Document:

Unassociated Document

 

EMPLOYMENT, NON-COMPETITION

AND PROPRIETARY RIGHTS AGREEMENT

 

THIS EMPLOYMENT NON-COMPETITION AND PROPRIETARY RIGHTS AGREEMENT (the “Agreement”) is made as of this 4th day of August, 2011, by and between Vitacost.Com, Inc., a Delaware corporation (the “Company”), and Robert Wegner (the “Employee”).

 

RECITALS:

 

A.           The Company is engaged in the sale of nutritional supplements, vitamins, and other healthcare products;

 

B.           The Company desires to employ the Employee and Employee desires to be employed by the Company as its Chief Operating Officer (Exempt-Professional), subject to the terms, conditions and covenants hereinafter set forth; and

 

C.           As a condition of the Company employing the Employee, Employee has agreed not to divulge to the public the Company’s confidential information, not to solicit the Company’s vendors, customers or employees and not to compete with the Company, all upon the terms and conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the foregoing and the agreements, covenants and conditions set forth herein, the Employee and the Company hereby agree as follows:

 

ARTICLE I

 

EMPLOYMENT

 

1.1           Employment.  The Company hereby employs, engages and hires Employee, and Employee hereby accepts employment, as its Chief Operating Officer upon the terms and conditions set forth in this Agreement.  Employee is employed as and as such reports to the Company’s Chief Executive Officer, Jeffrey Horowitz. Employee’s responsibilities are outlined on the attached Exhibit A.

 

1.2           Activities and Duties During Employment.  Employee represents and warrants to the Company that Employee is free to accept employment with the Company and that Employee has no prior or other commitments or obligations of any kind to anyone else which would hinder or interfere with the acceptance and performance of the obligations under this Agreement.

 

Employee accepts the employment described in Article I of this Agreement and agrees to devote his exclusive full time and efforts to the faithful and diligent performance of the services described herein, including the performance of such other services and responsibilities as the Company may, from time to time, stipulate.  Notwithstanding the foregoing, Employee may:  (i) serve on the board of directors of other entities or serve in any capacity with any hobby, avocation, civic, educational, religious, professional or charitable activity or organization provided that such service does not materially interfere or conflict with his duties hereunder; and (ii) make and manage personal investments of his choice.  Employee shall comply with and be bound by the Company’s operating policies, procedures and practices in effect from time to time during the terms of his employment.

 

  

  

  

 

ARTICLE II

 

TERM

 

2.1           Term.  The term of employment under this Agreement shall be one (1) year, commencing as of the date of the Agreement (such term of employment, as it may be extended or terminated, is herein referred to as the “Employment Term”), which Employment Term shall automatically renew for additional one (1) year periods unless terminated by Employee or the Company by written notice not less than thirty (30) days prior to expiration of the then-current term.

 

2.2           Termination.  The Employment Term and Employment of Employee may be terminated as follows:

 

(a)           Automatically, without the action of either party, upon the death of the Employee.

 

(b)           By either party upon the Total Disability of the Employee.  The Employee shall be considered to have a Total Disability for purposes of this Agreement if he is unable by reason of accident or illness or mental disability to substantially perform his employment duties, and is expected to be in such condition for periods totaling six (6) months (whether or not consecutive), during any period of twelve (12) consecutive months.  The determination of whether a Total Disability has occurred shall be based on the determination of a physician selected by the Company.  Nothing herein shall limit the Employee’s right to receive any payments to which Employee may be entitled under any disability or employee benefit plan of the Company or under any disability or insurance policy or plan.  During a period of Total Disability prior to termination hereunder, Employee shall continue to receive his full compensation (including base salary and bonus) and benefits.

 

(c)           By the Employee upon thirty (30) days’ written notice to the Company.

 

(d)           By the Company “Without Cause,” and without notice which shall mean a termination of the Employee’s employment by the Company other than pursuant to the provisions of Section 2.2(a), Section 2.2(b) and Section 2.2(e) hereof.

 

(e)           By the Company for “Cause” (as defined below).

 

(f)           By the Employee with Good Reason (as defined in Section 2.7(b) of this Agreement).”

 

2.3           Cessation of Rights and Obligations:  Survival of Certain Provisions.  On the date of expiration or earlier termination of the Employment Term for any reason, all of the respective rights, duties, obligations and covenants of the parties, as set forth herein, shall except as specifically provided herein to the contrary, cease and become of no further force or effect as of the date of said termination, and shall only survive as expressly provided for herein.

 

  

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2.4           Cessation of Compensation.  In lieu of any severance under any severance plan that the Company may then have in effect, and subject to:  (i) the receipt of a full and unconditional release from Employee; and (ii) any amounts owed by the Employee to the Company under any contract, agreement or loan document entered into after the date hereof (including, but not limited to, loans made by the Company to the Employee), the Company shall pay to the Employee, and the Employee shall be entitled to receive, the following amounts within thirty (30) days of the date of termination of his employment in full satisfaction of any obligation to Employee for termination of this Agreement:

 

(a)           Voluntary Termination/Termination For Cause/Expiration of Term.  Upon:  (i) termination of the Employee’s employment pursuant to Sections 2.2(c) or (e); or (ii) the expiration of the Employment Term because the Employee elects not to extend the Employment Term, Employee shall be entitled to receive his base salary, bonus, benefits and expense reimbursements solely through the date of termination.

 

(b)           Death or Total Disability.  Upon the termination of the Employment Term by reason of the death or Total Disability of the Employee, the Employee (or, in the case of death, his estate) shall be entitled to receive in a lump sum his base salary through the date of death plus ninety (90) days, or date of determination of Total Disability plus one hundred eighty (180) days (which shall include any of his unused vacation pay), unpaid bonus (if any) based on the portion of the calendar year through the date the Employment Term ends hereunder based on the annual bonus, if any, paid in the immediately preceding calendar year and expense reimbursement through the date of death or Total Disability.

 

(c)           Without Cause.  If Employee’s employment is terminated Without Cause, Employee will be entitled to receive payment of severance benefits equal to amount to six (6) months’ Base Salary (subject to any applicable tax withholding) plus the portion of Employee's bonus earned if any based on the percentage of the calendar year through the date of termination of employment, multiplied by the bonus earned by the Employee in the immediate preceding calendar year. .  Payment will be made in a lump sum not more than thirty (30) days following the date of termination.

 

Provided that Employee makes a timely election to continue coverage under the Company’s group health plans pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), health insurance benefits with the same coverage (subject to Company’s right to change coverage as set forth in the last sentence of this Section) provided to Employee prior to the termination (e.g. medical, dental, optical, mental health) will be provided at the Company’s cost price to the Employee at the expense of the Employee for eighteen (18) months following the termination date, but not longer than until Employee is covered by comparable health insurance benefits from another employer or is otherwise ineligible for COBRA continuation coverage.  Nothing in this Section 2.4(c) shall restrict the ability of the Company or its successor from changing some or all of the terms of such health insurance benefits, the cost to participants or other features of such benefits; provided, however, that all similarly situated participants are treated the same.

 

2.5           Business Expenses.

 

(a)           Reimbursement.  The Company shall reimburse the Employee for all reasonable, ordinary, and necessary business expenses incurred by his in connection with the performance of his duties hereunder, including, but not limited to, ordinary and necessary travel expenses and entertainment expenses.  The reimbursement of business expenses will be governed by the policies for the Company and the terms otherwise set forth herein.

 

  

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(b)           Accounting.  The Employee shall provide the Company with an accounting of his expenses, which accounting shall clearly reflect which expenses were incurred for proper business purposes in accordance with the policies adopted by the Company and as such are reimbursable by the Company.  The Employee shall provide the Company with such other supporting documentation and other substantiation of reimbursable expenses as will conform to Internal Revenue Service or other requirements.  All such reimbursements shall be payable by the Company to the Employee within a reasonable time after receipt by the Company of appropriate documentation therefore.

 

2.6           Definitions.  For purposes of this Agreement, the following definitions will apply:

 

(a)           “Cause” for Employee’s termination will exist if the Company terminates Employee’s employment for any of the following reasons: (i) Employee willfully fails to substantially perform his duties hereunder (other than any such failure due to his physical or mental illness), and such willful failure is not remedied within forty five (45) days after written notice from the Company’s Chief Executive Officer, which written notice shall state that failure to remedy such conduct may results in an involuntary termination for Cause; (ii) Employee engages in willful and serious misconduct (including, but not limited to, an act of fraud or embezzlement) that has caused or is reasonably expected to result in material injury to the Company or any of its Affiliates; (iii) Employee is convicted of or enters a plea of guilty or nolo contendere to a:  (A) crime that materially adversely affects his ability to perform his duties on behalf of the Company; or (B)  felony; (iv) Employee engages in alcohol or substance abuse which adversely affects his ability to perform his duties; or (v) Employee willfully breaches any of his obligations hereunder or under any other agreement between herself and the Company, and such willful breach is not remedied within forty five (45) after written notice from the Company’s Chief Executive Officer, which written notice shall state that failure to remedy such conduct may result in an involuntary termination for Cause.

 

(b)           “Good Reason” for Employee’s termination of employment will be deemed to exist if any of the following occurs: (i) a material diminution in the Employee’s base compensation; (ii) a material diminution in the Employee’s authority, duties, or responsibilities; (iii) a material change in the executive level of the party  to whom the Employee is required to report; (iv) a material change in the geographic location at which the Employee must perform the services under this Agreement; or (v) any other action or inaction that constitutes a material breach by the Company of this Agreement or any other agreement between the Company and the Employee.  For purposes of these Agreements, Good Reason shall not be deemed to exist unless the Employee’s termination of employment for Good Reason occurs within one (1) year following the initial existence of one of the conditions specified in clauses (i) through (v) above, the Employee provides the Company with written notice of the existence of such condition within 90 days after the initial existence of the condition, and the Company fails to remedy the condition within 30 days after its receipt of such notice.”

 

(c)           “Change in Control” means any of the following:

 

(i)   The acquisition by any person of Beneficial Ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of more than fifty percent (50%) of either (A) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”) (the foregoing Beneficial Ownership hereinafter being referred to as a "Controlling Interest"); provided, however, that for purposes of this definition, the following acquisitions shall not constitute or result in a Change of Control: (x) any acquisition by the Company; (y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any subsidiary of the Company; or (z) any acquisition by any corporation pursuant to a transaction which complies with clauses (A) and (B) of subsection (iii) below; or

 

  

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(ii)  During any period of two (2) consecutive years (not including any period prior to the Commencement Date) individuals who constitute the Company’s board of directors on the Commencement Date (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Company’s board of directors; provided, however, that any individual becoming a director subsequent to the Commencement Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Company’s board of directors; or

 

(iii)  Consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Company or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or stock of another entity by the Company or any of its subsidiaries (each a “Business Combination”), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the Beneficial Owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, and (B) at least a majority of the members of the Board of Directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Company’s board of directors, providing for such Business Combination; or approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

 

  

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2.7           Change in Control of the Company.  If the Employee’s employment is terminated by the Company Without Cause pursuant to Section 2.2(d) hereof or by the Employee for Good Reason pursuant to Section 2.2(f) hereof, in either case during the twelve (12) month period immediately following the Change in Control, then in lieu of any amounts otherwise payable under Section 2.4(c) hereof, the Employee shall be entitled to the following:

 

 (i)           payment of (a) any accrued yet unpaid base salary through the date of termination, (b) any accrued yet unpaid bonus payable on account of any calendar year ending prior to the year in which the termination occurs, (c) benefits through the date of termination, (d) reimbursement of reimbursable expenses incurred prior to the date of termination, and (e) any vacation pay on account of unused vacation accruing prior to the date of termination; and

 

(ii)           a severance amount equal to 6 months at his then current base salary, which severance amount shall be paid in a lump sum within ten days following the termination of employment (subject to applicable withholding and employment taxes)

 

2.8           Compensation.  During Employee’s employment, the Company shall pay Employee such salary, bonus and other benefits and awards as set forth on Exhibit B.

 

2.9           Payment.  Except as otherwise provided herein, all compensation shall be payable in intervals in accordance with the general payroll payment practice of the Company.  The compensation shall be subject to such withholdings and deductions by the Company as are required by law.

 

2.10           Vacation.  The Employee shall be entitled to receive personal time off (“PTO”) as outlined in the company’s Employee Handbook. Any PTO time not taken during each year of the Employment Term shall carry over to the next year subject to a maximum amount of hours. See employee manual for specific details on the companies PTO policy

 

2.11           Relocation.  To assist the Employee in meeting the extraordinary expense of moving and relocation and as a further inducement to accept employment, the Company shall pay the Employee Twenty Five Thousand Dollars ($25,000) net of taxes.  In consideration for this sum, Employee agrees to remain in the employ of the Company for a period of twelve (12) months.  In the event that the Employee does not remain in the employ of the Company as a full-time employee for the full twelve-month period, the Employee will repay such relocation expenses, provided however, that the Company will prorate, on a monthly basis, the amount for repayment so that each month during with the Employee remained employed by the Company, the amount for repayment is reduced by one-twelfth (1/12) of the total reimbursement.  The Company, in its sole discretion, may waive such repayment if the Employee is separated for reason beyond the Employee’s control.

