EXHIBIT 10.2

SECURITIES PURCHASE AGREEMENT

 

  

      SECURITIES PURCHASE

AGREEMENT dated as of September 25, 2006 by

and among BOULDER SPECIALTY BRANDS,

INC., a Delaware corporation (the “Company”) and

the Persons listed on Annex I hereto (the

“Investors”).

PREAMBLE

WHEREAS, the Company desires to sell to certain of the Investors and certain of
the Investors, severally and not jointly, subject to the terms and conditions
hereof, desire to purchase from the Company an aggregate of 14,410,188 shares of
Common Stock (as hereinafter defined) of the Company (the “Common Shares”);

WHEREAS, the Company desires to sell to certain of the Investors and certain of
the Investors, severally and not jointly, subject to the terms and conditions
hereof, desire to purchase from the Company (a) an aggregate 15,388,889 shares
of Series A Convertible Preferred Stock of the Company, $0.0001 par value per
share (the “Series A Preferred Shares,” and together with the Common Shares, the
“Shares”), with the designations, preferences, and rights set forth in the
Restated Certificate of Incorporation of the Company (the “Restated
Certificate”) attached hereto as Exhibit A, and (b) warrants in the form
attached hereto as Exhibit B (the “Warrants,” and together with the Shares, the
“Securities”), to purchase additional shares (the “Warrant Shares”) of Common
Stock as set forth in each applicable Warrant; and

WHEREAS, the Investors, severally and not jointly, wish to purchase the
Securities on the terms and subject to the conditions set forth herein.

NOW THEREFORE, in consideration of the foregoing and of the agreements set forth
below, the parties agree as follows:

ARTICLE I

SALE AND PURCHASE

1.1 Authorization of Issuance and Sale; Reservation of Reserved Shares.

(a) Subject to the terms and conditions hereof, the Company shall have, prior to
the Closing, authorized: (A) the issuance and sale of the Series A Preferred
Shares, the Common Shares, and the Warrants to the Investors, (B) the
reservation of the Warrant Shares for issuance upon exercise of the Warrants,
and (C) the reservation of 60,000,000 shares (the “Reserved Shares”) of the
Common Stock of the Company, $0.0001 par value per share (the “Common Stock”),
for issuance upon conversion of the Series A Preferred Shares.

(b) The Company’s agreement with each Investor is a separate agreement, and the
sale of Securities to each Investor is a separate sale. No Investor shall have
any obligation to

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purchase any Securities not purchased by another Investor. The Company and each
of the Investors purchasing Common Shares agree that the price per share for
each Common Share shall be $7.46. The Company and each of the Investors
purchasing Series A Preferred Shares and Warrants agree that the aggregate
purchase price to be paid at the Closing in respect of such Securities shall be
$9.00 and shall be allocated between the Warrants and the Series A Preferred
Shares in such amounts as shall be agreed to prior to the Closing by the Company
and the Investors who have committed to purchase hereunder a majority of the
Series A Preferred Shares to be issued and shall, in any event, include the OZ
Entities (as hereinafter defined)) and the GC Entities (as hereinafter defined)
as approving Investors. No party hereto shall take a position inconsistent with
this allocation unless otherwise required by Law (as hereinafter defined).

(c) Each Investor set forth on Schedule 1.1(c) hereof has elected to be subject
to the provisions of Section 9(l) of the Restated Certificate and Section 3(g)
of the Warrants and by executing this Agreement each such Investor hereby
acknowledges such election.

1.2 Closings.

(a) The closing of the sale of the Securities (the “Closing”) shall take place
at the offices of O’Melveny & Myers LLP, Times Square Tower, 7 Times Square, New
York, NY 10036, no later than three (3) Business Days after the satisfaction of
the conditions set forth in Article III (except for those conditions which by
their nature are to be satisfied at Closing including the closing of the Merger
(as hereinafter defined)) or at such other time and place as the parties shall
agree. The date of the Closing is referred to herein as the “Closing Date”.
“Business Day” means any day except Saturday, Sunday and any day which shall be
a federal legal holiday or a day on which banking institutions in the State of
New York are authorized or required by law or other governmental action to
close.

(b) On the Closing Date, upon the terms and subject to the conditions set forth
herein, the Company agrees to sell, and each Investor agrees to purchase in the
aggregate, severally and not jointly, the amount of Securities as set forth
opposite its name on Annex I hereto and each Investor shall pay its allocable
portion of the aggregate purchase price for such Securities set forth opposite
its name on Annex I hereto (the “Subscription Amounts”) with each such
Investor’s Subscription Amount to be paid by wire transfer to the account as
specified in writing by the Company (which will be disbursed from the Escrow
Account (as hereinafter defined) pursuant to the Escrow Agreement (as
hereinafter defined).

(c) In the event an Investor (a “Non-Participating Investor”) (i) has breached
its obligation to fund its Subscription Amount at the Closing or (ii) elects not
to fund its Subscription Amount at the Closing because all conditions to Closing
have not been satisfied (and such Investor elects not to waive such applicable
closing conditions), then each other Investor which shall elect to fund its
Subscription Amount (an “Over Subscription Investor”) may, in its sole
discretion, elect to subscribe for and purchase, pro rata, based upon the
aggregate Subscription Amounts committed by all such electing Investors, the
Securities to have been purchased by the Non-Participating Investor, in exchange
for the applicable portion of the Non-Participating Investor’s Subscription
Amount. Each Over Subscription Investor so purchasing its full allotment thereof
may also purchase its pro rata amount, based upon aggregate Subscription Amounts
committed by all such Over Subscription Investors so purchasing their full
allotments

 

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thereof, of any Non-Participating Investor Securities not so purchased (the
“Over-allotment Option”). In the event, upon exercise of all Over-allotment
Options, Over Subscription Investors have not elected to subscribe for and
purchase all of the Securities to have been purchased by a Non-Participating
Investor (the “Deficit Subscription Amount”), then an additional Person or
Persons (each a “Joinder Investor”) not then a party to this Agreement may
become, upon the approval of the Requisite Investors, a party to this Agreement
as an Investor subscribing for and purchasing any or all of the Securities with
respect to such Deficit Subscription Amount; provided, however, that each
Joinder Investor be consented to by the Company (such consent not to be
unreasonably withheld or delayed) in its reasonable discretion; provided
further, however, that the determination of the Company that the addition of a
Joinder Investor to this Agreement is not acceptable solely due to the receipt
of written legal advice from a nationally recognized law firm that the addition
of such Joinder Investor would result in the failure of the issuance of the
Securities to be exempt from registration under the Securities Act of 1933, as
amended (the “Securities Act”) and the rules and regulations promulgated
thereunder, shall be deemed to be a valid exercise of the Company’s reasonable
discretion. Each Joinder Investor shall be required to execute a counterpart to
this Agreement, agreeing to be treated as an Investor for all purposes under
this Agreement and the Annexes to this Agreement shall be amended and revised,
as applicable, to reflect the foregoing. The addition of a Joinder Investor as a
party to this Agreement shall in no way relieve or be deemed to provide a remedy
or reduction in claims to be made against an Investor that has defaulted on its
obligations hereunder.

(d) On or prior to the third (3rd) Business Day prior to the Closing Date, after
the satisfaction of all the conditions set forth in Article III (except for
those conditions which by their nature are to be satisfied at Closing including
the closing of the Merger (as hereinafter defined)) and after the satisfaction
of all the conditions set forth in the SB Merger Agreement (as hereinafter
defined) (except for those conditions which by their nature are to be satisfied
at closing of the Merger), upon delivery to and receipt by the Investors of a
certificate of the Chief Executive Officer of the Company that such applicable
conditions have been satisfied, each Investor shall deliver its Subscription
Amount, in United States dollars and in immediately available funds, to the
Escrow Agent in accordance with the wire instructions provided to such Investor
by the Company. The Escrow Agreement shall provide that all payments made by
each Investor as contemplated by this Section 1.2(d) will be held by the Escrow
Agent for each Investor’s benefit in an interest bearing escrow account (the
“Escrow Account”) pursuant to the terms of an Escrow Agreement, to be entered
into by and among the Escrow Agent (the “Escrow Agent”), the Company and the
Investors after the date hereof, in a form to be agreed to by the Requisite
Investors in their reasonable discretion on behalf of the Investors (the “Escrow
Agreement”) . Such moneys placed in the Escrow Account shall be disbursed by the
Escrow Agent with respect to an applicable Investor’s Subscription Amount either
(i) to the Company (plus the interest earned thereon), upon the satisfaction of
the conditions to Closing set forth in Article III and consummation of the
Closing (including the SB Transaction) as evidenced by the receipt by the Escrow
Agent of a certificate from each applicable Investor consenting to the
determination that the conditions to the Closing have been satisfied or waived
or (ii) back to the applicable Investor in an amount equal to such Investor’s
Subscription Amount (plus the interest earned thereon) upon the earlier to occur
of (x) the termination of this Agreement with respect to the applicable
Investor, or (y) in the event that the SB Transaction is not consummated within
fifteen (15) calendar days after the date by which the Investors must deposit
their Subscription Amount into the Escrow Account pursuant to this
Section 1.2(d), in each case in accordance with the terms of the Escrow
Agreement.

 

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(e) “Requisite Investors” means (x) prior to the Closing, Investors who have
committed to purchase hereunder a majority of the aggregate Subscription
Amounts; provided, that the definition of Requisite Investors prior to Closing
shall at all times include OZ Master Fund, Ltd., and OZ Global Special
Investments Master Fund, L.P. and/or their respective affiliates (collectively,
the “OZ Entities”) and Glenview Capital Partners, L.P., Glenview Institutional
Partners, L.P., Glenview Capital Master Fund, Ltd., GCM Little Arbor Partners,
L.P., GCM Little Arbor Institutional Partners, L.P., and GCM Little Arbor Master
Fund, Ltd. and/or their respective affiliates (collectively, the “GC Entities”)
and (y) after the Closing, Investors holding a majority of the Series A
Preferred Shares (on an as converted basis without taking into account any
restrictions on conversion set forth in Section 9(l) of the Restated
Certificate) and Common Shares purchased hereunder voting together as one class.
“SB Transaction” means the merger of a special purpose subsidiary of the Company
(the “Acquisition Subsidiary”) with and into SB pursuant to the SB Merger
Agreement. The SB Transaction may also be referred to herein as the “Merger.”
“SB Merger Agreement” means the Agreement and Plan of Merger by and among the
Company, a corporation previously and confidentially disclosed to the Investors
(“SB”), and the shareholders’ representative party thereto attached as Exhibit C
hereto (as so amended without giving effect to an SB Amendment (as hereinafter
defined) that has not been properly approved hereunder).

ARTICLE II

REPRESENTATION AND WARRANTIES

2.1 Representations and Warranties of the Company.

The Company hereby represents and warrants to the Investors as of the date
hereof and as of the Closing Date as follows (for purposes hereof, knowledge” or
“best knowledge” or words of similar import of the Company or any subsidiary
means (i) actual knowledge of Stephen B. Hughes, Robert S. Gluck, Christopher W.
Wolf and the other officers and key employees of the Company or any of its
subsidiaries and (ii) that knowledge which could have been acquired by such
aforementioned individuals after making such due inquiry and exercising such due
diligence as a prudent businessperson would have made or exercised in the
management of his or her business affairs, including due inquiry of those key
employees and professionals of the Company or any of its subsidiaries who could
reasonably be expected to have actual knowledge of the matters in question):

(a) Organization.

Each of the Company and its subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
is duly qualified to do business and in good standing in each other jurisdiction
in which it is required to do so by Law and, as of the date hereof, has all
requisite corporate power and authority to own, lease and operate the assets
used in its business, to carry on its business as presently conducted and to
enter into the Documents, to perform its obligations thereunder, and to
consummate the transactions contemplated thereby. As of the Closing Date, each
of the Company and its subsidiaries has or

 

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shall have all requisite corporate power and authority to own, lease and operate
the assets used in its business, to carry on its business as presently conducted
and as proposed to be conducted following the closing of the Merger. Attached as
Schedules 2.1(a)(i) and (ii), respectively, are correct and complete copies of
the Certificate of Incorporation, as in effect immediately before the filing of
the Restated Certificate, and the By-laws of the Company, as in effect on the
date hereof (the “Certificate of Incorporation” and the “By-laws,”
respectively). For purposes of this Agreement, the term “Documents” means
(i) this Agreement, (ii) the Restated Certificate, (iii) the Warrants, (iv) the
SB Merger Agreement, and (v) the Registration Rights Agreement to be entered
into at or prior to the Closing, in the form of Exhibit D hereto (as amended,
the “Registration Rights Agreement”) and all other documents, agreements and
instruments executed and delivered in connection herewith, in each case, as
amended, modified or supplemented from time to time.

(b) Subsidiaries.

(1) Except as set forth on Schedule 2.1(b), the Company has no subsidiaries or
controlled Affiliates and does not otherwise own or control, directly or
indirectly, any equity or voting interest in any Person, nor has the Company
made any commitment or subscribed for the purchase of any such equity or voting
interest (other than the acquisition of SB pursuant to the SB Merger Agreement).
The term “Affiliate” means, with respect to any Person, any (a) director,
officer, limited or general partner, member or stockholder holding 5% or more of
the outstanding capital stock or other equity interests of such Person, (b) any
spouse, parent, sibling or descendant of such Person (or a spouse, parent,
sibling or descendant of a Person specified in clause (i) above relating to such
Person) and (c) other Person that, directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such Person. The term “control” includes, without limitation, the possession,
directly or indirectly, of the power to direct the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise. The term “Person” shall be construed in the broadest sense and means
and includes any natural person, a partnership, a corporation, an association, a
joint stock company, a limited liability company, a trust, a joint venture, an
unincorporated organization and other entity or Governmental Authority. The term
“Governmental Authority” means any federal, state, municipal, foreign or other
government, governmental department, commission, board, bureau, agency or
instrumentality, or any private or public court or tribunal.

(2) Except as set forth on Schedule 2.1(b), either the Company or one of its
subsidiaries holds of record and owns beneficially all of the outstanding equity
securities of each subsidiary of the Company, free and clear of any
Encumbrances.

(c) Authorization of the Documents; No Conflicts.

The Company and each of its subsidiaries, as applicable, has all requisite
corporate power and authority to execute, deliver and perform the Documents and
to consummate the transactions contemplated thereby. The execution, delivery and
performance by the Company and each of its subsidiaries, as applicable, of the
Documents have been duly authorized by all requisite corporate action of the
Company and such subsidiary and no further action is required by the Company’s
board of directors or its stockholder’s in connection

 

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therewith other as set forth on Schedule 2.1(c), and each Document has been (or
upon delivery will have been) duly executed by the Company and each of its
subsidiaries, as applicable, and when delivered in accordance with the terms
hereof and thereof, will constitute a valid and binding obligation of the
Company and such subsidiaries, as applicable, enforceable against the Company
and such subsidiaries, as applicable, in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditor’s rights
and to general equitable principles. The Company’s and each subsidiaries’, as
applicable, execution, delivery and performance of the Documents to which it is
a party, its consummation of the transactions contemplated thereby and its
compliance with the provisions thereof will not (a) violate any provision of any
Law applicable to the Company, its subsidiaries, or any of its properties or
assets including without limitation the Securities and Exchange Commission, the
Commodities Futures Trading Commission, the National Association of Securities
Dealers (the “NASD” ) and the National Futures Association (the “NFA” ),
applicable to the Company or its subsidiaries or (b) conflict with or result in
any breach of any of the terms, conditions or provisions of, or constitute (with
due notice or lapse of time, or both) a default or give rise to any right of
termination, cancellation or acceleration under, or result in the creation of
any Encumbrance upon any of the properties or assets of the Company, any
subsidiary or under, the Certificate of Incorporation, Restated Certificate,
By-laws (or such subsidiary’s certificate of incorporation or formation, by-laws
or other organizational or governance document) or any Contract.

(d) Authorization of Preferred Shares, Common Shares, Warrants, Warrant Shares
and Reserved Shares.

Subject to the approvals set forth on Schedule 2.1(c), as of the date of the
Closing, (i) the authorization, issuance, sale and delivery of the Securities
and the SB Shares (as hereinafter defined) and the reservation of the Warrant
Shares and the Reserved Shares will be duly authorized by all requisite
corporate and stockholder action on the part of the Company and its
stockholders; (ii) the Securities and the SB Shares (as hereinafter defined),
upon issuance pursuant to the terms of this Agreement, and upon their respective
issuances in accordance with the provisions of the Warrants and the Restated
Certificate, the Warrant Shares and the Reserved Shares, respectively, will be,
validly issued and outstanding, fully paid and nonassessable, with no personal
liability attaching to the ownership thereof and not subject to any preemptive
rights, rights of first refusal or other similar rights of the shareholders of
the Company.

(e) No Consent or Approval Required.

Except as set forth on Schedules 2.1(c) and 2.1(e) hereto, no consent, approval
or authorization of, or declaration to or filing with (including pursuant to any
federal or state securities laws), any Person is required for the valid
authorization, execution and delivery by the Company or any of its subsidiaries
of any Document or for its consummation of the transactions contemplated thereby
or for the valid authorization, issuance and delivery of the Securities or for
the valid authorization, reservation, issuance and delivery of the Reserved
Shares or Warrant Shares, other than those consents, approvals, authorizations,
declarations or filings which have been obtained or made, as the case may be.
The only blue sky filings required in connection with the transactions
contemplated hereby are in the states of California and New York.

 

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(f) Capitalization.

The capital stock of the Company immediately upon the consummation of the
Closing shall consist solely of: (i) 250,000,000 shares of Common Stock, of
which: (A) 30,361,238 shares shall be or are issued and outstanding, subject to
the exercise by existing shareholders of the Company of the right to convert
their shares of Common Stock of the Company pursuant to Article XII of the
Certificate of Incorporation , (B) 12,760,840 shares shall be or are reserved
for issuance upon the exercise of warrants (“Public Warrants”) granted in the
Company’s initial public offering pursuant to the Warrant Agreement dated on or
about December 16, 2005, by and between the Company and Continental Stock
Transfer & Trust Company, (C) 1,000,000 shares shall be or are reserved for
issuance upon the exercise of warrants purchased by certain of the Company’s
founders pursuant to the Founding Director Warrant Purchase Agreement dated on
or about December 16, 2005 between the Company and Stephen B. Hughes, James E.
Lewis, Robert J. Gillespie, William E. Hooper, Robert F. McCarthy and Michael R.
O’Brien, (D) no more than 9,650,000 shares shall be or are reserved for issuance
upon the exercise of options, convertible securities or grants of restricted
stock to be issued pursuant to an option or incentive plan approved by the Board
of Directors of the Company, (E) no more than 1,340,483 shares may be issued
pursuant to Section 2.13 of the SB Merger Agreement (the “SB Shares”), and
(F) 60,000,000 shares shall be or are reserved for issuance upon conversion of
the Series A Preferred Shares and/or exercise of the Warrants; and
(ii) 50,000,000 shares of authorized Preferred Stock, $0.0001 par value,
15,388,889 of which have been designated as Series A Convertible Preferred
Stock, $0.0001 par value of the Company and 34,611,111 of which have not been
designated.

All of the Company’s and its subsidiaries’ issued and outstanding shares of
capital stock (or other equity securities) have been duly authorized and validly
issued and are fully paid and nonassessable, with no personal liability
attaching to the ownership thereof. Except as provided in this Agreement, for
shares of Common Stock that may be issued pursuant to Section 2.13 of the SB
Merger Agreement, or as set forth on Schedule 2.1(f), (i) no subscription,
warrant, option, convertible security or other right (contingent or otherwise)
to purchase or acquire any shares of capital stock of the Company or any of its
subsidiaries is authorized or outstanding, (ii) neither the Company nor any of
its subsidiaries has any obligation (contingent or otherwise) to issue any
subscription, warrant, option, convertible security or other such right or to
issue or distribute to holders of any shares of its capital stock or other
equity securities any evidences of indebtedness or assets of the Company or such
subsidiary, (iii) neither the Company nor any of its subsidiaries has any
obligation (contingent or otherwise) to purchase, redeem or otherwise acquire
any shares of its capital stock (or other equity securities) or any interest
therein or to pay any dividend or make any other distribution in respect
thereof, and (iv) there are no outstanding or authorized stock appreciation,
phantom stock or similar rights with respect to the Company or any of its
subsidiaries. All of the issued and outstanding shares of the Company’s and its
subsidiaries’ capital stock (or other equity securities) have been offered,
issued and sold by the Company or such subsidiary in compliance with applicable
federal and state securities Laws.

Immediately after the Closing, the Series A Preferred Shares in the aggregate
shall represent (on an as converted basis without taking into account any
restrictions on conversion set forth in Section 9(l) of the Restated
Certificate), at least 22.2508% of the Company’s Common Stock (calculated on a
fully diluted basis and including as outstanding

 

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securities, shares of Common Stock authorized or reserved under the Company’s
warrants (other than the Warrants issued hereunder), 9,650,000 shares of Common
Stock authorized or reserved for issuance upon the exercise of options,
convertible securities or grants of restricted stock to be issued pursuant to an
option or incentive plan approved by the Board of Directors of the Company, and
treating all outstanding securities of the Company that are convertible into or
exercisable or exchangeable for, shares of Common Stock, as the maximum number
of shares of Common Stock issuable with respect to such securities at any time
on or after the date of the Restated Certificate, and excluding from this
calculation shares that may be issued pursuant to Section 2.13 of the SB Merger
Agreement).

Immediately after the Closing, the Common Shares in the aggregate shall
represent at least 20.8357% of the Company’s Common Stock (calculated on a fully
diluted basis and including as outstanding securities, shares of Common Stock
authorized or reserved under the Company’s warrants (other than the Warrants
issued hereunder), 9,650,000 shares of Common Stock authorized or reserved for
issuance upon the exercise of options, convertible securities or grants of
restricted stock to be issued pursuant to an option or incentive plan approved
by the Board of Directors of the Company, and treating all outstanding
securities of the Company that are convertible into or exercisable or
exchangeable for, shares of Common Stock, as the maximum number of shares of
Common Stock issuable with respect to such securities at any time on or after
the date of the Restated Certificate and excluding from this calculation shares
that may be issued pursuant to Section 2.13 of the SB Merger Agreement).

Immediately after the Closing, the Warrants in the aggregate shall represent (on
an as exercised basis), at least 22.2508% of the Company’s Common Stock
(calculated on a fully diluted basis, assuming the Redemption Date (as defined
in the Restated Certificate) with respect to all of the Series A Preferred
Shares occurred immediately after the Closing and all Series A Preferred Shares
had been redeemed (and assuming solely for purposes of this calculation that
each of the Series A Preferred Shares are redeemed for their respective Series A
Purchase Price (as defined in the Restated Certificate)), and including as
outstanding securities, shares of Common Stock authorized or reserved under the
Company’s warrants, 9,650,000 shares of Common Stock authorized or reserved for
issuance upon the exercise of options, convertible securities or grants of
restricted stock to be issued pursuant to an option or incentive plan approved
by the Board of Directors of the Company, and treating all outstanding
securities of the Company that are convertible into or exercisable or
exchangeable for, shares of Common Stock, as the maximum number of shares of
Common Stock issuable with respect to such securities at any time on or after
the date of the Restated Certificate and excluding from this calculation shares
that may be issued pursuant to Section 2.13 of the SB Merger Agreement).

(g) Defaults.

Except as set forth on Schedule 2.1(g) hereto, neither the Company nor any of
its subsidiaries is in default (i) under the Certificate of Incorporation or the
By-laws (or such subsidiary’s certificate of incorporation or formation, by-laws
or other organizational or governance document), or any Contract to which the
Company or such subsidiary is a party or by which the Company or such subsidiary
or any of such Person’s properties are bound or affected or (ii) under any Law.
There exists no condition, event or act which constitutes, or which, after
notice, lapse of time or both, would constitute, a default under any of the
foregoing. The term

 

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“Law” means, as to any Person, all provisions of laws, statutes, ordinances,
rules, regulations, permits, certificates or orders of any Governmental
Authority applicable to such Person or any of its properties or assets, and all
Judgments applicable to such Person, and the term “Judgments” means all
judgments, injunctions, citations, orders and decrees of all courts and
arbitrators in proceedings or actions in which the Person in question is a party
or by which any of its assets or properties is bound.

(h) SEC Reports, Financial Statements.

(1) Since December 21, 2005, the Company has filed all reports, registrations,
schedules, forms, statements and other documents required to be filed by it
under the Securities Act and the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), including pursuant to Section 13(a) or 15(d) thereof, and
with any Governmental Authority, for the twelve months preceding the date hereof
(or such shorter period as the Company was required by law to file such reports)
(the foregoing materials, including the exhibits thereto and documents
incorporated by reference therein, being collectively referred to herein as the
“SEC Reports”) on a timely basis or has received a valid extension of such time
of filing and has filed any such SEC Reports prior to the expiration of any such
extension. Except as disclosed on Schedule 2.1(h), as of their respective dates,
the SEC Reports complied in all material respects with the requirements of the
Securities Act and the Exchange Act and the rules and regulations of the
Securities Exchange Commission (the “Commission”) promulgated thereunder
including, but not limited to, the applicable requirements of Regulation S-X
promulgated under the Exchange Act and, to the extent applicable, the
Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”), and the rules and regulations of
any other Governmental Authority with which the SEC Reports were made or should
have been made, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Except as
disclosed on Schedule 2.1(h), the financial statements of the Company included
in the SEC Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing. Except as disclosed on Schedule
2.1(h), such financial statements have been prepared in accordance with United
States generally accepted accounting principles applied on a consistent basis
during the periods involved (“GAAP”), except as may be otherwise specified in
such financial statements or the notes thereto and except that unaudited
financial statements may not contain all footnotes required by GAAP, and fairly
present in all material respects the financial position of the Company and its
consolidated subsidiaries as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, immaterial, year-end audit adjustments.

(2) The Chief Executive Officer and the Chief Financial Officer of the Company
have signed, and the Company has furnished to the Commission, all certifications
required by Section 906 of Sarbanes-Oxley; such certifications contain no
qualifications or exceptions to the matters certified therein and have not been
modified or withdrawn; and neither the Company nor any of its officers has
received notice from any Governmental Authority questioning or challenging the
accuracy, completeness, form or manner of filing or submission of such
certifications. To the Company’s knowledge, each director and executive officer
of the Company has filed with the Commission on a timely basis all statements
required by Section 16(a) of the Exchange Act and the rules and regulations
thereunder since December 21, 2005.

 

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(i) Absence of Undisclosed Liabilities.

Except as set forth on Schedule 2.1(i), neither the Company nor any of its
subsidiaries has any liability or obligation of any nature (whether known or
unknown, matured or unmatured, secured or unsecured, fixed or contingent,
accrued or unaccrued) (“Liabilities”), except for (a) Liabilities disclosed in
the latest audited balance sheet included in the SEC Reports (the “Company
Balance Sheet”), (b) Liabilities which have arisen since the date of the latest
audited financial statements in the ordinary course of business and
(c) contractual Liabilities incurred in the ordinary course of business.

(j) Absence of Changes.

