		Dissenting Shares			10
Article IV     REPRESENTATIONS AND WARRANTIES OF GAFRI							11
		Section 4.1		Organization			11
		Section 4.2		Authorization			11
		Section 4.3		Consents and Approvals; No Violations			12
		Section 4.4		Capitalization			13
		Section 4.5		Subsidiaries			14
		Section 4.6		No Undisclosed Liabilities			14
		Section 4.7		SEC Filings			14
		Section 4.8		Financial Statements; No Undisclosed Liabilities			15
		Section 4.9		Proxy Statement			16
		Section 4.10		Absence of Material Adverse Changes, etc			16
		Section 4.11		Environmental Matters			16
		Section 4.12		Employee Benefit Plans			17
		Section 4.13		Litigation; Compliance with Laws			17
		Section 4.14		Intellectual Property			17
		Section 4.15		Labor and Employment			18
		Section 4.16		Opinion of Financial Advisors			18
		Section 4.17		Finders’ and Other Fees			18
		Section 4.18		State Takeover Statutes			18
		Section 4.19		[Reserves			18
		Section 4.20		[Reserved]			18
		Section 4.21		Investment Company			18
		Section 4.22		No Downgrading of Rating			19
Article V     REPRESENTATIONS AND WARRANTIES OF PARENT AND GAC							19
		Section 5.1		Organization			19
		Section 5.2		Authorization			19
		Section 5.3		Consents and Approvals; No Violations			19

		Section 5.4		Proxy Statement			20
		Section 5.5		Brokers			20
		Section 5.6		Sufficient Funds			20
		Section 5.7		No Prior GAC Operations			20
Article VI     COVENANTS OF THE PARTIES							20
		Section 6.1		Conduct of the Business of GAFRI			20
		Section 6.2		Stockholders’ Meeting; Proxy Material			22
		Section 6.3		No Solicitation			23
		Section 6.4		Director and Officer Liability			23
		Section 6.5		Certain Filings			24
		Section 6.6		Best Efforts			25
		Section 6.7		Public Announcements			25
		Section 6.8		State Takeover Laws			25
		Section 6.9		Certain Notifications			25
		Section 6.10		Third Party Consents			26
		Section 6.11		Delisting			26
		Section 6.12		Guarantee of GAFRI Indebtedness			26
		Section 6.13		Formation of GAC			26
Article VII     CONDITIONS PRECEDENT							26
		Section 7.1		Conditions to Each Party’s Obligations to Effect the Merger			26
		Section 7.2		Conditions to GAFRI’s Obligation to Effect the Merger			27
		Section 7.3		Conditions to Parent’s and GAC’s Obligations to Effect the Merger			28
Article VIII     TERMINATION							28
		Section 8.1		Termination			28
		Section 8.2		Effect of Termination			29
		Section 8.3		Fees and Expenses			29
Article IX     MISCELLANEOUS							29
		Section 9.1		Notices			29
		Section 9.2		Non-Survival of Representations, Warranties and Covenants			30
		Section 9.3		Interpretation			31
		Section 9.4		Amendments, Modification and Waiver			31
		Section 9.5		Successors and Assigns			31
		Section 9.6		Specific Performance			31
		Section 9.7		Governing Law; Consent to Jurisdiction; Waiver of Trial by Jury			32
		Section 9.8		Severability			32
		Section 9.9		Third Party Beneficiaries			33
		Section 9.10		Entire Agreement			33
		Section 9.11		Counterparts; Fax Signatures; Effectiveness			33

AGREEMENT AND PLAN OF MERGER

     AGREEMENT AND PLAN OF MERGER, dated as of May 17, 2007 (this “Agreement”), among American Financial Group, Inc. , an Ohio corporation (“ Parent ”), Great American Financial Resources, Inc. , a Delaware corporation (“ GAFRI ”), and GAFRI Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of Parent (“ GAC ”) (GAFRI and GAC being hereinafter collectively referred to as the “ Constituent Corporations ”).

     WHEREAS, the Board of Directors of GAFRI (the “ GAFRI Board ”), upon the approval and recommendation of its Special Committee, has (i) declared that the merger of GAC with and into GAFRI (the “ Merger ”), with GAFRI being the surviving corporation (in this capacity, the “Surviving Corporation”), is advisable, (ii) determined that the Merger is fair to, and in the best interests of, GAFRI and its stockholders (other than Parent and its Affiliates), (iii) approved and adopted this Agreement, the Merger and the other transactions contemplated by this Agreement (collectively, the “ Transactions ”), and (iv) resolved to recommend the approval of the Merger and the adoption of this Agreement by the stockholders of GAFRI.