 

  

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2.12           Other Benefits.  Employee shall be entitled to participate in any retirement, pension, profit-sharing, stock option, health plan, insurance, disability income, incentive compensation and welfare or any other benefit plan or plans of the Company which may now or hereafter be in effect and for which the Employee is eligible or for which all senior executives in general are eligible.  Notwithstanding the forgoing, the Company shall be under no obligation to institute or continue the existence of any such benefit plan.

 

ARTICLE III

 

CONFIDENTIALITY, NON-SOLICITATION, NON-COMPETE

AND QUIT CLAIM AGREEMENT

 

3.1           Non-Disclosure of Confidential Information.  Employee hereby acknowledges and agrees that, as of a result of the employment hereunder, Employee will acquire, develop, and use information that is not generally known to the public or to the Company’s industry, including but not limited to, certain records, phone locations, documentation, software programs, price lists, customer lists, contract prices for the Company’s services, business plans and prospects of the Company, equipment configurations, ledgers and general information, employee records, mailing lists, manufacturing techniques, product formulations, accounts receivable and payable ledgers, financial and other records of the Company or its affiliates, and other  similar matters, as well as any information disclosed to the Company by any third party under which the Company has a confidentiality obligation to the third party (all such information pertaining to the Company, its affiliates or disclosed to Company under confidentiality from third parties being hereinafter referred to as “Confidential Information”).  Employee further acknowledges and agrees that the Confidential Information is of great value to the Company and its affiliates and that the restrictions and agreements contained in this Agreement are reasonably necessary to protect the Confidential Information and the goodwill of the Company.  Accordingly, Employee hereby agrees that:

 

(a)           Employee will not, while employed by the Company or for two years thereafter, directly or indirectly, except in connection with Employee’s performance of the duties under this Agreement, or as otherwise authorized in writing by the Company for the benefit of the Company or its “Affiliates” (as hereinafter defined), divulge to any person, firm, corporation, limited liability company, or organization, other than the Company or its Affiliates (hereinafter referred to as “Third Parties”), or use or cause or authorize any Third Parties to use, the Confidential Information, except as required by law; and

 

(b)           Upon the termination of Employee’s employment for any reason whatsoever, Employee shall deliver or cause to be delivered to the Company any and all Confidential Information, including drawings, notebooks, notes, records, keys, disks data and other documents and materials belonging to the Company or its Affiliates which is in his possession or under his control relating to the Company or its Affiliates or abstracts therefrom, regardless of the medium upon which it is stored, and will deliver to the Company upon such termination of employment any other property of the Company or its Affiliates which is in his possession or control.

 

  

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3.2           Non-Solicitation Covenant.  Employee hereby covenants and agrees that while employed by the Company and for a period of two (2) years following the termination of the Employee’s employment with the Company for any reason, Employee shall not:  (i) directly or indirectly, endeavor to entice away from the Company or its Affiliates any person, firm, corporation, limited liability company or other entity that was a customer of the Company at any time while Employee was an employee of the Company or its Affiliates or who is a “prospective vendor or customer” of the Company; or (ii) induce, attempt to induce or hire any employee (or any person who was an employee during the year preceding the date of any solicitation) of the Company or its Affiliates to leave the employ of the Company or its Affiliates or to otherwise perform services directly or indirectly for others, or in any way interfere with the relationship between any such employee and the Company or its Affiliates.  For purposes hereof, “prospective vendor or customer” shall mean any person or entity which has been solicited for business by Employee or any officer or other employee of the Company or its Affiliates at any time during Employee’s employment.

 

3.3           Non-Competition Covenant.  Employee acknowledges that the covenants set forth in this Section 3.3 are reasonable.  Employee also acknowledges that the enforcement of the covenants set forth in this Section 3.3 will not preclude Employee from being gainfully employed in such manner and to the extent as to provide a standard of living for herself, the members of his family and the others dependent upon him of at least the level to which he and they have become accustomed and may expect.  Employee hereby agrees that he shall not, during his employment and for a period of one (1) year after the end of his employment directly or indirectly, engage in any proprietorship, partnership, firms trust, company, limited liability company or other entity, other than the Company (whether as owner, partner, trustee, beneficiary, stockholder, member, officer, director, employee, independent contractor, agent, servant, consultant, manager, lessor, lessee, or otherwise) that competes with the Company in the Business of the Company in the Restricted Territory (as defined herein), other than acquiring an ownership interest in a company listed on a recognized Stock exchange in an amount which does not exceed five percent (5%) of the outstanding Stock of such corporation.  For purposes of this Agreement:  (i) the term “Business of the Company” shall include all business activities and ventures related to the sale of nutritional supplements, online and/or mail order sales vitamins and other healthcare products in which the Company is engaged, and all other businesses in which the Company subsequently is engaged in prior to, and on the date of, termination of Employee’s employment; and (ii) the term “Restricted Territory” means any state in the United States of America.

 

3.4           Remedies.

 

(a)           Injunctive Relief.  Employee expressly acknowledges and agrees that a violation of any of the provisions of Sections 3.1, 3.2 or 3.3 could cause immediate and irreparable harm, loss and damage to the Company not adequately compensable by a monetary award.  Employee further acknowledges and agrees that the time periods and territorial areas provided for herein are reasonable in order to adequately protect the Business of the Company, the enjoyment of the Confidential Information and the goodwill of the Company.  Without limiting any of the other remedies available to the Company at law or in equity, or the Company’s right or ability to collect money damages, Employee agrees that any actual or threatened violation of any of the provisions of Sections 3.1, 3.2, or 3.3 may be immediately restrained or enjoined by any court of competent jurisdiction, injunction may be issued in any court of competent jurisdiction, without notice and without bond.  Notwithstanding anything to the contrary contained in this Agreement, the provisions of this Article III shall survive the termination of Employee’s employment.

 

  

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(b)           Enforcement:  It is the desire of the parties that the provisions of Sections 3.1, 3.2, or 3.3 be enforced to the fullest extent permissible under the laws and public policies in each jurisdiction in which enforcement might be sought.  Accordingly, if any particular portion of Sections 3.1, 3.2 or 3.3 shall ever be adjudicated as invalid or unenforceable, or if the application thereof to any party or circumstance shall be adjudicated to be prohibited by or invalidated by such laws or public policies, such section or sections shall be:  (i) deemed amended to delete there from such portions so adjudicated; or (ii) modified as determined appropriate by such a court, such deletions or modifications to apply only with respect to the operation of such section or sections in the particular jurisdictions so adjudicating on the parties and under the circumstances as to which so adjudicated.

 

(c)           Legal Fees.  In any action to enforce the terms of this Agreement, the prevailing party shall be entitled to reimbursement from the other party of reasonable legal fees and costs.

 

3.5           Company.  All references to the Company in this Article III shall include “Affiliates” of the Company, as that term is construed under Rule 405 of the Securities Act of 1933, as amended.  Company acknowledges that, as of the date of this Agreement, the only Affiliate is Nutraceutical Sciences Institute.

 

ARTICLE IV

 

MISCELLANEOUS

 

4.1           Notices.  All notices or other communications required or permitted hereunder shall be in writing addressed to the last known address of the Party entitled to notice and shall be deemed given, delivered and received:  (a) when delivered, if delivered personally; (b) four (4) days after mailing, when sent by registered or certified mail, return receipt requested and postage prepaid; (c) one (1) business day after delivery to a private courier service, when delivered to a private courier service providing documented overnight service; and (d) on the date of delivery if delivered by telecopy, receipt confirmed, provided that a confirmation copy is sent on the next business day by first class mail, postage prepaid, in each case addressed as follows:

 

	
To Employee at:

	
The address set forth on the signature page hereof.

	
 

	  
	
To Company at:

	
Vitacost.com Inc.

5400 Broken Sound Blvd NW

Suite 500

Boca Raton, FL 33487

Attention:      Mary Marbach

Telephone:     561-982-4180

E-Mail:             Mary.Marbach@vitacost.com

	  	  

 

  

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Any party may change its address for purposes of this paragraph by giving the other party written notice of the new address in the manner set forth above.

 

4.2           Entire Agreement; Amendments, Etc.  This Agreement contains the entire agreement and understanding of the parties hereto, and supersedes all prior agreements and understandings relating to the subject matter hereof.  No modification, amendment, waiver or alteration of this Agreement or any provision or term hereof shall in any event be effective unless the same shall be in writing, executed by both parties hereto, and any waiver so given shall be effective only in the specific instance and for the specific purpose for which given.

 

4.3           Benefit.  This Agreement shall be binding upon, and inure to the benefit of,  and shall be enforceable by, the heirs, successors, legal representatives and permitted assignees of Employee and the successors, assignees and transferees of the Company.  This Agreement or any right or interest hereunder may not be assigned by Employee without the prior written consent of the Company.

 

4.4           No Waiver.  No failure or delay on the part of any party hereto in exercising any right, power or remedy hereunder or pursuant hereto shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy hereunder or pursuant thereto.

 

4.5           Severability.  Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law but, if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provision of this Agreement.  If any part of any covenant is unenforceable or the making of any covenant hereunder is unenforceable, the parties hereto agree, and it is their desire, that the court shall substitute a judicially enforceable limitation in its place, and that as so modified this Agreement, as so modified, shall be binding upon the parties as if originally set forth herein.

 

4.6           Compliance and Headings.  Time is of the essence of this Agreement.  The headings in this Agreement are intended to be for convenience and reference only, and shall not define or limit the scope, extent or intent or otherwise affect the meaning of any portion hereof.

 

4.7           Arbitration.  If there is any dispute between the parties concerning any matter relating to this Agreement, the exclusive basis for adjudication of this Agreement (except with respect to the performance of the covenants and obligations as set forth in Article III above) shall be by arbitration as detailed herein.  Either party may submit the dispute to binding arbitration.  Any such arbitration proceeding will be conducted in Palm Beach, Florida and except as otherwise provided in this Agreement, will be conducted under the auspices of JAMS/Mediation, Inc., in accordance with the then current Commercial Arbitration Rules of the American Arbitration Association.  The arbitrator shall allow such discovery as the arbitrator determines appropriate under the circumstances.  The arbitrator shall determine which party, if either, prevailed and shall award the prevailing party its costs.  Each party will bear its respective attorneys’ fees.  The award and decision of the arbitrator shall be conclusive and binding on all parties to this Agreement and judgment on the award may be entered in any court of competent jurisdiction.  The parties acknowledge and agree that any arbitration award may be enforced against either or both of them in a court of competent jurisdiction and each waives any right to contest the validity or enforceability of such award.  The parties further agree to be bound by the provisions of any statute of limitations which would be applicable in a court of law to the controversy or claim which is the subject of any arbitration proceeding initiated under the Agreement.  The parties further agree that they are entitled in any arbitration proceeding to the entry of an order, by a court of competent jurisdiction pursuant to an opinion of the arbitrator, for specific performance of any of the requirements of this Agreement.

 

  

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In any action to enforce any of the provisions of Article III hereof, the action shall be litigated in the state or federal courts situated in Palm Beach County, to which jurisdiction and venue all parties consent.  Each party hereby waives its right to trial by jury with respect to such action and agrees that the prevailing party such action shall be entitled to reimbursement from the other party of its legal fees and costs incurred in connection with such actions.  Company shall be entitled to injunctive relief, without the necessity of posting bond to remedy any breach of any of the terms of Article III of this Agreement by Employee.

 

4.8           Governing Law.  The parties agree that this Agreement shall be governed by, interpreted and construed in accordance with the laws of the State of Florida.

 

4.9           Counterparts.  This Agreement may be executed in one or more counterparts, whether by original, photocopy, facsimile or e-mail attachment in PDF format, each of which will be deemed an original and all of which together will constitute one and the same instrument.

 

4.10           Recitals.  The Recitals set forth above are hereby incorporated in and made a part of this Agreement by this reference.

 

4.11           Indemnification.  The Company shall indemnify and hold Employee harmless to the fullest extent permitted by law and under the Articles and bylaws of the Company as, to and from any and all costs, expenses (including reasonable attorneys’ fees, which shall be paid in advance by the Company, subject to recoupment in accordance with applicable law) or damages incurred by Employee as a result of any claim, suit, action or judgment arising out of the activities of the Company or its Affiliates or the Employee’s activities as an employee, officer or director of the Company or any related company; provided, however that the Employee shall not be entitled to indemnification hereunder to the extent the damages are the result of actions or omissions which have been finally adjudicated by a court of competent jurisdiction to constitute gross negligence or willful or intentional misconduct by the Employee.  This provision shall survive the termination of this Agreement.

 

4.12           Survival.  Employee’s obligations under Article III hereof shall survive any termination of this Agreement.