Since inception the Company has not conducted any operations except as set forth
in the SEC Reports. Except as set forth on Schedule 2.1(j) hereto, since the
date of the latest audited financial statements included within the SEC Reports
(the “Company Balance Sheet Date”), there has not been (i) any material adverse
change in the business, affairs, operations, assets, properties, Liabilities,
results of operations, condition (financial or otherwise) or prospects of the
Company or any of its subsidiaries (taken as a whole) (a “Material Adverse
Change”), (ii) any borrowing or agreement to borrow funds or any Liability
incurred by the Company or any of its subsidiaries, other than current
Liabilities incurred in the ordinary course of business consistent in type and
amount with past practice, (iii) any asset or property of the Company or any of
its subsidiaries made subject to any Encumbrance of any kind, (iv) any waiver of
any right of the Company or any of its subsidiaries, or the cancellation of any
debt owed to or claim held by the Company or any of its subsidiaries, (v) any
payment of dividends on, or other distribution with respect to, or any direct or
indirect redemption, purchase or acquisition of, any shares of the capital stock
or other securities of the Company or any of its subsidiaries, (vi) any issuance
of any stock, bond or other security of the Company or any of its subsidiaries,
(vii) any disposition of any tangible or intangible asset of the Company or any
of its subsidiaries, (viii) any loan by the Company or any of its subsidiaries
to any officer, director, employee, consultant, agent, affiliate or stockholder
of the Company or any of its subsidiaries (other than advances to such persons
in the ordinary course of business consistent with past practice in connection
with bona fide business expenses), (ix) any damage, destruction or loss (whether
or not covered by insurance) of any asset of the Company or any of its
subsidiaries, (x) any extraordinary increase, direct or indirect, in the
compensation paid or payable to any officer, director, employee, consultant or
agent of the Company or any of its subsidiaries, (xi) any change in the
accounting methods, practices or policies followed by the Company or any of its
subsidiaries or any change in depreciation or amortization policies or rates
theretofore adopted, which has not been adequately provided for or disclosed in
the SEC Reports, or (xii) any agreement or commitment with respect to any of the
foregoing matters. Except as disclosed on Schedule 2.1(j), the Company does not
have pending before the Commission any request for confidential treatment of
information. Except for the issuance of the Securities contemplated by this
Agreement and the contemplated SB Transaction and as set forth on Schedule
2.1(h), no event, liability or development has occurred or exists with respect
to the Company or any subsidiary or their respective business, prospects,
properties, operations or financial condition,

 

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that would be required to be disclosed by the Company under applicable
securities laws at the time this representation is made that has not been
publicly disclosed one (1) Trading Day prior to the date that this
representation is made. “Trading Day” means a day on which the Common Stock is
trading on a Trading Market. “Trading Market” means the following markets or
exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the Nasdaq Capital Market, the American Stock Exchange, the New
York Stock Exchange, the Nasdaq Global Market or the OTC Bulletin Board.

(k) Title to Assets, Properties and Rights.

Except as is set forth on Schedule 2.1(k), the Company and its subsidiaries have
good and marketable title to all properties, interests in properties and assets
(real, personal, intangible or mixed) used by the Company and its subsidiaries
in the conduct of their respective businesses, or necessary for use by the
Company and its subsidiaries in the conduct of such businesses, free and clear
of all mortgages, Judgments, claims, liens, security interests, pledges,
escrows, charges, pre-emptive rights, rights of first offer or first refusal or
other encumbrances of any kind or character whatsoever (“Encumbrances”).

(l) Intellectual Property Rights.

(i) The term “Intellectual Property Rights” means all industrial and
intellectual property rights recognized under any Laws or international
conventions or agreements, and in any country or jurisdiction in the world,
including, without limitation, patents, patent applications, and patent rights,
trademarks, trademark applications and registrations, service marks, service
mark applications and registrations, domain names, domain name applications and
registrations, trade dress, logos and designs, trade names, brands, product
configurations, copyrights and copyright rights, copyright applications and
registrations, mask works, know-how, business methods, franchises, licenses,
trade secrets, confidential information, proprietary processes and technology,
data bases, source and object code, inventions, discoveries, technical advances,
any manual, formulae and/or documentation constituting, describing or related to
the foregoing, and any and all goodwill connected with the foregoing.

(ii) Schedule 2.1(l)(ii) includes a list of all Intellectual Property Rights,
other than general commercial software (e.g., “shrink wrap” licenses for
Microsoft Word or Excel (“Retail Licenses”)) that are owned by or licensed to
the Company and its subsidiaries (the “Company Intellectual Property”).

(iii) The Company Intellectual Property is valid and subsisting and, except as
indicated in Schedule 2.1(l)(ii) that any of the Company Intellectual Property
is licensed from others, the Company or a subsidiary is the exclusive owner of,
and enjoys all rights of ownership with respect to, the Company Intellectual
Property, free and clear of any Encumbrance, and no royalties, honoraria or fees
are payable by the Company or any of its subsidiaries to other Persons by reason
of the ownership or use of the Company Intellectual Property.

 

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(iv) The Company or a subsidiary owns, is licensed or otherwise possesses all
Intellectual Property Rights necessary to make, use, manufacture, market,
import, export, sell, and offer to sell the Company’s and its subsidiaries’
current and contemplated products and services, except where any failure to own,
license or otherwise possess such Intellectual Property Rights would not
reasonably be expected to have a Material Adverse Change. The Company
Intellectual Property that falls within the scope of Title 35 of the United
States Code is in compliance with the same, including, but not limited to, 35
U.S.C. Section 112, Paragraph 1, in that the manner and process of making and
using the inventions claimed therein has been disclosed in such full, clear,
concise, and exact terms as to enable one skilled in the art to make and use the
same, and that the best mode contemplated by the inventors at the time of the
invention of carrying out their inventions has been set forth.

(v) Neither the execution and delivery of this Agreement or SB Merger Agreement,
nor the carrying on of the business of the Company and its subsidiaries as
currently conducted, will conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any contract or
agreement regarding any Company Intellectual Property.

(vi) Except as described in Schedule 2.1(l)(vii), neither the Company nor any of
its subsidiaries has received any threat, demand or notice of claim from any
Person, whether in writing or otherwise, asserting that the Company’s or a
subsidiary’s use, manufacture, marketing, importation, export, offer to sell, or
sale of products constitutes any infringement, interference, violation,
misappropriation, breach or wrongful use of the Intellectual Property Rights of
any other Person, nor are they aware of any facts that indicate a likelihood of
such infringement, interference, violation, misappropriation, breach or wrongful
use. Neither the Company nor any of its subsidiaries is a party to any
Proceeding (as hereinafter defined) or outstanding decree, order, Judgment,
agreement or stipulation restricting in any manner the use, transfer, or
licensing by the Company or any of its subsidiaries of any Intellectual Property
Rights necessary to conduct its business as presently conducted or as proposed
to be conducted, or which may affect the validity, use or enforceability of the
Company Intellectual Property. Neither the Company nor any of its subsidiaries
has been named in any suit, action or Proceeding which involves a claim of
infringement, misappropriation or violation of any Intellectual Property Rights
of any third party. The use, manufacturing, marketing, licensing and sale of the
products of the Company and its subsidiaries as presently conducted and as
proposed to be conducted do not infringe, misappropriate or violate any valid
Intellectual Property Rights of any third party.

(vii) Except as set forth on Schedule 2.1(l)(vii), all current and former
employees of the Company and its subsidiaries, and independent contractors of
the Company and its subsidiaries, have executed written agreements with the
Company or a subsidiary, (A) assigning to the Company or such subsidiary any and
all Intellectual Property Rights that were devised, developed or designed by
such employee or independent contractor within the scope of their employment or
engagement with the Company or such subsidiary and acknowledging that each piece
of such intellectual property constitutes a “work made for hire” for the Company
or such subsidiary (each a

 

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“Work for Hire”), and (B) providing for confidentiality, noncompetition and
nonsolicitation on the part of the employee. To the best knowledge of the
Company, no employee of the Company or any of its subsidiaries has entered into
any contract that restricts or limits in any way the scope or type of work in
which he may be engaged or requires him to transfer, assign, or disclose
information concerning his Work for Hire to any Person other than the Company or
any of its subsidiaries. The Company and each of its subsidiaries has exclusive
ownership of all such Work for Hire.

(viii) The Company and each of its subsidiaries has licensed copies of all
Retail Licenses and does not possess any pirated, illegally copied, bootleg or
otherwise non-licensed copies of any Retail Licenses.

(m) Employment of Officers, Employees and Consultants.

Except as set forth on Schedule 2.1(m), no Person has, or, may, assert any valid
claim against the Company or any of its subsidiaries with respect to:
(a) employment not terminable at will by, or association with, the Company, of
any of the present officers or employees of or consultants to the Company or any
of its subsidiaries (collectively, the “Designated Persons”) or (b) the use, in
connection with any business presently conducted or proposed to be conducted by
the Company or any of its subsidiaries or any of the Designated Persons, of any
information which the Company or any of its subsidiaries or any of the
Designated Persons would be prohibited from using under any prior agreements or
arrangements or any legal considerations applicable to unfair competition, trade
secrets or proprietary information.

(n) ERISA Plans.

(i) Except as set forth on Schedule 2.1(n), neither the Company nor any of its
subsidiaries maintains nor is it a party to (or ever maintained or was a party
to) any “employee welfare benefit plan,” as defined in Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or any
other written, unwritten, formal or informal plan or agreement involving direct
or indirect compensation other than workers’ compensation, unemployment
compensation and other government programs, under which the Company or any of
its subsidiaries has any present or future obligation or Liability. Neither the
Company nor any of its subsidiaries maintains nor is it a party to (or ever
maintained or was a party to) any “employee pension benefit plan,” as defined in
Section 3(2) of ERISA, and neither the Company nor any of its subsidiaries
contribute to any “multiemployer plan” as defined in Section 3(37) of ERISA.

(ii) There is no Contract, plan or arrangement covering any employee or former
employee of the Company or any of its subsidiaries that, individually or
collectively, could give rise to the payment of any amount that would not be
deductible by the Company or such subsidiary by reason of Section 280G of the
Code.

(iii) Schedule 2.1(n) hereto lists each employment, severance or other similar
Contract, arrangement or policy (written or oral) providing for insurance
coverage

 

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(including any self-insured arrangements), non-statutory workers’ compensation,
disability benefits, supplemental unemployment benefits, vacation benefits,
retirement benefits, deferred compensation, profit-sharing, bonuses, stock
options, stock appreciation or other forms of incentive compensation or
post-retirement insurance, compensation or benefits entered into, maintained or
contributed to by the Company or any of its subsidiaries.

(o) Agreements.

Schedule 2.1(o) sets forth an accurate and complete list of all contracts,
indentures, leases, agreements and instruments (each, a “Contract” and
collectively, the “Contracts”), whether written or oral (including any and all
amendments, modifications, supplements and side letters with respect thereto) to
which the Company or any of its subsidiaries is a party, or by which such Person
or any of such Person’s respective assets are bound. All of the Contracts are
enforceable in all respects in accordance with their terms and neither the
Company nor any of its subsidiaries nor any other party thereto, is in breach or
in default under (and no event has occurred which with notice or the passage of
time or both would constitute a breach or default under) any such Contract.
Except as set forth on Schedule 2.1(o) hereto, no Person has indicated that it
may terminate or cancel any Contract. Except as set forth on Schedule 2.1(o)
hereto, no party to any Contract has any rights of setoff, bankers lien or
similar rights with respect to any amounts due on any such Contract. Except as
set forth on Schedule 2.1(o) hereto, no Contract or Law restricts or inhibits in
any way the Company’s or any subsidiary’s right or ability to conduct its
business in the United States or any other jurisdiction in which it currently
conducts or proposes to conduct its business or to use any Intellectual Property
Rights or other rights related to the conduct of such business.

(p) Compliance; Licenses and Permits; Environmental Matters.

(i) The Company and each of its subsidiaries has complied in all material
respects with, and is not in violation in any respect of, any Law. The Company
and each of its subsidiaries has ownership and valid rights to all licenses and
permits of all Governmental Authorities (collectively, “Permits”) which are
required for the conduct of the business presently or previously conducted by
the Company or any of its subsidiaries, which Permits are in full force and
effect, and no violations or non-compliances are outstanding or uncured with
respect to any such Permits and no Proceeding is pending or, to the best
knowledge of the Company, threatened to revoke or limit any such Permits.
Schedule 2.1(p) attached hereto lists all Permits of the Company or any of its
subsidiaries which are used in or relate to such Person’s business, copies of
which have been previously delivered to the Investors. No condition or event has
occurred which, with notice or the passage of time or both, would constitute a
violation of any Law or Permit.

(ii) The Company and each of its subsidiaries is in compliance with all
Environmental and Safety Requirements, and there are no Proceedings pending or,
to the best knowledge of the Company, threatened against the Company or any of
its subsidiaries alleging any failure to so comply or involving any of its past
operations or any real property currently used by the Company or any of its
subsidiaries. Neither the

 

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Company nor any of its subsidiaries has received any written or oral notice or
report with respect to it or its facilities regarding any (A) actual or alleged
violation of Environmental and Safety Requirements or (B) actual or potential
Liability arising under Environmental Safety Requirements, including, without
limitation, any investigatory, remedial or corrective obligation. Neither the
Company nor any of its subsidiaries has expressly assumed or undertaken any
Liability of any other Person under any Environmental and Safety Requirements.
Neither the Company nor any of its subsidiaries has treated, stored, disposed
of, arranged for or permitted the disposal of, transported, handled or released
any substance, or owned or operated any real property in a manner that has given
rise to Liabilities pursuant to CERCLA, SWDA or any other Environmental and
Safety Requirement, including any Liability for response costs, corrective
action costs, personal injury, property damage, natural resources damage or
attorney fees, or any investigative, corrective or remedial obligations.
“Environmental and Safety Requirements” means all Laws, orders, contractual
obligations and all common law concerning public health and safety, worker
health and safety, and pollution or protection of the environment, including,
without limitation, all those relating to the presence, use, production,
generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control or cleanup of any hazardous materials, substances or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation, including, but not limited to, the SWDA, the
Clean Air Act, as amended, 42 U.S.C. §§ 7401 et seq., the Federal Water
Pollution Control Act, as amended, 33 U.S.C. §§ 1251 et seq., the Emergency
Planning and Community Right-to-Know Act, as amended, 42 U.S.C. §§ 11001 et
seq., CERCLA, the Hazardous Materials Transportation Uniform Safety Act, as
amended, 49 U.S.C. §§ 5101 et seq., the Occupational Safety and Health Act of
1970, as amended, and the rules and regulations promulgated thereunder. “CERCLA”
means the Comprehensive Environmental Response, Compensation, and Liability Act,
as amended, and the rules and regulations promulgated thereunder. “SWDA” means
the Solid Waste Disposal Act, as amended, and the rules and regulations
promulgated thereunder.

(q) Labor Relations; Employees.

The Company’s and each of its subsidiaries’ employees as of the date hereof are
listed on Schedule 2.1(q). Except as set forth on Schedule 2.1(q) hereto,
(i) neither the Company nor any of its subsidiaries is delinquent in payments to
any of its employees for any wages, salaries, commissions, bonuses or other
direct compensation for any services performed by them prior to the Closing Date
or amounts required to be reimbursed to such employees, (ii) there is no labor
strike, dispute, slowdown or stoppage actually pending or, to the best knowledge
of the Company, threatened against or involving the Company or any of its
subsidiaries and (iii) neither the Company nor any of its subsidiaries is a
party to or bound by any collective bargaining agreement and neither any
grievance nor any arbitration proceeding arising out of or under any collective
bargaining agreement is pending and no such claim has been asserted.

 

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(r) Litigation.

Except as set forth on Schedule 2.1(r) hereto, there is no action, suit,
customer claim, counterclaim, proceeding or investigation at law or in equity or
by or before any Governmental Authority or other agency (collectively,
“Proceedings”) now pending or, to the best knowledge of the Company, threatened
against or by the Company or any of its subsidiaries, or affecting the Company
or, to the best knowledge of the Company, its directors or officers, or any of
the Company’s subsidiaries or any of their respective assets or properties, nor
does there exist any basis for any such pending or threatened Proceeding. There
has not been, and to the knowledge of the Company, there is not pending or
contemplated, any investigation by the Commission involving the Company or any
subsidiary or any current or former director or officer thereof. The Commission
has not issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Company or any subsidiary under the Exchange
Act or the Securities Act. There are no disagreements of any kind presently
existing, or reasonably anticipate by the Company or any subsidiary to arise
between accountants and lawyers formerly or presently engaged by the Company or
any subsidiary and the Company and any subsidiary, including with out
limitation, any dispute with respect to any fees owed to its accountants and
lawyers.

(s) Tax Matters.

Except as set forth on Schedule 2.1(s) hereto, (i) the Company and each of its
subsidiaries has timely filed all Tax returns, declarations of estimated Tax,
Tax reports, information returns and statements (including all attachments
thereto) (collectively, the “Returns”) required to be filed by it prior to the
Closing Date; (ii) as of the time of filing, the Returns were true, complete and
correct and the Company and each of its subsidiaries has paid all Taxes required
to be paid, whether or not shown on the Returns to be due; (iii) the Company and
each of its subsidiaries has timely paid or made provisions on its books and
records for all Taxes payable for any period that ended on or before the Closing
Date and for any period that began on or before the Closing Date and ends after
the Closing Date, to the extent such Taxes are attributable to income earned or
accrued in the portion of any such period ending on the Closing Date;
(iv) neither the Company nor any of its subsidiaries is delinquent in the
payment of any Taxes, nor has the Company or any of its subsidiaries requested
any extension of time within which to file any Return, which Return has not
since been filed; (v) there are no pending Tax audits of any Returns of the
Company or any of its subsidiaries; (vi) no Encumbrance with respect to Taxes
has been filed and no deficiency or addition to Taxes, interest or penalties for
any Taxes with respect to any income, properties or operations of the Company or
any of its subsidiaries has been proposed, asserted or assessed against the
Company or any of its subsidiaries; (vii) neither the Company nor any of its
subsidiaries has been granted any extension of the statute of limitations
applicable to any Return or other Tax claim; (viii) the Company has never been a
“United States real property holding corporation” as defined in
Section 897(c)(2) of the Internal Revenue Code of 1986, as amended (the “Code”)
and Section 1.897-2(b) of the Regulations promulgated thereunder nor will it
become one upon the consummation of the transaction contemplated herein;
(ix) the Company, each of its subsidiaries, and each of their respective
predecessors has complied with all applicable Laws relating to the payment and
withholding of Taxes and has withheld and paid over all amounts required by Law
to be withheld and paid from the wages or salaries of employees, and neither the
Company nor any of its subsidiaries is liable for any Taxes for failure to
comply with such Laws; (x) No claim has ever been made in writing by a
governmental authority in a jurisdiction where any of the Company

 

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and the Company subsidiaries does not file Returns that it is or may be subject
to taxation by that jurisdiction; (xi) there are no Tax sharing agreements or
similar arrangements (including indemnity arrangements) with respect to or
involving any of the Company and the Company subsidiaries; and (xii) neither the
Company nor any of the Company subsidiaries has entered into any transaction
identified as a “listed transaction” for purposes of Treasury Regulations
Sections 1.6011-4(b)(2) or 301.6111-2(b)(2). “Tax” means any of the Taxes and
“Taxes” means, with respect to any Person, (A) all income Taxes (including any
tax on or based upon net income, or gross income, or income as specially
defined, or earnings, or profits, or selected items of income, earnings or
profits) and all gross receipts, sales, use, ad valorem, transfer, franchise,
license, withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property or windfall profits taxes, alternative or add-on minimum
taxes, customs duties or other taxes, fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any taxing authority (domestic or foreign) on such
Person and (B) any Liability for the payment of any amount of the type described
in the immediately preceding clause (A) as a result of (1) being a “transferee”
(within the meaning of Section 6901 of the Code or any other applicable law) or
successor of another Person, (2) being a member of an affiliated, combined,
consolidated or unitary group or (3) any Contractual Liability.

(t) Related Party Transactions.

Except as set forth on Schedule 2.1(t) hereto, no current or former stockholder,
director, officer or employee of the Company or any of its subsidiaries, nor any
“associate” (as defined in the rules and regulations promulgated under the
Securities Act), of the Company or any of its subsidiaries is presently, or
since the inception of the Company has been, directly or indirectly through his,
her or its affiliation with any other Person, a party to any transaction with
the Company or any of its subsidiaries, providing for the furnishing of services
by or to, or rental of real or personal property from or to, or otherwise
requiring cash payments to or by any such Person (other than the payment of
salaries and benefits to employees in the ordinary course of business).

(u) Offering Exemption.

(1) Assuming the accuracy of the representations of the Investors in
Section 2.2(a) the offering, sale, and issuance of the Securities, Warrant
Shares and the Reserved Shares are, or will be, exempt from registration under
the Securities Act and the rules and regulations promulgated thereunder, such
offering, sale and issuance is also exempt from registration under applicable
state securities and “blue sky” laws, and such offering, sale and issuance does
not contravene the rules and the regulations of the Trading Market. The Company
has made or will make all requisite filings and has taken or will take all
action necessary to be taken to comply with such state securities or “blue sky”
laws.

(2) Assuming the accuracy of the representations of the Investors set forth in
Section 2.2(a), neither the Company, nor any of its Affiliates, nor any Person
acting on its or their behalf has, directly or indirectly, made any offers or
sales of any security or solicited any offers to buy any security, under
circumstances that would cause this offering of the Securities to be integrated
with prior or concurrent offerings by the Company for purposes of the

 

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Securities Act, any state securities laws or any applicable stockholder approval
provisions, including, without limitation, under the rules and regulations of
any Trading Market on which any of the securities of the Company are listed or
designated.

(3) Neither the Company nor any Person acting on behalf of the Company had
offered or sold any of the Securities by any form of general solicitation or
general advertising. The Company has offered the Securities for sale only to the
Investors and certain “accredited investors” as defined in Rule 501 under the
Securities Act and “qualified institutional buyers” as defined in Rule 144A(a)
under the Securities Act.

(v) Insurance.

The Company and each of its subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
are prudent and customary in the businesses in which the Company and each of its
subsidiaries are engaged, including, but not limited to, directors and officers
insurance coverage, and such insurance contracts and policies are accurate and
complete. Neither the Company nor any of its subsidiaries has any reason to
believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business.

(w) Sarbanes-Oxley; Controls and Procedures.

The Company and its subsidiaries are in compliance with all provisions of
Sarbanes-Oxley which are applicable to it as of the date hereof. The Company and
all of its subsidiaries, giving effect to the consummation of the SB
Transaction, will be in compliance with all provisions of Sarbanes-Oxley which
are applicable to it as of the Closing Date except as permitted pursuant to the
transitions rules of The Nasdaq Stock Market’s Marketplace Rules with respect to
SB and its subsidiaries. Except as disclosed on Schedule 2.1(w), the Company and
its subsidiaries have established and maintain and will, upon consummation of
the SB Transaction, maintain an effective system of internal control over
financial reporting (as such term is defined in the Exchange Act ) regarding the
reliability of financial reporting and preparation of financial statements for
external purposes in accordance with GAAP and includes policies and procedures
that (i) pertain to maintenance of records that in reasonable detail accurately
and fairly reflect the transactions and dispositions of the assets of the
issuer; (ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with GAAP,
and that receipts and expenditures of the issuer are being made only in
accordance with authorizations of management and directors of the issuer; and
(iii) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the issuer’s assets that could
result in a Material Adverse Change on the financial statements. Except as
disclosed on Schedule 2.1(w), the Company and its subsidiaries have established
and maintain and will, upon consummation of the SB Transaction, maintain
disclosure controls and procedures (as defined in Exchange Act) that are
effective in ensuring that information required to be disclosed by the Company
in the reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the
Commission’s rules and forms, including, without limitation, controls and
procedures designed to ensure that information required to be disclosed by the
Company in

 

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the reports that it files or submits under the Exchange Act is accumulated and
communicated to the Company’s management, including its principal executive and
principal financial officers, or persons performing similar functions, as
appropriate to allow timely decisions regarding required disclosure. The
Company’s certifying officers have evaluated the effectiveness of the Company’s
disclosure controls and procedures and presented in the applicable SEC Reports
their conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the periods covered by such SEC Reports based on
such evaluation. Since the last such evaluation date, there has been no change
in the Company’s internal control over financial reporting that has materially
affected, or is reasonably likely to materially affect, the Company’s internal
control over financial reporting, and no significant deficiencies or material
weaknesses in internal controls over financial reporting, or other factors that
could significantly affect the Company’s internal control over financial
reporting, have been identified.

(x) Investment Company.

Neither the Company nor any of its subsidiaries is (either independently or as a
consolidated group) an “investment company” within the meaning of the Investment
Company Act of 1940, as amended. The Company and each of its subsidiaries shall
conduct their business in a manner so that they will not become subject to the
Investment Company Act, as amended. The Company is not governed by or subject to
Section 7(b) or Rule 419 of the Securities Act.

(y) Listing and Maintenance Requirements.

The Common Stock is registered pursuant to Section 12(g) of the Exchange Act,
and the Company has taken no action designed to, or likely to have the effect
of, terminating the registration of the Common Stock under the Exchange Act nor
has the Company received any notification that the Commission is contemplating
terminating such registration. Except as specified in the SEC Reports, the
Company has not, in the two (2) years preceding the date hereof, received notice
from any Trading Market on which the Common Stock is or has been listed or
quoted to the effect that the Company is not in compliance with the listing or
maintenance requirements of such Trading Market. The Company is, and has no
reason to believe that it will not in the foreseeable future continue to be, in
compliance with all such listing and maintenance requirements for continued
listing of the Common Stock on the applicable Trading Market, including the
eligibility rules thereunder. Upon satisfaction of the conditions precedent set
forth in Article III hereof with respect to stockholder approval of the issuance
of the Securities, the issuance and sale of the Securities under the Documents
shall not contravene the rules and regulations of the Trading Market on which
the Common Stock is currently listed or quoted or the rules and regulations of
the Nasdaq’s Global Market or Capital Market.

(z) Application of Takeover Protections.

Except to the extent the Company has authorized but not issued shares of
preferred stock of the Company, $0.0001 par value per share as set forth in the
Certificate of Incorporation, the Company and its Board of Directors have or
prior to Closing shall have taken all necessary action, if any, in order to
render inapplicable any control share acquisition, business combination, poison
pill (including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company’s certificate of incorporation (or
similar charter

 

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documents) or the laws of its state of incorporation that is or could become
applicable to the Investors as a result of the Investors and the Company
fulfilling their obligations or exercising their rights under the Documents,
including without limitation as a result of the Company’s issuance of the
Securities and the Investors’ ownership of the Securities.

(aa) Foreign Corrupt Practices.

Neither the Company, any of its subsidiaries, nor any agent or other person
acting on behalf of the Company, has (i) directly or indirectly, used any
corrupt funds for unlawful contributions, gifts, entertainment or other unlawful
expenses related to foreign or domestic political activity, (ii) made any
unlawful payment to foreign or domestic government officials or employees or to
any foreign or domestic political parties or campaigns from corporate funds,
(iii) failed to disclose fully any contribution made by the Company (or made by
any person acting on its behalf of which the Company is aware) which is in
violation of law, or (iv) violated in any material respect any provision of the
Foreign Corrupt Practices Act of 1977, as amended.

(bb) Accountants.

The Company’s accountants are Ehrhardt Keefe Steiner & Hottman, P.C. Such
accountants, who the Company expects will express their opinion with respect to
the financial statements to be included in the Company’s Annual Report on Form
10-K, or Form 10-KSB, if applicable, for the year ending December 31, 2006, are
an independent registered public accounting firm as required by the Securities
Act and registered with the Public Company Accounting Oversight Board. The
Company expects such accountants to consent to the inclusion of their opinion on
such financial statements into the registration statement and the prospectus
which forms a part thereof.

(cc) No Manipulation of Stock.

The Company has not taken and will not take, any action designed to or that
could reasonably be expected to cause or result in stabilization or manipulation
of the price of the Common Stock to facilitate the transactions contemplated
hereby or the sale or resale of the shares of Common Stock.

(dd) SB Transaction.

