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AGREEMENT AND PLAN OF MERGER

Agreement and Plan of Merger

AGREEMENT AND PLAN OF MERGER | Document Parties: SUPERIOR ENERGY SERVICES INC | SPN ACQUISITION SUB, INC | WARRIOR ENERGY SERVICES CORPORATION You are currently viewing:
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SUPERIOR ENERGY SERVICES INC | SPN ACQUISITION SUB, INC | WARRIOR ENERGY SERVICES CORPORATION

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Title: AGREEMENT AND PLAN OF MERGER
Governing Law: Delaware     Date: 9/25/2006
Industry: Oil Well Services and Equipment     Law Firm: Jones, Walker, Waechter, Poitevent, Carrère & Denègre, L.L.P.; Rosen, Cook, Sledge, Davis, Shattuck & Oldshue, P.A.; Baker Botts L.L.P    

AGREEMENT AND PLAN OF MERGER, Parties: superior energy services inc , spn acquisition sub  inc , warrior energy services corporation
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Exhibit 2.1

 

 

AGREEMENT AND PLAN OF MERGER

By and Among

SUPERIOR ENERGY SERVICES, INC.,

SPN ACQUISITION SUB, INC.

And

WARRIOR ENERGY SERVICES CORPORATION

Dated as of September 22, 2006

 

 

 


 

TABLE OF CONTENTS

 

 

 

 

 

 

 

Page

 

Article 1 Definitions

 

 

1

 

Section 1.1 Definitions

 

 

1

 

Article 2 The Merger

 

 

8

 

Section 2.1 The Merger

 

 

8

 

Section 2.2 Effective Time

 

 

8

 

Section 2.3 Effects of The Merger

 

 

8

 

Section 2.4 Certificate of Incorporation and Bylaws

 

 

8

 

Section 2.5 Officers

 

 

9

 

Section 2.6 Further Assurances

 

 

9

 

Section 2.7 Closing

 

 

9

 

Article 3 Effect of The Merger on the Capital Stock of The Constituent Companies; Exchange of Certificates

 

 

9

 

Section 3.1 Effect on Capital Stock

 

 

9

 

Section 3.2 Surviving Company to Make Certificates Available

 

 

11

 

Section 3.3 Dividends; Transfer Taxes

 

 

12

 

Section 3.4 No Fractional Shares

 

 

12

 

Section 3.5 Return of Exchange Fund

 

 

13

 

Section 3.6 Further Ownership Rights in Company Common Stock

 

 

13

 

Section 3.7 Closing of the Company’s Transfer Books

 

 

13

 

Section 3.8 Withholding Rights

 

 

13

 

Section 3.9 Adjustments

 

 

13

 

Article 4 Representations and Warranties

 

 

14

 

Section 4.1 Representations and Warranties of The Company

 

 

14

 

Section 4.2 Representations and Warranties of Parent and Merger Sub

 

 

28

 

Article 5 Covenants Relating to Conduct of Business

 

 

32

 

Section 5.1 Conduct of Business of The Company

 

 

32

 

Section 5.2 Conduct of Business of Parent and Merger Sub

 

 

34

 

Article 6 Additional Agreements

 

 

35

 

Section 6.1 Registration Statement; Stockholder Approval

 

 

35

 

Section 6.2 Access to Information

 

 

36

 

Section 6.3 Reasonable Efforts; Notification

 

 

37

 

Section 6.4 Indemnification and Insurance

 

 

38

 

Section 6.5 Fees and Expenses

 

 

39

 

Section 6.6 Public Announcements

 

 

39

 

Section 6.7 Agreement to Defend

 

 

39

 

Section 6.8 Benefit Matters

 

 

39

 

Section 6.9 Affiliate Agreements; Tax Treatment

 

 

40

 

Article 7 Conditions Precedent

 

 

40

 

Section 7.1 Conditions to Each Party’s Obligation to Effect The Merger

 

 

40

 

Section 7.2 Conditions to Obligations of Parent and Merger Sub

 

 

41

 

Section 7.3 Condition to Obligations of The Company

 

 

42

 

Article 8 Termination, Amendment and Waiver

 

 

42

 

Section 8.1 Termination

 

 

42

 

i

 

 

 

 

 


 

 

 

 

 

 

 

 

Page

 

Section 8.2 Procedure for Termination, Amendment, Extension or Waiver

 

 

44

 

Section 8.3 Effect of Termination

 

 

44

 

Section 8.4 Amendment

 

 

44

 

Section 8.5 Extension; Waiver

 

 

44

 

Article 9 Special Provisions as to Certain Matters

 

 

44

 

Section 9.1 Takeover Defenses of The Company

 

 

44

 

Section 9.2 No Solicitation

 

 

44

 

Section 9.3 Fee and Expense Reimbursements

 

 

47

 

Article 10 General Provisions

 

 

48

 

Section 10.1 Survival

 

 

48

 

Section 10.2 Notices

 

 

48

 

Section 10.3 Interpretation

 

 

49

 

Section 10.4 Counterparts

 

 

49

 