 

  

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COMPANY:

	  	
EMPLOYEE:

	  	  	  
	
Vitacost.com, Inc.

	  	  	  	  
	  	  	  	  	  
	  	  	  
	
By:

	
/s/ Jeffrey J. Horowitz

	  	
/s/ Robert Wegner

	  	
Jeffrey J. Horowitz

	  	
Robert Wegner

	  	
Chief Executive Officer

	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  
	  	  	
Employee Owned Inventions:

	
none

 

  

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Exhibit A

 

As may be determined by the Company.

 

  

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Exhibit B

 

Salary as of August 4, 2011 is $250,000 per annum ($4,807.70 per week).

 

Bonus equal to 50% of base salary, guaranteed and pro-rated in 2011.

 

A recommendation will be made to the Board of Directors to grant you 300,000 incentive stock options which shall vest over 5 years at 20% per year.  Such grant shall only be made (a) upon the approval of our 2011 Incentive Stock Option Plan by our stockholders at the Special Meeting of Stockholders to be held September 7, 2011 and (b) the approval of such grant by our Board of Directors.

 

  

14Unassociated Document

First Amendment to Amended and Restated Credit Agreement

 

This First Amendment to Amended and Restated Credit Agreement (herein, the “Amendment”) is entered into as of August 3, 2011 (the “First Amendment Effective Date”), among GFA Brands, Inc., a Delaware corporation (the “Borrower”), Smart Balance, Inc., a Delaware corporation (the “Parent”), as a Guarantor, the direct and indirect Subsidiaries of the Borrower from time to time party to the Credit Agreement (hereafter defined), as Guarantors (together with the Parent, the “Guarantors”), the several financial institutions from time to time party to this Agreement, as Lenders (the “Lenders”), and Bank of Montreal, a Canadian chartered bank acting through its Chicago branch, as Administrative Agent (the “Administrative Agent”).

 

Preliminary Statements

 

A.The Borrower, the Parent, the other Guarantors, the Lenders and the Administrative Agent are currently party to that certain Amended and Restated Credit Agreement dated as of March 31, 2011 (such Amended and Restated Credit Agreement, as the same has been amended prior to the date hereof, being referred to herein as the “Credit Agreement”).  All capitalized terms used herein without definition shall have the same meanings herein as such terms have in the Credit Agreement.

 

B.The Borrower has requested that the Lenders amend the Credit Agreement to add a new Borrower thereto and make certain other amendments to the Credit Agreement, and the Lenders are willing to do so under the terms and conditions set forth in this Amendment.

 

Now, Therefore, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

Section 1.                Permitted Acquisition.

 

The Lenders hereby confirm and agree that, upon satisfaction of the conditions precedent set forth in Section 4.1 below, the purchase by the Borrower, directly or indirectly, of all of the issued and outstanding capital stock of Importations DE-RO-MA (1983) Ltée, a corporation established pursuant to the laws of the Province of Québec (the “Glutino Acquisition”), as set forth in that certain Stock Purchase Agreement dated as of August 3, 2011 between 9249-2180 Québec Inc., a corporation established pursuant to the laws of Canada, and Stepworth Holdings Inc., a corporation established pursuant to the laws of Canada (the “Stock Purchase Agreement”), shall constitute a “Permitted Acquisition” for all purposes of the Credit Agreement and the other Loan Documents.

 

Exhibit 10.2 First Credit Agreement Amendment

 

  

  

  

 

Section 2.                Addition of New Borrower and New Guarantor.

 

2.1.        Each of the parties hereto hereby confirms and agrees that, upon the effectiveness of the conditions precedent set forth in Section 4.2 below, on or prior to the date  that is 10 Business Days after the First Amendment Effective Date (such date being the “Glutino Accession Date”), Glutino USA, Inc., a Delaware corporation (“Glutino”), shall execute a joinder substantially in the form of Exhibit J hereto (the “Credit Agreement Joinder”) and become a “Borrower” for all purposes of the Credit Agreement (the “Glutino Accession”).  At all times from and after the Glutino Accession Date, Glutino shall comply with each of the covenants set forth in Section 8 of the Credit Agreement applicable to it.  Without limiting the generality of the foregoing, Glutino hereby agrees to perform, at all times from and after the Glutino Accession Date, all the obligations of a Borrower under, and to be bound in all respects by the terms of, the Credit Agreement and the other Loan Documents to the same extent and with the same force and effect as if Glutino were a signatory party thereto.

 

2.2.        Each of the parties hereto hereby confirms and agrees that, on or prior to the date that is 10 Business Days after the First Amendment Effective Date (the “New Guarantor Accession Date”), the Borrower shall cause SB Glutino, L.P., a Delaware limited partnership (the “New Guarantor”) to satisfy the requirements of Section 4.3 below and become a “Guarantor” for all purposes of the Credit Agreement (the “New Guarantor Accession”).

 

2.3.        Each of the parties hereto hereby confirms and agrees that, notwithstanding anything to the contrary in the Credit Agreement or the other Loan Documents, (a) Glutino shall not be required to become a “Guarantor” under the Credit Agreement unless the Glutino Accession does not occur on or prior to the date that is 10 Business Days following the First Amendment Effective Date, (b) the New Guarantor shall not be required to become a “Guarantor” under the Credit Agreement prior to the date that is 10 Business Days following the First Amendment Effective Date and (c) the Borrower shall not be required to pledge any of the equity interests in the Glutino Subsidiaries, the Parent and the Borrower shall not be required to comply with the requirements of the Collateral Documents with respect to any of the Glutino Subsidiaries, and the Glutino Subsidiaries shall not be required to comply with the requirements to provide collateral, in each case, as required under the Credit Agreement and the other Loan Documents, until the date that is 10 Business Days following the First Amendment Effective Date.

 

Section 3.                Amendments.

 

3.1.         Subject to the satisfaction (or waiver by the Administrative Agent) of the conditions precedent set forth in Section 4.1 below, the Credit Agreement shall be and hereby is amended as follows:

(a)           Section 4.1 of the Credit Agreement is hereby amended in its entirety and as so amended shall be restated to read as follows:

Guaranties. The payment and performance of the Obligations, Hedging Liability, and Funds Transfer and Deposit Account Liability shall at all times be guaranteed by the Parent and each direct and indirect Domestic Subsidiary of the Borrower pursuant to Section 12 hereof or pursuant to one or more guaranty agreements in form and substance reasonably acceptable to the Administrative Agent, as the same may be amended, modified or supplemented from time to time (individually a “Guaranty” and collectively the “Guaranties” and each of the Parent and each such Domestic Subsidiary executing and delivering this Agreement as a Guarantor (including any Domestic Subsidiary hereafter executing and delivering an Additional Guarantor Supplement in the form called for by Section 12 hereof) or a separate Guaranty being referred to herein as a “Guarantor” and collectively the “Guarantors”); provided, for the avoidance of doubt, that a Foreign Subsidiary shall not be required to be a Guarantor hereunder.

  

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(b)           Section 4.2 of the Credit Agreement is hereby amended in its entirety and as so amended shall be restated to read as follows:

Collateral. The Obligations, Hedging Liability, and Funds Transfer and Deposit Account Liability shall be secured by (a) valid, perfected, and enforceable Liens on all issued and outstanding equity interests of the Borrower and its Subsidiaries and (b) valid, perfected, and enforceable Liens on all right, title, and interest of the Borrower and each Guarantor in all of their accounts, chattel paper, instruments, documents, general intangibles, letter-of-credit rights, supporting obligations, deposit accounts, investment property, inventory equipment, fixtures, commercial tort claims, real estate and certain other Property, whether now owned or hereafter acquired or arising, and all proceeds thereof; provided, however, that Liens on the Voting Equity of a Foreign Subsidiary shall be limited to 66% of the total outstanding Voting Equity of a first-tier Foreign Subsidiary (and no equity interests of any Subsidiary thereof); and provided further, that unless otherwise required by the Administrative Agent or the Required Lenders during the existence of an Event of Default: (i) Liens on local petty cash accounts maintained by the Borrower and the Guarantors in proximity to their operations need not be perfected provided that the total amount on deposit at any one time not so perfected shall not exceed $100,000 in the aggregate and Liens on payroll accounts maintained by the Borrower and the Guarantors need not be perfected provided the total amount on deposit at any time does not exceed at any time the then current amount of their payroll obligations, (ii) Liens on vehicles which are subject to a certificate of title law need not be perfected provided that the total value of such property at any one time not so perfected shall not exceed $250,000 in the aggregate, (iii) Liens on equipment located at facilities owned or maintained by the Borrower’s co-packers shall not be perfected to the extent that the book value of any such individual item of equipment does not exceed $50,000 and the book value of all such equipment does not exceed $1,000,000 in the aggregate, and (iv) except as otherwise required by Section 8.27 hereof, Liens will not be granted on patents, patent licenses, trademarks, trademark licenses and other intellectual property in each case registered in jurisdictions outside the United States of America. To the extent that the exceptions set forth in clauses (i), (ii),  or (iii) of the preceding sentence cease to apply as a result of the occurrence of a Default or Event of Default, such exceptions shall again be available to the Borrower and the Guarantors when such Default or Event of Default is cured or otherwise ceases to exist. The Borrower acknowledges and agrees that the Liens on the Collateral shall be granted to the Administrative Agent for the benefit of the holders of the Obligations, the Hedging Liability, and the Funds Transfer and Deposit Account Liability and shall be valid and perfected first priority Liens subject, however, to the proviso appearing at the end of the preceding sentence and to Liens permitted by Section 8.8 hereof, in each case pursuant to one or more Collateral Documents from such Persons, each in form and substance reasonably satisfactory to the Administrative Agent.

  

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(c)            Section 5.1 of the Credit Agreement is hereby amended by adding the following new defined terms thereto, appearing in appropriate alphabetical sequence:

“Glutino Acquisition” means the acquisition by GFA, directly or indirectly, of all of the issued and outstanding capital stock of Importations DE-RO-MA (1983) Ltée, a corporation established pursuant to the laws of the Province of Québec, the registered and beneficial owner of all of the issued and outstanding capital stock of Glutino USA, Inc., under and pursuant to that certain Stock Purchase Agreement dated as of August 3, 2011 between 9249-2180 Québec Inc., a corporation established pursuant to the laws of Canada, and Stepworth Holdings Inc., a corporation established pursuant to the laws of Canada.

“GFA Note” means that certain unsecured promissory note dated as of August 3, 2011 issued by 9249-2180 Québec Inc. to GFA pursuant to the transactions described in Schedule 8.28 hereof.

“Glutino Subsidiaries” means Glutino USA, Inc., SB Glutino, L.P., 9249-2180 Québec Inc. and 9249-2123 Québec Inc..

 

  

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(d)            The following defined terms set forth in Section 5.1 of the Credit Agreement are hereby amended in their entirety and as so amended shall be restated to read as follows:

“EBITDA” means, with reference to any period, Net Income for such period plus all amounts deducted in arriving at such Net Income amount in respect of (a) Interest Expense for such period, (b) federal, state, and local income and franchise taxes for such period, (c) depreciation of fixed assets and amortization of intangible assets for such period, (d) non-cash equity compensation, (e) non-cash warrant expenses, (f) any write off or amortization of deferred financing costs, (g) any other non-recurring expenses, losses and charges reducing Net Income which do not represent a cash item in such period or any future period, (h) special bonuses (in an aggregate amount not to exceed $1,000,000) paid to employees of any Glutino Subsidiary (to the extent not paid by any Borrower or Guarantor after the closing of the Glutino Acquisition), (i) expenses incurred in connection with the termination of hedging agreements of any Glutino Subsidiary (to the extent not paid by any Borrower or Guarantor after the closing of the Glutino Acquisition), (j) long-term incentive compensation for employees of any Glutino Subsidiary (to the extent not paid by any Borrower or Guarantor after the closing of the Glutino Acquisition), (k) costs and expenses incurred by any Glutino Subsidiary prior to the date of the Glutino Acquisition, which shall not be incurred after the consummation of the Glutino Acquisition (e.g., management fees), (l) integration expenses (including severance, relocation, plant consolidation and related items) arising from the Glutino Acquisition in an aggregate amount not to exceed $2,000,000; provided, however, such integration expenses must be incurred and paid prior to the third anniversary of the consummation of the Glutino Acquisition, (m) transaction expenses and charges incurred by the Parent or any Subsidiary directly relating to the Glutino Acquisition in an aggregate amount not to exceed $5,000,000, (n) other transaction expenses and charges incurred by any Glutino Subsidiary directly relating to the Glutino Acquisition (1) to the extent not directly or indirectly paid by the Borrower or any Guarantor after the date of the Glutino Acquisition or (2) that are otherwise reasonably acceptable to the Administrative Agent, (o) non-cash purchase accounting charges incurred during such period, (p) non-cash losses arising from mark-to-market adjustments of hedging transactions permitted hereunder and (p) the cumulative effect of changes in accounting principles as required by GAAP, minus (q) non-cash gains arising from mark-to-market adjustments of hedging transactions permitted hereunder; provided that for the purposes of calculating the Total Funded Debt/EBITDA Ratio and the ratio set forth in Section 8.23(b) hereof as of the end of each fiscal quarter of the Parent for the four fiscal quarter period then ended, (x) for any Permitted Acquisition other than the Glutino Acquisition, the EBITDA for any Acquired Business acquired by the Parent or any Subsidiary pursuant to a Permitted Acquisition during such four fiscal quarter period shall be included on a pro forma basis for such four fiscal quarter period (assuming the consummation of such acquisition and the incurrence or assumption of any Indebtedness for Borrowed Money in connection therewith occurred as of the first day of such four fiscal quarter period) and (y) with respect to the Glutino Acquisition, the “EBITDA” for the Glutino Subsidiaries to be consolidated with the EBITDA of the Parent for the fiscal quarters of the ending June 30, 2011, March 31, 2011, December 31, 2010 and September 30, 2010 shall for all purposes of this Agreement be deemed to be $489,000, $2,056,000, $2,352,000, and $1,755,000, respectively.