All of the representations and warranties of SB and the SB stockholders
contained in the SB Merger Agreement or any other agreement, instrument or
document entered into in connection with the SB Transaction are incorporated by
reference herein and are hereby deemed to be made by the Company to the
Investors. All of the representations and warranties of the Company contained in
the SB Merger Agreement or any other agreement, instrument or document entered
into in connection with the Merger are incorporated by reference herein and are
hereby deemed to be made by the Company to the Investors. The Company and its
subsidiaries have not agreed to any material amendments or supplements of, or
any material amendment or supplement to, or waived any provision or material
rights or any condition precedent to closing the merger pursuant to the SB
Merger Agreement (including the waiver of the right of the Company to terminate
the SB Merger Agreement or not to consummate the closing of the merger pursuant
to the SB Merger Agreement including pursuant to Section 2.8(b)

 

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thereunder) contained in the SB Merger Agreement or any other agreement,
instrument or document entered into with respect to the SB Transaction (in each
case, an “SB Amendment”). The Company shall not agree to any SB Amendment
without the prior written consent of the Requisite Investors. In the event that
the Company agrees to any amendment, supplement, or waiver of the SB Merger
Agreement or any other agreement, instrument or document entered into with
respect to the SB Transaction that is not an SB Amendment, the Company shall
provide each Investor, within one (1) Business Day, notice of such amendment or
waiver and the terms thereof. The Company represents that it has provided the
Investors with the final, valid and complete copy of the executed SB Merger
Agreement and each other agreement, instrument and document entered into in
connection therewith and the Company represents that no items were included in
the disclosure schedules which adversely affects the business, operations,
affairs, prospects, condition, properties or assets of the Company or SB as of
the date hereof.

(ee) Brokers.

Except for Citigroup Global Markets, Inc. and Banc of America Securities, LLC,
neither the Company nor any of its subsidiaries, nor any of the officers,
directors, employees or stockholders of the Company or any of its subsidiaries,
has employed any broker or finder in connection with the transactions
contemplated by this Agreement.

(ff) Registration Rights.

Except as set forth in the Registration Rights Agreement or on Schedule 2.1(ff),
no Person has any right to cause the Company or any of its subsidiaries to
effect the registration under the Securities Act of any shares of Common Stock
or any other securities (including debt securities) of the Company or any of its
subsidiaries.

(gg) Disclosure.

None of the Documents, any other document provided to the Investors by the
Company pursuant to the Documents, or the portion of the Executive Summary,
provided by Citigroup Global Markets, Inc. dated July 2006, describing the
business of the Company, SB and its subsidiaries, contains any untrue statement
of a material fact or omits to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading as of the date thereof or the Closing Date. There is no fact
known to the Company which adversely affects or in the future may adversely
affect the business, operations, affairs, prospects, condition, properties or
assets of the Company.

(hh) Use of Proceeds.

The proceeds received by the Company from the sale of the Securities shall be
used by the Company for payment of a portion of the cash consideration to be
paid to SB stockholders in the Merger and for working capital purposes following
the SB Transaction.

 

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2.2 Representations of the Investors.

Each Investor, severally and not jointly, represents to the Company as follows:

(a) Investment Representations.

(i) Such Investor is acquiring the Securities 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) Such Investor understands that the Securities have not been, and any shares
of capital stock issuable upon conversion of the Series A Preferred Shares and
the exercise of the Warrants will not be, registered under the 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) Such Investor understands that the exemption from registration afforded by
Rule 144 (the provisions of which are known to such Investor) 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) Such Investor 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 Securities, and to obtain any additional information which the
Company 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 of privately held companies as to
enable such Investor to understand and evaluate the risks of such investment and
form an investment decision with respect thereto. The foregoing representation,
however, shall not limit or modify the representations and warranties of the
Company contained in this Agreement or any other Document or the right of the
Investors to rely thereon.

(v) If such Investor is not the OZ Entities or the GC Entities, then such
Investor is not relying on any representation, warranty, statement, act
(including the fact that one or more OZ Entity or GC Entity is an Investor) or
investment expertise of any OZ Entity or GC Entity in making such Investor’s
decision to purchase the Securities.

(vi) Such Investor is an “accredited investor,” as such term is defined in Rule
501 or a “qualified institutional buyer” as such term is defined in Rule 144A
(the provisions of which are known to such Investor) promulgated under the
Securities Act.

(vii) Each Investor is an entity duly organized, validly existing and in good
standing under the laws of the applicable jurisdiction of its formation. Such
Investor has all requisite power and authority to execute, deliver and perform
the Documents to which such Investor is a party and to consummate the
transactions contemplated by the Documents to which such Investor is a party.
The execution, delivery and performance by each Investor, as applicable, of the
Documents to which such Investor is a party have been duly authorized by all
requisite action of such Investor and each Document to which such Investor is a
party constitutes a valid and binding obligation of such Investor, enforceable
against such Investor in accordance with its terms.

 

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(b) Brokers and Finders.

No Person acting on behalf or under the authority of such Investor is or will be
entitled to any broker’s, finder’s, or similar fee or commission in connection
with the transactions contemplated hereby.

2.3 Relationship Among Investors.

Each Investor acknowledges that it has, and agrees that it shall continue to,
make independent decisions concerning the investment in the Securities purchased
hereby and exercising or refraining from exercising any rights under any of the
Documents and no inference, presumption or conclusion that such Investors
constitute a “Group” within the meaning of Section 13(d)(3) of the Exchange Act
or Rule 13d-5 thereunder (“Group”) shall be raised from the fact that the
Investors collectively may exercise or refrain from exercising any rights in the
same manner, that such Investors may be represented by a single law firm or
advisor or that any rights or agreements were negotiated with the Company at the
same time or amended or modified with the Company and the Investors in the same
or a similar manner or pursuant to a single document.

ARTICLE III

PRIOR OR SIMULTANEOUS ACTIONS

3.1 Closing Conditions.

The obligations of each applicable party at the Closing to consummate the
transactions contemplated at the Closing shall be subject to the fulfillment, or
waiver by the parties, of each of the following conditions:

(a) The approval of the Company’s stockholders shall have been obtained for each
of (A) the issuance of the Securities; and (B) the filing of the Restated
Certificate.

(b) On or prior to the Closing Date, the SB Transaction shall have been approved
by the Company’s stockholders and the SB stockholders.

(c) On or prior to the Closing Date, the SB Transaction shall have been
consummated in accordance with its terms (with no SB Amendment which has not
been properly approved pursuant to the terms hereof).

(d) No court, arbitrator or Governmental Authority shall have issued any order
restraining the consummation of the transactions contemplated by this Agreement,
and no proceeding challenging this Agreement or the transactions contemplated
hereby or seeking to prohibit or materially delay the Closing shall have been
instituted by any Person before any court, arbitrator or Governmental Authority
and be pending.

 

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(e) Restated Certificate. The Restated Certificate shall have been filed with
and accepted by the Secretary of State of the State of Delaware and shall have
become effective.

(f) Escrow Agreement. The Escrow Agreement shall have been executed and
delivered by the Company, Escrow Agent and all other parties thereto and be in
full force and effect.

3.2 Investor Closing Conditions.

The obligation of each of the Investors to purchase the Securities at the
Closing is subject to the fulfillment, or the waiver by such Investor, of each
of the following conditions on or before the Closing Date:

(a) Accuracy of Representations and Warranties. The representations and
warranties of the Company contained in the Documents shall be true and correct
in all material respects (except those representations and warranties that are
qualified as to materiality, which shall be true and correct in all respects) as
of the date of this Agreement and the date of the Closing as if made on and as
of the Closing, and the Investors shall have received a certificate of an
officer of the Company to such effect on the Closing Date.

(b) Compliance with Covenants. The Company shall have performed and complied in
all material respects (except those covenants that are qualified as to
materiality, which shall have performed and complied in all respects) with all
agreements and covenants contained in the Documents as of the date of the
Closing, and the Investors shall have received a certificate of an officer of
the Company attesting as to such compliance.

(c) No Material Adverse Change. No Material Adverse Effect (as defined in the SB
Merger Agreement) shall have occurred (or shall be reasonably likely to occur)
since December 31, 2005 nor shall there exist any condition or fact which has,
or would reasonably be likely to have, a Material Adverse Effect on the Closing
Date, in each case, with respect to SB and its subsidiaries, and no Material
Adverse Change shall have occurred (or shall be reasonably likely to occur)
since the Company Balance Sheet Date, with respect to the Company and its
subsidiaries.

(d) Registration Rights Agreements.

(1) The Registration Rights Agreement shall have been executed and delivered by
the Company thereto and shall be in full force and effect.

(2) The Registration Rights Agreement dated on or about December 16, 2005 by and
among the Company and the parties thereto (the “Founders Registration Rights
Agreement”) shall have been amended and restated to reflect the amendments to
certain provisions as set forth on Exhibit E.

(e) Required Consents. All consents, approvals and other actions of, and notices
and filings with, all Persons as may be necessary or required with respect to
the execution and delivery by the parties of the Documents, and the consummation
by the parties of the transactions contemplated thereby, including the SB
Transaction have been obtained or made

 

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including all filings, consents and approvals required under the HSR Act and/or
any other Law concerning competition matters, any state securities laws and
Sections 141, 228, 242 and 245 of the General Corporation Law of the State of
Delaware, and an authorized officer of the Company shall deliver a certificate
to each Investor to such effect on the Closing Date.

(f) Authorizing Actions of the Company. Prior to the Closing Date, the Investors
shall have received certified copies of all requisite corporate and stockholder
actions taken by the Company to authorize the Company’s execution and delivery
of the Documents to which it is a party and its consummation of the transactions
contemplated thereby, and such other documents and other instruments as the
Investors or their counsel may reasonably request including a certificate signed
by the Secretary of the Company, dated as of the Closing Date, as to: (i) a
copy, certified by the Secretary of the Company, of the resolutions of the Board
of Directors of the Company evidencing approval of the Documents and
consummation of the transactions contemplated therein and other matters
contemplated hereby; (ii) a copy, certified by the Secretary of the Company, of
the By-laws of the Company; (iii) certified copies of all documents evidencing
other necessary corporate or other action and governmental approvals, if any,
with respect to this Agreement; (iv) certifying the names, titles and signatures
of the officers of the Company authorized to sign this Agreement and other
documents or certificates to be delivered pursuant to this Agreement by the
Company or any of its officers, together with the true signatures of such
officers; and (v) a copy, certified by the Secretary of the Company and
certified by the Secretary of State of Delaware, of the Certificate of
Incorporation of the Company as in effect on the Closing Date. The Investors
shall have received (i) a certificate of the Secretary of State of the State of
Delaware, dated as of a recent date as to the due incorporation or organization
of the Company and each of its subsidiaries and its good standing in such
jurisdiction and (ii) a facsimile, telegram, telex or other acceptable method of
confirmation from said Secretary as of the close of business on the next
Business Day preceding the Closing Date as to the continued good standing of the
Company.

(g) Opinion of Counsel. The Investors shall have received the opinion dated as
of the Closing Date from counsel to the Company in a form to be agreed to by the
Requisite Investors, in their reasonable discretion on behalf of the Investors,
and the Company, in its reasonable discretion. In addition, the Investors shall
be recipients of, and shall be entitled to rely upon, and receive reliance
letters with respect to, each of the legal opinions delivered by counsel to the
Company to SB and by counsel to SB to the Company pursuant to the SB Merger
Agreement.

(h) Payment of Fees. On or prior to the date of the Closing, the Company shall
have reimbursed the fees and expenses as provided in Section 7.1 hereof.

(i) Warrants; Stock Certificates. On the date of the Closing, the Investors
purchasing Series A Preferred Shares or, with respect to the OZ Entities and the
GC Entities their designees (who shall be Credit Suisse Attn: Edward Mcalea; 11
Madison Ave; New York, NY 10010 with respect to the OZ Entities (such account
numbers to be separately provided to the Company), and shall be Goldman, Sachs &
Co. Attn: Michael Daly; One New York Plaza; 44th Floor; New York, NY 10004 with
respect to the GC Entities (such account numbers to be separately provided to
the Company)) shall have received Warrants evidencing their purchase of the
Warrants hereunder, and the Investors shall have received a copy of the
irrevocable

 

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instructions to the Company’s transfer agent instructing the transfer agent to
deliver, on an expedited basis, a certificate evidencing the applicable Shares
registered in the name of each Investor.

(j) De-Listing Suspension of Trading. From the date hereof to the Closing Date,
trading in the Common Stock shall not have been suspended by the Commission
(except for any suspension of trading of limited duration agreed to by the
Company or relating to the announcement of the SB Transaction, which suspension
shall be terminated prior to the Closing), and, at any time prior to the Closing
Date, trading in securities generally as reported by Bloomberg Financial Markets
shall not have been suspended or limited, nor shall a banking moratorium have
been declared either by the United States or New York State authorities nor
shall there have occurred any material outbreak or escalation of hostilities or
other national or international calamity of such magnitude in its effect on, or
any material adverse change in, any financial market which, in each case, in the
reasonable judgment of each Investor, makes it impracticable or inadvisable to
purchase the Securities at the Closing.

(k) Financing.

(1) Investors shall have in the aggregate purchased Securities for a total
Subscription Amount equal to the greater of (x) two hundred and forty million
dollars ($240,000,000) and (y) such amount, together with the net proceeds of
the closing of the debt financing as set forth in Section 3.2(k)(2) below and
cash otherwise available to the Company, as shall be required for the Company to
consummate the transactions contemplated by the SB Merger Agreement including
all fees and expenses incurred by the Company in connection with the Documents
and the consummation of the transactions contemplated thereby including the SB
Merger Agreement and consummation of the Merger. In determining the amounts
(i) available from the debt financing for purposes of the foregoing clause (y),
committed amounts under the revolving credit facility to be entered into at
Closing and referenced in the Financing Letter shall not be taken into account,
except in the event the maximum number of SB Shares permitted to be issued
pursuant to the SB Merger Agreement are issued, then an amount of up to
$10,000,000 of such revolving credit facility shall be so taken into account
solely to the extent such amount is used to consummate the redemption of shares
of Common Stock issued in the Company’s initial public offering solely as, and
to the extent, set forth in Article XII of the Company’s Certificate of
Incorporation in effect immediately prior to the filing of this Restated
Certificate and (ii) of cash available to the Company for purposes of the
foregoing clause (y), $2,000,000 cash of the Company to be used in the ongoing
operation of the Company and its subsidiaries (including SB and its
subsidiaries) shall not be taken into account; with such two hundred and forty
million dollars ($240,000,000) or other greater amount being held in escrow
pursuant to the Escrow Agreement.

(2) The Company shall have closed on one hundred and eighty million dollars
($180,000,000) of debt financing, one hundred and sixty million dollars
($160,000,000) of debt financing of which shall be fully funded at Closing, in
connection with the SB Transaction on terms and conditions set forth in the
Financing Letter (as hereinafter defined); provided, however, in the event the
maximum number of SB Shares permitted to be issued pursuant to the SB Merger
Agreement are issued, then the Company shall fully fund on such additional
amount of debt financing (in excess of $160,000,000), not to exceed an
additional

 

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$10,000,000, as may be required to consummate the redemption of shares of Common
Stock issued in the Company’s initial public offering solely as, and to the
extent, set forth in Article XII of the Company’s Certificate of Incorporation
in effect immediately prior to the filing of this Restated Certificate.

3.3 Company Obligations to Close.

The obligations of the Company at the Closing to consummate the transactions
contemplated at the Closing with respect to the Investors shall be subject to
the fulfillment, or waiver by the Company, of the following conditions:

(a) All representations and warranties of the Investors contained herein shall
remain true and correct in all material respects (except those representations
and warranties that are qualified as to materiality, which shall be true and
correct in all respects) as of the Closing Date, as if made at and as of the
Closing Date.

(b) The Investors shall have performed all of their covenants (except those
covenants that are qualified as to materiality, which shall have performed and
complied in all respects) and agreements to be performed on or prior to the
Closing Date.

(c) The applicable waiting period (and any extension thereof) applicable to the
purchase and sale of the Securities under the HSR Act or any other Law relating
to competition matters shall have terminated or expired.

(d) All consents, approvals and other actions of, and notices and filings with,
all Persons as may be necessary or required with respect to the execution and
delivery by the parties hereto of the Documents, and the consummation by the
parties of the transactions contemplated thereby, have been obtained or made
including all filings, any state securities laws and Sections 141, 228, 242 and
245 of the General Corporation Law of the State of Delaware.

(e) With respect to each Investor, such Investor’s Subscription Amount shall be
delivered by wire transfer to the account as specified in writing by the Company
(which will be disbursed from the Escrow Account pursuant to the Escrow
Agreement) except the Company shall be obligated to consummate the Closing with
respect to those Investors whose funds have been provided if the Company shall
consummate the closing of the Merger regardless of whether all Investors have
funded or not.

(f) From the date hereof to the Closing Date, trading in the Common Stock shall
not have been suspended by the Commission (except for any suspension of trading
of limited duration agreed to by the Company, which suspension shall be
terminated prior to the Closing), and, at any time prior to the Closing Date,
trading in securities generally as reported by Bloomberg Financial Markets shall
not have been suspended or limited, nor shall a banking moratorium have been
declared either by the United States or New York State authorities.

 

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ARTICLE IV

COVENANTS

4.1 Conduct Pending Closing; Non-Solicitation.

(a) From and after the date hereof until the Closing Date, except as
contemplated by the Documents and unless otherwise consented to in writing by
the Requisite Investors, the Company and Acquisition Subsidiary shall
(i) conduct its business substantially as presently conducted and only in the
ordinary course and (ii) shall not, and shall cause its subsidiaries and each of
their respective Affiliates not to (A) enter into or agree to an SB Amendment,
and (B) directly or indirectly, consent to any request made by SB or its
representatives pursuant to the SB Merger Agreement (whether pursuant to
covenants governing pre-closing periods or otherwise, except for consents as to
requests made by SB with respect to Sections 4.2(d), (e), (f), (g) and (l) of
the SB Merger Agreement with respect to immaterial matters). The Requisite
Investors shall respond to consent requests pursuant to this Section 4.1(a)
within a reasonable time frame, but in no event later than ten (10) days after
the date on which the Investors receive a written request for such consent in
the manner set forth in Section 7.4.

(b) Investors have received true and correct executed copies of a commitment
letter from certain lenders (the “Financing Letter”) in the signed version
previously delivered to the Investors, pursuant to which such lenders have
committed to provide to the Company debt financing in the amounts set forth
therein, subject only to the terms and conditions set forth therein. The
Financing Letter shall not be amended or modified prior to the date of this
Agreement and, as of the date hereof, the respective commitments contained in
the Financing Letter have not been withdrawn or rescinded in any respect. From
and after the date hereof until the Closing Date, except as contemplated by the
Documents and unless otherwise consented to in writing by the OZ Entities in
their sole discretion, the Company shall not amend or modify the Financing
Letter.

(c) The Company shall give prompt notice to the Investors of (i) any
representation or warranty made by it contained in this Agreement becoming
untrue or inaccurate in any material respect (including any representation or
warranty made in the SB Merger Agreement) or (ii) the failure by it or any
subsidiary to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it or any subsidiary
under this Agreement; provided, however, that no such notification shall affect
the representations, warranties, covenants or agreement of the parties or the
conditions to the obligations of the parties or indemnification rights under
this Agreement, except as set forth in Section 5.2(b). After the date hereof and
prior to the Closing Date, the Company shall not have the right to update the
disclosure schedules to this Agreement; provided, however, that the Company
shall have the right to update the disclosure schedules solely to reflect
Contracts entered into or other affirmative actions taken by the Company after
the date hereof and prior to the Closing to the extent such Contracts or actions
are entered into in connection with consummating the transactions contemplated
by the SB Merger Agreement and to the extent such Contracts and other actions
are permitted to be entered into or taken by the Company pursuant to this
Agreement (including pursuant to Section 4.1 hereof); provided further, however,
that the disclosure schedules shall in no event be deemed to be updated
(including pursuant to this Section 4.1(c)) and no items will be deemed to be
disclosed as such for purposes of determining whether or not the conditions
precedent set forth in Section 3.2(c) have been satisfied.

(d) The parties shall use their reasonable best efforts to ensure that all
conditions to the Closing set forth in Section 3.1 (with respect to either the
Company or an

 

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Investor, as applicable), Section 3.2 (with respect to the Company) and
Section 3.3 (with respect to the Investors) are satisfied on or prior to the
Closing Date, including executing and delivering all documents required to be
delivered by the Company at the Closing and taking any and all actions which may
be necessary on its part to cause each other party to the Documents to so
execute and deliver each Document.

(e) Stockholders Meeting. As promptly as possible after the date hereof the
Company will prepare, and in no event later than ten (10) calendar days after
receipt of the financial statements required to be included in the proxy
statement or information statement relating to the transactions contemplated by
the SB Merger Agreement (the “Proxy Statement”), the Company shall file a
preliminary Proxy Statement with the Commission. The Company will respond to any
comments of the Commission and use its commercially reasonable efforts to mail
the Proxy Statement to its stockholders at the earliest practicable time. As
soon as practicable following its approval by the Commission, the Company shall
distribute the Proxy Statement to its stockholders and, pursuant thereto, shall
hold a special meeting of its stockholders, for the purpose of voting on the
transactions contemplated by this Agreement including the offering of the
Securities and the Merger (the “Stockholders Meeting”). Such efforts will
include, without limitation, the preparation, delivery and dissemination of the
Proxy Statement, prepared in accordance with the Exchange Act, to the
stockholders of the Company soliciting their vote in favor of the transactions
contemplated hereby (the “Stockholder Approval”) and containing advice that the
Board of Directors recommends that the stockholders approve the transactions
contemplated by this Agreement. The Company shall deliver copies of the Proxy
Statement to each Investor and such Investor’s counsel at least two (2) Business
Days prior to the dissemination of the Proxy Statement to the stockholders of
the Company.

(f) Prior to Closing, the Company shall not and shall cause each subsidiary and
its subsidiaries’ officers and directors not to, and each of the foregoing shall
not permit their respective agents, representatives, advisors or subsidiaries to
(whether directly or indirectly) (i) solicit, initiate or take any action
knowingly to facilitate the submission of inquiries, proposals or offers
(“Acquisition Proposals”) from any Third Party relating to (A) any acquisition
or purchase of assets of the Company and its subsidiaries other than in the
ordinary course of business consistent with past practice, (B) the purchase of
any equity security of the Company or any of its subsidiaries (including a self
tender offer) or any security that is convertible, exchangeable or exercisable
for any equity security, other than Securities issued hereunder, or pursuant to
any equity incentive plans approved by the Requisite Investors or that may be
issued pursuant to Section 2.13 of the SB Merger Agreement, (C) any merger,
consolidation, business combination, sale of substantially all assets,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any of its subsidiaries (except for the acquisition of SB and its
subsidiaries pursuant to the SB Merger Agreement), or (D) any other transaction
the consummation of which would, or could reasonably be expected to impede,
interfere with, prevent or materially delay the transactions contemplated by
this Agreement (each of the foregoing items set forth in (A) through (D), an
“Alternative Transaction”), or agree to or endorse any Alternative Transaction,
or (ii) enter into or participate in any discussions or negotiations regarding
any of the foregoing, or furnish to any Third Party any information with respect
to its business, properties or assets in connection with any of the foregoing,
or otherwise cooperate in any way with, or knowingly assist or participate in,
facilitate or encourage, any effort or attempt by any Third Party (other than
the Investors) to do or seek any of the foregoing.

 

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Subject to the provisions of the previous sentence, the Company shall
immediately cease and cause its subsidiaries and its and their advisors, agents
and other intermediaries to cease any and all existing activities, discussions
or negotiations with any Third Party conducted heretofore with respect to any of
the foregoing, except to advise such Third Party of the existence of the
provisions of this Section, and shall use its best efforts to cause any such
parties in possession of confidential information about the Company that was
furnished by or on behalf of the Company to return or destroy all such
information in the possession of any such Third Party or in the possession of
any agent or advisor of any such Third Party; provided, however, that the
foregoing shall not prohibit the Company (either directly or indirectly through
advisors, agents or other intermediaries) from (i) following receipt of a bona
fide Acquisition Proposal, taking and disclosing to its stockholders a position
contemplated by Rule 14d-9 or Rule 14e-2(a) under the Exchange Act or otherwise
making disclosure to its stockholders and/or (ii) taking any action that the
Board of the Company shall have concluded in good faith after consultation with
outside counsel that such action is required to prevent the Board of the Company
from breaching its fiduciary duties to the stockholders of the Company under
applicable law (it being understood that the Board of the Company may rely on
the written advice of its outside counsel in good faith and the Investors agree
not to take a contrary position to any such written advice). “Third Party” means
any person or Group, other than the Investors or any of their respective
Affiliates.

4.2 Transfer Restrictions.

(a) The Company and each Investor expressly acknowledge that the Securities may
only be disposed of in compliance with state and federal securities laws. In
connection with any transfer of Securities 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 Company or to an Affiliate of a Investor or in
connection with a pledge as contemplated in Section 4.2(b), the Company may
require the transferor thereof to provide to the Company an opinion of counsel
selected by the transferor, a form of which opinion shall have been reasonably
agreed to prior to the Closing or promptly thereafter by each of the Company and
the Requisite Investors, which form of legal opinion may be used, and shall be
accepted, thereafter with respect to all such transfers, to the effect that such
transfer does not require registration of such transferred Securities under the
Securities Act. As a condition of transfer, any such transferee shall agree in
writing to be bound by the terms of this Agreement and shall have the rights of
a Investor under this Agreement and the Registration Rights Agreement.

(b) The Investors agree to the imprinting, so long as is required by this
Section 4.2(b), of a legend on any of the Securities 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

 

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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 COMPANY. 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.

(c) The Company and the Investors acknowledge and agree that any Investor may,
as permitted by law, from time to time pledge pursuant to a bona fide margin
agreement or grant a security interest in some or all of the Securities and, if
required under the terms of such arrangement, such Investor may, as permitted by
law, transfer pledged or secured Securities to the pledgees or secured parties.
Such a pledge or transfer would not be subject to approval or consent of the
Company, provided that, upon the reasonable request of the Company, a legal
opinion of legal counsel to the pledgee, secured party or pledgor shall be
obtained. At the Company’s expense, so long as the Securities are subject to the
legend required by this Section 4.2, the Company will use its reasonable
commercial efforts to execute and deliver such reasonable documentation as a
pledgee or secured party of Securities may reasonably request in connection with
a pledge or transfer of the Securities. The foregoing does not affect such
Investor’s obligations pursuant to Section 4.2(a).

(d) Certificates evidencing the Securities shall not contain any legend
(including the legend set forth in Section 4.2(b)), (i) while a registration
statement (including the Registration Statement (as such term is defined in the
Registration Rights Agreement)) covering the resale of such security is
effective under the Securities Act, or (ii) following any sale of such
Securities pursuant to Rule 144, or (iii) if such Securities are eligible for
sale under Rule 144(k), or (iv) if such legend is not required under applicable
requirements of the Securities Act (including judicial interpretations and
pronouncements issued by the staff of the Commission). The Company shall cause
its counsel to issue a legal opinion to the Company’s transfer agent promptly
after the Closing Date if required by the Company’s transfer agent to effect the
removal of the legend hereunder as permitted pursuant to the previous sentence.
The Company agrees that following the Closing Date or at such time as such
legend is no longer required under this Section 4.2(d), it will, no later than
three (3) Trading Days following the delivery by a Investor to the Company or
the Company’s transfer agent of a certificate (in the case of a transfer, in the
proper form for transfer) representing Shares issued with a restrictive legend
(such third Trading Day, the “Legend Removal Date”), deliver or cause to be
delivered to such Investor a certificate representing such shares that is free
from all restrictive and other legends. The Company may not make any notation on
its records or give instructions to any transfer agent of the Company that
enlarge the restrictions on transfer set forth in this Section. Certificates for
Securities subject to legend removal hereunder shall be transmitted by the
transfer agent of the Company to the Investors by crediting the account of the
Investor’s prime broker with the Depository Trust Company System.

 

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(e) Each Investor, severally and not jointly with the other Investors, agrees
that the removal of the restrictive legend from certificates representing
Securities as set forth in this Section 4.2 is predicated upon the Company’s
reliance that the Investor will sell any Securities pursuant to either the
registration requirements of the Securities Act, including any applicable
prospectus delivery requirements, or an exemption therefrom.

4.3 Furnishing of Information.

The Company covenants that it will timely file the reports required to be filed
by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the Commission thereunder (or, if the Company is not
required to file such reports, it will, upon the request of any Investor holding
Securities purchased hereunder made after the first anniversary of the Closing
Date, make publicly available such information as necessary to permit sales
pursuant to Rule 144 under the Securities Act), and it will take such further
action as any such Investor may reasonably request, all to the extent required
from time to time to enable such Investor to sell Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (b) any similar rule or regulation hereafter adopted by
the Commission.