     WHEREAS, the respective Boards of Directors of Parent and GAC have each approved and adopted this Agreement and the Transactions, including the Merger, upon the terms and subject to the conditions set forth herein; and

     WHEREAS, Parent, concurrently with the execution and delivery of this Agreement, is approving this Agreement and the Transactions, including the Merger, as the sole stockholder of GAC, upon the terms and subject to the conditions set forth herein.

     NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants, agreements and conditions set forth herein, and intending to be legally bound hereby, the parties hereto agree as follows:

ARTICLE I
DEFINITIONS

     Section 1.1 Definitions . As used in this Agreement, the following terms have the meanings specified or referred to in this Section 1.1 and shall be equally applicable to both singular and plural forms. Any agreement referred to below means such agreement as amended, supplemented or modified from time to time in accordance with its terms to the extent permitted by the applicable provisions of this Agreement.

     “ Acquiror Entities ” has the meaning set forth in the first sentence of Article V.

     “ Acquiror Entity Material Adverse Effect ” means any effect, change or development that, individually or in the aggregate, with other effects, changes or developments, is material and adverse to the financial condition, business operations, prospects or results of operations of the Acquiror Entities, taken as a whole, or could be reasonably expected to adversely affect the ability of any Acquiror Entity to consummate the Merger or other Transactions; provided, however, that to the extent any effect, change or development is caused by or results from any of the following, it shall not be taken into account in determining whether there has been an “Acquiror Entity Material Adverse Effect”: (i) the announcement of the execution of this

Agreement, actions contemplated by this Agreement or the performance of obligations under this Agreement (in each case, including any reduction in premiums or sales, any disruption in supplier, distributor, partner, agent or similar relationships or any loss of employees), (ii) factors affecting the economy or financial markets as a whole, (iii) the suspension of trading in securities generally on the New York Stock Exchange or the NASDAQ Global Market, and (iv) the commencement, occurrence or continuation of any war, armed hostilities or acts of terrorism involving or affecting the United States of America or any part thereof.

     “ Acquisition Proposal ” means any offer or proposal regarding a merger, consolidation, share exchange, recapitalization, reclassification, liquidation or other business combination involving GAFRI or the acquisition or purchase of 10% or more of any class of equity securities of GAFRI or any of its Material Subsidiaries then outstanding, or any tender offer (including self-tenders) or exchange offer that, if consummated, would result in any Person beneficially owning 10% or more of any class of equity securities of GAFRI or any of its Material Subsidiaries, or a substantial portion of the assets of, GAFRI or any of its Material Subsidiaries, taken as a whole, other than the Transactions.

     “ Affiliate ” has the meaning as defined in Rule 12b-2 under the Exchange Act.

     “ Agreement ” means this Agreement and Plan of Merger among Parent, GAC and GAFRI.

     “ Applicable Law ” means any federal, state, local, municipal or other law, statute, legislation, constitution, principle of common law, resolution, ordinance, code, edict, order, judgment, decree, rule, regulation, ruling or requirement or legally binding policies or guidelines issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Entity.

     “ Business Day ” means each day that is not a Saturday, Sunday or other day on which banking institutions located in the City of Cincinnati, Ohio, are authorized or obligated by law or executive order to close, and the term “day” when not immediately preceded by the word “business” shall mean a calendar day.

     “ Certificate ” has the meaning set forth in Section 3.7.

     “ Certificate of Merger ” has the meaning set forth in Section 2.3.

      “ Closing ” has the meaning set forth in Section 2.2.

     “ Closing Date ” has the meaning set forth in Section 2.2.

     “ Code ” means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.

     “ Constituent Corporations ” has the meaning set forth in the introductory paragraph of this Agreement.

     “ Contract ” means any written or oral, agreement, contract, subcontract, lease, mortgage, indenture, understanding, arrangement, instrument, note, bond, option, warranty, purchase order,

license, sublicense, insurance policy, or other legally binding instrument, obligation or commitment or undertaking of any nature.

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

     “ Dissenting Shares ” has the meaning set forth in Section 3.10(a).

      “ Effective Time ” has the meaning set forth in Section 2.3.

     “ Environmental Law ” means any federal, state, local or foreign statute, law, regulation, order, decree, permit, authorization, common law or legally binding agency requirement relating to: (i) the regulation, protection, investigation or restoration of the environment, health, safety or natural resources, (ii) the handling, use, presence, disposal, release or threatened release of any Hazardous Substance or (iii) noise, odor, indoor air, employee exposure, wetlands, pollution, contamination or any injury or threat of injury to Persons or property relating to any Hazardous Substance.

     “ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.

     “ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

     “ GAAP ” means United States generally accepted accounting principles.

     “ GAC ” has the meaning set forth in the introductory paragraph of this Agreement.

      “ GAC Bylaws ” has the meaning set forth in Section 3.3.

     “ GAC Certificate of Incorporation ” has the meaning set forth in Section 3.2.