 

  

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“GAAP” means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or agencies with similar functions of comparable stature and authority with respect to any Domestic Subsidiary (or, with respect to any Foreign Subsidiary, generally accepted accounting principles in the opinions and pronouncements of equivalent organizations in such Foreign Subsidiary’s jurisdiction of organization), which are applicable to the circumstances as of the date of determination, consistently applied.

 

“Intercompany Agreements” means and includes the Management and Administrative Services Agreement, the Tax Sharing Agreement and all other agreements, instruments and other documents described in Schedule 8.28 hereto or directly related thereto.

 

“Management and Administrative Services Agreement” means that certain Management and Administrative Services Agreement dated as of May 21, 2007, by and between the Parent and GFA.

 

“Tax Sharing Agreement” means that certain Tax Sharing Agreement dated as of August 3, 2011, by and among the Parent, GFA and Glutino.

 

(e)Section 8.1 of the Credit Agreement is hereby amended in its entirety and as so amended shall be restated to read as follows:

 

Section 8.1.   Maintenance of Business.  Each of the Parent and the Borrower shall, and shall cause each Subsidiary to, preserve and maintain its existence, except as otherwise provided in Section 8.10(c) hereof.  Each of the Parent and the Borrower shall, and shall cause each Subsidiary to, preserve and keep in force and effect all licenses, permits, franchises, approvals, patents, trademarks, trade names, trade styles, copyrights, and other proprietary rights necessary to the proper conduct of its business where the failure to do so could reasonably be expected to have a Material Adverse Effect.  Notwithstanding the foregoing, following the sale, transfer, lease or other disposition of all of the Property of any Guarantor to the Borrower or any other Guarantor, such Guarantor may dissolve in accordance with the terms of its organizational documents.

 

  

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(f)      Clause (b) of Section 8.7 of the Credit Agreement is hereby amended by deleting the number “$5,000,000” and inserting the number “$6,500,000” in lieu thereof.

 

(g)     Clause (e) of Section 8.7 of the Credit Agreement is hereby amended in its entirety and as so amended shall be restated to read as follows:

 

(e)intercompany advances from time to time owing by any Subsidiary to the Parent or another Subsidiary or by the Parent to a Subsidiary in the ordinary course of business; provided, however, that the aggregate amount of all intercompany advances made from the Borrower or any Guarantor to any Subsidiary that is not a Guarantor (other than any amounts due and outstanding under the Intercompany Agreements and any advance to any Subsidiary for the purpose of making Capital Expenditures pursuant to Section 8.23(c)) shall not exceed $10,000,000 at any time outstanding;

 

(h)     Clause (f) of Section 8.7 of the Credit Agreement is hereby amended by deleting the number “$10,000,000” and inserting the number “$15,000,000” in lieu thereof.

 

(i)      Clause (l) of Section 8.7 of the Credit Agreement is hereby amended by deleting the number “$2,500,000” and inserting the number “$4,000,000” in lieu thereof.

 

(j)      Clause (j) of Section 8.8 of the Credit Agreement is hereby amended by deleting the words “the Borrower and the Guarantors” and inserting the words “the Borrower or any Subsidiary” in lieu thereof.

 

(k)     Clause (l) of Section 8.8 of the Credit Agreement is hereby amended by deleting the words “the Borrower or any Guarantor” and inserting the words “the Borrower or any Subsidiary” in lieu thereof.

 

(l)      Clause (m) of Section 8.8 of the Credit Agreement is hereby amended in its entirety and as so amended shall be restated to read as follows:

 

(m)    Liens arising from precautionary UCC filings (or similar registrations in foreign jurisdictions) regarding “true” operating leases or the consignment of goods to the Borrower or any Subsidiary; and

 

  

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(m)    Clause (f) of Section 8.9 of the Credit Agreement is hereby amended in its entirety and as so amended shall be restated to read as follows:

 

(f)the Borrower’s investments from time to time in its Subsidiaries, the Parent’s investments from time to time in any Borrower or any Guarantor, and investments made from time to time by a Subsidiary in one or more of its Subsidiaries; provided, however, that the aggregate amount of such investments made from the Borrower or any Guarantor to any Subsidiary that is not a Guarantor (other than any amounts due and outstanding under the Intercompany Agreements and) shall in no event exceed $10,000,000 at any time outstanding;

 

(n)    Clause (g) of Section 8.9 of the Credit Agreement is hereby amended in its entirety and as so amended shall be restated to read as follows:

 

(g)intercompany advances made from time to time by the Parent or a Subsidiary to another Subsidiary or by a Subsidiary to the Borrower in the ordinary course of business; provided, however, that the aggregate amount of intercompany advances made from the Borrower or any Guarantor to any Subsidiary that is not a Guarantor (other than any amounts due and outstanding under the Intercompany Agreements and any advance to any Subsidiary for the purpose of making Capital Expenditures pursuant to Section 8.23(c)) shall not exceed $10,000,000 at any time outstanding;

 

(o)    Clause (k) of Section 8.9 of the Credit Agreement is hereby amended by inserting the words “or any Subsidiary” immediately following the words “by the Borrower” and immediately preceding the words “in interest rate”.

 

(p)Section 8.9 of the Credit Agreement is hereby amended by inserting a new clause (p) immediately following the existing clause (o):

 

(p)any other investment and/or advance made for the purpose of making a Capital Expenditure or that otherwise constitutes a Capital Expenditure, in each case that is otherwise permitted under Section 8.23(c).

 

(q)Clause (c) of Section 8.10 of the Credit Agreement is hereby amended in its entirety and as so amended shall be restated to read as follows:

 

  

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(c)(i) the merger of any Guarantor or Subsidiary with and into the Borrower or any other Guarantor, provided that, in the case of any merger involving the Borrower, the Borrower is the corporation surviving the merger; or (ii) the merger of any Subsidiary that is not a Guarantor with and into any other Subsidiary that is not a Guarantor.

 

(r)Clause (e) of Section 8.10 of the Credit Agreement is hereby amended by deleting the words “the Borrower or the Guarantor” and inserting the words “the Borrower or any Subsidiary” in lieu thereof.

 

(s)Clause (k) of Section 8.10 of the Credit Agreement is hereby amended by deleting the words “the Borrower or any Guarantor” and inserting the words “the Borrower or any Subsidiary” in lieu thereof.

 

(t)Clause (o) of Section 8.10 of the Credit Agreement is hereby amended in its entirety and as so amended shall be restated to read as follows:

 

(o)the sale, transfer, lease or other disposition of Property of the Borrower or any Subsidiary (including any disposition of Property as part of a sale and leaseback transaction) aggregating for the Borrower and its Subsidiaries not more than $1,000,000 during any fiscal year of the Borrower;

 

(u)    Clause (p) of Section 8.10 of the Credit Agreement is hereby amended in its entirety and as so amended shall be restated to read as follows:

 

(p)disposition of Property that does not use (i) the “Earth Balance”, “Smart Balance”, “Best Life” or “Glutino” trademark or (ii) technology that is subject to any license agreement existing on the date hereof; and

 

(v)     Section 8.17 of the Credit Agreement is hereby amended in its entirety and as so amended shall be restated to read as follows:

 

No Changes in Fiscal Year. The fiscal year of the Parent, the Borrower and its Subsidiaries ends on December 31 of each year; and the Borrower shall not, nor shall it permit any Subsidiary to, change its fiscal year from its present basis without the prior written consent of the Administrative Agent.  Notwithstanding the foregoing, the parties hereto hereby acknowledge and agree that the fiscal year of one or more of the Glutino Subsidiaries ends on March 31 of each year and that the Borrower shall be permitted to take such action as may be required so that any such fiscal year ends on December 31 of each year.

 

  

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(w)    Clause (c) of Section 8.23 of the Credit Agreement is hereby amended by adding the following sentence at the end thereof, to read as follows:

 

Notwithstanding the foregoing and in addition thereto, the Parent, the Borrower and its Subsidiaries shall be permitted to incur additional Capital Expenditure in an aggregate amount not to exceed $8,500,000 at any time on or prior to December 31, 2012.

 

(x)     Section 8.24 of the Credit Agreement is hereby amended in its entirety and as so amended shall be restated to read as follows:

 

Operating Accounts.  Each of the Parent, the Borrower and their Subsidiaries (other than any Foreign Subsidiary) shall maintain with the Administrative Agent (or one of its Affiliates) or another Lender or one of its Affiliates as its primary depository bank, including for its principal operating, administrative, cash management, collection activity, and other deposit accounts for the conduct of its business; provided that at all times from and after the Closing Date (or, in the case of any such accounts maintained by a Glutino Subsidiary that is not a Foreign Subsidiary, at all times from after November 2, 2011), such accounts are subject to deposit account control agreements in favor of Administrative Agent on terms reasonably satisfactory to Administrative Agent, including that, upon the occurrence and during the continuation of an Event of Default, no other party other than the Administrative Agent, including the Borrower, shall otherwise have control over such deposit account.

 

(y)    Section 8.27 of the Credit Agreement is hereby amended by deleting the number “5%” and inserting the number “10%” in lieu thereof.

 

(z)Section 8 of the Credit Agreement is hereby amended by adding a new Section 8.28 thereto, to read as follows:

 

Section 8.28.  Glutino Acquisition.  Notwithstanding anything contained herein or in any other Loan Document to the contrary, the parties hereto agree that the Parent, the Borrower and its Subsidiaries shall be permitted to consummate each of the transactions described in Schedule 8.28 hereof and to execute, deliver and perform its obligations under any agreements, instruments or other documents described therein or otherwise reasonably necessary or appropriate in connection therewith.

 

(aa)   Schedule 5.1 to the Credit Agreement is hereby amended in its entirety and as so amended shall be replaced with Schedule 5.1 to this Amendment.

 

  

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(bb)  The Credit Agreement is hereby amended by adding a new Schedule 8.28, to read as set forth in Schedule 8.28 to this Amendment.

 

3.2.   Subject to the satisfaction (or waiver by the Administrative Agent) of the conditions precedent set forth in Section 4.2 below, the Credit Agreement shall, as of the Glutino Accession Date, be amended as follows:

 

(a)The first sentence appearing in the introductory paragraph of the Credit Agreement shall be amended in its entirety, and as so amended shall be restated to read as follows:

 

This Amended and Restated Credit Agreement is entered into as of March 31, 2011, by and among GFA Brands, Inc., a Delaware corporation (“GFA”), Glutino USA, Inc., a Delaware corporation (“Glutino,” and together with GFA, the “Borrowers”), Smart Balance, Inc., a Delaware corporation (the “Parent”), as a Guarantor, the direct and indirect Subsidiaries of the Borrowers from time to time party to this Agreement, as Guarantors, the several financial institutions from time to time party to this Agreement, as Lenders, and Bank of Montreal, a Canadian chartered bank acting through its Chicago branch, as Administrative Agent as provided herein. 