4.4 Integration.

The Company shall not sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that would be integrated with the offer or sale of the Securities in a
manner that would require the registration under the Securities Act of the sale
of the Securities to the Investors or that would be integrated with the offer or
sale of the Securities for purposes of the rules and regulations of any Trading
Market such that it would require stockholder approval prior to the closing of
such other transaction unless stockholder approval is obtained before the
closing of such subsequent transaction.

4.5 Securities Laws Disclosure, Publicity.

The Company shall, on or before 5:00 p.m. Eastern time on the fourth
(4th) Business Day following the date hereof, issue a Current Report on Form
8-K, reasonably acceptable to the Requisite Investors, disclosing all such
information required to be disclosed pursuant to the rules and regulations of
the Commission, including the material terms of the transactions contemplated
hereby, and shall attach the Documents thereto. The Investors shall not issue
any press release or otherwise make any such public statement without the prior
consent of the Company, which consent shall not unreasonably be withheld, except
if such disclosure is required by law, in which case the disclosing party shall
promptly provide the Company with prior notice of such public statement or
communication. No Investor shall be named in a press release or any other public
disclosure or announcement to be issued by another Investor or the Company
without the prior written consent of the Investor to be named, except if such
disclosure is required by law, in which case the disclosing party shall promptly
provide the Investor to be so disclosed with prior notice of such public
statement or communication.

 

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4.6 Non-Public Information.

The Company covenants and agrees that neither it nor any other Person acting on
its behalf will provide any Investor or its agents or counsel with any
information that constitutes material non-public information, unless prior
thereto such Investor shall have executed a written agreement regarding the
confidentiality and use of such information. The Company understands and
confirms that each Investor shall be relying on the foregoing representations in
effecting transactions in securities of the Company. The Company covenants and
agrees that all material, non-public information provided to the Investors will
be publicly disclosed in the preliminary Proxy Statement to be filed pursuant to
Section 4.1(e).

4.7 No Registration.

The Company agrees not to issue any securities pursuant to any registration
statement or register for resale on behalf of others any securities prior to the
date that is ninety (90) days after the Effectiveness Date (as such term is
defined in the Registration Rights Agreement), except for (i) securities subject
to a registration statement on Form S-8, (ii) the resale of shares of Common
Stock underlying outstanding warrants, and (iii) securities issued in connection
with an acquisition by the Company, whether by merger, consolidation, sale of
assets, sale or exchange of stock or otherwise.

4.8 Termination Fee.

Upon receipt of any termination or similar fee under the terms of the SB Merger
Agreement, the Company shall pay to each Investor two percent (2%) of such
Investor’s Subscription Amount, to the extent that the Company has sufficient
funds to pay such amounts after payment of any costs and expenses incurred by
the Company in the collection of any such termination fee.

4.9 Reservation of Common Stock.

Prior to the Closing, the Company shall have reserved and the Company shall
thereafter continue to reserve and keep available at all times, free of
preemptive rights, a sufficient number of shares of Common Stock for the purpose
of enabling the Company to issue Common Shares, Reserved Shares or Warrant
Shares pursuant to this Agreement.

4.10 Equal Treatment of Investors.

No consideration shall be offered or paid to any holder of a class of Securities
to amend or consent to a waiver or modification of any provision of any of the
Documents unless the same consideration is also offered to all of the holders of
the same class of Securities. Except as set forth in the SEC Reports, the
Company has not entered into any transaction document or agreement with any
other party prior to the Closing Date with respect to the offering of the
Company’s securities except as contemplated hereby and except as contemplated by
the SB Merger Agreement. The Company has not entered into any transaction
document or agreement with any Investor in connection with the purchase by such
Investor of its Securities (including by any amendment, supplement or side
letter thereto or by any other agreement), containing more favorable terms than
as set forth in the Documents.

 

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4.11 Short Sales.

Each Investor acknowledges the Commission’s position, and such Investor will
adhere to such position, set forth in Item 65, Section 5 under Section A, of the
Manual of Publicly Available Telephone Interpretations, dated July 1997,
compiled by the Office of Chief Counsel, Division of Corporation Finance.
Notwithstanding the foregoing, in the case of an Investor that is a
multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Investor’s assets and the portfolio managers have no
direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Investor’s assets, the acknowledgement and
adherence obligation set forth above shall only apply with respect to the
portion of assets managed by the portfolio manager that made the investment
decision to purchase the Securities covered by this Agreement.

4.12 Delivery of Securities After Closing.

The Company shall deliver, or cause to be delivered, certificates evidencing the
respective Shares purchased by each Investor to such Investor or, with respect
to the OZ Entities and the GC Entities their designees (who shall be Credit
Suisse Attn: Edward Mcalea; 11 Madison Ave; New York, NY 10010 with respect to
the OZ Entities (such account numbers to be separately provided to the Company),
and shall be shall be Goldman, Sachs & Co. Attn: Michael Daly; One New York
Plaza; 44th Floor; New York, NY 10004 with respect to the GC Entities (such
account numbers to be separately provided to the Company)) with respect to the
GC Entities) within three (3) Trading Days of the Closing Date.

4.13 Nasdaq Listing.

(a) The Company shall file to list all of its Common Stock, including without
limitation, the Common Shares, the Reserved Shares and the Warrant Shares, on
Nasdaq’s Global Market or Capital Market or the American Stock Exchange by the
date that is fourteen (14) calendar days after the Closing Date and shall list
its Common Stock, including, without limitation, the Common Shares, the Reserved
Shares and the Warrant Shares, by the date that is ninety (90) calendar days
after the Closing Date; and at any time when such Common Stock is listed on the
Nasdaq’s Capital Market or the American Stock Exchange, the Company shall use
its best efforts to promptly seek to list all of its Common Stock on Nasdaq’s
Global Market, including, without limitation, the Common Shares, the Reserved
Shares and the Warrant Shares, if at any time it becomes eligible to do so. The
Company shall maintain the listing of shares of its Common Stock, including
without limitation, the Common Shares, the Reserved Shares and the Warrant
Shares, on the Over-the-Counter Bulletin Board until such time as it has listed
the shares of Common Stock, including without limitation, the Common Shares, the
Reserved Shares and the Warrant Shares, on Nasdaq’s Global Market or Capital
Market or the American Stock Exchange and thereafter shall maintain such
listing.

(b) The Company shall file with The Portal Market of The Nasdaq Stock Market,
Inc. (“Portal”) to designate all of the Series A Preferred Shares as “Portal
Trading Securities” on Portal to the extent the Series A Preferred Shares are
eligible for such qualification and listing, promptly following the date hereof
and the Series A Preferred Shares shall be designated as such by the date that
is fourteen (14) calendar days after the Closing Date. Each Investor
acknowledges that Series A Preferred Shares of shareholders which are not
“qualified institutional buyers” as defined in Rule 144A(a) under the Securities
Act may not be eligible for trading via Portal.

 

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(c) If the Company fails to list, designate, and/or maintain such listing as set
forth in Section 4.13 (a) and/or (b), the holders of the Series A Preferred
Shares purchased hereunder shall have the rights set forth in Section 9(e) of
the Restated Certificate and Section 4(c) of the Warrants.

(d) If the Company fails to list, and/or maintain such listing as set forth in
Section 4.13(a) (each a “Default”), each holder of Common Shares purchased
hereunder shall have the right to be issued by the Company, on each ninety
(90) day anniversary of the date of the occurrence of the Default (if the
applicable Default shall not have been cured by such date) until the applicable
Default is cured with respect to each Common Share so purchased, a fractional
share of Common Stock calculated by dividing (x) the decrease in the Conversion
Price (as defined in the Restated Certificate) of a Series A Preferred Share as
a result of the same Default pursuant to Section 9(e) of Article IV of the
Restated Certificate for the same period by (y) $7.46 (subject to equitable
adjustment as a result of any stock dividend, stock split, combination, reverse
split, reclassification or similar event after the Closing Date). The Company
and Investors shall treat any shares issued pursuant to this Section 4.13(d) or
pursuant to Section 2(b) of the Registration Rights Agreement as an adjustment
to the Subscription Amounts of each applicable Investor for Tax purposes and
shall file their Returns accordingly, unless otherwise required by applicable
Law or change in applicable Law causes any such payment not to be so treated.

(1) For the sake of clarity and by example, in the event a Default has occurred
for the first time and continues for six (6) consecutive months, (i) the
Conversion Price of a Series A Preferred Share would be decreased by one-percent
(1%) of the original $9.00 Conversion Price for the first ninety (90) days so as
to be reduced by $0.09 to $8.91, (ii) the Conversion Price of a Series A
Preferred Share would be decreased by an additional one-percent (1%) of the
$9.00 Conversion Price for the second ninety (90) days so as to be reduced by
$0.09 to $8.82, (iii) each holder of a share of Common Stock purchased hereunder
shall be entitled to receive 0.012064 shares of Common Stock for the first
ninety (90) days, and (iv) each holder of a share of Common Stock purchased
hereunder shall be entitled to receive an additional 0.012064 shares of Common
Stock for the second ninety (90) days.

4.14 Redemption of Preferred Shares.

(a) Notwithstanding anything in the Restated Certificate to the contrary, in the
event the Company provides a Redemption Notice (as defined in the Restated
Certificate) and the redemption by the Company of the Series A Preferred Shares
of a holder thereof pursuant to the terms of the Redemption Notice at such time
would cause such holder of Series A Preferred Shares or such holder’s Affiliates
(each an “Additional Redemption Holder”) to recognize dividend income pursuant
to the Code or the other applicable rules and regulations of any taxing
authority (in each case as reasonably determined by the applicable Additional
Redemption Holder) then each such Additional Redemption Holder shall not be
required in such holder’s sole discretion, subject to the terms of
Section 4.14(b), to have all or any portion of its Series A Preferred Shares
redeemed in accordance with this provision; provided, that upon delivery of a

 

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Redemption Notice, such Redemption Notice and the Company’s obligation to redeem
the Series A Preferred Shares thereunder, shall be irrevocable by the Company
(unless waived by such Applicable Redemption Holder) until such redemption shall
have been effected pursuant to Section 4.14(b).

(b) Notwithstanding anything in Section 4.14(a) to the contrary, at such time as
either (x) the Additional Redemption Holder shall have sold sufficient shares of
Common Stock, Warrants, Public Warrants or other securities of the Company
convertible or exercisable for Common Stock (“Convertible Securities”)
(“Additional Redeemed Securities”) held by such Additional Redemption Holder, or
(y) except to the extent Section 16 of the Exchange Act, and the rules and
regulations promulgated thereunder and/or the provisions of the HSR Act and/or
any other Law concerning competition matters would arise in the same or a
similar manner as set forth in Sections 7(c) and 7(d) of the Restated
Certificate (the benefit of which may be waived by the affected Additional
Redeemed Holder) the Company shall redeem, or a third party purchaser made
available by the Company shall purchase, sufficient Additional Redeemed
Securities held by such Additional Redemption Holder, in each case, such that
such Additional Redemption Holder would not recognize dividend income with
respect to the redemption of such holder’s Series A Preferred Shares or
Additional Redeemed Securities (if any), then, the redemption of the Series A
Preferred Shares held as of the date of the Redemption Notice with respect to
such Additional Redemption Holder shall be consummated promptly thereafter. The
Company shall redeem no more than the minimum number of Additional Redeemed
Securities from an Additional Redemption Holder that is necessary to ensure that
the Applicable Redeemed Holder would not (as reasonably determined by the
Additional Redemption Holder) recognize dividend income with respect to the
redemption of such holder’s Series A Preferred Shares and Additional Redeemed
Securities (if any); provided, however, that the Company shall redeem or any
Company provided third party purchaser shall purchase Additional Redeemed
Securities on the same terms and conditions and at the same price (with respect
to each type of Additional Redeemed Securities determined to be sold by each
applicable Additional Redemption Holder) from each Additional Redemption Holder.

(c) The Corporation shall purchase the Additional Redeemed Securities in the
following order of priority based upon the type of Additional Redeemed
Securities held by the applicable Additional Redemption Holder:

(i) first, shares of Common Stock held by each Applicable Additional Redemption
Holder, if any;

(ii) second, if an Additional Redemption Holder has not (as reasonably
determined by the Additional Redemption Holder) had sufficient Additional
Redeemed Securities redeemed (pursuant to clause (c)(i) above) so as to avoid
the recognition of dividend income on the redemption of such holder’s Series A
Preferred Shares, then repurchase of the warrants issued pursuant to the Public
Warrant Agreement held by each applicable Additional Redemption Holder, if any;
and

(iii) thereafter, if an Additional Redemption Holder has not (as reasonably
determined by the Additional Redemption Holder) had sufficient Additional
Redeemed Securities redeemed (pursuant to clauses (c)(i) and (c)(ii) above) so
as to avoid the recognition of dividend income on the redemption of such
holder’s Series A Preferred Shares, then repurchase of the Warrants held by each
applicable Additional Redemption Holder, if any.

 

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(d) Shares of Common Stock held by an applicable Additional Redemption Holder to
be redeemed pursuant to Section 4.14(a), shall be redeemed or purchased at a
price per share equal to the Fair Market Value (as hereinafter defined) thereof
as of the date of consummation of the redemption. Public Warrants held by an
applicable Additional Redemption Holder to be redeemed pursuant to
Section 4.14(a), shall be redeemed or purchased at a price per such Public
Warrant equal to the Fair Market Value (as hereinafter defined) thereof as of
the date of consummation of the redemption. Warrants issued hereunder and held
by an applicable Additional Redemption Holder to be redeemed pursuant to
Section 4.14(a), shall be redeemed or purchased at a price per such Warrant
equal to the Fair Market Value (as hereinafter defined) thereof as of the date
of consummation of the redemption.

(e) For purposes of this Section 4.14, the “Fair Market Value” as of a
particular date shall be determined as follows: (i) if shares of Common Stock,
Public Warrants, Warrants or other Convertible Securities are traded on a
securities exchange including the New York Stock Exchange, American Stock
Exchange and NASDAQ Stock Exchange) or through the NASDAQ Global Market or
Capital Market or other over-the-counter market, the Fair Market Value shall be
deemed to be the average of the closing sales prices of such shares, warrants or
other Convertible Securities on such exchange over the thirty (30) day period
ending three (3) days prior to the date of determination of the Fair Market
Value; or (ii) if no public market exists for the shares of Common Stock, Public
Warrants, Warrants, or other Convertible Securities, the Fair Market Value shall
(subject to the applicable Additional Redemption Holders’ right to dispute such
valuation as described below) be determined in good faith by the Board of
Directors of the Company; provided, however, that the calculation of the Fair
Market Value of a Warrant issued hereunder for purposes of this provision only
shall be made using the Black-Scholes Option Pricing Model which shall assume
for purposes of such calculation that the volatility underlying the Common Stock
price be an amount that is the greater of (x) the average volatility for the
trailing 250 Trading Days from the date of determination, (y) 50%, or (z) the
implied volatility of the Public Warrants (if Public Warrants are outstanding
and listed for trading as of the date of determination) as calculated by The
Bloomberg Professional data services. If the applicable Additional Redemption
Holders holding a majority of Series A Preferred Shares which have not waived
their rights under this Section 4.14 disagree with the Board of Directors’
determination of the Fair Market Value, such holders may submit a notice of
disagreement to the Company. During the three (3) Business Days immediately
following the Company’s receipt of such notice, such holders and the Company
shall negotiate in good faith to determine a mutually agreeable resolution. If
the parties remain unable to reach agreement after such period, they shall
engage one of the “Big 4” accounting firms reasonably acceptable to each such
party to resolve such dispute (the “Valuation Firm”). Each of such holders and
the Company shall provide (at each’s own expense) the Valuation Firm with copies
of any documents, analyses or other information within its possession or control
that the Valuation Firm reasonably requests in order to resolve such dispute.
The Valuation Firm shall determine the Fair Market Value as soon as practicable
after its engagement to resolve the dispute using customary valuation techniques
for other companies or businesses in the same or similar industries as the
Company (and shall not apply any discount due to the fact that the Common Stock,
Public Warrants or other securities may constitute “restricted securities”, may
be illiquid

 

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or represent a minority interest in the Company but shall utilize the
Black-Scholes Option Pricing Model and the volatility assumption set forth in
the proviso to the first sentence of this Section 4.14(e)). The Valuation’s
Firm’s determination shall be binding, and not subject to challenge or
collateral attack for any reason other than manifest error. The Company shall
pay all fees, costs and expenses of the Valuation Firm in connection with its
engagement to resolve such dispute (the “Valuation Cost”); provided, however,
that if the Valuation Firm’s determination of the Fair Market Value is in excess
of 50% lower than said holders’ proposed Fair Market Value, then the fees and
expenses of the Valuation Firm shall be shared (with respect to the holders of
the Series A Preferred Shares involved in the dispute, pro rata in accordance
with their respective ownership percentages) in the same proportion that the
Company’s position, on the one hand, and the holders’ position, on the other
hand, initially presented to the Valuation Firm (based on the aggregate of all
differences taken as a whole) bear to the final resolution as determined by the
Valuation Firm.

(f) Notwithstanding anything to the contrary, any Additional Redemption Holder
shall be entitled to waive the right to have any Additional Redeemed Securities
redeemed by the Company or purchased by any Company provided third party
pursuant to this Section 4.14.

ARTICLE V

REMEDIES

5.1 Survival.

Irrespective of any investigation, inquiry or examination made by, for or on
behalf of any Investor, or the acceptance by any Investor of any certificate or
opinion, the representations, warranties and covenants contained herein shall
survive the Closing.

5.2 Indemnification.

The Company shall indemnify, defend and hold the Investors and their respective
officers, directors, members, partners, affiliates, employees, agents and
representatives (collectively, “Indemnitees”) harmless against all liability,
loss, and damage (including taxes thereon) together with all reasonable costs
and expenses related thereto (including reasonable legal fees and expenses),
relating to or arising from (i) the untruth, inaccuracy or breach of any of the
representations or warranties contained in the Documents (regardless of whether
such representations, or warranties have terminated or expired pursuant to the
SB Merger Agreement) and made or deemed made on, or as of, the Closing Date,
(ii) the breach of any covenants or agreements of the Company contained in the
Documents, (iii) the execution or delivery of any Document or any other
agreement or instrument contemplated hereby or thereby, the performance by the
Company of its obligations under the Documents or the consummation by the
Company of the transactions contemplated hereby or thereby, and (iv) any actual
or prospective claim, litigation, investigation or proceeding relating to any of
the foregoing (including as may be commenced by third parties), whether based in
contract, tort or any other theory and regardless of whether any Indemnitee is a
party thereto. In the event that any Indemnitee claims any such right of
indemnification, such Indemnitee shall provide to the Company written notice
thereof, together with reasonable detail regarding such claims and in the event
that such claim involves third party claims, allow the Company at its expense to
defend such claim(s) on the Indemnitee’s behalf.

 

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5.3 Remedies

In addition to being entitled to exercise all rights provided herein or granted
by Law, including recovery of damages, each of the Investors and the Company
will be entitled to specific performance under the Documents. The parties agree
that monetary damages may not be adequate compensation for any loss incurred by
reason of any breach of obligations described in the foregoing sentence and
hereby agrees to waive in any action for specific performance of any such
obligation the defense that a remedy at law would be adequate (including,
without limitation, as set forth in Section 4.13).

5.4 Liquidated Damages.

The Company’s obligations to pay any partial liquidated damages or other amounts
owing under the Documents (including, without limitation, as set forth in
Section 4.13) is a continuing obligation of the Company and shall not terminate
until all unpaid partial liquidated damages and other amounts have been paid
notwithstanding the fact that the instrument or security pursuant to which such
partial liquidated damages or other amounts are due and payable shall have been
cancelled.

5.5 Trust Assets.

(a) As an inducement to the Company to consider the Investor’s subscription
herein, and for other valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, each Investor hereby agrees that it will not now
or at any time prior to the Closing have any claim to, or make any claim
against, the Trust Assets (as defined below) in excess of such portion of the
Trust Assets the Company is permitted to access pursuant to the Investment
Management Trust Agreement dated on or about December 16, 2005 (the “Trust
Agreement”) whether such claim arises as a result of, in connection with or
relating in any way directly or indirectly to, the financing contemplated herein
and regardless of whether such claim arises based on contract, tort, equity or
any other theory of legal liability (any and all such claims are collectively
referred to hereafter as the “Claims”); provided, however, that this waiver will
be terminated and of no force and effect in the event that the Company
consummates a business combination, including the SB Transaction, and the funds
held in the Trust are released from being held as Trust Assets.

(b) Each Investor recognizes and understands that as of August 31, 2006 the
Company has on deposit approximately $99,543,000 in a trust (the “Trust”) where
it has and will accumulate interest (the initial funds plus interest are
referred to hereafter as the “Trust Assets”). The Trust Assets are to be held
for the exclusive benefit of the Company’s stockholders to the extent set forth
in the Trust Agreement and either distributed as part of the consummation of a
business combination between the Company and a business entity or entities
meeting certain requirements, the payment of federal and state income taxes on
the earned interest or returned to the Company’s stockholders. As of July 31,
2006, the Company owned liquid assets of approximately $1,300,000 outside of the
Trust which it intends to use for its working capital and other corporate
purposes (the “Non-Trust Assets”), it being understood that this Section 5.5 is
not intended to apply to, nor restrict access to, the Non-Trust Assets.

 

39

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(c) In the event that the Investor commences any action or proceeding based
upon, in connection with, relating to or arising out of the financing
contemplated herein or in any other way directly or indirectly related to the
financing, seeking, in whole or in part, relief against the Trusts Assets,
whether in the form of money damages or injunctive relief, in which the Company
prevails in whole on all counts as determined by a final adjudicated
non-appealable judgment, then the Company shall be entitled to recover from such
party(s) who commenced the action or proceeding, the legal fees and associated
costs required to defend such action.

ARTICLE VI

TERMINATION

6.1 Termination.

This Agreement shall terminate with respect to an Investor on the earlier of
(i) February 16, 2007 (the “Final Termination Date”) if the Closing shall not
have occurred prior thereto; provided, however, if as of the Final Termination
Date all the closing conditions set forth in Article III have been satisfied
(except for those conditions which by their nature are to be satisfied at
Closing including the closing of the Merger) but for the fact that the
Stockholders Meeting shall not have been held solely due to the fact that the
Commission had not as of yet granted approval for, or rejected, the Proxy
Statement, then the Company and the Requisite Investors shall discuss in good
faith as to whether it is reasonable and practicable to expect Commission
approval within a reasonable period of time thereafter, and in the event the
Company and the Requisite Investors agree that such approval is reasonably
likely within a reasonable period of time thereafter, the Company and such
Requisite Investors may, but none of such parties shall be obligated to, agree
upon a new Final Termination Date; (ii) if the Company’s stockholders (as
required by Law and as required by the Company’s Certificate of Incorporation)
fail to approve the Merger and the issuance of the Securities upon receipt of
the Proxy Statement and holding of a valid Stockholder Meeting; (iii) by the
Requisite Investors (A) if the preliminary Proxy Statement shall not have been
filed with the Commission on or before the tenth (10th) calendar day after the
receipt of the applicable financial information, as set forth in Section 4.1(e)
or (B) if the Proxy Statement shall not have been sent to the Company’s
stockholders by January 10, 2007; provided, however, in the event final
Commission approval of the Proxy Statement has not been received by January 5,
2007 then the Company and the Requisite Investors shall discuss in good faith as
to whether it is reasonable and practicable to expect Commission approval within
a reasonable period of time thereafter, and in the event the Company and the
Requisite Investors agree that such approval is reasonably likely within a
reasonable period of time thereafter, the Company and such Requisite Investors
may, but none of such parties shall be obligated to, agree upon a new Final
Termination Date; (iv) the date that any permanent injunction or other order of
a Governmental Authority preventing the Closing shall have become effective or
(v) the date of the termination of the SB Merger Agreement (each of the events
in clauses (i)-(v), a “Termination Date”); provided, however, that no such
termination will affect the right of any party to initiate legal action for any
breach by the other party (or parties). If the Closing has not occurred as of
the Termination Date with respect to an Investor, the Company shall direct the
Escrow Agent to return the funds held in the Escrow Account on behalf of such
applicable Investor to such Investor (together with interest thereon) pursuant
to the terms of the Escrow Agreement.

 

40

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6.2 Effect of Termination.

In the event of a termination of this Agreement, this Agreement shall forthwith
become void and there shall be no liability or obligation on the part of the
Investors or the Company or their respective officers, directors or Affiliates
after the Termination Date; provided that Section 6.1, this Section 6.2 and
Article VII shall survive any such Termination Date; provided further, that
nothing herein shall relieve any party for liability for any breach of any
pre-Termination Date obligation.

ARTICLE VII

MISCELLANEOUS

7.1 Fees and Expenses.

The Company shall pay all of its expenses incurred in connection with the
preparation, execution and delivery of the Documents and the consummation of the
transactions contemplated thereby and shall pay at Closing (to the extent
Closing shall have occurred) any and all fees related to filings required by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”)
made as a result of the acquisition of the Securities on the Closing Date or any
other Law relating to competition matters up to $45,000 per Investor with
respect thereto, whether or not the transactions contemplated hereby are
consummated or the Agreement is terminated on a Termination Date. In addition,
the Company shall pay, and hold the Investors and their representatives harmless
against all liability for the payment of: (i) up to $700,000 of the fees and
charges of O’Melveny & Myers LLP, counsel to certain of the Investors, incurred
in connection with the preparation, execution and delivery of the Documents and
the consummation of the transactions contemplated thereby, (ii) all reasonable
costs and expenses incurred from time to time by the Investors in connection
with their monitoring and enforcement of the Company’s performance of and
compliance with all agreements and conditions contained in the Documents on its
part to be performed or complied with, (iii) the reasonable costs and expenses
(including fees and expenses of counsel, accountants and other advisors)
incurred by the Investors in connection with any amendment or waiver of any
Document, (iv) any reasonable costs incurred by the Investors in rendering
assistance to the Company or any of their subsidiaries at the request of the
Company, (it being understood that the Investors are not obligated to render,
and may charge additional fees for, such assistance), (v) the reasonable fees
and expenses incurred by the Investors in any filing with any Governmental
Authority with respect to the Company or any of its subsidiaries that mentions
any Investor or its affiliates, (vi) any stamp or similar taxes which may be
determined to be payable in connection with the execution and delivery and
performance of any Document or any modification, amendment or alteration of any
Document, and all issue taxes in respect of the issuance of any Securities,
Reserved Shares or Warrant Shares (or any other securities issued in respect
thereof), and (vii) up to $50,000 of the fees and charges of Goodwin Procter,
LLP, counsel to Citigroup Global Markets, Inc., the Company’s placement agent
and advisor on the transactions contemplated hereby. The provisions of this
Section are automatically assignable to any Person who acquires any Securities
pursuant to Section 7.2. The Company hereby acknowledges that,

 

41

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in the event a Closing occurs, its obligation to reimburse the Investors for the
fees and charges of O’Melveny & Myers LLP and to reimburse the fees and charges
of Goodwin Procter, LLP pursuant to this Section 7.1 shall be fulfilled at the
Closing by permitting the Investors to deduct such fees and charges from the
proceeds payable by the Investors to the Company as set forth on Annex I and to
wire such amounts directly to O’Melveny & Myers LLP and Goodwin Procter, LLP, as
applicable at the Closing.

7.2 Assignment; Parties in Interest.

This Agreement shall bind and inure to the benefit of the parties and each of
their respective successors and permitted assigns. The Company may not assign
either this Agreement or any of its rights, interests, or obligations hereunder.
Any Investor may assign any of its rights hereunder; provided, however, that the
assignee agrees to be bound by, and entitled to the benefits of, this Agreement
as an original party hereto; provided, further, however, assignments by an
Investor prior to Closing (other than to its Affiliates) shall require the
Company’s prior approval (not to be unreasonably withheld or delayed) of the
assignee in the Company’s reasonable discretion solely to the extent the Company
has received written legal advice from a nationally recognized law firm that the
assignment to such assignee would result in the failure of issuance of the
Securities hereunder to be exempt from registration under the Securities Act.