      “ GAFRI ” has the meaning set forth in the introductory paragraph of this Agreement.

      “ GAFRI Board ” has the meaning set forth in the first recital of this Agreement.

      “ GAFRI Bylaws ” has the meaning set forth in Section 4.1.

     “ GAFRI Certificate of Incorporation ” has the meaning set forth in Section 4.1.

     “ GAFRI Common Stock ” has the meaning set forth in Section 2.1.

     “ GAFRI Disclosure Schedule ” means any disclosure schedule delivered by GAFRI to Parent dated the date hereof, which disclosure schedule relates to this Agreement and is designated therein as the GAFRI Disclosure Schedule.

     “ GAFRI Material Adverse Effect ” means any effect, change or development that, individually or in the aggregate, with other effects, changes or developments, is material and adverse to the financial condition, business operations, prospects or results of operations of GAFRI and its Subsidiaries, taken as a whole, or could reasonably be expected to adversely affect the ability of GAFRI to consummate the Merger or other Transactions; provided, however, that to the extent any effect, change or development is caused by or results from any of the

following, it shall not be taken into account in determining whether there has been a “GAFRI Material Adverse Effect”: (i) the announcement of the execution of this Agreement, actions contemplated by this Agreement or the performance of obligations under this Agreement (in each case, including any reduction in premiums or sales, any disruption in supplier, distributor, agent or partner or similar relationships or any loss of employees), (ii) factors affecting the economy or financial markets as a whole, (iii) the suspension of trading in securities generally on the New York Stock Exchange or the NASDAQ Global Market, and (iv) the commencement, occurrence or continuation of any war, armed hostilities or acts of terrorism involving or affecting the United States of America or any part thereof.

      “ GAFRI SEC Documents ” has the meaning set forth in Section 4.7.

     “ GAFRI Stockholder Approval ” has the meaning set forth in Section 4.2(c).

     “ Governmental Entity ” means any federal, state, local or foreign government or any court, tribunal, administrative agency or commission or other governmental or other regulatory authority or agency, domestic, foreign or supranational.

     “ Hazardous Substance ” means (i) any substance that is listed, classified, regulated or for which liability is imposed pursuant to any Environmental Law, (ii) any petroleum product or by-product, asbestos-containing material, lead-containing paint or plumbing, polychlorinated biphenyls, radioactive material or radon and (iii) any other substance which is the subject of regulatory action by any Governmental Entity in connection with any Environmental Law.

     “ Holder ” has the meaning set forth in Section 3.9(a).

     “ HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

     “ Indemnitees ” has the meaning set forth in Section 6.4(a).

     “ Insurance Regulatory Authority ” shall mean, with respect to any Subsidiary that is an insurance company, the Governmental Entity of such Subsidiary’s state of domicile with which such Subsidiary is required to file its annual financial statement prepared in accordance with SAP.

     “ Intellectual Property Rights ” has the meaning set forth in Section 4.15.

     “ IRS ” means the Internal Revenue Service.

     “ Knowledge ” means the actual knowledge after reasonable inquiry of the executive officers of GAFRI or the executive officers of Parent and GAC, as the case may be.

     “ Liens ” means, with respect to any asset, mortgages, deeds of trust, pledges, charges, security interests, liens, title retention devices, conditional sales or other security arrangements, collateral assignments, claims, charges, adverse claims of title, ownership or right to use, easements, servitudes, restrictive covenants, options, rights of first refusal, restrictions or other encumbrances of any kind or nature whatsoever in respect of such asset (including any restriction on (1) the voting of any security or the transfer of any security or other asset, (2) the receipt of any income derived from any asset, (3) the use of any asset, and (4) the possession, exercise or

transfer of any other attribute of ownership of any asset), in each case except for such restrictions of general application under the Securities Act and state “blue sky” laws.

     “ Material Subsidiary ” means any Subsidiary whose consolidated revenues, net income or assets constitute 10% or more of the revenues, net income or assets of GAFRI and its Subsidiaries, taken as a whole.

     “ Merger ” has the meaning set forth in the first recital of this Agreement.

     “ Merger Consideration ” has the meaning set forth in Section 3.7.

     “ Parent ” has the meaning set forth in the introductory paragraph of this Agreement.

     “ PBGC ” means the Pension Benefit Guaranty Corporation.

     “ Person ” means any person, employee, individual, corporation, limited liability company, partnership, trust, joint venture, or any other non-governmental entity or any governmental or regulatory authority or body.

     “ Plans ” has the meaning set forth in Section 4.13(a).

     “ Proxy Statement ” has the meaning set forth in Section 6.2(b).