  

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 (b)Section 13 of the Credit Agreement shall be amended by adding a new Section 13.27 and a new 13.28 thereto, to read as follows:

 

Section 13.27.  Joint and Several.  Each of the Borrowers (each a “Borrower Loan Party”) hereby acknowledge and agree that each reference to “Borrower” in this Agreement shall be deemed a reference to each Borrower Loan Party collectively and each Borrower Loan Party hereby acknowledge and agree that it has joint and several liability on the Loans, Notes, Reimbursement Obligations and on all obligations owed by the Borrower under this Agreement and that such liability is absolute and unconditional and shall not in any manner be affected or impaired by any of acts or omissions whatsoever by the Lenders, and without limiting the generality of the foregoing, each Borrower Loan Party’s joint and several liability on the Loans, Notes, Reimbursement Obligations and under this Agreement shall not be impaired by any acceptance by the Lenders of any other security for or guarantors upon the Loans, Notes, Reimbursement Obligations or any obligations under this Agreement or by any failure, neglect or omission on the Lenders’ part to resort to any one or all of the Borrower Loan Parties for payment of the Loans, Notes, Reimbursement Obligations or the obligations under this Agreement or to realize upon or protect any collateral security therefor.  Each Borrower Loan Party’s joint and several liability on the Loans, Notes, Reimbursement Obligations and under this Agreement shall not in any manner be impaired or affected by who receives or uses the proceeds of the Loans, Reimbursement Obligations or for what purposes such proceeds are used, and each Borrower Loan Party waives notice of borrowing requests issued by, and loans made to, other Borrower Loan Parties.  Such joint and several liability of each Borrower shall also not be impaired or affected by (and each Lender, without notice to anyone, is hereby authorized to make from time to time) any sale, pledge, surrender, compromise, settlement, release, renewal, extension, indulgence, alteration, substitution, exchange, change in, modification or disposition of any collateral security for the Loans, Notes, Reimbursement Obligations or the obligations under this Agreement or of any guaranty thereof.  In order to enforce payment of the Loans, Notes, Reimbursement Obligations and the Borrower Loan Parties’ obligations under this Agreement, foreclose or otherwise realize on any collateral security therefor, and to exercise the rights granted to the Administrative Agent hereunder and thereunder and under applicable law, the Administrative Agent shall be under no obligation at any time to first resort to any collateral security, property, liens or any other rights or remedies whatsoever, and the Lenders shall have the right to enforce the Loans, Notes, Reimbursement Obligations and the Borrower Loan Parties’ obligations under this Agreement irrespective of whether or not other proceedings or steps are pending seeking resort to or realization upon or from any of the foregoing.  By its acceptance below, each Borrower Loan Party hereby expressly waives and surrenders any defense to its joint and several liability on the Loans, Notes or Reimbursement Obligations under this Agreement based upon any of the foregoing.  In furtherance thereof, each Borrower Loan Party agrees that wherever in this Agreement it is provided that a Borrower Loan Party is liable for a payment such obligation is the joint and several obligation of each Borrower Loan Party.

 

Section 13.28.  Appointment and Authorization of GFA.  Glutino irrevocably appoints and authorizes GFA to take such action as agent on its behalf and to exercise such powers under the Loan Documents as are delegated to GFA by the terms thereof, together with all such powers as are reasonably incidental thereto.  Each Borrower Loan Party irrevocably agrees that the Lenders and Administrative Agent may conclusively rely on the authority of GFA in exercising the powers granted to it by the terms of this Agreement.

 

  

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(c)     Exhibit A to the Credit Agreement shall be amended in its entirety and as so amended shall be replaced with Exhibit A to this Amendment.

 

(d)    Exhibit B to the Credit Agreement shall be amended in its entirety and as so amended shall be replaced with Exhibit B to this Amendment.

 

(e)     Exhibit C to the Credit Agreement shall be amended in its entirety and as so amended shall be replaced with Exhibit C to this Amendment.

 

(f)     Each of Exhibit D-1, Exhibit D-2 and Exhibit D-3 to the Credit Agreement shall be amended in its entirety and as so amended shall be replaced with Exhibit D-1, Exhibit D-2 and Exhibit D-3, respectively, to this Agreement.

 

(g)    Exhibit E to the Credit Agreement shall be amended in its entirety and as so amended shall be replaced with Exhibit E to this Amendment.

 

(h)    Exhibit F to the Credit Agreement shall be amended in its entirety and as so amended shall be replaced with Exhibit F to this Amendment.

 

(i)      Exhibit G to the Credit Agreement shall be amended in its entirety and as so amended shall be replaced with Exhibit G to this Amendment.

 

(j)      Exhibit H to the Credit Agreement shall be amended in its entirety and as so amended shall be replaced with Exhibit H to this Amendment.  

 

(k)     Schedule 6.2 to the Credit Agreement is hereby amended in its entirety and as so amended shall be replaced with Schedule 6.2 to this Amendment.

 

Section 4.                Conditions Precedent.

 

4.1.   The effectiveness of this Amendment is subject to the satisfaction (or waiver by the Administrative Agent) of all of the following conditions precedent:

 

(a)     GFA, the Guarantors, the Required Lenders, and the Administrative Agent shall have executed and delivered this Amendment;

 

(b)    the Administrative Agent shall have received for the ratable account of each Lender that executes and delivers this Amendment on or prior to 12:00 Noon Central time on August 1, 2011, payment of the amendment fee agreed to in writing between GFA and the Administrative Agent;

 

(c)    the Administrative Agent shall have received a certificate, substantially in the form of Exhibit I to this Amendment, as to the solvency of the Parent and its Subsidiaries on a consolidated basis after giving effect to the Glutino Acquisition;

 

  

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(d)    the Administrative Agent shall have received copies of resolutions of GFA’s Board of Directors (or similar governing body) authorizing the execution, delivery and performance of this Amendment and the consummation of the transactions contemplated hereby, together with specimen signatures of the persons authorized to execute such documents on GFA’s behalf, all certified in each instance by its Secretary or Assistant Secretary;

 

(e)    the Administrative Agent shall have received copies of the certificates of good standing for each of GFA and Smart Balance (dated no earlier than thirty (30) days prior to the First Amendment Effective Date) from the office of the secretary of state of the state of its incorporation or organization;

 

(f)     the Administrative Agent shall have received financing statement, tax, and judgment lien search results against the Property of Glutino and its Subsidiaries evidencing the absence of Liens on their Property (other than those permitted under Section 8.8 of the Credit Agreement, as amended hereby, and any such Liens that will be terminated and released in connection with the consummation of the Glutino Acquisition);

 

(g)    the Administrative Agent shall have received the favorable written opinion of counsel to GFA in form and substance reasonably satisfactory to the Administrative Agent; and

 

(h)    the Administrative Agent shall have received for the account of the Lenders copies (executed or certified, as may be appropriate) of all legal documents or proceedings taken in connection with the execution and delivery of this Amendment and such other agreements, instruments, documents, certificates, and opinions as the Administrative Agent or its counsel may reasonably request, each in form and substance reasonably satisfactory to the Administrative Agent.

 

4.2.    The effectiveness of the Glutino Accession is subject, except as otherwise set forth below, to the satisfaction (or waiver by the Administrative Agent) of all of the following conditions precedent:

 

(a)     the Administrative Agent shall have received an executed Stock Purchase Agreement and any other related agreement entered into in connection with the Glutino Acquisition;

 

(b)    the Administrative Agent shall have received a certificate confirming that each of the representations and warranties set forth in Section 6 of the Credit Agreement are true and correct as to Glutino as of the Glutino Accession Date;

 

(c)the Administrative Agent shall have received copies of resolutions of Glutino’s Board of Directors (or similar governing body) authorizing the execution, delivery and performance of the Credit Agreement, the other Loan Documents, the Assumption and Supplemental Security Agreement and the consummation of the transactions contemplated thereby, together with specimen signatures of the persons authorized to execute such documents on Glutino’s behalf, all certified in each instance by its Secretary or Assistant Secretary;  

 

  

-14-

  

 

(d)     the Administrative Agent shall have received for each Lender such Lender’s duly executed replacement Notes of GFA and Glutino dated the date hereof and otherwise in compliance with the provisions of Section 1.11 of the Credit Agreement;

 

(e)the Administrative Agent shall have received copies of Glutino’s articles of incorporation and bylaws (or comparable organizational documents) and any amendments thereto, certified by its Secretary or Assistant Secretary or other appropriate officer;

 

(f)the Administrative Agent shall have received a Collateral Assignment of Material Contracts and an Assumption and Supplemental Security Agreement duly executed by GFA, Glutino and the Guarantors, together with (i) original stock certificates or other similar instruments or securities representing all of the issued and outstanding shares of capital stock or other equity interests (to the extent certificated) in each Subsidiary (66% of such capital stock in the case of any Foreign Subsidiary (the term “Foreign Subsidiary”, for the avoidance of doubt shall be deemed to include Newco Canada (as defined in Schedule 8.28 hereto) and New Target Sub (as defined in Schedule 8.28 hereto)), (ii) stock powers for the Collateral consisting of the stock or other equity interests (to the extent certificated) in each Subsidiary executed in blank and undated, and (iii) UCC financing statements to be filed against Glutino, as debtor, in favor of the Administrative Agent, as secured party, as applicable;

 

(g)the Administrative Agent shall have received evidence of insurance from Glutino required to be maintained under the Loan Documents, naming the Administrative Agent as mortgagee and loss payee;

 

(h)the Administrative Agent shall have received for each Lender a list of each of Glutino’s Authorized Representatives;

 

(i) the Administrative Agent shall have received the favorable written opinion of counsel to Glutino in form and substance reasonably satisfactory to the Administrative Agent;

 

(j) the Administrative Agent shall have received a copy of the certificate of good standing for Glutino (dated no earlier than thirty (30) days prior to the date which is 10 Business Days following the First Amendment Effective Date) from the office of the secretary of state of the state of its incorporation or organization; and

 

(k)except as otherwise set forth in this Amendment (including, without limitation, Section 4.3 below), GFA and Glutino shall execute such Collateral Documents (or amendments thereto) as the Administrative Agent may reasonably require, and GFA and Glutino shall deliver to the Administrative Agent, at their own cost and expense, such other instruments, documents, certificates reasonably required by the Administrative Agent in connection therewith; provided that, notwithstanding the foregoing, the parties hereto agree that GFA and Glutino shall be permitted to deliver updated schedules to the Collateral Documents (reflecting the Glutino Acquisition) to the Administrative Agent at any time on or prior to September 2, 2011.

 

4.3.    The Parent and GFA shall cause the New Guarantor to deliver the following items on the New Guarantor Accession Date:

 

  

-15-

  

 

(a)the Administrative Agent shall have received with respect to the New Guarantor (i) an executed Assumption and Supplemental Security Agreement in form and substance satisfactory to the Administrative Agent, (ii) an executed Additional Guarantor Supplement in form and substance satisfactory to the Administrative Agent, (iii) resolutions of the New Guarantor’s Board of Directors (or similar governing body) authorizing the execution, delivery and performance of the Loan Documents to which it is a party and the consummation of the transactions contemplated thereby, certified by its Secretary or Assistant Secretary or other appropriate officer and otherwise in form and substance satisfactory to the Administrative Agent, (iv) copies of the organizational documents of the New Guarantor certified by its Secretary or Assistant Secretary or other appropriate officer, (v) copies of the certificates of good standing for the New Guarantor (or equivalents thereof dated no earlier than thirty (30) days prior to the First Amendment Effective Date), (vi) a legal opinion of counsel to the New Guarantor in form and substance satisfactory to the Administrative Agent and (vii) such other documents as may be required by the terms of Section 4 of the Credit Agreement with respect to such New Guarantor.

 

Section 5.                Representations.

 

In order to induce the Lenders to execute and deliver this Amendment:

 

5.1.GFA hereby represents to the Lenders that as of the date hereof this Amendment has been duly authorized, executed and delivered thereby.

 

5.2.GFA hereby represents to the Lenders that as of the date hereof (i) no Default or Event of Default has occurred and is continuing under the Credit Agreement or shall result after giving effect to this Amendment and (b) the representations and warranties set forth in Section 6 of the Credit Agreement are true and correct (except that the representations contained in Section 6.5 shall be deemed to refer to the most recent financial statements delivered to the Administrative Agent pursuant thereto) in all material respects and that any other representations and warranties which relate to a specific date are true and correct as of such date.

 

Section 6.                Miscellaneous.

 

6.1.Notwithstanding anything in the Credit Agreement (including, without limitation, Section 11.12 thereof) to the contrary, by the execution and delivery of this Amendment, the Lenders hereby authorize the Administrative Agent to take such action (and execute and deliver such documents, including amendments to the Collateral Documents) on the Lenders’ behalf as the Administrative Agent determines is reasonably necessary or appropriate, in its sole discretion, to carry out its obligations under Sections 4.1, 4.2 and 4.3 above.

 

6.2.GFA heretofore executed and delivered to the Administrative Agent the Security Agreement and certain other Collateral Documents. GFA hereby acknowledges and agrees that the Liens created and provided for by the Collateral Documents continue to secure, among other things, the Obligations arising under the Credit Agreement as amended hereby; and the Collateral Documents and the rights and remedies of the Administrative Agent thereunder, the obligations of GFA thereunder, and the Liens created and provided for thereunder remain in full force and effect and shall not be affected, impaired or discharged hereby.  Nothing herein contained shall in any manner affect or impair the priority of the liens and security interests created and provided for by the Collateral Documents as to the indebtedness which would be secured thereby prior to giving effect to this Amendment.

 

  

-16-

  

 

6.3.Except as specifically amended herein, the Credit Agreement shall continue in full force and effect in accordance with its original terms.  Reference to this specific Amendment need not be made in the Credit Agreement, the Notes, or any other instrument or document executed in connection therewith, or in any certificate, letter or communication issued or made pursuant to or with respect to the Credit Agreement, any reference in any of such items to the Credit Agreement being sufficient to refer to the Credit Agreement as amended hereby.