7.3 Entire Agreement; Severability.

This Agreement contains the entire understanding of the parties with respect to
the subject matter hereof and supersedes all prior agreements and understandings
among the parties with respect to such subject matter (including, on the Closing
Date, any confidentiality or non-disclosure agreement entered into by any of the
Investors or their Affiliates with the Company prior to the date hereof, each of
which shall be automatically terminated upon the Closing Date (including the
provisions thereof that purport to survive the termination thereof)). It is the
desire and intent of the parties that the provisions of this Agreement be
enforced to the fullest extent permissible under the law and public policies
applied in each jurisdiction in which enforcement is sought. Accordingly, in the
event that any provision of this Agreement would be held in any jurisdiction to
be invalid, prohibited or unenforceable for any reason, such provision, as to
such jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction. Notwithstanding the foregoing, if such
provision could be more narrowly drawn so as not be invalid, prohibited or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.

7.4 Notices.

All notices, claims, certificates, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered or if sent by nationally-recognized overnight courier, by
telecopy, electronic transmission or by registered or certified mail, return
receipt requested and postage prepaid, addressed as follows:

if to the Company:

Boulder Specialty Brands, Inc.

6106 Sunrise Ranch Drive

Longmont, Colorado 80503

Telephone: 303-682-1978

Attention: Robert S. Gluck

 

42

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with a copy to:

Davis & Kuelthau, s.c.

111 East Kilbourn Avenue, Suite 1400

Milwaukee, Wisconsin 53202

Fax: 414-276-9369

Telephone: 414-276-0200

Attention: Norman J. Matar

and

Ellenoff Grossman & Schole LLP

370 Lexington Avenue, 19th Floor

New York, New York 10017

Telephone: 212-370-1300

Attention: Douglas S. Ellenoff

if to the Investors, to the address set forth on Annex I hereto;

or to such other address as the party to whom notice is to be given may have
furnished to the other parties in writing in accordance herewith. Any such
notice or communication shall be deemed to have been received (a) in the case of
personal delivery, on the date of such delivery if a Business Day or, if not a
Business Day, the next succeeding Business Day, (b) in the case of
nationally-recognized overnight courier, on the next Business Day after the date
when sent, (c) in the case of email, upon receipt of acknowledgment of receipt,
(d) in the case of telecopy transmission, when received if a Business Day or, if
not a Business Day, the next succeeding Business Day, and (e) in the case of
mailing, on the third Business Day following that on which the piece of mail
containing such communication is posted.

7.5 Amendments; Waivers.

The terms and provisions of this Agreement may be modified, waived or amended
pursuant to an instrument signed by the Company and the Requisite Investors,
except as otherwise permitted as set forth in Section 1.2(c) with respect to the
addition of a Joinder Investor; provided, however, that any modification,
amendment or waiver that materially and adversely affects any Investor with
respect to the rights or obligations in respect of such Investor’s Series A
Preferred Shares or Common Shares purchased hereunder in a manner
disproportionate to how it adversely affects the rights or obligations in
respect of such Securities of other Investors purchased hereunder shall not be
effective without the prior written consent of such holder; provided further,
however, that the conditions precedent to Closing as set forth in

 

43

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Sections 3.1 and 3.2 shall not be amended or waived with respect to any
particular Investor without the prior written consent of such Investor. In
addition, the terms and provisions of each of the Warrants may be modified,
amended, or waived pursuant to an instrument signed by the Company and the
Requisite Investors; provided, however, that any modification, amendment or
waiver that materially and adversely affects any holder of a Warrant with
respect to the rights or obligations in respect of such holder’s Warrants in a
manner disproportionate to how it materially and adversely affects the rights or
obligations of the other holders in respect of their other Warrants shall not be
effective without the prior written consent of such holder. Any waiver of any
term or provision of this Agreement requested by any party hereto must be
granted in advance, in writing, by the Company (if an Investor is requesting
such waiver) or by the Requisite Investors (if the Company is requesting such
waiver), as the case may be, provided that any amendment that increases the
Subscription Amount of any Investor shall require consent of such Investor.

7.6 Counterparts.

This Agreement may be executed in any number of original or facsimile
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.

7.7 Headings.

The section and paragraph headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.

7.8 Governing Law; Consent to Jurisdiction and Venue; Waiver of Jury Trial.

This Agreement shall be governed by and construed in accordance with the laws of
the State of New York, without giving effect to any law or rule that would cause
the laws of any jurisdiction other than the State of New York to be applied.

ANY PROCEEDING AGAINST THE PARTIES RELATING IN ANY WAY TO THIS AGREEMENT MAY BE
BROUGHT AND ENFORCED IN THE COURTS OF THE STATE OF NEW YORK OR THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, TO THE EXTENT SUBJECT
MATTER JURISDICTION EXISTS THEREFOR, AND THE PARTIES IRREVOCABLY SUBMIT TO THE
JURISDICTION OF BOTH SUCH COURTS IN RESPECT OF ANY SUCH PROCEEDING. EACH OF THE
PARTIES IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
THAT THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH
PROCEEDING IN THE COURTS OF THE STATE OF NEW YORK LOCATED IN NEW YORK COUNTY OR
THE SOUTHERN DISTRICT OF NEW YORK AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT
IN ANY SUCH COURT HAS BEEN BROUGHT IN ANY INCONVENIENT FORUM. ANY JUDGMENT MAY
BE ENTERED IN ANY COURT HAVING JURISDICTION THEREOF.

 

44

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EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY
IN ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.

7.9 Independent Nature of Investors’ Obligations and Rights

The obligations of each Investor under any Document are several and not joint
with the obligations of any other Investor, and no Investor shall be responsible
in any way for the performance of the obligations of any other Investor under
any Document. The decision of each Investor to purchase Securities pursuant to
the Documents has been made by such Investor independently of any other
Investor. Nothing contained herein or in any Document, and no action taken by
any Investor pursuant thereto, shall be deemed to constitute the Investors as a
partnership, an association, a joint venture or any other kind of entity. Each
Investor shall be entitled to independently protect and enforce its rights,
including without limitation, the rights arising out of this Agreement or out of
the other Documents, and it shall not be necessary for any other Investor to be
joined as an additional party in any proceeding for such purpose. Each Investor
has been represented by its own separate legal counsel in their review and
negotiation of the Documents. The Company has elected to provide all Investors
with the same terms and Documents for the convenience of the Company and not
because it was required or requested to do so by the Investors.

* * * *

 

45

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IN WITNESS WHEREOF, the parties have executed and delivered this Securities
Purchase Agreement on the date first above written.

 

BOULDER SPECIALTY BRANDS, INC. By:  

/s/ Stephen B. Hughes

Name:   Stephen B. Hughes Title:   Chairman and Chief Executive Officer

--------------------------------------------------------------------------------

INVESTOR: OZ MASTER FUND, LTD. By:   OZ Management, L.L.C., its Investment
Manager By:  

/s/ Joel Frank

 

Name:   Joel Frank Title:   Chief Financial Officer OZ Global Special
Investments Master Fund, L.P. By:   OZ Management, L.L.C., its Investment
Manager By:  

/s/ Joel Frank

 

Name:   Joel Frank Title:   Chief Financial Officer GPC LVII, LLC By:   OZ
Management, L.L.C., its Investment Manager By:  

/s/ Joel Frank

 

Name:   Joel Frank Title:   Chief Financial Officer Fleet Maritime, Inc. By:  
OZ Management, L.L.C., its Investment Manager By:  

/s/ Joel Frank

 

Name:   Joel Frank Title:   Chief Financial Officer

--------------------------------------------------------------------------------

INVESTOR: Aragon Trading Company, L.P. By:  

/s/ Brian Yeatman

 

Name:   Brian Yeatman Title:   General Partner

--------------------------------------------------------------------------------

INVESTOR: Westmount Investments LLC By:  

/s/ Robert J. Gillespie

 

Name:   Robert J. Gillespie Title:   Principal

--------------------------------------------------------------------------------

INVESTOR: Investcorp Interlachen Multi-Strategy Master Fund Limited By:  
Interlachen Capital Group LP By:  

/s/ Gregg T. Colburn

 

Name:   Gregg T. Colburn Title:   Authorized Signatory

--------------------------------------------------------------------------------

INVESTOR: UBS AG By:  

/s/ Chris Coward

 

Name:   Chris Coward Title:   Director

--------------------------------------------------------------------------------

INVESTOR: Glenhill Capital Overseas Master Fund, L.P. By:   Glenhill Capital
Overseas G.P. Ltd. By:  

/s/ Glenn J. Krevlin

 

Name:   Glenn J. Krevlin Title:   Director

--------------------------------------------------------------------------------

INVESTOR: Glenhill Capital, L.P. By:   Glenhill Capital Management, LLC By:  

/s/ Glenn J. Krevlin

Name:   Glenn J. Krevlin Title:   Managing Member

--------------------------------------------------------------------------------

INVESTOR: Glenview Capital Partners, L.P. By:   Glenview Capital Management, LLC
its investment manager By:  

/s/ Richard Barrera

Name:   Richard Barrera Title:   Managing Member Glenview Institutional
Partners, L.P. By:   Glenview Capital Management, LLC its investment manager By:
 

/s/ Richard Barrera

 

Name:   Richard Barrera Title:   Managing Member GCM Little Arbor Partners, L.P.
By:   Glenview Capital Management, LLC its investment manager By:  

/s/ Richard Barrera

 

Name:   Richard Barrera Title:   Managing Member GCM Little Arbor Institutional
Partners, L.P. By:   Glenview Capital Management, LLC its investment manager By:
 

/s/ Richard Barrera

 

Name:   Richard Barrera Title:   Managing Member GCM Little Arbor Master Fund
Ltd. By:   Glenview Capital Management, LLC its investment manager

--------------------------------------------------------------------------------

By:  

/s/ Richard Barrera

 

Name:   Richard Barrera Title:   Managing Member Glenview Capital Master Fund
Ltd. By:   Glenview Capital Management, LLC its investment manager By:  

/s/ Richard Barrera

 

Name:   Richard Barrera Title:   Managing Member

--------------------------------------------------------------------------------

INVESTOR: Fort Mason Partners, LP By:   Fort Mason Capital, LLC By:  

/s/ Dan German

 

Name:   Dan German Title:   Managing Member

--------------------------------------------------------------------------------

INVESTOR: Fort Mason Master, LP By:   Fort Mason Capital, LLC By:  

/s/ Dan German

 

Name:   Dan German Title:   Managing Member

--------------------------------------------------------------------------------

INVESTOR: Adage Capital Partners, L.P. By:  

/s/ D. Lehan

 

Name:   D. Lehan Title:   C.O.O.

--------------------------------------------------------------------------------

INVESTOR:

Canyon Capital Advisors LLC, on behalf of

its managed funds and accounts

By:  

/s/ Joshua S. Friedman

 

Name:   Joshua S. Friedman Title:   Authorized Signatory

--------------------------------------------------------------------------------

INVESTOR: Highbridge International LLC By:   Highbridge Capital Management, LLC
By:  

/s/ Ari I. Storch

 

Name:   Ari I. Storch Title:   Managing Director

--------------------------------------------------------------------------------

INVESTOR: Old Lane, L.P. on behalf of Old Lane US Master Fund, L.P. By:  

/s/ John Havens

 

Name:   John Havens Title:   Managing Director

--------------------------------------------------------------------------------

INVESTOR: Old Lane, L.P. on behalf of Old Lane Cayman Master Fund, L.P. By:  

/s/ John Havens

 

Name:   John Havens Title:   Managing Director

--------------------------------------------------------------------------------

INVESTOR: Old Lane, L.P. on behalf of Old Lane HMA Master Fund, L.P. By:  

 

Name:   John Havens Title:   Managing Director

--------------------------------------------------------------------------------

INVESTOR: SF Capital Partners Ltd. By:  

 

Name:   Brian H. Davidson Title:   Managing Director

--------------------------------------------------------------------------------

INVESTOR: Citigroup Global Markets, Inc. By:  

/s/ Tyler G. Dickson

 

Name:   Tyler G. Dickson Title:   Managing Director

--------------------------------------------------------------------------------

INVESTOR: Kings Road Investments LTD By:   Kings Road By:  

/s/ Brandon L. Jones

Name:   Brandon L. Jones Title:   Co-Head, Private Investments

 

66

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ANNEX I

SECURITIES TO BE PURCHASED BY INVESTORS

 

Investor

  

(1)

Number of Series
A Preferred
Shares Purchased
at Closing

  

(2)

Number of
Warrant
Purchased at
Closing based
upon issued
Series A
Preferred Shares

  

(3)

Number of
Common Shares
Purchased at
Closing

  

(4)

Subscription
Amount

OZ Master Fund, Ltd.

c/o Och-Ziff Capital Management Group,

L.L.C.

9 West 57th St., 39th floor

New York, NY 10019

Telephone: (212) 790-0160

Facsimile: (212) 790-0060

Attn:  Joel M. Frank

           David Stonehill

   7,382,953    7,382,953    2,266,025    $ 83,351,123.50

OZ Global Special Investments Master

Fund, L.P.

c/o Och-Ziff Capital Management Group,

L.L.C.

9 West 57th St., 39th floor

New York, NY 10019

Telephone: (212) 790-0160

Facsimile: (212) 790-0060

Attn:  Joel M. Frank

           David Stonehill

   152,459    152,459    46,794    $ 1,721,214.24

GPC LVII, LLC

c/o Och-Ziff Capital Management Group,

L.L.C.

9 West 57th St., 39th floor

New York, NY 10019

Telephone: (212) 790-0160

Facsimile: (212) 790-0060

Attn:  Joel M. Frank

           David Stonehill

   93,560    93,560    28,716    $ 1,056,261.36

Fleet Maritime, Inc.

c/o Och-Ziff Capital Management Group,

L.L.C.

9 West 57th St., 39th floor

New York, NY 10019

Telephone: (212) 790-0160

Facsimile: (212) 790-0060

Attn:  Joel M. Frank

           David Stonehill

   90,472    90,472    27,768    $ 1,021,397.28

in each case, with a copy to:

 

O’MELVENY & MYERS LLP

Times Square Tower

7 Times Square

New York, New York 10036

Telephone: (212) 326-2000

Facsimile: (212) 326-2061

Attn:  Ilan S. Nissan, Esq.

           

--------------------------------------------------------------------------------

Glenview Capital Partners, L.P.

c/o Glenview Capital Management, LLC

767 Fifth Avenue, 44th Floor

New York, NY 10153

Telephone: 212.812.4700

Facsimile: 212.812.4701

Attn:  Mark Horowitz

   140,800    140,800    43,200    $ 1,589,472.00

Glenview Institutional Partners, L.P.

c/o Glenview Capital Management, LLC

767 Fifth Avenue, 44th Floor

New York, NY 10153

Telephone: 212.812.4700

Facsimile: 212.812.4701

Attn:  Mark Horowitz

   824,000    824,000    252,900    $ 9,302,634.00

GCM Little Arbor Partners, L.P.

c/o Glenview Capital Management, LLC

767 Fifth Avenue, 44th Floor

New York, NY 10153

Telephone: 212.812.4700

Facsimile: 212.812.4701

Attn:  Mark Horowitz

   7,000    7,000    2,200    $ 79,412.00

GCM Little Arbor Institutional Partners, L.P.

c/o Glenview Capital Management, LLC

767 Fifth Avenue, 44th Floor

New York, NY 10153

Telephone: 212.812.4700

Facsimile: 212.812.4701

Attn:  Mark Horowitz

   118,600    118,600    36,400    $ 1,338,944.00

GCM Little Arbor Master Fund, Ltd.

c/o Glenview Capital Management, LLC

767 Fifth Avenue, 44th Floor

New York, NY 10153

Telephone: 212.812.4700

Facsimile: 212.812.4701

Attn:  Mark Horowitz

   429,100    429,100    131,700    $ 4,844,382.00

Glenview Capital Master Fund Ltd.

c/o Glenview Capital Management, LLC

767 Fifth Avenue, 44th Floor

New York, NY 10153

Telephone: 212.812.4700

Facsimile: 212.812.4701

Attn:  Mark Horowitz

   1,788,833    1,788,833    549,015    $ 20,195,148.90

Glenhill Capital, L.P.

c/o Glenhill Capital Management, L.L.C.

598 Madison Ave., 12th Floor

New York, NY 10022

Telephone: (646) 432-0625

Facsimile: (646) 432-0666

Attn:  Kevin Corb

   388,889    388,889    469,169    $ 7,000,001.74

 

68

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Glenhill Capital Overseas Master Fund LP

c/o Glenhill Capital Management, L.L.C.

598 Madison Ave., 12th Floor

New York, NY 10022

Telephone: (646) 432-0625

Facsimile: (646) 432-0666

Attn:  Kevin Corb

   166,667    166,667    201,072    $ 3,000,000.12

in each case, with a copy to:

 

Glenhill Capital Management, L.L.C.

598 Madison Ave., 12th Floor

New York, NY 10022

Telephone: (646)432-0605

Facsimile: (646) 432-0666

Attn:  Glenn Krevlin

           

Adage Capital Partners, L.P.

200 Clarendon Street, 52nd Floor

Boston, MA 02116

Telephone: (617)867-2800

Facsimile: (617) 867-2801

   1,111,111    1,111,111    2,010,724    $ 25,000,000.04

with a copy to:

 

Schulte Roth & Zabel LLP

919 Third Avenue

New York, NY 10022

Attn:  Peter Halasz, Esq.

           

SF Capital Partners Ltd.

c/o Stark Offshore Management, LLC

3600 South Lake Drive

St. Francis, WI 53235

Attn: Brian H. Davidson

Telephone: (414)294-7000

Facsimile: (414) 294-7700

   0    0    1,340,483    $ 10,000,003.18

Investcorp Interlachen Multi-Strategy

Master Fund Limited

c/o Interlachen Capital Group LP

800 Nicollet Mall, Suite 2500

Minneapolis, MN 55402

Attn:  Gregg Colburn and Legal Department

Telephone: (612)659-4407

Facsimile: (612) 659-4457

   0    0    268,097    $ 2,000,003.62

Aragon Trading Company, L.P.

P.O. Box 178

Glenbrook, NV 89413

Telephone: (916)663-1823

Facsimile: (916) 663-1824

   13,889    13,889    16,756    $ 250,000.76

with a copy to:

 

John Yeatman

1313 Gold Hill Road

Newcastle, CA 95658

           

--------------------------------------------------------------------------------

Canyon Capital Advisors LLC

9665 Wilshire Blvd.

Suite 200

Beverly Hills, CA 90212

Telephone: (310) 247-2700

Facsimile: (310) 247-2700

   777,778    777,778    670,241    $ 11,999,999.86

Citigroup Global Markets, Inc.

390 Greenwich St., 5th Floor

New York, NY 10013

Telephone: (212) 723-7916

Facsimile: (646) 291-5597

 

with a copy to:

 

Aren C. Leekong

Colleen Gerard

Brooke Gottshall

390 Greenwich St., 5th Floor

New York, NY 10013

   0    0    3,016,086    $ 22,500,001.56

Kings Road Investments, LTD.

(Registration name: UBS Securities, LLC

F/B/O Kings Road Investments Ltd.)

c/o Polygon Investment Partners LP

598 Madison Avenue 14th Floor

New York, NY 10022

 

with a copy to:

 

Schulte Roth & Zabel LLP

919 Third Avenue

New York, New York 10022

Attention: Eleazer Klein, Esq.

Telephone: (212) 756-2376

Facsimile: (212) 593-5955

   1,333,333    1,333,333    1,005,362    $ 19,499,997.52

UBS AG

Attention: Chris Coward

1285 6th Ave

NY, NY 10019

Telephone: (212) 649-7588

Facsimile: (212) 713-6222

   0    0    670,241    $ 4,999,997.86

Fort Mason Master, LP

4 Embarcadero Ctr, Ste 2050

San Francisco, CA 94111

Attn: KC Lynch

Telephone: (415) 288-8100

Facsimile: (415) 288-8113

   260,862    260,862    314,712    $ 4,695,509.52

Fort Mason Partners, LP

4 Embarcadero Ctr, Ste 2050

San Francisco, CA 94111

Attn: KC Lynch

Telephone: (415) 288-8100

Facsimile: (415) 288-8113

   16,916    16,916    20,409    $ 304,495.14

Old Lane, L.P.

on behalf of Old Lane US Master Fund,

L.P.

Old Lane L.P.

500 Park Avenue 2nd Floor

New York, NY 10022

   62,500    62,500    75,402    $ 1,124,998.92

--------------------------------------------------------------------------------

with a copy to:

 

Frederick Yoon/Steven Weiss

Old Lane L.P.

500 Park Avenue 2nd Floor

New York, NY 10022

Telephone: (212) 572-3206

Telephone: (212)572-3293

Facsimile: (212) 572-2917

           

Old Lane, L.P.

on behalf of Old Lane HMA Master Fund,

L.P.

Old Lane L.P.

500 Park Avenue 2nd Floor

New York, NY 10022

 

with a copy to:

 

Frederick Yoon/Steven Weiss

Old Lane L.P.

500 Park Avenue 2nd Floor

New York, NY 10022

Telephone: (212) 572-3206

Telephone: (212)572-3293

Facsimile: (212) 572-2917

   41,111    41,111    49,598    $ 740,000.08

Old Lane, L.P.

on behalf of Old Lane Cayman Master

Fund, L.P.

Old Lane L.P.

500 Park Avenue 2nd Floor

New York, NY 10022

 

with a copy to:

 

Frederick Yoon/Steven Weiss

Old Lane L.P.

500 Park Avenue 2nd Floor

New York, NY 10022

Telephone: (212) 572-3206

Telephone: (212)572-3293

Facsimile: (212) 572-2917

   174,167    174,167    210,121    $ 3,135,005.66

Highbridge International LLC

c/o Highbridge Capital Management, LLC

9 West 57th Street, 27th Floor

New York, NY 10019

Attn: Ari J. Storch/Adam J. Chill

Telephone: (212) 287-4720

Facsimile: (212) 751-0755

   0    0    670,241    $ 4,999,997.86

Westmount Investments LLC

350 West Passaic Street

Rochelle Park, NJ 07662

Phone Number: (201) 226-0701

Fax Number: (201) 226-0703

 

with copy to:

 

Robert J. Gillespie

c/o Westmount Investments LLC

350 West Passaic Street

Rochelle Park, NJ 07662

   13,889    13,889    16,756    $ 250,000.76                       TOTAL:   
15,388,889.00    15,388,889.00    14,410,188.00    $ 246,000,003.48             
        

--------------------------------------------------------------------------------

INDEX OF SCHEDULES & EXHIBITS

 

  

Annex

Annex I:

  

Securities Purchased by Investors

  

Exhibits

Exhibit A:

  

Form of Restated Certificate of Incorporation

Exhibit B:

  

Form of Warrant

Exhibit C:

  

SB Merger Agreement

Exhibit D:

  

Form of Registration Rights Agreement

Exhibit E:

  

Terms to be included in Amended and Restated Founder Registration Rights
Agreement

  

Schedules

Schedule 1.1(c)

   Conversion Blocker Election

Schedule 2.1(a)(i):

  

Articles of Incorporation

Schedule 2.1(a)(ii):

  

Bylaws

Schedule 2.1(b)

  

Subsidiaries

Schedule 2.1(c)

  

No Conflicts

Schedule 2.1(e):

  

Consents and Approvals

Schedule 2.1(f):

  

Fully Diluted Securities

Schedule 2.1(g):

  

Defaults

Schedule 2.1(h):

  

SEC Reports

Schedule 2.1(i):

  

Undisclosed Liabilities

Schedule 2.1(j):

  

Absence of Changes; Confidential Treatment

Schedule 2.1(k):

  

Encumbrances

Schedule 2.1(l)(ii):

  

Exceptions to Intellectual Property Rights

Schedule 2.1(m):

  

Employment Matters

Schedule 2.1(n):

  

Benefit Plans

Schedule 2.1(o):

  

Contracts

Schedule 2.1(p):

  

Permits

Schedule 2.1(q):

  

Employees

Schedule 2.1(r):

  

Litigation

Schedule 2.1(s):

  

Tax Matters

Schedule 2.1(t):

  

Related Party Transaction

Schedule 2.1(w):

  

Sarbanes-Oxley

Schedule 2.1(ff):

  

Registration Rights

--------------------------------------------------------------------------------

EXHIBIT A

Form of Restated Certificate of Incorporation

--------------------------------------------------------------------------------

EXHIBIT B

Form of Warrant

--------------------------------------------------------------------------------

EXHIBIT C

SB Merger Agreement

--------------------------------------------------------------------------------

EXHIBIT D

Form of Registration Rights Agreement

--------------------------------------------------------------------------------

SCHEDULE 1.1(c)

 

1. Glenview Capital Partners, L.P.

Glenview Institutional Partners, L.P.

GCM Little Arbor Partners, L.P.

GCM Little Arbor Institutional Partners, L.P.

GCM Little Arbor Master Fund, Ltd.

Glenview Capital Master Fund Ltd.

 

2. Glenhill Capital, L.P.

Glenhill Capital Overseas Management, L.L.C.

 

3. Fort Mason Master, LP1

Fort Mason Partners, LP2

 

4. OZ Master Fund, Ltd.

OZ Global Special Investments Master Fund, L.P.

GPC LVII, LLC

Fleet Maritime, Inc.

 

5. Kings Road Investments, Ltd

(Registration name: UBS Securities, LLC F/B/O Kings Road Investments Ltd.)

6. Adage Capital Partners, L.P. (“Adage”) has elected to waive, and not be
subject to, the provisions of Section 9(l) of the Restated Certificate and
Section 3(g) of the Warrants until such time (if any) as Adage has provided
written notice to the Company that it has elected to be subject to such
provisions, at which time Adage shall be subject to such provisions and the
foregoing waiver shall no longer be in effect.

 

--------------------------------------------------------------------------------

1 Fort Mason have elected a 4.99% blocker.

2 Fort Mason have elected a 4.99% blocker.

--------------------------------------------------------------------------------

Schedule 2.1(a)(i)

Certificate of Incorporation

Delaware

PAGE 1            

The first State

I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF “BOULDER SPECIALTY BRANDS, INC.”, FILED IN THIS OFFICE ON THE
THIRTY-FIRST DAY OF MAY, A.D. 2005, AT 6:36 O’CLOCK P.M.

A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT COUNTY RECORDER
OF DEEDS.

 

              [LOGO]      [LOGO]    Harriet Smith Windsor, Secretary of State
3978002   8100      

AUTHENTICATION: 3917027

050453502         DATE: 06-01-05

 

--------------------------------------------------------------------------------

CERTIFICATE OF INCORPORATION

OF

BOULDER SPECIALTY BRANDS, INC.

The undersigned, a natural person eighteen years of age or older, hereby
establishes a corporation pursuant to the General Corporation Law of the State
of Delaware and adopts the following Certificate of Incorporation which reads in
its entirety as follows:

ARTICLE I

NAME

The name of the corporation (hereinafter, the “Corporation”) is Boulder
Specialty Brands, Inc.

ARTICLE II

ADDRESS AND REGISTERED AGENT

The address of the Corporation’s registered office in the State of Delaware is
Capitol Services, Inc., 615 South DuPont Highway, Dover, Kent County, Delaware.
The name of the Corporation’s registered agent at such address is Capitol
Services, Inc.

ARTICLE III

PURPOSE

The purpose of the Corporation is to engage in any lawful act or activity for
which corporations may be organized under the General Corporation Law of the
State of Delaware (the “DGCL”).

ARTICLE IV

CAPITAL STOCK

Section 1. Authorized Shares. The aggregate number of shares which the
Corporation shall have authority to issue is 76,000,000; of which 1,000,000
shares of the par value of $0.0001 shall be designated Preferred Stock and
75,000,000 shares of the par value of $0.0001 shall be designated Common Stock.