     “ Regulatory Law ” means the Sherman Act, the Clayton Act, the HSR Act, the Federal Trade Commission Act, each as amended, and all other federal, state and foreign, if any, statutes, rules, regulations, orders, decrees, administrative and judicial doctrines and other laws that are designed or intended to prohibit, restrict or regulate (x) foreign investment, (y) foreign exchange or currency controls or (z) actions having the purpose or effect of monopolization or restraint of trade or lessening of competition.

     “ SAP ” means statutory accounting principles prescribed or permitted by the respective state of domicile for each GAFRI Subsidiary that is an insurance company.

     “ SEC ” means the United States Securities and Exchange Commission.

     “ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

     “ Special Committee ” means the Special Committee of the GAFRI Board formed for the purpose of considering Parent’s proposal to acquire all capital stock of GAFRI not owned by Parent as contemplated by the Merger.

     “ Special Meeting ” has the meaning set forth in Section 6.2(a).

     “ Subsidiary ” of any Person means another Person, an amount of the voting securities, other voting ownership or voting partnership interests of which is sufficient to elect at least a majority of its Board of Directors or other governing body (or, if there are no such voting interests, 50% or more of the equity interests of which) is owned directly or indirectly by such first Person.

     “ Surviving Corporation ” has the meaning set forth in the first recital of this Agreement.

     “ Tax ” and “ Taxes ” means: (i) any and all federal, state, local or foreign net income, gross income, gross receipts, windfall profit, severance, property, production, sales, use, license, excise, franchise, employment, payroll, withholding, alternative or add-on minimum, ad valorem, value added, transfer, stamp, or environmental tax, or any other tax, custom, duty, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest or penalty, addition to tax or additional amount imposed by any Governmental Entity; (ii) any liability for the payment of any amounts of the type described in clause (i) as a result of being a member of an affiliated, consolidated, combined or unitary group for any period; and (iii) any liability for the payment of any amounts of the type described in clause (i) or (ii) as a result of any express or implied obligation to indemnify any other person or as a result of any obligations under any agreements or arrangements with any other person with respect to such amounts and including any liability for taxes of a predecessor entity.

     “ Tax Return ” means any return, report or similar statement required to be filed with respect to any Tax including any information return, claim for refund, amended return or declaration of estimated Tax.

     “ Termination Date ” has the meaning set forth in Section 8.1(b).

     “ Third Party ” means any Person or group of Persons (other than GAFRI and its Affiliates or Parent and its Affiliates).

ARTICLE II
THE MERGER

     Section 2.1 The Merger . Upon the terms and subject to the satisfaction or waiver (subject to Applicable Law) of the conditions set forth in this Agreement, and in accordance with the Delaware General Corporation Law (the “ DGCL ”), GAC shall merge with and into GAFRI at the Effective Time and the separate corporate existence of GAC shall thereupon cease. Following the Effective Time, GAFRI, as the Surviving Corporation, shall succeed to and assume all of the rights and obligations of GAC and GAFRI in accordance with the DGCL and Section 3.1 of this Agreement.

     Section 2.2 Closing . The closing of the Merger (the “ Closing ”) shall take place at a time and date to be specified by the parties to this Agreement, which shall be no later than the thirty (30) Business Day after satisfaction or waiver (subject to Applicable Law) of the conditions set forth in Article VII (other than those conditions that by their terms are to be satisfied at the Closing, but subject to the fulfillment or waiver (subject to Applicable Law) of those conditions), at the offices of Keating Muething & Klekamp PLL, Suite 1400, One East Fourth Street, Cincinnati, Ohio, 45202, unless another time, date or place is agreed to by the parties hereto (the “ Closing Date ”).

     Section 2.3 Effective Time . The Merger shall become effective at the close of business on the date when the Certificate of Merger relating to the Merger, in such form and as required by and executed in accordance with the relevant provisions of the DGCL, is duly filed with the Secretary of State of the State of Delaware (the “ Certificate of Merger ”), or at such later date and time as the Constituent Corporations shall, by written agreement, specify in the Certificate of Merger. When used in this Agreement, the term “ Effective Time ” means the later of the close of business on the date on which the Certificate of Merger is duly filed with the

Secretary of State of the State of Delaware, or such later date and time established by the Certificate of Merger. The filing of the Certificate of Merger shall be made as soon as practicable after the satisfaction or waiver (subject to Applicable Law) of the conditions to the Merger set forth in Article VII.

ARTICLE III
EFFECTS OF THE MERGER

     Section 3.1 Effects of the Merger . The Merger shall have the effects set forth in this Agreement, the Certificate of Merger and the applicable provisions of the DGCL. Without limiting the generality of the foregoing, at the Effective Time, all the assets, property, rights, privileges, powers and franchises of GAC and GAFRI shall vest in the Surviving Corporation, and all debts, liabilities, restrictions and duties of GAC and GAFRI shall become the debts, liabilities, restrictions and duties of the Surviving Corporation.