 

6.4.GFA agrees to pay on demand all costs and expenses of or incurred by the Administrative Agent in connection with the negotiation, preparation, execution and delivery of this Amendment, including the reasonable fees and expenses of counsel for the Administrative Agent.

 

6.5.This Amendment may be executed in any number of counterparts, and by the different parties on different counterpart signature pages, all of which taken together shall constitute one and the same agreement.  Any of the parties hereto may execute this Amendment by signing any such counterpart and each of such counterparts shall for all purposes be deemed to be an original.  Delivery of a counterpart hereof by facsimile transmission or by e-mail transmission of an Adobe portable document format file (also known as a “PDF” file) shall be effective as delivery of a manually executed counterpart hereof.  This Amendment shall be governed by the internal laws of the State of Illinois.

 

[Signature Page to Follow.]

 

  

-17-

  

 

This First Amendment to Amended and Restated Credit Agreement is entered into as of the date and year first above written.

	  	
“Borrowers”

	  	  
	  	
GFA Brands, Inc.

	  	  
	  	
By

	/s/ Alan S. Gever
	  	  	
Name:  Alan S. Gever

	
 

	  	

Title: Executive Vice President, Chief

          Financial Officer, Treasurer and

          Assistant Secretary

	  	  
	  	
“Guarantors”

	  	  
	  	
Smart Balance, Inc.

	  	  
	 	
By

	/s/ Alan S. Gever
	  	  	
Name:  Alan S. Gever

	  	  	
Title: Executive Vice President, Chief

          Financial Officer, Treasurer and

          Assistant Secretary

[Signature page to First Amendment]

 

  

  

  

 

Accepted and agreed to.

	  	
“Administrative Agent and L/C Issuer”

	  	  
	  	
Bank of Montreal, as L/C Issuer and as

	  	
Administrative Agent

	  	  
	  	
By

	/s/ Philip Langheim
	  	  	
Name

	Philip Langheim
	  	  	
Title

	Managing Director  

[Signature page to First Amendment]

  

  

  

	  	
“Lenders”

	  	  
	  	
Bank of Montreal

	  	  
	  	
By

	/s/ Philip Langheim
	  	  	
Name

	Philip Langheim
	  	  	
Title

	Managing Director

[Signature page to First Amendment]

  

  

  

	  	
General Electric Capital Corporation, as

	  	
a Lender

	  	  
	  	
By:

	/s/ John J. Ryan
	  	  	
Name:

	John J. Ryan
	  	  	
Title: Duly Authorized Signatory

[Signature page to First Amendment]

 

  

  

  

 

	  	
GE Capital Financial Inc., as a Lender

	  	  
	  	
By:

	/s/ Dennis Leonard
	  	  	
Name:

	Dennis Leonard
	  	  	
Title: Duly Authorized Signatory

[Signature page to First Amendment]

  

  

  

	  	
Union Bank, N.A.

	  	  
	  	
By

	/s/ Pierre Bury
	  	  	
Name

	Pierre Bury
	  	  	
Title

	Vice President

[Signature page to First Amendment]

  

  

  

	  	
Siemens Financial Services, inc.

	  	  
	  	
By

	/s/ Maria Levy
	  	  	
Name

	Maria Levy
	  	  	
Title

	Director
	  	  	  
	  	
By

	/s/ Michael Zion
	  	  	
Name

	Michael Zion
	  	  	
Title

	Portfolio Manager

 

[Signature page to First Amendment]

  

  

  

	  	
Fifth Third Bank

	  	  
	  	
By

	/s/ Marc Crady
	  	  	
Name

	Marc Crady
	  	  	
Title

	Vice President

[Signature page to First Amendment]

 

  

  

  

 

	  	
KeyBank National Association

	  	  
	  	
By

	/s/ Shibani Faehnle
	  	  	
Name

	Shibani Faehnle
	  	  	
Title

	Vice President 

[Signature page to First Amendment]

  

  

  

	  	
ING Capital LLC

	  	  
	  	
By

	/s/ William B. Redmond
	  	  	
Name

	William B. Redmond
	  	  	
Title

	Managing Director

[Signature page to First Amendment]

  

  

  

Exhibit A

 

Notice of Payment Request

 

[Date]

 

[Name of Lender]

[Address]

 

Attention:

 

Reference is made to that certain Amended and Restated Credit Agreement, dated as of March 31, 2011, among GFA Brands, Inc., Glutino USA, Inc., the Guarantors party thereto, the Lenders party thereto, and Bank of Montreal, as Administrative Agent (as extended, renewed, amended or restated from time to time, the “Credit Agreement”).  Capitalized terms used herein and not defined herein have the meanings assigned to them in the Credit Agreement.  [The Borrower has failed to pay its Reimbursement Obligation in the amount of $____________.  Your Revolver Percentage of the unpaid Reimbursement Obligation is $_____________] or [__________________________ has been required to return a payment by the Borrower of a Reimbursement Obligation in the amount of $_______________.  Your Revolver Percentage of the returned Reimbursement Obligation is $_______________.]

	  	
Very truly yours,

	  	  
	  	
,

	  	
as L/C Issuer

	  	  
	  	
By

	  
	  	  	
Name

	  
	  	  	
Title

	  

  

  

  

Exhibit B

 

Notice of Borrowing

 

Date: ______________, ____

 

	
To:

	
Bank of Montreal, as Administrative Agent for the Lenders parties to that certain Amended and Restated Credit Agreement dated as of March 31, 2011 (as extended, renewed, amended or restated from time to time, the“Credit Agreement”), among GFA Brands, Inc., Glutino USA, Inc., the Guarantors party thereto, certain Lenders which are signatories thereto, and Bank of Montreal, as Administrative Agent

 

Ladies and Gentlemen:

 

The undersigned, _________________ (the “Borrower”), refers to the Credit Agreement, the terms defined therein being used herein as therein defined, and hereby gives you notice irrevocably, pursuant to Section 1.6 of the Credit Agreement, of the Borrowing specified below:

 

1.The Business Day of the proposed Borrowing is ___________, ____.

 

2.The aggregate amount of the proposed Borrowing is $______________.

 

3.The Borrowing is being advanced under the [Revolving] [Term] Credit.

 

4.The Borrowing is to be comprised of $___________ of [Base Rate] [Eurodollar] Loans.

 

[5.The duration of the Interest Period for the Eurodollar Loans included in the Borrowing shall be ____________ months.]

 

The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the proposed Borrowing, before and after giving effect thereto and to the application of the proceeds therefrom:

 

(a)the representations and warranties of the Borrower contained in Section 6 of the Credit Agreement are true and correct in all material respects as though made on and as of such date (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct as of such date); and

 

(b)no Default or Event of Default exists or would result from such proposed Borrowing.

	  	  
	  	  
	  	
By

	  
	  	  	
Name

	  
	  	  	
Title

	  

 

  

  

  

 

Exhibit C

 

Notice of Continuation/Conversion

 

Date:  ____________, ____

 

	
To:

	
Bank of Montreal, as Administrative Agent for the Lenders parties to that certain Amended and Restated Credit Agreement dated as of March 31, 2011 (as extended, renewed, amended or restated from time to time, the“Credit Agreement”) among GFA Brands, Inc., Glutino USA, Inc., the Guarantors party thereto, certain Lenders which are signatories thereto, and Bank of Montreal, as Administrative Agent

 

Ladies and Gentlemen:

 

The undersigned, _________________ (the “Borrower”), refers to the Credit Agreement, the terms defined therein being used herein as therein defined, and hereby gives you notice irrevocably, pursuant to Section 1.6 of the Credit Agreement, of the [conversion] [continuation] of the Loans specified herein, that:

 

1.The conversion/continuation Date is __________, ____.

 

2.The aggregate amount of the [Revolving] [Term] Loans to be [converted] [continued] is $______________.

 

3.The Loans are to be [converted into] [continued as] [Eurodollar] [Base Rate] Loans.

 

4.[If applicable:]  The duration of the Interest Period for the [Revolving] [Term] Loans included in the [conversion] [continuation] shall be _________ months.

 

The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the proposed conversion/continuation date, before and after giving effect thereto and to the application of the proceeds therefrom:

 

(a)the representations and warranties of the Borrower contained in Section 6 of the Credit Agreement are true and correct in all material respects as though made on and as of such date (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct as of such date); provided, however, that this condition shall not apply to the conversion of an outstanding Eurodollar Loan to a Base Rate Loan; and

 

(b)no Default or Event of Default exists, or would result from such proposed [conversion] [continuation].

	  	  
	  	  
	  	
By

	  
	  	  	
Name

	  
	  	  	
Title

	  

  

  

  

Exhibit D-1

 

Term Note

 

____________, _______

 

For Value Received, the undersigned, GFA Brands, Inc., a Delaware corporation and Glutino USA, Inc., a Delaware corporation (the “Borrowers”), hereby promise to pay to _________________________ (the “Lender”) or its registered assigns at the principal office of the Administrative Agent in Chicago, Illinois (or such other location as the Administrative Agent may designate to the Borrowers), in immediately available funds, the principal sum of the aggregate unpaid principal amount of all Term Loans made or maintained by the Lender to the Borrowers pursuant to the Credit Agreement, in installments in the amounts called for by Section 1.8(a) of the Credit Agreement, commencing on March 31, 2010, together with interest on the principal amount of such Term Loan from time to time outstanding hereunder at the rates, and payable in the manner and on the dates, specified in the Credit Agreement.  

 

This Note is one of the Term Notes referred to in the Amended and Restated Credit Agreement dated as of March 31, 2011, among the Borrowers, the Guarantors party thereto, the Lenders and L/C Issuer parties thereto, and Bank of Montreal, as Administrative Agent (as extended, renewed, amended or restated from time to time, the “Credit Agreement”), and this Note and the holder hereof are entitled to all the benefits and security provided for thereby or referred to therein, to which Credit Agreement reference is hereby made for a statement thereof.  All defined terms used in this Note, except terms otherwise defined herein, shall have the same meaning as in the Credit Agreement.  This Note shall be governed by and construed in accordance with the internal laws of the State of Illinois.

 

Voluntary prepayments may be made hereon, certain prepayments are required to be made hereon, and this Note may be declared due prior to the expressed maturity hereof, all in the events, on the terms and in the manner as provided for in the Credit Agreement.

 

The Borrowers hereby waive demand, presentment, protest or notice of any kind hereunder.

 

This Note is issued in substitution and replacement for, and evidences all indebtedness previously evidenced by, that certain Note of ____________________ dated _____________, ____, payable to the Lender.

	  	
GFA Brands, Inc.

	  	  
	  	
By

	  
	  	  	
Name

	  
	  	  	
Title

	  

 

  

  

  

 

	  	
Glutino USA, Inc.

	  	  
	  	
By

	  
	  	  	
Name

	  
	  	  	
Title

	  

  

-2-

  

 

Exhibit D-2

 

Revolving Note

____________, ______

 

For Value Received, the undersigned, GFA Brands, Inc., a Delaware corporation and Glutino USA, Inc., a Delaware corporation (the “Borrowers”), hereby promise to pay to ____________________ (the “Lender”) or its registered assigns on the Revolving Credit Termination Date of the hereinafter defined Credit Agreement, at the principal office of the Administrative Agent in Chicago Illinois (or such other location as the Administrative Agent may designate to the Borrowers), in immediately available funds, the principal sum of the aggregate unpaid principal amount of all Revolving Loans made by the Lender to the Borrowers pursuant to the Credit Agreement, together with interest on the principal amount of each Revolving Loan from time to time outstanding hereunder at the rates, and payable in the manner and on the dates, specified in the Credit Agreement.

 

This Note is one of the Revolving Notes referred to in the Amended and Restated Credit Agreement dated as of March 31, 2011, among the Borrowers, the Guarantors party thereto, the Lenders and L/C Issuer parties thereto, and Bank of Montreal, as Administrative Agent (as extended, renewed, amended or restated from time to time, the “Credit Agreement”), and this Note and the holder hereof are entitled to all the benefits and security provided for thereby or referred to therein, to which Credit Agreement reference is hereby made for a statement thereof.  All defined terms used in this Note, except terms otherwise defined herein, shall have the same meaning as in the Credit Agreement.  This Note shall be governed by and construed in accordance with the internal laws of the State of Illinois.

 

Voluntary prepayments may be made hereon, certain prepayments are required to be made hereon, and this Note may be declared due prior to the expressed maturity hereof, all in the events, on the terms and in the manner as provided for in the Credit Agreement.

 

The Borrowers hereby waive demand, presentment, protest or notice of any kind hereunder.

 

This Note is issued in substitution and replacement for, and evidences all indebtedness previously evidenced by, that certain Note of ____________________ dated _____________, ____, payable to the Lender.

	  	
GFA Brands, Inc.

	  	  
	  	
By

	  
	  	  	
Name

	  
	  	  	
Title

	  

 

  

  

  

 

	  	
Glutino USA, Inc.