Section 2. Preferred Stock Designation. The Board is hereby expressly
authorized, by resolution or resolutions, to provide, out of the unissued shares
of Preferred Stock, for series of Preferred Stock and, with respect to each such
series, to fix the number of shares constituting such series and the designation
of such series, the voting powers (if any) of the shares of such series, and the
preferences and relative, participating, optional or other special rights, if
any, and any qualifications, limitations or restrictions thereof, of the shares
of such series, to the full extent now or hereafter permitted by the laws of the
State of Delaware and the DGCL. The powers, preferences and relative,
participating, optional and other special rights of each series of Preferred
Stock, and the qualifications, limitations or restrictions thereof, if any, may
differ from those of any and all other series at any time outstanding.

Section 3. Assessment of Stock. The capital stock of the Corporation, after the
amount of the subscription price has been fully paid in, shall not be assessable
for any purpose, and no stock issued as fully paid shall ever be assessable or
assessed. No stockholder of the Corporation is individually liable for the debts
or liabilities of the Corporation.

 

State of Delaware Secretary of State Division of Corporations Delivered 06:41 PM
05/31/2005 FILED 06:36 PM 05/31/2005 SRV 050453502 - 3978002 FILE

 

1

--------------------------------------------------------------------------------

ARTICLE V

INCORPORATOR

The name and mailing address of the incorporater is Stephen B. Hughes, 6106
Sunrise Ranch Drive, Longmont, Colorado 80503. The powers of the incorporator
shall terminate upon the filing of this Certificate of Incorporation.

ARTICLE VI

DIRECTORS

Section 1. Number of Directors. The members of the governing board of the
Corporation are styled as directors. The board of directors of the Corporation
shall be elected in such manner as shall be provided in the Bylaws of the
Corporation. The number of directors shall be not less than two (2) nor more
than ten (10). The number of directors may be changed from time to time within
this range in such manner as shall be provided in the Bylaws of the Corporation.

Section 2. Initial Directors. The initial Board of Directors of this Corporation
shall consist of two (2) members, but the number may be increased or decreased
in the manner provided in the Bylaws of this Corporation; provided, however,
that, except as otherwise provided in the Bylaws of this Corporation, or except
as otherwise provided for or fixed by or pursuant to the provisions of Article
IV of this Certificate of Incorporation relating to the rights of the holders of
any series of Preferred Stock, the number of directors constituting the entire
Board of Directors shall not be changed without the affirmative vote of at least
sixty-six and two-thirds percent (66 and 2/3%) of the issued and outstanding
shares of Common Stock. As used in this Certificate of lncorporation, the term
“entire board” means the total number of directors that the Corporation would
have if there were no vacancies or unfilled newly created directorships.
Elections of directors need not be by written ballot except and to the extent
provided in the Bylaws of the Corporation. The names and addresses of the
persons who are to serve as the initial directors of the Corporation upon the
filing of this Certificate of Incorporation are:

 

Name

  

Address

     Stephen B. Hughes    6106 Sunrise Ranch Drive       Longmont, Colorado
805O3    James E. Lewis    6106 Sunrise Ranch Drive       Longmont, Colorado
80503   

Section 3. Removal and Filling of Newly Created Directorships. Any one or more
directors may be removed at any time, with or without cause, by the affirmative
vote of at least sixty-six and two-thirds percent (66 2/3%) of the issued and
outstanding shares of Common Stock that are present or represented at a special
meeting of stockholders called for such purpose, voting together as a single
class. At the same meeting at which the stockholders remove one or more
directors, a successor or successors may be elected for the unexpired term of
the director or directors removed. Except as set forth in this Article VI (3),
directors shall not be subject to removal. Notwithstanding the foregoing,
whenever holders of outstanding shares of one or more series of Preferred Stock
are entitled to elect directors of the Corporation pursuant to the provisions
contained in the resolution or resolutions of the Board providing for the
establishment of any such series, any such director of the Corporation so
elected may be removed only in accordance with the provisions of such resolution
or resolutions. Except as otherwise provided for or fixed by or pursuant to the
provisions of Article IV of this Certificate of Incorporation relating to the
rights of the holders of any series of Preferred Stock, newly created
directorships resulting from any increase in the number of directors shall be
filled by the Board by the affirmative vote of a majority of the directors then
in office, or by the stockholders holding at least sixty-six and two-thirds
percent (66 2/3%) of the issued and outstanding shares of Common Stock that are
present or represented at a special meeting of stockholders called for such
purpose, voting together as a single class.

 

2

--------------------------------------------------------------------------------

Section 4. Election and Vacancies. Directors shall be elected at each annual
meeting of stockholders, and each director elected shall hold office until such
director’s successor has been elected and qualified, subject, however, to
earlier death, resignation or removal from office. Except as otherwise provided
for or fixed by or pursuant to the provisions of Article IV of this Certificate
of Incorporation relating to the rights of the holders of any series of
Preferred Stock, any vacancies on the Board resulting from death, resignation,
removal or other cause shall be filled by the Board by the affirmative vote of a
majority of the remaining directors then in office, even though less than a
quorum of the Board, or by a sole remaining director, or by the stockholders
holding at least sixty-six and two-thirds percent (66 2/3%) of the issued and
outstanding shares of Common Stock that are present or represented at a special
meeting of stockholders called for such purpose, voting together as a single
class.

Section 5. Advance Notice of Nominations. Subject to Article XIII of this
Certificate of Incorporation, advance notice of nominations for the election of
directors shall be given in the manner and to the extent provided in the Bylaws
of the Corporation.

Section 6. Payment of Expenses. In addition to any other rights of
indemnification permitted by the laws of the State of Delaware, including the
DGCL, or as may be provided for by the Corporation in this Certificate of
Incorporation, its Bylaws or by agreement, the expenses of officers and
directors incurred in defending a civil or criminal action, suit or proceeding,
involving alleged acts or omissions of such officer or director in his or her
capacity as an officer or director of the Corporation, must be paid, by the
Corporation or through insurance purchased and maintained by the Corporation or
through other financial arrangements made by the Corporation, as they are
incurred and in advance of the final disposition of the action, suit or
proceeding, upon receipt of an undertaking by or on behalf of the director or
officer to repay the amount if it is ultimately determined by a court of
competent jurisdiction that he or she is not entitled to be indemnified by the
Corporation.

Section 7. Classification of Directors. Upon the closing of a firm commitment
underwritten public offering of securities of the Corporation, the Board of
Directors shall divide itself into three classes, as nearly equal in number as
possible, with respect to the time for which the directors shall severally hold
office. Directors of the first class first chosen shall initially hold office
for one year or until the first annual election following their election;
directors of the second class first chosen shall initially hold office for two
years or until the second annual election following their election; and
directors of the third class first chosen shall initially hold office for three
years or until the third annual election following their election; and, in each
case, until their successors to the class of directors whose term shall expire
at that time shall be elected to hold office for a term of three years, so that
the term of office of one class of directors shall expire in each year. Each
director elected shall hold office until his successor shall be elected and
shall qualify.

ARTICLE VII

BYLAWS

The Board of Directors is authorized to adopt, amend or repeal any and all
provisions of the Bylaws of the Corporation by a vote of at least two-thirds of
all directors who constitute the Board of Directors, except as and to the extent
provided in the Bylaws. Notwithstanding any other provision of this Certificate
of Incorporation or the Bylaws of this Corporation (and notwithstanding that
some lesser percentage may be specified by law), no provision of the Bylaws of
the Corporation shall be amended, modified or repealed by the stockholders of
the Corporation, nor shall any provision of the Bylaws of the Corporation
inconsistent with any such provision be adopted by the stockholders of the
Corporation, unless approved by the affirmative vote of holders of at least
seventy-five (75%) of the issued and outstanding shares of Common Stock. Any
purported amendment to the Bylaws which would add thereto a matter not expressly
covered in the Bylaws prior to such purported amendment shall be deemed to
constitute the adoption of a Bylaw provision and not an amendment to the Bylaws.

 

3

--------------------------------------------------------------------------------

ARTICLE VIII

MODIFICATION, AMENDMENT OR REPEAL OF DESIGNATED PROVISIONS

Notwithstanding any other provision of this Certificate of Incorporation, the
Bylaws of the Corporation or any provision of law which might otherwise permit a
lesser vote or no vote, but in addition to any affirmative vote of the holders
of any particular class or series of stock of the Corporation required by law,
this Certificate of Incorporation or as provided for or fixed by or pursuant to
the provisions of Article IV of this Certificate of Incorporation relating to
the rights of the holders of any series of Preferred Stock, the affirmative vote
(or consent under Article XIII, if such consent is then permitted) of at least
seventy-five percent (75%) of the voting power of the then outstanding shares of
the voting stock of the Corporation entitled to vote generally in the election
of directors, voting together as a single class, shall be required for the
modification, amendment or repeal of all or any portion of Articles IV, VI, VII,
this Article VIII, IX, X, XI, XII or XIII of this Certificate of Incorporation.

ARTICLE IX

INDEMNIFICATION

Any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (whether or not by or in the right of
the Corporation) by reason of the fact that he is or was a director, officer,
incorporator, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, incorporator, employee,
partner, trustee or agent of another corporation, partnership, joint venture,
trust or other enterprise (including an employee benefit plan), shall be
entitled to be indemnified by the Corporation to the full extent then permitted
by the DGCL as it exists or as it may hereafter be amended against expenses
(including counsel and expert witness fees and disbursements), judgments, fines
(including excise taxes assessed on a person with respect to an employee benefit
plan) and amounts paid in settlement incurred by him or her in connection with
such action, suit or proceeding. Such right of indemnification shall inure
whether or not the claim asserted is based on matters which antedate the
adoption of this Article IX. Such right of indemnification shall continue as to
a person who has ceased to be a director, officer, incorporator, employee,
partner, trustee or agent and shall inure to the benefit of the heirs and
personal representatives of such a person. The indemnification provided by this
Article IX shall not be deemed exclusive of any other rights which may be
provided now or in the future under any provision currently in effect or
hereafter adopted in this Certificate of Incorporation, the Bylaws, by any
agreement, by vote of stockholders, by resolution of disinterested directors, by
provision of law or otherwise.

ARTICLE X

MONETARY DAMAGES

No director of the Corporation shall be liable to the Corporation or any of its
stockholders for monetary damages for breach of fiduciary duty as a director,
provided that this provision does not eliminate the liability of the director
(i) for any breach of the director’s duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
Title 8 of the Delaware Code or (iv) for any transaction from which the director
derived an improper personal benefit. For purposes of the prior sentence, the
term “damages” shall, to the extent permitted by law, include, without
limitation, any judgment, fine, amount paid in settlement, penalty, punitive
damages, excise or other tax assessed with respect to an employee benefit plan,
or expense of any nature (including, without limitation, counsel and expert
witness fees and disbursements). Each person who serves as a director of the
Corporation while this Article X is in effect shall be deemed to be doing so in
reliance on the provisions of this Article X, and neither the amendment or
repeal of this Article X, nor the adoption of any provision of this Certificate
of Incorporation inconsistent with this Article X, shall apply to or have any
effect on the liability or alleged liability of any director or the Corporation
for, arising out of, based upon or in connection with any acts or omissions of
such director occurring prior to such amendment, repeal or adoption of an
inconsistent

 

4

--------------------------------------------------------------------------------

provision. The provisions of this Article X are cumulative and shall be in
addition to and independent of any and all other limitations on or eliminations
of the liabilities of directors of the Corporation, as such, whether such
limitations or eliminations arise under or are created by any law, rule,
regulation, bylaw, agreement, vote of shareholders or disinterested directors,
or otherwise. If the DGCL is amended to authorize corporate action further
eliminating or limiting the personal liability of directors, then the liability
of a director of the Corporation shall be eliminated or limited to the fullest
extent permitted by the DGCL, as so amended, without any further amendment to
this Certificate of Incorporation.

ARTICLE XI

COMPROMISE OR ARRANGEMENT

Whenever a compromise or arrangement is proposed between this Corporation and
its creditors or any class of them and/or between this Corporation and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of this
Corporation or of any creditor or stockholder thereof or on the application of
any receiver or receivers appointed for this Corporation under the provisions of
Section 291 of Title 8 of the Delaware Code, or on the application of trustees
in dissolution or of any receiver or receivers appointed for this Corporation
under the provisions of Section 279 of Title 8 of the Delaware Code order a
meeting of the creditors or class of creditors, and/or of the stockholders or
class of stockholders of this Corporation, as the case may be, to be summoned in
such manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
Corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this Corporation, as the case may be, and also on this
Corporation.

ARTICLE XII

PROVISIONS RELATING TO BUSINESS COMBINATIONS

The following provisions (i) through (iv) of this Article XII shall apply during
the period commencing upon the filing of this Certificate of Incorporation and
terminating upon the consummation of any Business Combination (as hereinafter
defined) and may not be amended prior to the consummation of any Business
Combination. A “Business Combination” shall mean the acquisition by the
Corporation, whether by merger, stock exchange, asset or stock acquisition or
similar type of transaction, or a combination of the foregoing, of one or more
operating businesses that are in the food or beverage business (each a “Target
Business”).

(i) Prior to the consummation of any Business Combination, the Corporation shall
submit such Business Combination to its stockholders for approval regardless of
whether the Business Combination is of a type which normally would require such
stockholder approval under the DGCL. In the event that a majority of the IPO
Shares (defined below) cast at the meeting to approve the Business Combination
are voted for the approval of such Business Combination, the Corporation shall
be authorized to consummate the Business Combination; provided that the
Corporation shall not consummate any Business Combination if 20%, or more in
interest of the holders of IPO Shares exercise their conversion rights described
in subparagraph (ii) below.

(ii) In the event that a Business Combination is approved in accordance with the
above paragraph (i) and is consummated by the Corporation, any stockholder of
the Corporation holding shares of Common Stock (“IPO Shares”) issued in the
Corporation’s initial public offering (“IPO”) of securities who voted against
the Business Combination may, contemporaneous with such vote, demand that the
Corporation convert his, her or its IPO Shares into cash. If so demanded, the
Corporation shall convert such shares at a per share conversion price equal to
the quotient determined by dividing (i) the amount in the Trust Fund (as defined
below), inclusive of any interest thereon, calculated as of two business days
prior to the proposed consummation of the Business Combination, by (ii) the
total number of IPO Shares.

 

5

--------------------------------------------------------------------------------

“Trust Fund” shall mean the trust account established by the Corporation at the
consummation of its IPO and into which a designated portion of the net proceeds
of the IPO are deposited.

(iii) In the event that the Corporation does not consummate a Business
Combination with one or more Target Businesses by the later of (1) 18 months
after the consummation of the IPO or (2) 24 months after the consummation of the
IPO in the event that either a letter of intent, an agreement in principle or a
definitive agreement to complete a Business Combination with one or more Target
Businesses was executed but was not consummated within such 18 month period
(such later date being referred to as the “Termination Date”), the officers of
the Corporation shall take all such action necessary to dissolve and liquidate
the Corporation as soon as reasonably practicable. In the event that the
Corporation is so dissolved and liquidated, only the holders of IPO Shares shall
be entitled to receive liquidating distributions and the Corporation shall pay
no liquidating distributions with respect to any other shares of capital stock
of the Corporation.

(iv) A holder of IPO Shares shall be entitled to receive distributions from the
Trust Fund only in the event of a liquidation of the Corporation in accordance
with subparagraph (iii) above or in the event he, she or it demands conversion
of his, hers, or its IPO Shares in accordance with subparagraph (ii) above. In
no other circumstances shall a holder of IPO Shares have any right or interest
of any kind in or to the Trust Fund.

ARTICLE XIII

ACTION BY CONSENT

Effective upon the closing of a firm commitment underwritten public offering of
Common Stock of the Corporation and notwithstanding any other provision of this
Certificate of Incorporation or the Bylaws of this Corporation, and
notwithstanding anything to the contrary specified by law, no action required or
permitted to be taken at any annual or special meeting of the stockholders of
this Corporation may be taken without such a meeting, and the power of
stockholders of this Corporation to consent in writing to the taking of such
action without a meeting, as contemplated by Section 228 of the DGCL, is hereby
specifically denied.

IN WITNESS WHEREOF, I made, signed and sealed this Certificate of Incorporation
this 31st day of May, 2005.

 

/s/ Stephen B. Hughes

Stephen B. Hughes, Incorporator

--------------------------------------------------------------------------------

Schedule 2.1(a)(ii)

Bylaws

BYLAWS OF

BOULDER SPECIALTY BRANDS, INC.

 

--------------------------------------------------------------------------------

TABLE OF CONTENTS

 

          Page

ARTICLE I — CORPORATE OFFICES

   1

    1.1

  

REGISTERED OFFICE

   1

    1.2

  

OTHER OFFICES

   1

ARTICLE II — MEETINGS OF STOCKHOLDERS

   1

    2.1

  

PLACE OF MEETINGS

   1

    2.2

  

ANNUAL MEETING

   1

    2.3

  

SPECIAL MEETING

   1

    2.4

  

NOTICE OF STOCKHOLDERS’ MEETINGS

   1

    2.5

  

MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE

   2

    2.6

  

QUORUM

   2

    2.7

  

ADJOURNED MEETING; NOTICE

   2

    2.8

  

ADMINISTRATION OF THE MEETING

   2

    2.9

  

VOTING

   3

    2.10

  

STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING

   3

    2.11

  

RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS

   3

    2.12

  

PROXIES

   4

    2.13

  

LIST OF STOCKHOLDERS ENTITLED TO VOTE

   4

    2.14

  

ADVANCE NOTICE OF STOCKHOLDER BUSINESS

   4

    2.15

  

ADVANCE NOTICE OF DIRECTOR NOMINATIONS

   5

ARTICLE III — DIRECTORS

   6

    3.1

  

POWERS

   6

    3.2

  

NUMBER OF DIRECTORS

   6

    3.3

  

ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS

   6

    3.4

  

RESIGNATION AND VACANCIES

   6

    3.5

  

PLACE OF MEETINGS; MEETINGS BY TELEPHONE

   6

    3.6

  

REGULAR MEETINGS

   6

    3.7

  

SPECIAL MEETINGS; NOTICE

   7

    3.8

  

QUORUM

   7

    3.9

  

WAIVER OF NOTICE

   7

    3.10

  

BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING

   7

    3.11

  

ADJOURNED MEETING; NOTICE

   7

    3.12

  

FEES AND COMPENSATION OF DIRECTORS

   8

    3.13

  

REMOVAL OF DIRECTORS

   8

    3.14

  

INTERESTED DIRECTORS

   8

ARTICLE IV — COMMITTEES

   8

    4.1

  

COMMITTEES OF DIRECTORS

   8

    4.2

  

COMMITTEE MINUTES

   8

    4.3

  

MEETINGS AND ACTION OF COMMITTEES

   8

ARTICLE V — OFFICERS

   9

    5.1

  

OFFICERS

   9

 

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TABLE OF CONTENTS

(continued)

 

          Page

    5.2

  

APPOINTMENT OF OFFICERS

   9

    5.3

  

SUBORDINATE OFFICERS

   9

    5.4

  

REMOVAL AND RESIGNATION OF OFFICERS

   9

    5.5

  

VACANCIES IN OFFICES

   9

    5.6

  

REPRESENTATION OF SHARES OF OTHER CORPORATIONS

   10

    5.7

  

AUTHORITY AND DUTIES OF OFFICERS

   10

ARTICLE VI — RECORDS AND REPORTS

   10

    6.1

  

MAINTENANCE AND INSPECTION OF RECORDS

   10

    6.2

  

INSPECTION BY DIRECTORS

   10

ARTICLE VII — GENERAL MATTERS

   10

    7.1

  

CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS

   10

    7.2

  

EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS

   10

    7.3

  

STOCK CERTIFICATES; PARTLY PAID SHARES

   11

    7.4

  

SPECIAL DESIGNATION ON CERTIFICATES

   11

    7.5

  

LOST CERTIFICATES

   11

    7.6

  

DIVIDENDS

   11

    7.7

  

FISCAL YEAR

   11

    7.8

  

SEAL

   12

    7.9

  

TRANSFER OF STOCK

   12

    7.10

  

STOCK TRANSFER AGREEMENTS

   12

    7.11

  

REGISTERED STOCKHOLDERS

   12

    7.12

  

WAIVER OF NOTICE

   12

ARTICLE VIII — NOTICE BY ELECTRONIC TRANSMISSION

   12

    8.1

  

NOTICE BY ELECTRONIC TRANSMISSION

   12

    8.2

  

DEFINITION OF ELECTRONIC TRANSMISSION

   13

    8.3

  

INAPPLICABILITY

   13

ARTICLE IX — INDEMNIFICATION OF DIRECTORS AND OFFICERS

   13

    9.1

  

POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS OTHER THAN THOSE BY OR IN
THE RIGHT OF THE CORPORATION

   13

    9.2

  

POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS BY OR IN THE RIGHT OF THE
CORPORATION

   14

    9.3

  

AUTHORIZATION OF INDEMNIFICATION

   14

    9.4

  

GOOD FAITH DEFINED

   14

    9.5

  

INDEMNIFICATION BY A COURT

   14

    9.6

  

EXPENSES PAYABLE IN ADVANCE

   15

    9.7

  

NONEXCLUSIVITY OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES

   15

    9.8

  

INSURANCE

   15

    9.9

  

CERTAIN DEFINITIONS

   15

    9.10

  

SURVIVAL OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES

   16

    9.11

  

LIMITATION ON INDEMNIFICATION

   16

    9.12

  

INDEMNIFICATION OF EMPLOYEES AND AGENTS

   16

    9.13

  

EFFECT OF AMENDMENT OR REPEAL

   16

ARTICLE X — MISCELLANEOUS

   16

    10.1

  

PROVISIONS OF CERTIFICATE GOVERN

   16

    10.2

  

CONSTRUCTION; DEFINITIONS

   16

    10.3

  

SEVERABILITY

   16

    10.4

  

AMENDMENT

   16

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BYLAWS OF BOULDER SPECIALTY BRANDS, INC.

 

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ARTICLE I — CORPORATE OFFICES

1.1 REGISTERED OFFICE.

The registered office of Boulder Specialty Brands, Inc. shall be fixed in the
corporation’s certificate of incorporation, as the same may be amended and/or
restated from time to time (as so amended and/or restated, the “Certificate”).

1.2 OTHER OFFICES.

The corporation’s Board of Directors (the “Board”) may at any time establish
other offices at any place or places where the corporation is qualified to do
business.

ARTICLE II — MEETINGS OF STOCKHOLDERS

2.1 PLACE OF MEETINGS.

Meetings of stockholders shall be held at any place within or outside the State
of Delaware as designated by the Board. The Board may, in its sole discretion,
determine that a meeting of stockholders shall not be held at any place, but may
instead be held solely by means of remote communication as authorized by
Section 211(a)(2) of the Delaware General Corporation Law (the “DGCL”). In the
absence of any such designation or determination, stockholders’ meetings shall
be held at the corporation’s principal executive office.

2.2 ANNUAL MEETING.

The annual meeting of stockholders shall be held each year on a date and at a
time designated by the Board. At the annual meeting, directors shall be elected
and any other proper business may be transacted.

2.3 SPECIAL MEETING.

Unless otherwise required by law or the Certificate, special meetings of the
stockholders may be called at any time, for any purpose or purposes, only by
(a) the Board, (b) the Chairperson of the Board, or (c) the chief executive
officer.

No business may be transacted at such special meeting other than the business
specified in the notice to stockholders of such meeting.

2.4 NOTICE OF STOCKHOLDERS’ MEETINGS.

All notices of meetings of stockholders shall be sent or otherwise given in
accordance with either Section 2.5 or Section 8.1 of these bylaws not less than
ten (10) nor more than 60 days before the date of the meeting to each
stockholder entitled to vote at such meeting, except as otherwise required by
applicable law. The notice shall specify the place, if any, date and hour of the
meeting, the means of remote communication, if any, by which stockholders and
proxy holders may be deemed to be present in person and vote at such meeting,
and, in the case of a special meeting, the purpose or purposes for which the
meeting is called. Any previously scheduled meeting of stockholders may be
postponed, and, unless the Certificate provides otherwise, any special meeting
of the stockholders may be cancelled by resolution duly adopted by a majority of
the Board members then in office upon public notice given prior to the date
previously scheduled for such meeting of stockholders.

Whenever notice is required to be given, under the DGCL, the Certificate or
these bylaws, to any person with whom communication is unlawful, the giving of
such notice to such person shall not be required and there shall be no duty to
apply to any governmental authority or agency for a license or permit to give
such notice to such person. Any action or meeting which shall be taken or held
without notice to any such person with whom communication is unlawful shall have
the same force and effect as if such notice had been duly given. In the event
that the action taken by the corporation is such as to require the filing of a
certificate with the Secretary of State of Delaware, the certificate shall
state, if such is the fact and if notice is required, that notice was given to
all persons entitled to receive notice except such persons with whom
communication is unlawful.

Whenever notice is required to be given, under any provision of the DGCL, the
Certificate or these bylaws, to any stockholder to whom (A) notice of two
(2) consecutive annual meetings, or (B) all, and at least two (2), payments (if
sent by first-class mail) of dividends or interest on securities during a 12
month period, have been mailed addressed to such person at such person’s address
as shown on the records of the corporation and have been returned undeliverable,
the giving of such notice to such person shall not be required. Any action or
meeting which shall be taken or held without notice to such person shall have
the same force and effect as if such notice had been duly given. If any such
person shall deliver to the corporation a written notice setting forth such
person’s then current address, the requirement that notice be given to such
person shall be reinstated. In the event that the action taken by the
corporation is such as to require the filing of a certificate with the Secretary
of State of Delaware, the certificate need not state that notice was not given
to persons to whom notice was not required to be given pursuant to
Section 230(b) of the DGCL.

The exception in subsection (A) of the above paragraph to the requirement that
notice be given shall not be applicable to any notice returned as undeliverable
if the notice was given by electronic transmission.

 

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2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE.

Notice of any meeting of stockholders shall be given:

(a) if mailed, when deposited in the United States mail, postage prepaid,
directed to the stockholder at his or her address as it appears on the
corporation’s records;

(b) if electronically transmitted, as provided in Section 8.1 of these bylaws;
or

(c) otherwise, when delivered.

An affidavit of the secretary or an assistant secretary of the corporation or of
the transfer agent or any other agent of the corporation that the notice has
been given shall, in the absence of fraud, be prima facie evidence of the facts
stated therein.

Notice may be waived in accordance with Section 7.12 of these bylaws.

2.6 QUORUM.

Unless otherwise provided in the Certificate or required by law, stockholders
representing a majority of the voting power of the issued and outstanding
capital stock of the corporation, present in person or represented by proxy,
shall constitute a quorum for the transaction of business at all meetings of the
stockholders. If such quorum is not present or represented at any meeting of the
stockholders, then the chairperson of the meeting, or the stockholders
representing a majority of the voting power of the capital stock at the meeting,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time until a quorum is present or represented. At such
adjourned meeting at which a quorum is present or represented, any business may
be transacted that might have been transacted at the meeting as originally
noticed. The stockholders present at a duly called meeting at which a quorum is
present may continue to transact business until adjournment, notwithstanding the
withdrawal of enough stockholders to leave less than a quorum unless the number
of stockholders who withdrew does not permit action to be taken by the
stockholders in accordance with DGCL.

2.7 ADJOURNED MEETING; NOTICE.

When a meeting is adjourned to another time or place, unless these bylaws
otherwise require, notice need not be given of the adjourned meeting if the
time, place if any thereof, and the means of remote communications if any by
which stockholders and proxy holders may be deemed to be present in person and
vote at such adjourned meeting are announced at the meeting at which the
adjournment is taken. At the continuation of the adjourned meeting, the
corporation may transact any business that might have been transacted at the
original meeting. If the adjournment is for more than 30 days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting in accordance with the provisions of Section 2.4 and
Section 2.5 of these bylaws.