     Section 3.2 Certificate of Incorporation . The Certificate of Incorporation of GAC (the “GAC Certificate of Incorporation”), as in effect immediately prior to the Effective Time, shall be the Certificate of Incorporation of the Surviving Corporation, until thereafter changed or amended as provided therein or by Applicable Law.

     Section 3.3 Bylaws . The Bylaws of GAC (the “GAC Bylaws”), as in effect immediately prior to the Effective Time, shall be the Bylaws of the Surviving Corporation, until thereafter changed or amended as provided therein, by Applicable Law or the Certificate of Incorporation of the Surviving Corporation.

     Section 3.4 Officers . From and after the Effective Time, the officers of GAC immediately prior to the Effective Time shall be the officers of the Surviving Corporation, until the earlier of their resignation or removal or until their respective successors are duly elected, as the case may be.

     Section 3.5 Directors . From and after the Effective Time, the directors of the Surviving Corporation shall be the following persons until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be: S. Craig Lindner, Charles R. Scheper and Mark F. Muething.

     Section 3.6 Conversion of Treasury Stock and Parent Owned Stock . At the Effective Time, by virtue of the Merger and without any action on the part of the holder thereof, (i) each share of GAFRI Common Stock that is held, directly or indirectly, by GAFRI shall automatically be converted into and become a validly issued and outstanding share of common stock of the Surviving Corporation, and (ii) each issued and outstanding share of GAFRI Common Stock that is owned by Parent, any Subsidiary of Parent or GAC shall automatically be converted into and become a validly issued and outstanding share of common stock of the Surviving Corporation.

     Section 3.7 Conversion of GAFRI Common Stock . At the Effective Time, by virtue of the Merger and without any action on the part of any holder thereof, each share of GAFRI Common Stock issued and outstanding immediately prior to the Effective Time (other than shares to be converted in accordance with Section 3.6 and Dissenting Shares) shall be converted into the right to receive $24.50 in cash (the “ Per Share Merger Consideration ” and the aggregate of all Per Share Merger Consideration in respect of all GAFRI Common Stock entitled thereto, the “ Merger Consideration ”). As of the Effective Time, all such shares of GAFRI Common

Stock shall no longer remain outstanding and shall automatically be canceled and shall cease to exist, and each holder of a certificate that immediately prior to the Effective Time represented such shares of GAFRI Common Stock (a “ Certificate ”) shall cease to have any rights with respect thereto, except the right to receive an amount of cash equal to the Per Share Merger Consideration multiplied by the number of shares of GAFRI Common Stock formerly represented by such Certificate or Certificates, to be paid in consideration therefor upon surrender, or surrender, notation and return of such Certificate in accordance with Section 3.9, without interest or dividends.

     Section 3.8 Option Consideration .

     (a) At or prior to the Effective Time, GAFRI shall take (or shall have caused to have been taken) all actions necessary to terminate, as of the Effective Time, its employee stock option plans, on the terms and subject to the conditions set forth in this Agreement, and to extinguish all rights of grantees or optionees under such stock option plans for cash payments by GAFRI to each optionee in respect of vested employee stock options in an amount equal to the positive number difference, less applicable Taxes, between the Per Share Merger Consideration and option exercise paid multiplied by the number of shares of GAFRI Common Stock formerly subject to an option (“Option Payment Amount”). For the avoidance of doubt, at the Effective Time, each Company option that is vested at the Effective Time in which the Per Share Merger Consideration is equal to or less than the exercise price per share under such Company option shall be terminated and be of no further effect. For options vested at the Effective Time, such payments shall be made as soon as practicable after the Effective Time. So long as a holder of an option is an employee of GAFRI, Parent or any subsidiary of either of them at the vesting dates (as set forth in a GAFRI employee stock option plan or document evidencing a grant of an employee stock option), GAFRI shall pay the Option Payment Amount as soon as practicable after such vesting dates in 2008, 2009, 2010 and 2011.

     (b) Effective as of the Effective Time, GAFRI shall take all action necessary to provide for the termination of its agent stock option plans or agreements and the extinguishment of all rights thereunder.

     Section 3.9 Cancellation of the Common Stock of GAC . At the Effective Time, by virtue of the Merger and without any action on the part of the holder thereof, each issued and outstanding share of common stock, $.001 par value per share, of GAC shall automatically be cancelled and all certificates evidencing ownership of such shares shall be void and of no effect.