	  	  
	  	
By

	  
	  	  	
Name

	  
	  	  	
Title

	  

 

  

-2-

  

 

Exhibit D-3

 

Swing Note

____________, ___

 

For Value Received, the undersigned, GFA Brands, Inc., a Delaware corporation and Glutino USA, Inc., a Delaware corporation (the “Borrowers”), hereby promise to pay to ___________________ (the “Lender”) or its registered assigns on the Revolving Credit Termination Date of the hereinafter defined Credit Agreement, at the principal office of the Administrative Agent in Chicago, Illinois (or such other location as the Administrative Agent may designate to the Borrowers), in immediately available funds, the principal sum of the aggregate unpaid principal amount of all Swing Loans made by the Lender to the Borrowers pursuant to the Credit Agreement, together with interest on the principal amount of each Swing Loan from time to time outstanding hereunder at the rates, and payable in the manner and on the dates, specified in the Credit Agreement.

 

This Note is the Swing Note referred to in the Amended and Restated Credit Agreement dated as of March 31, 2011, among the Borrowers, the Guarantors party thereto, the Lenders and L/C Issuer parties thereto, and Bank of Montreal, as Administrative Agent (as extended, renewed, amended or restated from time to time, the “Credit Agreement”), and this Note and the holder hereof are entitled to all the benefits and security provided for thereby or referred to therein, to which Credit Agreement reference is hereby made for a statement thereof.  All defined terms used in this Note, except terms otherwise defined herein, shall have the same meaning as in the Credit Agreement.  This Note shall be governed by and construed in accordance with the internal laws of the State of Illinois.

 

Voluntary prepayments may be made hereon, certain prepayments are required to be made hereon, and this Note may be declared due prior to the expressed maturity hereof, all in the events, on the terms and in the manner as provided for in the Credit Agreement.

 

The Borrowers hereby waive demand, presentment, protest or notice of any kind hereunder.

 

This Note is issued in substitution and replacement for, and evidences all indebtedness previously evidenced by, that certain Note of ____________________ dated _____________, ____, payable to the Lender.

	  	
GFA Brands, Inc.

	  	  
	  	
By

	  
	  	  	
Name

	  
	  	  	
Title

	  

 

  

  

  

 

	  	
Glutino USA, Inc.

	  	  
	  	
By

	  
	  	  	
Name

	  
	  	  	
Title

	  

 

  

-2-

  

 

Exhibit E

 

GFA Brands, Inc.

 

Compliance Certificate

 

	
To:

	
Bank of Montreal, as Administrative Agent under, and the Lenders and L/C Issuer parties to, the Credit Agreement described below

 

 This Compliance Certificate is furnished to the Administrative Agent, the L/C Issuer, and the Lenders pursuant to that certain Amended and Restated Credit Agreement dated as of March 31, 2011, among us, Smart Balance, Inc., the direct and indirect Subsidiaries of the Borrowers from time to time party thereto, as Guarantors, certain Lenders which are signatories thereto, and Bank of Montreal, as Administrative Agent (as extended, renewed, amended or restated from time to time, the “Credit Agreement”).  Unless otherwise defined herein, the terms used in this Compliance Certificate have the meanings ascribed thereto in the Credit Agreement.

 

 The Undersigned hereby certifies that:

 

1.I am the duly elected ____________ of _________________;

 

2.I have reviewed the terms of the Credit Agreement and I have made, or have caused to be made under my supervision, a detailed review of the transactions and conditions of the Borrower and its Subsidiaries during the accounting period covered by the attached financial statements;

 

3.The examinations described in paragraph 2 did not disclose, and I have no knowledge of, the existence of any condition or the occurrence of any event which constitutes a Default or Event of Default during or at the end of the accounting period covered by the attached financial statements or as of the date of this Compliance Certificate, except as set forth below;

 

4.The financial statements required by Section 8.5 of the Credit Agreement and being furnished to you concurrently with this Compliance Certificate are true, correct and complete in all material respects as of the date and for the periods covered thereby, provided that with respect to any quarterly statements delivered, such statements are subject to normal year-end audit adjustments and the absence of footnotes; and

 

5.The Schedule I hereto sets forth financial data and computations evidencing the Borrower’s compliance with certain covenants of the Credit Agreement, all of which data and computations are, to the best of my knowledge, true, complete and correct and have been made in accordance with the relevant Sections of the Credit Agreement.

 

  

  

  

 

Described below are the exceptions, if any, to paragraph 3 by listing, in detail, the nature of the condition or event, the period during which it has existed and the action which the Borrower has taken, is taking, or proposes to take with respect to each such condition or event:

	  	  	  
	  	  	  
	  	  	  
	  	  	  

 

The foregoing certifications, together with the computations set forth in Schedule I hereto and the financial statements delivered with this Certificate in support hereof, are made and delivered this ______ day of __________________ 20___.

	  	
GFA Brands, Inc.

	  	  
	  	
By

	  
	  	  	
Name

	  
	  	  	
Title

	  
	  	  
	  	
Glutino USA, Inc.

	  	  
	  	
By

	  
	  	  	
Name

	  
	  	  	
Title

	  

 

  

-2-

  

 

Schedule I

to Compliance Certificate

 

GFA Brands, Inc.

Glutino USA, Inc.

 

Compliance Calculations

for Amended and Restated Credit Agreement 

dated as of March 31, 2011

 

Calculations as of _____________, _______

	 	 	 	 
	 	 	 	 
	
A.

	
Total Funded Debt/EBITDA Ratio (Section 8.23(a))

	  	  
	  	  	  	  	  
	  	
1.

	
Total Funded Debt

	
$

	
___________

	  	  	  	  	  
	  	
2.

	
Available Cash

	  	
___________

	  	  	  	  	  
	  	
3.

	
Line A1 minus A2

	  	
___________

	  	  	  	  	  
	  	
4.

	
Net Income for past 4 quarters

	  	
___________

	  	  	  	  	  
	  	
5.

	
Interest Expense for past 4 quarters

	  	
___________

	  	  	  	  	  
	  	
6.

	
Income and franchise taxes for past 4 quarters

	  	
___________

	  	  	  	  	  
	  	
7.

	
Depreciation and Amortization Expense for past 4 quarters

	  	
___________

	  	  	  	  	  
	  	
8.

	
Non-cash equity compensation for past 4 quarters

	  	
___________

	  	  	  	  	  
	  	
9.

	
Non-cash warrant expenses for past 4 quarters

	  	
___________

	  	  	  	  	  
	  	
10.

	
Write off or amortization of deferred financing costs for past 4 quarters

	  	
___________

	  	  	  	  	  
	  	
11.

	
Other non-cash, non-recurring expenses

	  	
___________

	  	  	  	  	  
	  	
12.

	
Special bonuses (up to $1,000,000) to employees of any Glutino Subsidiary for past 4 quarters

	  	
___________

	  	  	  	  	  
	  	
13.

	
Expenses incurred in connection with the termination of hedging agreements of any Glutino Subsidiary for past 4 quarters

	  	
___________

	  	  	  	  	  
	  	
14.

	
Long-term incentive compensation for employees of any Glutino Subsidiary for past 4 quarters

	  	
___________

	  	  	  	  	  
	  	
15.

	
Costs and expenses incurred by any Glutino Subsidiary prior to the date of the Glutino Acquisition, which shall not be incurred after the consummation of the Glutino Acquisition (e.g., management fees) for past 4 quarters

	  	
___________

  

  

  

	  	
16.

	
Severance and integration costs incurred in connection with the Glutino Acquisition for past 4 quarters (limited to such costs incurred and paid prior to the third anniversary of the consummation of the Glutino Acquisition)

	  	
___________

	  	  	  	  	  
	  	
17.

	
Transaction expenses and charges incurred by the Parent or any Subsidiary directly relating to the Glutino Acquisition for past 4 quarters in an aggregate amount not to exceed $5,000,000

	  	
___________

	  	  	  	  	  
	  	
18.

	
Transaction expenses and charges incurred by any Glutino Subsidiary directly relating to the Glutino Acquisition (1) to the extent not directly or indirectly paid by the Borrower or any Guarantor after the date of the Glutino Acquisition or (2) that are otherwise reasonably acceptable to the Administrative Agent, in each case for past 4 quarters

	  	
___________

	  	  	  	  	  
	  	
19.

	
Non-cash losses arising from mark-to-market adjustments of hedging transactions during past 4 quarters

	  	
___________

	  	  	  	  	  
	  	
20.

	
Non-cash purchase accounting charges during past 4 quarters

	  	
___________

	  	  	  	  	  
	  	
21.

	
Cumulative effect of changes in accounting principles as required by GAAP during past 4 quarters

	  	
___________

	  	  	  	  	  
	  	
22.

	
Pro forma adjustments related to Permitted Acquisitions other than the Glutino Acquisition during past 4 quarters

	  	
___________

	  	  	  	  	  
	  	
22.

	
Sum of Lines A4, A5, A6, A7, A8, A9, A10, A11, A12, A13, A14, A15, A16, A17, A18, A19, A20, A21 and A22

	  	
___________

	  	  	  	  	  
	  	
23.

	
Non-cash gains arising from mark-to-market adjustments of hedging transactions during past 4 quarters

	  	  
	  	  	  	  	  
	  	
24.

	
Line A22 minus Line A23 (“EBITDA”)1

	  	  
	  	  	  	  	  
	  	
25.

	
Ratio of Line A3 to A24

	  	
____:1.0

	  	  	  	  	  
	  	
26.

	
Line A25 ratio must not exceed

	  	
____:1.0

	  	  	  	  	  
	  	
27.

	
The Borrowers are in compliance (circle yes or no)

	  	
yes/no

	  	  	  	  	  
	
B.

	
Debt Service Coverage Ratio (Section 8.23(b))

	  	  
	  	  	  	  	  
	  	
1.

	
EBITDA (Line A24 above)

	
$

	
___________

	  	  	  	  	  
	  	
2.

	
Principal payments for past 4 quarters

	
$

	
___________

 

	

1

	
With respect to the Glutino Acquisition, the “EBITDA” for the Glutino Subsidiaries to be consolidated with the EBITDA of the Parent for the fiscal quarters of the ending June 30, 2011, March 31, 2011, December 31, 2010 and September 30, 2010 shall be deemed to be $[__], $[__], $[__] and $[__], respectively.

 

  

-2-

  

 

	  	
3.

	
Interest Expense paid in cash for past 4 quarters

	
$

	
___________

	  	  	  	  	  
	  	
4.

	
Sum of Lines B2 and B3

	
$

	
___________

	  	  	  	  	  
	  	
5.

	
Ratio of Line B1 to Line B4

	  	
____:1.0

	  	  	  	  	  
	  	
6.

	
Line B5 ratio must not be less than

	  	
2.0:1.0

	  	  	  	  	  
	  	
7.

	
The Borrowers are in compliance (circle yes or no)

	  	
yes/no

	  	  	  	  	  
	
C. 

	Capital Expenditures (Section 8.23(c))	  	  
	  	  	  	  	  
	  	
1.

	
Year-to-date Capital Expenditures

	
$

	
___________

	  	  	  	  	  
	  	
2.

	
Maximum permitted amount

	
$

	
___________

	  	  	  	  	  
	  	
3.

	
The Borrowers are in compliance (circle yes or no)

	  	
yes/no

  

-3-

  

Exhibit F

 

Additional Guarantor Supplement

 

______________, ___

 

Bank of Montreal, as Administrative Agent for the Lenders and L/C Issuer parties to the Amended and Restated Credit Agreement dated as of March 31, 2011, among GFA Brands, Inc., Glutino USA, Inc., each as a Borrower, the Guarantors referred to therein, the Lenders and L/C Issuer parties thereto from time to time, and the Administrative Agent (as extended, renewed, amended or restated from time to time, the “Credit Agreement”)

 

Ladies and Gentlemen:

 

Reference is made to the Credit Agreement described above.  Terms not defined herein which are defined in the Credit Agreement shall have for the purposes hereof the meaning provided therein.

 

The undersigned, [name of Subsidiary Guarantor], a [jurisdiction of incorporation or organization] hereby elects to be a “Guarantor” for all purposes of the Credit Agreement, effective from the date hereof.  The undersigned confirms that the representations and warranties set forth in Section 6 of the Credit Agreement are true and correct as to the undersigned as of the date hereof and the undersigned shall comply with each of the covenants set forth in Section 8 of the Credit Agreement applicable to it.

 

Without limiting the generality of the foregoing, the undersigned hereby agrees to perform all the obligations of a Guarantor under, and to be bound in all respects by the terms of, the Credit Agreement, including without limitation Section 12 thereof, to the same extent and with the same force and effect as if the undersigned were a signatory party thereto.  

 

The undersigned acknowledges that this Agreement shall be effective upon its execution and delivery by the undersigned to the Administrative Agent, and it shall not be necessary for the Administrative Agent, the L/C Issuer, or any Lender, or any of their Affiliates entitled to the benefits hereof, to execute this Agreement or any other acceptance hereof.  This Agreement shall be construed in accordance with and governed by the internal laws of the State of Illinois.