2.8 ADMINISTRATION OF THE MEETING.

Meetings of stockholders shall be presided over by the chief executive officer
of the corporation. If the chief executive officer will not be present at a
meeting of stockholders, such meeting shall be presided over by such chairperson
as the Board shall appoint, or, in the event that the Board shall fail to make
such appointment, any officer of the corporation elected by the Board. The
secretary of the meeting shall be the secretary of the corporation, or, in the
absence of the secretary of the corporation, such person as the chairperson of
the meeting appoints.

The Board shall, in advance of any meeting of stockholders, appoint one (1) or
more inspector(s), who may include individual(s) who serve the corporation in
other capacities, including without limitation as officers, employees or agents,
to act at the meeting of stockholders and make a written report thereof. The
Board may designate one (1) or more persons as alternate inspector(s) to replace
any inspector, who fails to act. If no inspector or alternate has been appointed
or is able to act at a meeting of stockholders, the chairperson of the meeting
shall appoint one (1) or more inspector(s) to act at the meeting. Each
inspector, before discharging his or her duties, shall take and sign an oath to
faithfully execute the duties of inspector with strict impartiality and
according to the best of his or her ability. The inspector(s) or alternate(s)
shall have the duties prescribed pursuant to Section 231 of the DGCL or other
applicable law.

 

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The Board shall be entitled to make such rules or regulations for the conduct of
meetings of stockholders as it shall deem necessary, appropriate or convenient
to the extent not inconsistent with law, the corporation’s Certificate or these
Bylaws, as they are in effect from time to time. Subject to such rules and
regulations, if any, the chairperson of the meeting shall have the right and
authority to prescribe such rules, regulations and procedures and to do all acts
as, in the judgment of such chairperson, are necessary, appropriate or
convenient for the proper conduct of the meeting, including without limitation
establishing an agenda of business of the meeting, rules or regulations to
maintain order, restrictions on entry to the meeting after the time fixed for
commencement thereof and the fixing of the date and time of the opening and
closing of the polls for each matter upon which the stockholders will vote at a
meeting (and shall announce such at the meeting). In the absence of any rule of
procedure adopted by the Board, the chairperson shall make all decisions
regarding procedures to be followed in any meeting.

2.9 VOTING.

The stockholders entitled to vote at any meeting of stockholders shall be
determined in accordance with the provisions of Section 2.11 of these bylaws,
subject to Section 217 (relating to voting rights of fiduciaries, pledgors and
joint owners of stock) and Section 218 (relating to voting trusts and other
voting agreements) of the DGCL.

Except as otherwise provided in the provisions of Section 213 of the DGCL
(relating to the fixing of a date for determination of stockholders of record),
each stockholder shall be entitled to that number of votes for each share of
capital stock held by such stockholder as set forth in the Certificate.

In all matters, other than the election of directors and except as otherwise
required by law, the Certificate or these bylaws, the affirmative vote of a
majority of the voting power of the shares present or represented by proxy at
the meeting and entitled to vote on the subject matter shall be the act of the
stockholders. Directors shall be elected by a plurality of the voting power of
the shares present in person or represented by proxy at the meeting and entitled
to vote on the election of directors.

The stockholders of the corporation shall not have the right to cumulate their
votes for the election of directors of the corporation.

2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING.

Notwithstanding any statutory provision to the contrary, the shareholders shall
have no power or authority to act by written consent in lieu of a meeting unless
expressly permitted to do so by the Certificate.

2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS.

In order that the corporation may determine the stockholders entitled to notice
of or to vote at any meeting of stockholders or any adjournment thereof, or
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful action,
the Board may fix, in advance, a record date, which record date shall not
precede the date on which the resolution fixing the record date is adopted and
which shall not be more than 60 nor less than ten (10) days before the date of
such meeting, nor more than 60 days prior to any other such action.

If the Board does not fix a record date in accordance with these bylaws and
applicable law:

(a) The record date for determining stockholders entitled to notice of or to
vote at a meeting of stockholders shall be at the close of business on the day
next preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held.

(b) The record date for determining stockholders entitled to consent to
corporate action in writing without a meeting, when no prior action by the Board
is necessary, shall be the first day on which a signed written consent setting
forth the action taken or proposed to be taken is delivered to the corporation.

(c) The record date for determining stockholders for any other purpose shall be
at the close of business on the day on which the Board adopts the resolution
relating thereto.

 

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A determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board may fix a new record date for the adjourned meeting.

2.12 PROXIES.

Each stockholder entitled to vote at a meeting of stockholders may authorize
another person or persons to act for such stockholder by proxy authorized by an
instrument in writing or by a transmission permitted by law and filed with the
secretary of the corporation, but no such proxy shall be voted or acted upon
after three (3) years from its date, unless the proxy provides for a longer
period. A stockholder may also authorize another person or persons to act for
him, her or it as proxy in the manner(s) provided under Section 212(c) of the
DGCL or as otherwise provided under Delaware law. The revocability of a proxy
that states on its face that it is irrevocable shall be governed by the
provisions of Section 212 of the DGCL.

2.13 LIST OF STOCKHOLDERS ENTITLED TO VOTE.

The officer who has charge of the stock ledger of the corporation shall prepare
and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. The corporation shall not
be required to include electronic mail addresses or other electronic contact
information on such list. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting for a period of at least ten
(10) days prior to the meeting: (a) on a reasonably accessible electronic
network, provided that the information required to gain access to such list is
provided with the notice of the meeting, or (b) during ordinary business hours,
at the corporation’s principal place of business.

In the event that the corporation determines to make the list available on an
electronic network, the corporation may take reasonable steps to ensure that
such information is available only to stockholders of the corporation. If the
meeting is to be held at a place, then the list shall be produced and kept at
the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present. If the meeting is to be held solely
by means of remote communication, then the list shall also be open to the
examination of any stockholder during the whole time of the meeting on a
reasonably accessible electronic network, and the information required to access
such list shall be provided with the notice of the meeting.

2.14 ADVANCE NOTICE OF STOCKHOLDER BUSINESS.

Only such business shall be conducted as shall have been properly brought before
a meeting of the stockholders of the corporation. To be properly brought before
an annual meeting, business must be (a) specified in the notice of meeting (or
any supplement thereto) given by or at the direction of the Board, (b) otherwise
properly brought before the meeting by or at the direction of the Board, or
(c) a proper matter for stockholder action under the DGCL that has been properly
brought before the meeting by a stockholder (i) who is a stockholder of record
on the date of the giving of the notice provided for in this Section 2.14 and on
the record date for the determination of stockholders entitled to vote at such
annual meeting and (ii) who complies with the notice procedures set forth in
this Section 2.14. For such business to be considered properly brought before
the meeting by a stockholder such stockholder must, in addition to any other
applicable requirements, have given timely notice in proper form of such
stockholder’s intent to bring such business before such meeting. To be timely,
such stockholder’s notice must be delivered to or mailed and received by the
secretary of the corporation at the principal executive offices of the
corporation not later than the close of business on the 90th day, nor earlier
than the close of business on the 120th day, prior to the anniversary date of
the immediately preceding annual meeting; provided, however, that in the event
that no annual meeting was held in the previous year or the annual meeting is
called for a date that is not within thirty (30) days before or after such
anniversary date, notice by the stockholder to be timely must be so received not
later than the close of business on the tenth (10th) day following the day on
which such notice of the date of the meeting was mailed or public disclosure of
the date of the meeting was made, whichever occurs first.

To be in proper form, a stockholder’s notice to the secretary shall be in
writing and shall set forth:

(a) the name and record address of the stockholder who intends to propose the
business and the class or series and number of shares of capital stock of the
corporation which are owned beneficially or of record by such stockholder;

 

4

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(b) a representation that the stockholder is a holder of record of stock of the
corporation entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to introduce the business specified in the notice;

(c) a brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting;

(d) any material interest of the stockholder in such business; and

(e) any other information that is required to be provided by the stockholder
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”).

Notwithstanding the foregoing, in order to include information with respect to a
stockholder proposal in the proxy statement and form of proxy for a
stockholder’s meeting, stockholders must provide notice as required by, and
otherwise comply with the requirements of, the Exchange Act and the regulations
promulgated thereunder.

No business shall be conducted at the annual meeting of stockholders except
business brought before the annual meeting in accordance with the procedures set
forth in this Section 2.14. The chairperson of the meeting may refuse to
acknowledge the proposal of any business not made in compliance with the
foregoing procedure.

2.15 ADVANCE NOTICE OF DIRECTOR NOMINATIONS.

Only persons who are nominated in accordance with the following procedures shall
be eligible for election as directors of the corporation. To be properly brought
before an annual meeting of stockholders, or any special meeting of stockholders
called for the purpose of electing directors, nominations for the election of
director must be (a) specified in the notice of meeting (or any supplement
thereto), (b) made by or at the direction of the Board (or any duly authorized
committee thereof) or (c) made by any stockholder of the corporation (i) who is
a stockholder of record on the date of the giving of the notice provided for in
this Section 2.15 and on the record date for the determination of stockholders
entitled to vote at such meeting and (ii) who complies with the notice
procedures set forth in this Section 2.15.

In addition to any other applicable requirements, for a nomination to be made by
a stockholder, such stockholder must have given timely notice thereof in proper
written form to the secretary of the corporation. To be timely, a stockholder’s
notice to the secretary must be delivered to or mailed and received at the
principal executive offices of the corporation, in the case of an annual
meeting, in accordance with the provisions set forth in Section 2.14 of these
bylaws, and, in the case of a special meeting of stockholders called for the
purpose of electing directors, not later than the close of business on the tenth
(10th) day following the day on which notice of the date of the special meeting
was mailed or public disclosure of the date of the special meeting was made,
whichever first occurs.

To be in proper written form, a stockholder’s notice to the secretary must set
forth:

(a) as to each person whom the stockholder proposes to nominate for election as
a director (i) the name, age, business address and residence address of the
person, (ii) the principal occupation or employment of the person, (iii) the
class or series and number of shares of capital stock of the corporation which
are owned beneficially or of record by the person, (iv) a description of all
arrangements or understandings between the stockholder and each nominee and any
other person or persons (naming such person or persons) pursuant to which the
nominations are to be made by the stockholder, and (v) any other information
relating to such person that is required to be disclosed in solicitations of
proxies for elections of directors, or is otherwise required, in each case
pursuant to Regulation 14A under the Exchange Act (including without limitation
such person’s written consent to being named in the proxy statement, if any, as
a nominee and to serving as a director if elected); and

(b) as to such stockholder giving notice, the information required to be
provided pursuant to Section 2.14 of these bylaws.

No person shall be eligible for election as a director of the corporation unless
nominated in accordance with the procedures set forth in this Section 2.15. If
the chairperson of the meeting properly determines that a nomination was not
made in accordance with the foregoing procedures, the chairperson shall declare
to the meeting that the nomination was defective and such defective nomination
shall be disregarded.

 

5

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ARTICLE III — DIRECTORS

3.1 POWERS.

Subject to the provisions of the DGCL and any limitations in the Certificate,
the business and affairs of the corporation shall be managed and all corporate
powers shall be exercised by or under the direction of the Board.

3.2 NUMBER OF DIRECTORS.

The authorized number of directors shall be determined from time to time by
resolution of the Board, provided the Board shall consist of at least one
member. No reduction of the authorized number of directors shall have the effect
of removing any director before that director’s term of office expires.

3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS.

Except as provided in Section 3.4 and Section 3.13 of these bylaws, directors
shall be elected at each annual meeting of stockholders to hold office until the
next annual meeting. Directors need not be stockholders unless so required by
the Certificate or these bylaws. The Certificate or these bylaws may prescribe
other qualifications for directors. Each director, including a director elected
to fill a vacancy, shall hold office until such director’s successor is elected
and qualified or until such director’s earlier death, resignation or removal.

All elections of directors shall be by written ballot, unless otherwise provided
in the Certificate. If authorized by the Board, such requirement of a written
ballot shall be satisfied by a ballot submitted by electronic transmission,
provided that any such electronic transmission must be either set forth or be
submitted with information from which it can be determined that the electronic
transmission was authorized.

3.4 RESIGNATION AND VACANCIES.

Any director may resign at any time upon written notice or by electronic
transmission to the corporation.

Unless the Board otherwise determines, newly created directorships resulting
from any increase in the authorized number of directors, or any vacancies on the
Board resulting from the death, resignation, retirement, disqualification,
removal from office or other cause shall, unless otherwise required by law, be
filled by the affirmative vote of a majority of the remaining directors then in
office, even though less than a quorum of the Board, or by a sole remaining
director. When one or more directors resigns and the resignation is effective at
a future date, a majority of the directors then in office, including those who
have so resigned, shall have power to fill such vacancy or vacancies, the vote
thereon to take effect when such resignation or resignations shall become
effective, and each director so chosen shall hold office as provided in this
Section 3.4 in the filling of other vacancies.

3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE.

The Board may hold meetings, both regular and special, either within or outside
the State of Delaware.

Unless otherwise restricted by the Certificate or these bylaws, members of the
Board, or any committee designated by the Board, may participate in a meeting of
the Board, or any committee, by means of conference telephone or other
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.

3.6 REGULAR MEETINGS.

Regular meetings of the Board may be held without notice at such time and at
such place as shall from time to time be determined by the Board.

 

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3.7 SPECIAL MEETINGS; NOTICE.

Special meetings of the Board for any purpose or purposes may be called at any
time by the chairperson of the Board, the chief executive officer, the
president, the secretary or a majority of the authorized number of directors.
The person(s) authorized to call special meetings of the Board may fix the place
and time of the meeting.

Notice of the time and place of special meetings shall be:

(a) delivered personally by hand, by courier or by telephone;

(b) sent by United States first-class mail, postage prepaid;

(c) sent by facsimile; or

(d) sent by electronic mail,

directed to each director at that director’s address, telephone number,
facsimile number or electronic mail address, as the case may be, as shown on the
corporation’s records.

If the notice is (i) delivered personally by hand, by courier or by telephone,
(ii) sent by facsimile or (iii) sent by electronic mail, it shall be delivered
or sent at least 24 hours before the time of the holding of the meeting. If the
notice is sent by United States mail, it shall be deposited in the United States
mail at least four days before the time of the holding of the meeting. Any oral
notice may be communicated either to the director or to a person at the office
of the director who the person giving notice has reason to believe will promptly
communicate such notice to the director. The notice need not specify the place
of the meeting if the meeting is to be held at the corporation’s principal
executive office nor the purpose of the meeting.

3.8 QUORUM.

Except as otherwise required by law or the Certificate, at all meetings of the
Board, a majority of the authorized number of directors (as determined pursuant
to Section 3.2 of these bylaws) shall constitute a quorum for the transaction of
business, except to adjourn as provided in Section 3.11 of these bylaws. The
vote of a majority of the directors present at any meeting at which a quorum is
present shall be the act of the Board, except as may be otherwise specifically
provided by statute, the Certificate or these bylaws.

3.9 WAIVER OF NOTICE.

Whenever notice is required to be given under any provisions of the DGCL, the
Certificate or these bylaws, a written waiver thereof, signed by the person
entitled to notice, or a waiver by electronic transmission by the person
entitled to notice, whether before or after the time stated therein, shall be
deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends a
meeting solely for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the directors, or members of a committee
of directors, need be specified in any written waiver of notice or any waiver by
electronic transmission unless so required by the Certificate or these bylaws.

3.10 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING.

Unless otherwise restricted by the Certificate or these bylaws, any action
required or permitted to be taken at any meeting of the Board, or of any
committee thereof, may be taken without a meeting if all members of the Board or
committee, as the case may be, consent thereto in writing or by electronic
transmission and the writing or writings or electronic transmission or
transmissions are filed with the minutes of proceedings of the Board or
committee. Such filing shall be in paper form if the minutes are maintained in
paper form and shall be in electronic form if the minutes are maintained in
electronic form.

3.11 ADJOURNED MEETING; NOTICE.

If a quorum is not present at any meeting of the Board, then a majority of the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum is present.

 

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3.12 FEES AND COMPENSATION OF DIRECTORS.

Unless otherwise restricted by the Certificate or these bylaws, the Board shall
have the authority to fix the compensation of directors.

3.13 REMOVAL OF DIRECTORS.

Any director or the entire Board may be removed from office at any time, with or
without cause, by the affirmative vote of the holders of at least a majority of
the voting power of the issued and outstanding shares of capital stock of the
corporation then entitled to vote in the election of directors.

3.14 INTERESTED DIRECTORS.

No contract or transaction between the corporation and one or more of its
directors or officers, or between the corporation and any other corporation,
partnership, association or other organization in which one or more of its
directors or officers are directors or officers, or have a financial interest,
shall be void or voidable solely for this reason, or solely because the director
or officer is present at or participates in the meeting of the Board or
committee thereof which authorizes the contract or transaction, or solely
because his, her or their votes are counted for such purpose, if (i) the
material facts as to his, her or their relationship or interest and as to the
contract or transaction are disclosed or are known to the Board or the
committee, and the Board or committee in good faith authorizes the contract or
transaction by the affirmative votes of a majority of the disinterested
directors, even though the disinterested directors be less than a quorum, or
(ii) the material facts as to his, her or their relationship or interest and as
to the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders, or (iii) the contract or
transaction is fair as to the corporation as of the time it is authorized,
approved or ratified by the Board, a committee thereof or the stockholders.
Common or interested directors may be counted in determining the presence of a
quorum at a meeting of the Board or of a committee which authorizes the contract
or transaction.

ARTICLE IV — COMMITTEES

4.1 COMMITTEES OF DIRECTORS.

The Board may designate one or more committees, each committee to consist of one
or more of the directors of the corporation. The Board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not such
member or members constitute a quorum, may unanimously appoint another member of
the Board to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
Board or in these bylaws, shall have and may exercise such lawfully delegable
powers and duties as the Board may confer.

4.2 COMMITTEE MINUTES.

Each committee shall keep regular minutes of its meetings and report to the
Board when required.

4.3 MEETINGS AND ACTION OF COMMITTEES.

Meetings and actions of committees shall be governed by, and held and taken in
accordance with, the provisions of:

(a) Section 3.5 (relating to place of meetings and meetings by telephone);

(b) Section 3.6 (relating to regular meetings);

(c) Section 3.7 (relating to special meetings and notice);

(d) Section 3.8 (relating to quorum);

(e) Section 3.9 (relating to waiver of notice);

 

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(f) Section 3.10 (relating to action without a meeting); and

(g) Section 3.11 (relating to adjournment and notice of adjournment)

of these bylaws, with such changes in the context of those bylaws as are
necessary to substitute the committee and its members for the Board and its
members.

Notwithstanding the foregoing:

(i) the time of regular meetings of committees may be determined either by
resolution of the Board or by resolution of the committee;

(ii) special meetings of committees may also be called by resolution of the
Board; and

(iii) notice of special meetings of committees shall also be given to all
alternate members, who shall have the right to attend all meetings of the
committee. The Board may adopt rules for the governance of any committee not
inconsistent with the provisions of these bylaws.

ARTICLE V — OFFICERS

5.1 OFFICERS.

The officers of the corporation shall be a president and a secretary. The
corporation may also have, at the discretion of the Board, a chairperson of the
Board, a vice chairperson of the Board, a chief executive officer, a chief
financial officer or treasurer, one or more vice presidents, one or more
assistant vice presidents, one or more assistant treasurers, one or more
assistant secretaries, and any such other officers as may be appointed in
accordance with the provisions of these bylaws. Any number of offices may be
held by the same person.

5.2 APPOINTMENT OF OFFICERS.

The Board shall appoint the officers of the corporation, except such officers as
may be appointed in accordance with the provisions of Section 5.3 of these
bylaws, subject to the rights, if any, of an officer under any contract of
employment. Each officer shall hold office until his or her successor is elected
and qualified or until his or her earlier resignation or removal. A failure to
elect officers shall not dissolve or otherwise affect the corporation.

5.3 SUBORDINATE OFFICERS.

The Board may appoint, or empower the chief executive officer or, in the absence
of a chief executive officer, the president, to appoint, such other officers and
agents as the business of the corporation may require. Each of such officers and
agents shall hold office for such period, have such authority, and perform such
duties as are provided in these bylaws or as the Board may from time to time
determine.

5.4 REMOVAL AND RESIGNATION OF OFFICERS.

Any officer may be removed, either with or without cause, by an affirmative vote
of the majority of the Board at any regular or special meeting of the Board or,
except in the case of an officer appointed by the Board, by any officer upon
whom such power of removal may be conferred by the Board.

Any officer may resign at any time by giving written notice to the corporation.
Any resignation shall take effect at the date of the receipt of that notice or
at any later time specified in that notice. Unless otherwise specified in the
notice of resignation, the acceptance of the resignation shall not be necessary
to make it effective. Any resignation is without prejudice to the rights, if
any, of the corporation under any contract to which the officer is a party.

5.5 VACANCIES IN OFFICES.

Any vacancy occurring in any office of the corporation may only be filled by the
Board or as provided in Section 5.3 of these bylaws.

 

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5.6 REPRESENTATION OF SHARES OF OTHER CORPORATIONS.

The chairperson of the Board, the chief executive officer, the president, any
vice president, the treasurer, the secretary or assistant secretary of this
corporation, or any other person authorized by the Board, the chief executive
officer, the president or a vice president, is authorized to vote, represent,
and exercise on behalf of this corporation all rights incident to any and all
shares or other equity interests of any other corporation or entity standing in
the name of this corporation. The authority granted herein may be exercised
either by such person directly or by any other person authorized to do so by
proxy or power of attorney duly executed by such person having the authority.

5.7 AUTHORITY AND DUTIES OF OFFICERS.

In addition to the foregoing authority and duties, all officers of the
corporation shall respectively have such authority and perform such duties in
the management of the business of the corporation as may be designated from time
to time by the Board.

ARTICLE VI — RECORDS AND REPORTS

6.1 MAINTENANCE AND INSPECTION OF RECORDS.

The corporation shall, either at its principal executive office or at such place
or places as designated by the Board, keep a record of its stockholders listing
their names and addresses and the number and class of shares held by each
stockholder, a copy of these bylaws, as may be amended to date, minute books,
accounting books and other records.

Any such records maintained by the corporation may be kept on, or by means of,
or be in the form of, any information storage device or method, provided that
the records so kept can be converted into clearly legible paper form within a
reasonable time. The corporation shall so convert any records so kept upon the
request of any person entitled to inspect such records pursuant to the
provisions of the DGCL. When records are kept in such manner, a clearly legible
paper form produced from or by means of the information storage device or method
shall be admissible in evidence, and accepted for all other purposes, to the
same extent as an original paper form accurately portrays the record.

Any stockholder of record, in person or by attorney or other agent, shall, upon
written demand under oath stating the purpose thereof, have the right during the
usual hours for business to inspect for any proper purpose the corporation’s
stock ledger, a list of its stockholders, and its other books and records and to
make copies or extracts therefrom. A proper purpose shall mean a purpose
reasonably related to such person’s interest as a stockholder. In every instance
where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent to so act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal executive
office.

6.2 INSPECTION BY DIRECTORS.

Any director shall have the right to examine the corporation’s stock ledger, a
list of its stockholders, and its other books and records for a purpose
reasonably related to his or her position as a director.

ARTICLE VII — GENERAL MATTERS

7.1 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS.

From time to time, the Board shall determine by resolution which person or
persons may sign or endorse all checks, drafts, other orders for payment of
money, notes or other evidences of indebtedness that are issued in the name of
or payable to the corporation, and only the persons so authorized shall sign or
endorse those instruments.

7.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS.

Except as otherwise provided in these bylaws, the Board, or any officers of the
corporation authorized thereby, may authorize any officer or officers, or agent
or agents, to enter into any contract or execute any instrument in the name of
and on behalf of the corporation; such authority may be general or confined to
specific instances.

 

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7.3 STOCK CERTIFICATES; PARTLY PAID SHARES.

The shares of the corporation shall be represented by certificates, provided
that the Board may provide by resolution or resolutions that some or all of any
or all classes or series of its stock shall be uncertificated shares. Any such
resolution shall not apply to shares represented by a certificate until such
certificate is surrendered to the corporation. Notwithstanding the adoption of
such a resolution by the Board, every holder of stock represented by
certificates and upon request every holder of uncertificated shares shall be
entitled to have a certificate signed by, or in the name of the corporation by
the chairperson or vice-chairperson of the Board, or the president or
vice-president, and by the treasurer or an assistant treasurer, or the secretary
or an assistant secretary of the corporation representing the number of shares
registered in certificate form. Any or all of the signatures on the certificate
may be a facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate has
ceased to be such officer, transfer agent or registrar before such certificate
is issued, it may be issued by the corporation with the same effect as if he or
she were such officer, transfer agent or registrar at the date of issue.

The corporation may issue the whole or any part of its shares as partly paid and
subject to call for the remainder of the consideration to be paid therefor. Upon
the face or back of each stock certificate issued to represent any such partly
paid shares, and upon the books and records of the corporation in the case of
uncertificated partly paid shares, the total amount of the consideration to be
paid therefor and the amount paid thereon shall be stated. Upon the declaration
of any dividend on fully paid shares, the corporation shall declare a dividend
upon partly paid shares of the same class, but only upon the basis of the
percentage of the consideration actually paid thereon.

7.4 SPECIAL DESIGNATION ON CERTIFICATES.

If the corporation is authorized to issue more than one class of stock or more
than one series of any class, then the powers, designations, preferences, and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights shall be set forth in full or summarized on the face
or back of the certificate that the corporation shall issue to represent such
class or series of stock; provided, however, that, except as otherwise provided
in Section 202 of the DGCL, in lieu of the foregoing requirements there may be
set forth on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock a statement that the
corporation will furnish without charge to each stockholder who so requests the
powers, designations, preferences, and relative, participating, optional or
other special rights of each class of stock or series thereof and the
qualifications, limitations or restrictions of such preferences and/or rights.

7.5 LOST CERTIFICATES.

Except as provided in this Section 7.5, no new certificates for shares shall be
issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and cancelled at the same time. The corporation
may issue a new certificate of stock or uncertificated shares in the place of
any certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the corporation may require the owner of the lost, stolen or
destroyed certificate, or such owner’s legal representative, to give the
corporation a bond sufficient to indemnify it against any claim that may be made
against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate or uncertificated shares.

7.6 DIVIDENDS.

The Board, subject to any restrictions contained in either (a) the DGCL or
(b) the Certificate, may declare and pay dividends upon the shares of its
capital stock. Dividends may be paid in cash, in property, or in shares of the
corporation’s capital stock.

The Board may set apart out of any of the funds of the corporation available for
dividends a reserve or reserves for any proper purpose and may abolish any such
reserve.

7.7 FISCAL YEAR.

The fiscal year of the corporation shall be fixed by resolution of the Board and
may be changed by the Board.

 

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7.8 SEAL.

The corporation may adopt a corporate seal, which shall be adopted and which may
be altered by the Board. The corporation may use the corporate seal by causing
it or a facsimile thereof to be impressed or affixed or in any other manner
reproduced.

7.9 TRANSFER OF STOCK.

Transfers of stock shall be made only upon the transfer books of the corporation
kept at an office of the corporation or by transfer agents designated to
transfer shares of the stock of the corporation. Except where a certificate is
issued in accordance with Section 7.5 of these bylaws, an outstanding
certificate for the number of shares involved shall be surrendered for
cancellation before a new certificate is issued therefore. Upon surrender to the
corporation or the transfer agent of the corporation of a certificate for shares
duly endorsed or accompanied by proper evidence of succession, assignation or
authority to transfer, it shall be the duty of the corporation to issue a new
certificate to the person entitled thereto, cancel the old certificate, and
record the transaction in its books.

7.10 STOCK TRANSFER AGREEMENTS.

The corporation shall have power to enter into and perform any agreement with
any number of stockholders of any one or more classes or series of stock of the
corporation to restrict the transfer of shares of stock of the corporation of
any one or more classes or series owned by such stockholders in any manner not
prohibited by the DGCL.