     (a) Exchange Procedures . As soon as practicable after the Effective Time, the Surviving Corporation shall mail (and make available for collection by hand) to each holder of record of a Certificate or Certificates (other than Certificates, if any, held by Parent, any Subsidiary of Parent, GAC, GAFRI or any GAFRI Subsidiary) (each, a “ Holder ”), (i) a letter of transmittal in customary form and approved by GAFRI prior to the Effective Time (which approval shall not be unreasonably withheld or delayed), which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates to the Surviving Corporation and which shall have such other customary provisions as Parent may specify, and (ii) instructions for use in effecting the surrender of the Certificates in exchange for the applicable portion of the Merger Consideration (pursuant to Section 3.7) to be

received in cash by the Holder thereof pursuant to this Agreement. Upon surrender of a Certificate for cancellation to the Surviving Corporation, together with a letter of transmittal duly completed and validly executed in accordance with the instructions thereto, and such other documents as may be reasonably required pursuant to such instructions (or, if such shares are held in book-entry or other uncertificated form, upon the entry through a book-entry transfer agent or the surrender of such GAFRI Common Stock on a book entry statement (it being understood that any references herein to “Certificates” shall be deemed to include references to book-entry account statements), the Holder of such Certificate shall be entitled to receive promptly in exchange therefor the Per Share Merger Consideration for each share of GAFRI Common Stock formerly represented by such Certificate, payable in check to be mailed (or made available for collection by hand if so elected by the surrendering Holder of a Certificate within three (3) Business Days of receipt thereof), and the Certificate so surrendered shall be forthwith cancelled. No interest shall be paid or accrued for the benefit of Holders on the Merger Consideration payable upon the surrender of the Certificates. At the Effective Time, the stock transfer books of GAFRI shall be closed, and thereafter there shall be no further registration of transfers of shares of GAFRI Common Stock outstanding on the records of GAFRI. Until so surrendered, outstanding Certificates shall be deemed from and after the Effective Time, for all corporate purposes, to evidence only the right to receive, without interest, the applicable portion of the Merger Consideration to which the Holder of such Certificate is entitled by virtue thereof. If Certificates are presented to GAFRI for transfer following the Effective Time, they shall be canceled against delivery of the applicable portion of the Merger Consideration to which the Holder of such Certificate is entitled to receive. All cash paid upon conversion of shares of GAFRI Common Stock in accordance with the terms of this Article III shall be deemed to have been paid in full satisfaction of all rights of the respective Holders pertaining to such shares of GAFRI Common Stock.

     (b)  No Liability . None of Parent, GAC, the Surviving Corporation or any of their respective Affiliates shall be liable to any Person in respect of any Merger Consideration delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. If any Certificate shall not have been surrendered prior to two years after the Effective Time (or immediately prior to such earlier date on which any Merger Consideration in respect of such Certificate would otherwise escheat to or become the property of any Governmental Entity), any such cash in respect of such Certificate shall, to the extent permitted by Applicable Law, become the property of the Surviving Corporation, free and clear of all claims or interest of any Person previously entitled thereto.

     (c)  Transfer Taxes . If any Merger Consideration is to be remitted to a Person (other than the Person in whose name the Certificate surrendered in exchange therefor is registered), it shall be a condition of such exchange that the Certificate so surrendered shall be properly endorsed and otherwise in proper form for transfer and that the Person requesting such exchange shall pay to the Surviving Corporation any transfer or other Taxes required by reason of the payment of the Merger Consideration to a Person other than the registered Holder of the Certificate so surrendered, or shall establish to the satisfaction of the Surviving Corporation that such Tax either has been paid or is not applicable.

     (d)  Withholding Rights . The Surviving Corporation shall be entitled to deduct and withhold from the Merger Consideration otherwise payable pursuant to this Agreement to any Holder of a Certificate such amounts as are required to be deducted and withheld with respect to the making of such payment under the Code or any provisions of applicable state, local or foreign Tax law. To the extent that amounts are so deducted and withheld and paid over to the appropriate Taxing authority by the Surviving Corporation, such deducted and withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Holder of the Certificate in respect of which such deduction and withholding was made by the Surviving Corporation.

     (e)  Lost Certificates . If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by the Surviving Corporation, the posting by such Person of a bond, in such reasonable amount as the Surviving Corporation may determine and direct, as indemnity against any claim that may be made against it with respect to such Certificate, the Surviving Corporation will issue, in exchange for such lost, stolen or destroyed Certificate, the Merger Consideration to which the Holder thereof is entitled pursuant to this Agreement.

     (f)  Adjustments to Prevent Dilution or Unjust Enrichment . If, prior to the Effective Time, solely as a result of a reclassification, stock split (including a reverse stock split), stock dividend or stock distribution which in any such event is made on a pro rata basis to all holders of GAFRI Common Stock, there is a change in the number of shares of GAFRI Common Stock outstanding or issuable upon the conversion, exchange or exercise of securities or rights convertible or exchangeable or exercisable for shares of GAFRI Common Stock, then the Merger Consideration shall be equitably adjusted to eliminate the effects of such event.