	  	
Very truly yours,

	  	  
	  	
[Name of Subsidiary Guarantor]

	  	  
	  	
By

	  
	  	  	
Name

	  
	  	  	
Title

	  

 

  

  

  

 

Exhibit G

 

Assignment and Acceptance

 

Dated _____________, _____

 

Reference is made to the Amended and Restated Credit Agreement dated as of March 31, 2011 (as extended, renewed, amended or restated from time to time, the “Credit Agreement”) among GFA Brands, Inc., Glutino USA, Inc., the Guarantors party thereto, the Lenders and L/C Issuer parties thereto, and Bank of Montreal, as Administrative Agent (the “Administrative Agent”).  Terms defined in the Credit Agreement are used herein with the same meaning.

 

______________________________________________________ (the “Assignor”) and _________________________ (the “Assignee”) agree as follows:

 

1.The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, the amount and specified percentage interest shown on Annex I hereto of the Assignor’s rights and obligations under the Credit Agreement as of the Effective Date (as defined below), including, without limitation, the Assignor’s Commitments as in effect on the Effective Date and the Loans, if any, owing to the Assignor on the Effective Date and the Assignor’s Revolver Percentage of any outstanding L/C Obligations.

 

2.The Assignor (i) represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim, lien, or encumbrance of any kind; (ii) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any other instrument or document furnished pursuant thereto; and (iii) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or any Subsidiary or the performance or observance by the Borrower or any Subsidiary of any of their respective obligations under the Credit Agreement or any other instrument or document furnished pursuant thereto.

 

3.The Assignee (i) confirms that it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered to the Lenders pursuant to Section 8.5(a), and (b) thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (ii) agrees that it will, independently and without reliance upon the Administrative Agent, the Assignor or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iii) appoints and authorizes the Administrative Agent to take such action as Administrative Agent on its behalf and to exercise such powers under the Credit Agreement and the other Loan Documents as are delegated to the Administrative Agent by the terms thereof, together with such powers as are reasonably incidental thereto; (iv) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender; and (v) specifies as its lending office (and address for notices) the offices set forth on its Administrative Questionnaire.

 

  

  

  

 

4.As consideration for the assignment and sale contemplated in Annex I hereof, the Assignee shall pay to the Assignor on the Effective Date in Federal funds the amount agreed upon between them.  It is understood that commitment and/or letter of credit fees accrued to the Effective Date with respect to the interest assigned hereby are for the account of the Assignor and such fees accruing from and including the Effective Date are for the account of the Assignee.  Each of the Assignor and the Assignee hereby agrees that if it receives any amount under the Credit Agreement which is for the account of the other party hereto, it shall receive the same for the account of such other party to the extent of such other party’s interest therein and shall promptly pay the same to such other party.

 

5.The effective date for this Assignment and Acceptance shall be ___________ (the “Effective Date”).  Following the execution of this Assignment and Acceptance, it will be delivered to the Administrative Agent for acceptance and recording by the Administrative Agent and, if required, the Borrower.  It is understood that commitment and/or letter of credit fees accrued to the Effective Date with respect to the interest assigned hereby are for the account of the Assignor and such fees accruing from and including the Effective Date are for the account of the Assignee.  Each of the Assignor and the Assignee hereby agrees that if it receives any amount under the Credit Agreement which is for the account of the other party hereto, it shall receive the same for the account  of such other party to the extent of such other party’s interest therein and shall promptly pay the same to such other party.

 

6.Upon such acceptance and recording, as of the Effective Date, (i) the Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment and Acceptance, have the rights and obligations of a Lender thereunder and (ii) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement.

 

7.Upon such acceptance and recording, from and after the Effective Date, the Administrative Agent shall make all payments under the Credit Agreement in respect of the interest assigned hereby (including, without limitation, all payments of principal, interest and commitment fees with respect thereto) to the Assignee.  The Assignor and Assignee shall make all appropriate adjustments in payments under the Credit Agreement for periods prior to the Effective Date directly between themselves.

 

  

-2-

  

 

8.This Assignment and Acceptance shall be governed by, and construed in accordance with, the laws of the State of Illinois.

	  	
[Assignor Lender]

	  	  
	  	
By

	  
	  	  	
Name

	  
	  	  	
Title

	  
	  	  
	  	
[Assignee Lender]

	  	  
	  	
By

	  
	  	  	
Name

	  
	  	  	
Title

	  

Accepted and consented this

____ day of _____________

	
GFA Brands, Inc.

	  
	
By

	  	  
	  	
Name

	  	  
	  	
Title

	  	  

	
Glutino USA, Inc.

	  
	
By

	  	  
	  	
Name

	  	  
	  	
Title

	  	  

Accepted and consented to by the Administrative

Agent and L/C Issuer this ___ day of ________

Bank of Montreal, 

as Administrative Agent and L/C Issuer 

	
By

	  	  
	  	
Name

	  	  
	  	
Title

	  	  

 

  

-3-

  

 

Annex I

to Assignment and Acceptance

 

The assignee hereby purchases and assumes from the assignor the following interest in and to all of the Assignor’s rights and obligations under the Credit Agreement as of the effective date.

 

	
Facility Assigned

	 	
Aggregate

Commitment/Loans

For All Lenders

	 	 	
Amount of

Commitment/Loans

Assigned

	 	 	
Percentage

Assigned of

Commitment/Loans

	 
	  	 	 	 	 	 	 	 	 	 
	
Revolving Credit

	 	$	_____________	 	 	$	_____________	 	 	 	_____	%
	  	 	 	 	 	 	 	 	 	 	 	 	 
	
Term Loan

	 	$ 	 _____________	 	 	$ 	 _____________	 	 	 	_____	% 

 

  

  

  

 

Exhibit H

 

Increase Request

 

_______________, ____

 

	
To:

	
Bank of Montreal, as Administrative Agent under Credit Agreement described below

 

Ladies and Gentlemen:

 

The undersigned, GFA Brands, Inc. and Glutino USA, Inc. (the “Borrowers”), hereby refer to the Amended and Restated Credit Agreement dated as of March 31, 2011, among the Borrowers, the Guarantors party thereto, the Lenders and L/C Issuer party thereto and you (as amended, modified, restated or supplemented from time to time, the “Credit Agreement”) and requests that the Administrative Agent consent to a(n) [increase in the aggregate Revolving Credit Commitments][making of Incremental Term Loans] (the “Increase”), in accordance with Section 1.16 of the Credit Agreement, to be effected by [an increase in the Revolving Credit][the making of an Incremental Term Loan] of/by [name of existing Lender] [the addition of [name of new Lender] (the “New Lender”) as a Lender under the terms of the Credit Agreement].  Capitalized terms used herein without definition shall have the same meanings herein as such terms have in the Credit Agreement.

 

After giving effect to such Increase, the [Revolving Credit Commitment][Incremental Term Loan] of the [Lender] [New Lender] shall be $_____________.

 

[Include paragraphs 1-4 for a New Lender]

 

1.The New Lender hereby confirms that it has received a copy of the Loan Documents and the exhibits related thereto, together with copies of the documents which were required to be delivered under the Credit Agreement as a condition to the making of the Loans and other extensions of credit thereunder.  The New Lender acknowledges and agrees that it has made and will continue to make, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, its own credit analysis and decisions relating to the Credit Agreement.  The New Lender further acknowledges and agrees that the Administrative Agent has not made any representations or warranties about the credit worthiness of the Borrowers or any other party to the Credit Agreement or any other Loan Document or with respect to the legality, validity, sufficiency or enforceability of the Credit Agreement or any other Loan Document or the value of any security therefor.

 

  

  

  

 

2.Except as otherwise provided in the Credit Agreement, effective as of the date of acceptance hereof by the Administrative Agent, the New Lender (i) shall be deemed automatically to have become a party to the Credit Agreement and have all the rights and obligations of a “Lender” under the Credit Agreement as if it were an original signatory thereto and (ii) agrees to be bound by the terms and conditions set forth in the Credit Agreement as if it were an original signatory thereto.

 

3.The New Lender shall deliver to the Administrative Agent an Administrative Questionnaire.

 

4.[The New Lender has delivered, if appropriate, to the Borrowers and the Administrative Agent (or is delivering to the Borrowers and the Administrative Agent concurrently herewith) the tax forms referred to in Section 13.1 of the Credit Agreement.]

 

This Agreement shall be deemed to be a contractual obligation under, and shall be governed by and construed in accordance with, the laws of the state of Illinois.

 

The Increase shall be effective when the executed consent of the Administrative Agent is received or otherwise in accordance with Section 1.16 of the Credit Agreement, but not in any case prior to ___________________, ____.  It shall be a condition to the effectiveness of the Increase that all expenses referred to in Section 1.16 of the Credit Agreement shall have been paid.

 

The Borrowers hereby certify that no Default or Event of Default has occurred and is continuing.

 

Please indicate the Administrative Agent’s consent to such Increase by signing the enclosed copy of this letter in the space provided below.

	  	
Very truly yours,

	  	  
	  	  
	  	  
	  	
By

	  
	  	  	
Name

	  
	  	  	
Title

	  

 

  

-2-

  

 

	  	
[New or Existing Lender increasing

	  	
commitments or making incremental

	  	
term loans]

	  	  
	  	
By

	  
	  	  	
Name

	  
	  	  	
Title

	  

The undersigned hereby consents on this __

day of __________________ to the

above-requested Increase

	
Bank of Montreal, as Administrative Agent

	  
	
By

	  	  
	  	
Name

	  	  
	  	
Title

	  	  

  

-3-

  

 

Exhibit I

Form of Solvency Certificate

 

The undersigned, the _________ of GFA Brands, Inc., a Delaware corporation (the “Borrower”) and the ______________ of Smart Balance, Inc., a Delaware corporation (the “Parent”) hereby certify, in accordance with Sections 4.1(c) of that certain First Amendment to Amended and Restated Credit Agreement dated as of August 3, 2011, which amends that certain Amended and Restated Credit Agreement dated as of March 31, 2011 (the “Credit Agreement”), each among the Borrower, the Parent, the Lenders party thereto, the Guarantors party thereto, and Bank of Montreal, as Administrative Agent as provided therein, as follows:

 

After giving effect to the Glutino Acquisition, the Parent, the Borrower and their Subsidiaries are solvent, able to pay their debts as they become due, and have sufficient capital to carry or their business and all business in which they are about to engage.

 

Capitalized terms used herein but not defined shall have the meanings assigned to such terms in the Credit Agreement.

 

[Signature Page to Follow]

 

  

-1-

  

 

In Witness Whereof, the Borrower has caused this Officer’s Certificate to be duly executed and delivered this ____ day of __________, 2011.

	  	
GFA Brands, Inc.

	  	  
	  	
By:

	  
	  	  	
Name:

	  
	  	  	
Its:

	  
	  	  
	  	
Smart Balance, Inc.

	  	  
	  	
By:

	  
	  	  	
Name:

	  
	  	  	
Its:

	  

  

-2-

  

Exhibit J

 

Form of Joinder Agreement

 

 

August __, 2011

 

Bank of Montreal, as Administrative Agent for the Lenders and L/C Issuer parties to the Amended and Restated Credit Agreement dated as of March 31, 2011, among GFA Brands, Inc., Glutino USA, Inc., each as a Borrower, the Guarantors referred to therein, the Lenders and L/C Issuer parties thereto from time to time, and the Administrative Agent (as extended, renewed, amended or restated from time to time, the “Credit Agreement”)

 

Ladies and Gentlemen:

 

Reference is made to the Credit Agreement described above.  Terms not defined herein which are defined in the Credit Agreement shall have for the purposes hereof the meaning provided therein.

 

The undersigned, Glutino USA, Inc., a Delaware corporation (“NewCo”) hereby elects to be a “Borrower” for all purposes of the Credit Agreement, effective from the date hereof.  NewCo confirms that the representations and warranties set forth in Section 6 of the Credit Agreement are true and correct as to NewCo as of the date hereof and NewCo shall comply with each of the covenants set forth in Section 8 of the Credit Agreement applicable to it.

 

Without limiting the generality of the foregoing, NewCo hereby agrees to perform all the obligations of a Borrower under, and to be bound in all respects by the terms of, the Credit Agreement to the same extent and with the same force and effect as if NewCo were a signatory party thereto.  

 

[Remainder Left Intentionally Blank]

 

  

  

  

 

The undersigned acknowledges that this Agreement shall be effective upon its execution and delivery by the undersigned to the Administrative Agent, and shall not be necessary for the Administrative Agent to execute this Agreement or any other acceptance hereof.  This Agreement shall be construed in accordance with and governed by the internal laws of the State of Illinois.

	  	
Very truly yours,

	  	  
	  	
Glutino USA, Inc.

	  	  
	  	
By

	  
	  	  	
Name

	  
	  	  	
Title

	  

  

-2-

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