7.11 REGISTERED STOCKHOLDERS.

The corporation:

(a) shall be entitled to recognize the exclusive right of a person registered on
its books as the owner of shares to receive dividends and to vote as such owner;

(b) shall be entitled to hold liable for calls and assessments on partly paid
shares the person registered on its books as the owner of shares; and

(c) shall not be bound to recognize any equitable or other claim to or interest
in such share or shares on the part of another person, whether or not it shall
have express or other notice thereof, except as otherwise provided by the laws
of Delaware.

7.12 WAIVER OF NOTICE.

Whenever notice is required to be given under any provision of the DGCL, the
Certificate or these bylaws, a written waiver, signed by the person entitled to
notice, or a waiver by electronic transmission by the person entitled to notice,
whether before or after the time of the event for which notice is to be given,
shall be deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends a
meeting solely for the express purpose of objecting at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the stockholders need be specified in any
written waiver of notice or any waiver by electronic transmission unless so
required by the Certificate or these bylaws.

ARTICLE VIII — NOTICE BY ELECTRONIC TRANSMISSION

8.1 NOTICE BY ELECTRONIC TRANSMISSION.

Without limiting the manner by which notice otherwise may be given effectively
to stockholders pursuant to the DGCL, the Certificate or these bylaws, any
notice to stockholders given by the corporation under any provision of the DGCL,
the Certificate or these bylaws shall be effective if given by a form of
electronic transmission consented to by the stockholder to whom the notice is
given. Any such consent shall be revocable by the stockholder by written notice
to the corporation. Any such consent shall be deemed revoked if:

(a) the corporation is unable to deliver by electronic transmission two
consecutive notices given by the corporation in accordance with such consent;
and

 

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(b) such inability becomes known to the secretary or an assistant secretary of
the corporation or to the transfer agent, or other person responsible for the
giving of notice.

However, the inadvertent failure to treat such inability as a revocation shall
not invalidate any meeting or other action.

Any notice given pursuant to the preceding paragraph shall be deemed given:

(i) if by facsimile telecommunication, when directed to a number at which the
stockholder has consented to receive notice;

(ii) if by electronic mail, when directed to an electronic mail address at which
the stockholder has consented to receive notice;

(iii) if by a posting on an electronic network together with separate notice to
the stockholder of such specific posting, upon the later of (A) such posting and
(B) the giving of such separate notice; and

(iv) if by any other form of electronic transmission, when directed to the
stockholder.

An affidavit of the secretary or an assistant secretary or of the transfer agent
or other agent of the corporation that the notice has been given by a form of
electronic transmission shall, in the absence of fraud, be prima facie evidence
of the facts stated therein.

8.2 DEFINITION OF ELECTRONIC TRANSMISSION.

An “electronic transmission” means any form of communication, not directly
involving the physical transmission of paper, that creates a record that may be
retained, retrieved, and reviewed by a recipient thereof, and that may be
directly reproduced in paper form by such a recipient through an automated
process.

8.3 INAPPLICABILITY.

Notice by a form of electronic transmission shall not apply to Section 164
(relating to failure to pay for stock; remedies), Section 296 (relating to
adjudication of claims; appeal), Section 311 (relating to revocation of
voluntary dissolution), Section 312 (relating to renewal, revival, extension and
restoration of certificate of incorporation) or Section 324 (relating to
attachment of shares of stock or any option, right or interest therein) of the
DGCL.

ARTICLE IX — INDEMNIFICATION OF DIRECTORS AND OFFICERS

9.1 POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS OTHER THAN THOSE BY OR
IN THE RIGHT OF THE CORPORATION.

Subject to Section 9.3 of these bylaws, the corporation shall indemnify, to the
fullest extent permitted by the DGCL, as now or hereafter in effect, any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
corporation) by reason of the fact that such person (or the legal representative
of such person) is or was a director or officer of the corporation or any
predecessor of the corporation, or is or was a director or officer of the
corporation serving at the request of the corporation as a director or officer,
employee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, against expenses (including
attorneys’ fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding if such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe such person’s conduct was unlawful. The termination
of any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which such
person reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that such person’s conduct was unlawful.

 

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9.2 POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS BY OR IN THE RIGHT OF
THE CORPORATION.

Subject to Section 9.3 of these bylaws, the corporation shall indemnify, to the
fullest extent permitted by the DGCL, as now or hereafter in effect, any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that such person (or the
legal representative of such person) is or was a director or officer of the
corporation or any predecessor of the corporation, or is or was a director or
officer of the corporation serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise against expenses
(including attorneys’ fees) actually and reasonably incurred by such person in
connection with the defense or settlement of such action or suit if such person
acted in good faith and in a manner such person reasonably believed to be in or
not opposed to the best interests of the corporation; except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.

9.3 AUTHORIZATION OF INDEMNIFICATION.

Any indemnification under this Article IX (unless ordered by a court) shall be
made by the corporation only as authorized in the specific case upon a
determination that indemnification of the director or officer is proper in the
circumstances because such person has met the applicable standard of conduct set
forth in Section 9.1 or Section 9.2 of these bylaws, as the case may be. Such
determination shall be made, with respect to a person who is either a director
or officer at the time of such determination or a former director or officer,
(i) by a majority vote of the directors who are not parties to such action, suit
or proceeding, even though less than a quorum, or (ii) by a committee of such
directors designated by a majority vote of such directors, even though less than
a quorum, or (iii) if there are no such directors, or if such directors so
direct, by independent legal counsel in a written opinion or (iv) by the
stockholders (but only if a majority of the directors who are not parties to
such action, suit or proceeding, if they constitute a quorum of the board of
directors, presents the issue of entitlement to indemnification to the
stockholders for their determination). To the extent, however, that a present or
former director or officer of the corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding described above, or in
defense of any claim, issue or matter therein, such person shall be indemnified
against expenses (including attorneys’ fees) actually and reasonably incurred by
such person in connection therewith, without the necessity of authorization in
the specific case.

9.4 GOOD FAITH DEFINED.

For purposes of any determination under Section 9.3 of these bylaws, to the
fullest extent permitted by applicable law, a person shall be deemed to have
acted in good faith and in a manner such person reasonably believed to be in or
not opposed to the best interests of the corporation, or, with respect to any
criminal action or proceeding, to have had no reasonable cause to believe such
person’s conduct was unlawful, if such person’s action is based on the records
or books of account of the corporation or another enterprise, or on information
supplied to such person by the officers of the corporation or another enterprise
in the course of their duties, or on the advice of legal counsel for the
corporation or another enterprise or on information or records given or reports
made to the corporation or another enterprise by an independent certified public
accountant or by an appraiser or other expert selected with reasonable care by
the corporation or another enterprise. The term “another enterprise” as used in
this Section 9.4 shall mean any other corporation or any partnership, joint
venture, trust, employee benefit plan or other enterprise of which such person
is or was serving at the request of the corporation as a director, officer,
employee or agent. The provisions of this Section 9.4 shall not be deemed to be
exclusive or to limit in any way the circumstances in which a person may be
deemed to have met the applicable standard of conduct set forth in Section 9.1
or 9.2 of these bylaws, as the case may be.

9.5 INDEMNIFICATION BY A COURT.

Notwithstanding any contrary determination in the specific case under
Section 9.3 of this Article IX, and notwithstanding the absence of any
determination thereunder, any director or officer may apply to the Court of
Chancery in the State of Delaware for indemnification to the extent otherwise
permissible under Section 9.1 and Section 9.2 of these bylaws. The basis of such
indemnification by a court shall be a determination by such court that

 

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indemnification of the director or officer is proper in the circumstances
because such person has met the applicable standards of conduct set forth in
Section 9.1 or Section 9.2 of these bylaws, as the case may be. Neither a
contrary determination in the specific case under Section 9.3 of these bylaws
nor the absence of any determination thereunder shall be a defense to such
application or create a presumption that the director or officer seeking
indemnification has not met any applicable standard of conduct. Notice of any
application for indemnification pursuant to this Section 9.5 shall be given to
the corporation promptly upon the filing of such application. If successful, in
whole or in part, the director or officer seeking indemnification shall also be
entitled to be paid the expense of prosecuting such application.

9.6 EXPENSES PAYABLE IN ADVANCE.

To the fullest extent not prohibited by the DGCL, or by any other applicable
law, expenses incurred by a person who is or was a director or officer in
defending any civil, criminal, administrative or investigative action, suit or
proceeding shall be paid by the corporation in advance of the final disposition
of such action, suit or proceeding; provided, however, that if the DGCL
requires, an advance of expenses incurred by any person in his or her capacity
as a director or officer (and not in any other capacity) shall be made only upon
receipt of an undertaking by or on behalf of such person to repay such amount if
it shall ultimately be determined that such person is not entitled to be
indemnified by the corporation as authorized in this Article IX.

9.7 NONEXCLUSIVITY OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES.

The indemnification and advancement of expenses provided by or granted pursuant
to this Article IX shall not be deemed exclusive of any other rights to which
those seeking indemnification or advancement of expenses may be entitled under
the Certificate, any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in such person’s official capacity and
as to action in another capacity while holding such office, it being the policy
of the corporation that indemnification of the persons specified in Section 9.1
and Section 9.2 of these bylaws shall be made to the fullest extent permitted by
law. The provisions of this Article IX shall not be deemed to preclude the
indemnification of any person who is not specified in Section 9.1 or Section 9.2
of these bylaws but whom the corporation has the power or obligation to
indemnify under the provisions of the DGCL, or otherwise. The corporation is
specifically authorized to enter into individual contracts with any or all of
its directors, officers, employees or agents respecting indemnification and
advances, to the fullest extent not prohibited by the DGCL, or by any other
applicable law.

9.8 INSURANCE.

To the fullest extent permitted by the DGCL or any other applicable law, the
corporation may purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee or agent of the corporation, or is or was a
director, officer, employee or agent of the corporation serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise against any liability asserted against such person and incurred by
such person in any such capacity, or arising out of such person’s status as
such, whether or not the corporation would have the power or the obligation to
indemnify such person against such liability under the provisions of this
Article IX.

9.9 CERTAIN DEFINITIONS.

For purposes of this Article IX, references to “the corporation” shall include,
in addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger which,
if its separate existence had continued, would have had power and authority to
indemnify its directors or officers, so that any person who is or was a director
or officer of such constituent corporation, or is or was a director or officer
of such constituent corporation serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,
shall stand in the same position under the provisions of this Article IX with
respect to the resulting or surviving corporation as such person would have with
respect to such constituent corporation if its separate

 

15

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existence had continued. For purposes of this Article IX, references to “fines”
shall include any excise taxes assessed on a person with respect to an employee
benefit plan; and references to “serving at the request of the corporation”
shall include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such director or
officer with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner such person
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner “not
opposed to the best interests of the corporation” as referred to in this Article
IX.

9.10 SURVIVAL OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES.

The rights to indemnification and advancement of expenses conferred by this
Article IX shall continue as to a person who has ceased to be a director or
officer and shall inure to the benefit of the heirs, executors, administrators
and other personal and legal representatives of such a person.

9.11 LIMITATION ON INDEMNIFICATION.

Notwithstanding anything contained in this Article IX to the contrary, except
for proceedings to enforce rights to indemnification (which shall be governed by
Section 9.5 of these bylaws), the corporation shall not be obligated to
indemnify any director or officer in connection with a proceeding (or part
thereof) initiated by such person unless such proceeding (or part thereof) was
authorized or consented to by the board of directors of the corporation.

9.12 INDEMNIFICATION OF EMPLOYEES AND AGENTS.

The corporation may, to the extent authorized from time to time by the board of
directors, provide rights to indemnification and to the advancement of expenses
to employees and agents of the corporation similar to those conferred in this
Article IX to directors and officers of the corporation.

9.13 EFFECT OF AMENDMENT OR REPEAL.

Neither any amendment or repeal of any Section of this Article IX, nor the
adoption of any provision of the Certificate or the bylaws inconsistent with
this Article IX, shall adversely affect any right or protection of any director,
officer, employee or other agent established pursuant to this Article IX
existing at the time of such amendment, repeal or adoption of an inconsistent
provision, including without limitation by eliminating or reducing the effect of
this Article IX, for or in respect of any act, omission or other matter
occurring, or any action or proceeding accruing or arising (or that, but for
this Article IX, would accrue or arise), prior to such amendment, repeal or
adoption of an inconsistent provision.

ARTICLE X — MISCELLANEOUS

10.1 PROVISIONS OF CERTIFICATE GOVERN.

In the event of any inconsistency between the terms of these bylaws and the
Certificate, the terms of the Certificate will govern.

10.2 CONSTRUCTION; DEFINITIONS.

Unless the context requires otherwise, the general provisions, rules of
construction, and definitions in the DGCL shall govern the construction of these
bylaws. Without limiting the generality of this provision, the singular number
includes the plural, the plural number includes the singular, and the term
“person” includes both a corporation and a natural person.

10.3 SEVERABILITY.

In the event that any bylaw or the application thereof becomes or is declared by
a court of competent jurisdiction to be illegal, void or unenforceable, the
remaining bylaws will continue in full force and effect.

10.4 AMENDMENT.

Neither these Bylaws nor any provision herein may be amended, altered, or
repealed by the shareholders of the corporation, nor shall any provision of
these Bylaws of the corporation inconsistent with any such provision be

 

16

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adopted by the stockholders of the Corporation, unless approved by the
affirmative vote of at least seventy-five percent (75%) of the issued and
outstanding shares of Common Stock. These Bylaws may be amended, altered, or
repealed by the affirmative vote of at least seventy-five percent (75%) of the
whole Board of Directors at any regular or special meeting of the Board.

BOULDER SPECIALTY BRANDS, INC.

a Delaware corporation

CERTIFICATE OF ADOPTION OF BYLAWS

The undersigned hereby certifies that he or she is the duly elected, qualified,
and acting Secretary of Boulder Specialty Brands, Inc., a Delaware corporation,
and that the foregoing bylaws were adopted as the corporation’s bylaws by the
corporation’s board of directors effective June 10, 2005.

IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand this 22nd
day of June, 2005.

 

By:  

/s/ JAMES E. LEWIS

Print Name:   James E. Lewis Title:   Vice Chairman and Secretary

--------------------------------------------------------------------------------

Schedule 2.1(b)

Subsidiaries

BSB Acquisition Co., Inc.

The Company, pursuant to the terms of the Financing Letter, is required to
pledge the stock of its subsidiaries in support of its obligations in connection
with the transactions contemplated by the Financing Letter.

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Schedule 2.1(c)

Approvals

The transactions contemplated by the SB Merger Agreement and the transactions
contemplated by this Agreement and the Documents (including, without limitation,
the adoption of the Restated Certificate) require the approval of the Company’s
stockholders pursuant to:

1. The Delaware General Corporation Law.

2. The Company’s Certificate of Incorporation and bylaws.

3. Underwriting Agreement between the Company and Citigroup Global Markets,
Inc., as amended.

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Schedule 2.1(e)

Consents and Approvals

All approvals necessary for the consummation of the transactions contemplated by
the SB Merger Agreement.

All approvals necessary for the consummation of the transactions contemplated by
the Financing Letter.

Approval by the Commission of the Company’s proxy statement with respect to the
stockholders’ meeting.

Any filings required under Regulation D under the Securities Act of 1933.

Any “blue sky” filings in connection with the transactions contemplated hereby.

Any filing required of any Investor, including, without limitation, any
Hart-Scott-Rodino filing.

Any filings and approvals necessary in connection with the listing of the Common
Stock pursuant to Section 4.13 hereof.

Any filings and approvals necessary in connection with the registration of the
Registrable Shares, as defined in and required by the Registration Rights
Agreement.

Consent of the parties to the Founders Registration Rights Agreement to the
amendments set forth on Exhibit E.

--------------------------------------------------------------------------------

Schedule 2.1(f)

Capitalization

1,000,000 warrants issued under the Founder’s Warrant Agreement.

12,760,840 warrants issued under the Public Warrant Agreement.

Any stock option or stock grant plan adopted by the Company with the approval of
the Company’s Board of Directors and shareholders, as permitted pursuant to the
Agreement.

The existing shareholders of the Company have the right to convert their shares
of stock of the Company pursuant to Article XII of the Company’s Certificate of
Incorporation.

--------------------------------------------------------------------------------

Schedule 2.1(g)

Defaults

None

--------------------------------------------------------------------------------

Schedule 2.1 (h)

SEC Reports

As a result of its interpretation of EITF 00-19, the Company determined that it
was required to restate its financial statements to record liabilities arising
in connection with the issuance of the Redeemable Common Stock Purchase Warrants
of the Company which were sold with each share of the Company’s common stock in
its initial public offering. As a result, the Company filed a restated Form 10-Q
for the period ending March 31, 2006, a restated Form 10-K for the period ending
December 31, 2005, and a restated Form 8-K for the period ended December 21,
2005.

--------------------------------------------------------------------------------

Schedule 2.1(i)

Liabilities

Any and all indebtedness to be incurred, and fees and expenses payable, in
connection with the consummation of the transactions contemplated by the
Financing Letter.

All obligations of the Company pursuant to the SB Merger Agreement.

Any fees of third parties required to be paid by the Company pursuant to the
terms of this Agreement or any of the Documents.

The Company has agreed to pay professional fees and expenses of Goodwin &
Procter LLP of up to $50,000.00 incurred by Citigroup Global Markets, Inc. in
connection with a private offering of the Company’s securities.

The Company has incurred fees payable to a number of professional service firms,
including, without limitation, the following parties:

Alvarez & Marsal

Banc of America Securities, LLC

Citigroup Global Markets, Inc.

Core Communications Partners LLC

Davis & Kuelthau, S.C.

Duff & Phelps, LLC

Ehrhardt Keefe Steiner & Hottman, P.C.

Ellenoff Grossman & Schole LLP

Frederic Cook and Co.

Foley & Lardner

RR Donnelly

Amounts owed to Katherine Miano for administrative services

Pursuant to Statement of Financial Accounting Standards Number 5, the Company
may be required to record a liability with respect to certain contingent
liabilities arising under the existing Registration Rights Agreement. As of the
date hereof, the Company has determined that no such liability need be recorded,
however, the Company is required to periodically revisit the issue and the
Company may, in the future, determine that a liability must be recorded.

--------------------------------------------------------------------------------

Pursuant to EITF 00-19, the Company may have to record liabilities with respect
to the warrants being issued in connection with the redemption of the Series A
Preferred Stock and the conversion rights of the Series A Preferred Shares.

The Series A Preferred Shares outstanding may be required to be treated as
mezzanine financing for financial reporting purposes (however, the Series A
Preferred Shares will be treated as equity for tax purposes).

Obligation to pay Roth Capital Partners, LLC’s attorneys fees incurred in
connection with any dispute regarding fees payable as set forth in more detail
in note 5 to the Company’s financial statements attached to the Company’s Form
10-K for the period ending December 31, 2005.

Insurance premiums and related interest expense associated with the financing of
insurance premiums for the Company’s insurance policies.

Obligation to reimburse officers and directors for out-of -pocket expenses
incurred for the benefit of the Company.

Accrued federal income taxes, State of Colorado income taxes and Delaware
franchise taxes.

Obligation to pay those shareholders of the Company electing to convert some or
all of the shares of stock of the Company in connection with a stockholder vote
on a business combination, including pro rata share of interest earned in trust.

Obligations of the Company under the contracts listed on Schedule 2.1(o).

Any contingent liabilities disclosed in the footnotes to the latest audited
balance sheet included in the SEC Reports.

--------------------------------------------------------------------------------

Schedule 2.1(j)

Changes

See disclosures contained on Schedules 2.1(g), 2.1(h) and 2.1(i).

The Company will incur debt in connection with the consummation of the
transactions contemplated by the Financing Letter.

The assets of the Company and its subsidiaries will be subject to Encumbrances
pursuant to the documents executed in connection with the consummation of the
transactions contemplated by the Financing Letter.

The Company will issue shares of common stock, preferred stock and warrants
pursuant to the terms of the Securities Purchase Agreement to which this
schedule is attached.

The Company has requested confidential treatment with respect to a number of
matters from the Commission.

--------------------------------------------------------------------------------

Schedule 2.1(k)

Liens

The assets of the Company and its subsidiaries will be subject to Encumbrances
pursuant to the documents executed in connection with the consummation of the
transactions contemplated by the Financing Letter.

--------------------------------------------------------------------------------

Schedule 2.1(l)(ii)

Company Intellectual Property

Boulderspecialtybrands.com

The content of the Company’s website

--------------------------------------------------------------------------------

Schedule 2.1(l)(vii)

Intellectual Property - Work for Hire

No employee of the Company has executed an agreement described in
Section 2.1(l)(vii).

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Schedule 2.1(m)

Employees

Consultants may have claims for amount earned but not yet paid.

Chris Wolf may have a claim pursuant to the terms of his Consulting Agreement in
the event the Company does not hire him as an employee of the Company.

--------------------------------------------------------------------------------

Schedule 2.1(n)

ERISA

Any stock option or stock grant plan adopted as set forth on Schedule 2.1(f).

--------------------------------------------------------------------------------

Schedule 2.1(o)

Contracts

The Financing Letter.

Letter of Intent with SB, as extended.

Nondisclosure Agreement with SB.

Nondisclosure Agreements with various parties having access to confidential
information related to the SB Transaction.

The SB Merger Agreement.

Agreements with professional service providers, including the following
providers:

Banc of America Securities, LLC

Citigroup Global Markets, Inc.

Davis & Kuelthau, S.C.

Duff & Phelps, LLC

Ehrhardt Keefe Steiner & Hottman, P.C.

Ellenoff Grossman & Schole LLP

Frederic Cook and Co.

Foley & Lardner

RR Donnelley

Willis of Arizona

Engagement Letters with Duff & Phelps, LLC regarding issuance of fairness
opinion and purchase price allocation

Founders Warrant Agreement and warrants issued thereunder, as amended.

Public Warrant Agreement and warrants issued thereunder.

Registration Rights Agreement among the Company and the initial stockholders

Letter Agreement among the Company, Roth Capital Partners, LLC and Stephen B.
Hughes

--------------------------------------------------------------------------------

Letter Agreement among the Company, Roth Capital Partners, LLC and James E.
Lewis

Letter Agreement among the Company, Roth Capital Partners, LLC and William E.
Hooper

Letter Agreement among the Company, Roth Capital Partners, LLC and Robert F.
McCarthy

Letter Agreement among the Company, Roth Capital Partners, LLC and Michael R.
O’Brien

Letter Agreement among the Company, Roth Capital Partners, LLC and Gerald J.
Laber

Letter Agreement among the Company, Roth Capital Partners, LLC and John T.
Stofko

Letter Agreement among the Company, Roth Capital Partners, LLC and Caroline
Elise Hughes Irrevocable Trust

Letter Agreement among the Company, Roth Capital Partners, LLC and John Trevelyn
Hughes Irrevocable Trust

Letter Agreement among the Company, Roth Capital Partners, LLC and Henry Thomas
Hughes Irrevocable Trust

Letter Agreement among the Company, Roth Capital Partners, LLC and Stephen
Feldhaus

Letter Agreement among the Company, Roth Capital Partners, LLC and Janis M.
Lewis

Letter Agreement among the Company, Roth Capital Partners, LLC and Jeffrey R.
Nieder

Letter Agreement among the Company, Roth Capital Partners, LLC and Peter Mazula

Letter Agreement among the Company, Roth Capital Partners, LLC and Lee Anne
Lewis

Letter Agreement among the Company, Roth Capital Partners, LLC and Robert J.
Gillespie

Letter Agreement among the Company, Roth Capital Partners, LLC and Robyn L Duda

Letter Agreement among the Company, Roth Capital Partners, LLC and Earl E.
Hoellen

Letter Agreement among the Company, Citigroup Global Markets Inc. and Robert S.
Gluck

Indemnity Agreements with each of the Company’s officers and directors

Stock Escrow Agreement among the Company, the initial stockholders and
Continental Stock Transfer & Trust Company

Investment Management Trust Agreement by and between the Company and Continental
Stock Transfer & Trust Company

Noncompete Agreements with all officers and directors of the Company

--------------------------------------------------------------------------------

Letter Agreement among the Company, Hughes Consulting, Inc. and Jeltex Holdings,
LLC.

The Company has agreed to repay monetary advances made by Steven Hughes, James
Lewis, Robert Gluck, Robert Gillespie, William Hooper, Gerald Laber, John Stofko
and Robert McCarthy to or on behalf of the Company for travel, office and other
business expenses (as of June 30, 2006, the Company owed Hughes Consulting, Inc.
and Jeltex Holdings, LLC $65,161 pursuant to the Letter Agreement described
above and $70,932 to certain stockholders for travel and related expenses and
advances during the period commencing July 1, 2006, through the date of the
Agreement do not exceed $100,000).

Contractor Agreement by and between the Company and Christopher Wolf.

Underwriting Agreement between the Company and Citigroup Global Markets, Inc.,
as amended

Steven Hughes and James Lewis may be obligated in certain circumstances to
ensure that the proceeds in the trust account are not reduced by the claims of
various vendors that are owed money by the Company or other parties with which
the Company has contracted.

Insurance Policy YDCZ91440023015 (Property) - Employers Insurance Company of
Wausau

Insurance Policy YDCZ91440023015 (General Liability) - Employers Insurance
Company of Wausau

Insurance Policy YDCZ91440023015 (Automobile) - Employers Insurance Company of
Wausau

Insurance Policy EBU9039180 (Umbrella) - National Fire Insurance Company of
Pittsburgh (AIG)

Insurance Policy ELU09085605 (Directors & Officers) - XL Specialty Insurance
Company

Insurance Policy ELU09085705 (Directors & Officers - Side A) - XL Specialty
Insurance Company

Insurance Policy NHS620437 (Excess Directors & Officers) - RSUI Indemnity
Company

Obligation to pay Roth Capital Partners, LLC’s attorneys fees incurred in
connection with any dispute regarding fees payable as set forth in more detail
in note 5 to the Company’s financial statements attached to the Company’s Form
10-K for the period ending December 31, 2005.

This Agreement, the Documents and the Financing Letter all include restrictions
and limitations on the Company’s operation of its business.

The Nondisclosure Agreement with SB restricts the use and disclosure of
information obtained by the Company regarding SB and its business.

--------------------------------------------------------------------------------

Schedule 2.1(p)

Permits

None.

--------------------------------------------------------------------------------

Schedule 2.1(q)

Employees

Steven Hughes - Chief Executive Officer

James L. Lewis - Vice Chairman

Robert S. Gluck - Vice Chairman

--------------------------------------------------------------------------------

Schedule 2.1(r)

Litigation

See Note 6 to the Company’s Unaudited Financial Statements attached to the
Company’s Form 10-Q for the period ended June 30, 2006. In the event of a
controversy described therein, the Company may be obligated to pay certain legal
fees and expenses of up to $500,000.

--------------------------------------------------------------------------------

Schedule 2.1(s)

Taxes

Extension for 2005 state and federal income tax return until September 15, 2006.

--------------------------------------------------------------------------------

Schedule 2.1(t)

Related Party Transactions

Letter Agreement among the Company, Hughes Consulting, Inc. (an affiliate of
Steven Hughes) and Jeltex Holdings, LLC (an affiliate of James Lewis).

The Company has agreed to repay monetary advances made by certain stockholders
of the Company.

Robert S. Gluck and his consulting firm, Matthew Robert Associates, LLC, were
party to a letter agreement with the Company, which agreement was rescinded on
November 1, 2005.

--------------------------------------------------------------------------------

Schedule 2.1(w)

Compliance

The Company has not yet evaluated the internal control over financial reporting
or the disclosure controls and procedures of SB and its subsidiaries. The
Company will, as promptly as practicable following the consummation of the SB
Transaction, (i) evaluate such internal control and disclosure controls and
procedures and (ii) use commercially reasonable efforts to remedy any
deficiencies contained therein to comply with all applicable provisions of the
Exchange Act and the Sarbanes-Oxley Act of 2002 within all prescribed time
periods.

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Schedule 2.1(ff)

Registration Rights

Rights under the Founders Registration Rights Agreement