     (g)  Taking of Necessary Action; Further Action . If, at any time after the Effective Time, any further action is necessary or desirable to carry out the purposes of this Agreement and to vest the Surviving Corporation with full right, title and possession to all assets, property, rights, privileges, powers and franchises of the Constituent Corporations, the officers and directors of GAFRI and GAC will take all such action.

Section 3.10 Dissenting Shares .

     (a) For purposes of this Agreement, the term “Dissenting Shares” means any shares of GAFRI Common Stock with respect to which appraisal rights apply under Section 262 of the DGCL and held by a Holder who (i) has not voted in favor of the Merger or consented thereto in writing, (ii) has demanded properly in writing fair value for such GAFRI Common Stock in accordance with Section 262 of the DGCL, and (iii) has not withdrawn such demand or otherwise lost such Holder’s right to receive the fair value of such Holder’s Dissenting Shares in accordance with Section 262 of the DGCL.

     (b) Notwithstanding any provision of this Agreement to the contrary, Holders of Dissenting Shares shall not be entitled to receive payment of the fair value of such Dissenting Shares in accordance with the provisions of Section 262 of the DGCL if such holders (i) fail to perfect, (ii) effectively withdraw or (iii) otherwise lose their rights to payment of fair value under the DGCL. If, after the Effective Time, any such Holder

fails to perfect or effectively withdraws or otherwise loses such right, such Dissenting Shares shall thereupon be treated as if they had been canceled, extinguished and converted into, as of the Effective Time, and represent, the right to receive payment of the portion of the Merger Consideration to be paid therefor pursuant to Section 3.7, and such shares shall not be deemed to be Dissenting Shares. None of Parent, GAC, GAFRI or the Surviving Corporation shall be liable for any failure of any Holder of shares of GAFRI Common Stock to comply with such Holder’s duties under this Section 3.10.

     (c) Notwithstanding anything to the contrary contained in this Section 3.10, if (i) the Merger is rescinded or abandoned or (ii) stockholders of GAFRI revoke the authority to effect the Merger, then the right of any Holder to be paid the fair value of such Holder’s Dissenting Shares pursuant to Section 262 of the DGCL shall cease.

     (d) GAFRI shall give Parent (i) prompt notice of any demands received by GAFRI for dissenters’ rights and withdrawals of such demands served pursuant to the DGCL, and (ii) the opportunity to direct all negotiations and proceedings with respect to demands for dissenters’ rights under DGCL. GAFRI shall not, except with the prior written consent of Parent, make any payment (including, without limitation, any payment under Section 262 of the DGCL) with respect to any demands for valuation or offer to settle or settle any such demands.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF GAFRI

     Except (i) as set forth in the corresponding section of the GAFRI Disclosure Schedule, it being understood that matters disclosed pursuant to one section of the GAFRI Disclosure Schedule shall be deemed disclosed with respect to any other section of the GAFRI Disclosure Schedule where it is apparent on its face that the matters so disclosed are applicable to such other sections ( provided, however, that the mere inclusion of an item on the GAFRI Disclosure Schedule shall not be deemed to be an admission by GAFRI that such item is or was material or is or was required to be disclosed therein), or (ii) as expressly contemplated or permitted under this Agreement or any agreement contemplated hereby or thereby, GAFRI hereby represents and warrants to Parent and to GAC as follows:

     Section 4.1 Organization . GAFRI is duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite power and authority to carry on its businesses as now being conducted, except where the failure to be so organized, existing and in good standing (or the local law equivalent) or to have such power and authority could not reasonably be expected to have a GAFRI Material Adverse Effect. GAFRI is duly qualified or licensed to do business and is in good standing (or the local law equivalent) in each jurisdiction in which the nature of its businesses or the ownership or leasing of its properties makes such qualification or licensing necessary, other than where the failure to be so duly qualified, licensed and in good standing (or the local law equivalent) could not reasonably be expected to have a GAFRI Material Adverse Effect. GAFRI has made available to Parent and GAC true and complete copies of GAFRI’s Certificate of Incorporation, as amended, in effect as of the date of this Agreement (the “ GAFRI Certificate of Incorporation ”) and GAFRI’s Bylaws in effect as of the date of this Agreement (the “ GAFRI Bylaws ”).

     Section 4.2 Authorization .

     (a) GAFRI has the requisite corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder and to consummate the Transactions (subject, with respect to the Merger, to receipt of the GAFRI Stockholder Approval). The execution and delivery of this Agreement, the consummation by GAFRI of the Transactions, and the performance of its obligations hereunder have been duly and validly authorized, and this Agreement and the Transactions have been approved by the GAFRI Board, and no other corporate proceedings on the part of GAFRI are necessary to authorize the execution, delivery and performance of this Agreement and the consummation of the Transactions (subject, with respect to the Merger, to receipt of the GAFRI Stockholder Approval) other than (i) with respect to the Merger, the filing with the SEC of a proxy statement with respect to, and the receipt of, the GAFRI Stockholder Approval, (ii) the filing of the Certificate of Merger as required by the DGCL, and (iii) such other filings as may be required under, and in compliance with the other applicable requirements of, the HSR Act, the Exchange Act and any other Applicable Law. This Agreement has been duly executed and delivered by GAFRI, and constitutes, assuming due authorization, execution and delivery of this Agreement by Parent and GAC, a valid and binding obligation of GAFRI enforceable against GAFRI in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting the rights and remedies of creditors generally and to general principles of equity (regardless of whether considered in a proceeding in equity or at law).

     (b) The Special Committee, at a meeting duly called and held, has by unanimous vote of all its members, approved and declared this Agreement and the Transactions advisable and has determined that the Merger is fair to GAFRI’s stockholders other than Parent and its Affiliates. The GAFRI Board, at a meeting duly called and held: (i) has declared that the Merger is advisable; (ii) approved and adopted this Agreement and the Transactions and has determined that the Merger is fair to GAFRI’s stockholders other than Parent and its Affiliates; and (iii) has recommended approval by the stockholders of GAFRI of this Agreement and the Merger, subject to the right of the GAFRI Board to withdraw or modify its recommendation of this Agreement and the Merger.

     (c) Under Applicable Law and the GAFRI Certificate of Incorporation, the affirmative vote of a majority of the votes represented by the shares of GAFRI Common Stock outstanding on the record date, established by the GAFRI Board in accordance with the GAFRI Bylaws, Applicable Law and this Agreement, voting together as a single class, at the Special Meeting at which a quorum is present in accordance with GAFRI Bylaws and Applicable Law (the “ GAFRI Stockholder Approval ”) is the only vote of GAFRI’s stockholders required to approve this Agreement and the Transactions, including the Merger.

     Section 4.3 Consents and Approvals; No Violations . Except for filings, permits, authorizations, consents and approvals as may be required under, and other applicable requirements of, the HSR Act, the DGCL, state “blue sky” and securities or takeover laws, neither the execution, delivery or performance of this Agreement by GAFRI nor the consummation by GAFRI of the Transactions will (i) conflict with or result in any breach of any provision of the GAFRI Certificate of Incorporation or the GAFRI Bylaws or of the similar organizational documents of any Subsidiary of GAFRI, (ii) result in a violation or breach of,

constitute (with or without due notice or lapse of time or both) a default under, require the consent from or the giving of notice to a Third Party pursuant to, or give rise to any right of termination, cancellation or acceleration or obligation to repurchase, repay, redeem or acquire or any similar right or obligation under, any of the terms, conditions or provisions of any Contract to which GAFRI or any Subsidiary of GAFRI is a party or by which they or any of their assets is bound, (iii) require any filing or registration with, or permit, authorization, consent or approval of, any Governmental Entity on the part of GAFRI or any Subsidiary of GAFRI or (iv) violate any order, injunction, decree, statute, rule or regulation of any Governmental Entity to which GAFRI or any Subsidiary of GAFRI is subject, excluding from the foregoing clause (ii) such conflicts, requirements, obligations, defaults, failures, breaches, rights or violations that could not reasonably be expected to have a GAFRI Material Adverse Effect.

     Section 4.4 Capitalization . (a) As of the date hereof, the authorized capital stock of GAFRI consists of (i) 100,000,000 shares of GAFRI Common Stock, and (ii) 25,000,000 shares of preferred stock, $1.00 par value per share (“ GAFRI Preferred Stock ”).

(a) (i) At the close of business on May 16, 2007, 47,774,881 shares of GAFRI Common Stock were issued and outstanding, all of which were validly issued, fully paid and nonassessable and free of preemptive rights; and,

     (ii) At the close of business on May 16, 2007, no shares of GAFRI Preferred Stock were issued and outstanding.

     (iii) At the close of business on May 16, 2007, there were 2,777,287 shares of GAFRI Common Stock reserved for issuance under Plans, 301,559 shares of GAFRI Common Stock reserved for issuance under the agent stock option plans. Except as set forth in the immediately preceding sentence, there are no options, warrants, calls, rights or agreements to which GAFRI is a party or by which it is bound obligating GAFRI to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock of GAFRI or obligating GAFRI to grant, extend or enter into any option, warrant, call, right or agreement, and there are no outstanding contractual rights, including (without limitation) “phantom” equity, stock appreciation, profit participation or similar plan rights, to which GAFRI is a party or by which GAFRI is bound the value of which is or are based on the value of the capital stock or other equity securities of GAFRI. There are no outstanding contractual obligations of GAFRI to repurchase, redeem or otherwise acquire any shares of GAFRI Common Stock or of GAFRI Preferred Stock.