Section 10.5 Entire Agreement; No Third-Party Beneficiaries

 

 

49

 

Section 10.6 Governing Law

 

 

49

 

Section 10.7 Assignment

 

 

49

 

Section 10.8 Enforcement of the Agreement

 

 

50

 

Section 10.9 Attorney’s Fees

 

 

50

 

Section 10.10 Performance by Merger Sub

 

 

50

 

Section 10.11 Severability

 

 

50

 

 

 

 

 

 

Schedules

 

 

 

 

 

 

 

 

 

Schedule I — Company Disclosure Schedule

 

 

 

 

Schedule II — Company’s Knowledge

 

 

 

 

Schedule III — Parent’s Knowledge

 

 

 

 

 

 

 

 

 

Exhibits

 

 

 

 

 

 

 

 

 

Exhibit A — Form of Rule 145 Letter Agreement

 

 

 

 

 

 

 

 

 

ii

 

 

 

 

 


 

AGREEMENT AND PLAN OF MERGER

     This Agreement and Plan of Merger (this “ Agreement ”), dated as of September 22, 2006, is by and among Superior Energy Services, Inc., a Delaware corporation (“ Parent ”), SPN Acquisition Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent (“ Merger Sub ”), and Warrior Energy Services Corporation, a Delaware corporation (the “ Company ”).

W I T N E S S E T H:

      WHEREAS , the respective Boards of Directors of each of Parent, Merger Sub and the Company, and Parent, as the sole stockholder of Merger Sub, have determined that it is in the best interests of each corporation and their respective stockholders for the Company to merge with and into Merger Sub upon the terms and subject to the conditions set forth in this Agreement (the “ Merger ”);

      WHEREAS , the parties intend that the Merger will qualify as a reorganization described in Section 368(a) of the Internal Revenue Code of 1986, as amended, and that this Agreement constitute a plan of reorganization; and

      WHEREAS , Parent, Merger Sub and the Company desire to make certain representations, warranties, covenants, and agreements in connection with the Merger.

      NOW, THEREFORE , in consideration of the premises and the representations, warranties, covenants and agreements herein contained, the parties hereby agree as follows:

ARTICLE 1
DEFINITIONS

      Section 1.1 Definitions . As used in this Agreement, capitalized terms shall have the meanings set forth in this Article 1.

     an “ Affiliate ” of any Person means another Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first person.

     “ Acquisition Proposal ” is defined in Section 9.2(a).

     “ Agreement ” is defined in the first paragraph hereof.

     “ Applicable Period ” is defined in Section 9.2(a).

     “ Business Employee ” means an individual who is employed by the Company as of the Effective Time and who becomes an employee of Parent or a Subsidiary of Parent immediately following the Effective Time.

     “ Cash Consideration ” means the aggregate amount payable pursuant to Section 3.1(b)(i).

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     “ Capital Budget ” is defined in Section 5.1(a)(vii).

     “ Certificate of Merger ” is defined in Section 2.2.

     “ Certificates ” is defined in Section 3.2(a).

     “ Claim ” means any complaint, notice, claim, demand, action, suit or investigation or any judicial, administrative or arbitral proceeding.

     “ Closing ” is defined in Section 2.7.

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

     “ Company ” is defined in the first paragraph hereof.

     “ Company Balance Sheet ” means the most recent balance sheet of the Company included in the Company Financial Statements.

     “ Company Balance Sheet Date ” means June 30, 2006.

     “ Company Benefit Plan ” means (a) any employee welfare benefit plan or employee pension benefit plan as defined in Sections 3(1) and 3(2) of ERISA, respectively and (b) any other plan, fund, program, arrangement or agreement (including any employment agreement), whether or not in writing, to provide deferred compensation, incentive, bonus, stock option, stock purchase, stock award, golden parachute, severance, dependent care, flexible benefit, cafeteria, employee assistance, scholarship, retention incentive, noncompetition, consulting, confidentiality, vacation, fringe or other benefits maintained by, participated in, or contributed to by the Employer at any time during the three-year period ending on the date of this Agreement, or with respect to which the Employer may have any liability.

     “ Company Breach ” is defined in Section 8.1(d).

     “ Company Charter Documents ” means the Restated Certificate of Incorporation and the Bylaws of the Company, each as amended through the date hereof.

     “ Company Class A Option Value ” means, with respect to any Company Class A Stock Option, an amount per share of Company Stock subject to such Company Class A Stock Option equal to the greater of: (a) $14.50; and (b)(i) the product of the Parent Common Stock Closing FMV and 0.452, plus (ii) $14.50, less (iii) the exercise price per share of such Company Stock Option.

     “ Company Class B Option Value ” means, with respect to any Company Class B Stock Option, an amount per share of Company Stock subject to such Company Class B Stock Option equal to (a) the product of the Parent Common Stock Closing FMV and 0.452, plus (b) $14.50, less (c) the exercise price per share of such Company Stock Option.

     “ Company Class A Stock Option ” means each option to acquire Company Shares outstanding or in effect as of the Effective Time, excluding the Company Class B Options.

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     “ Company Class B Stock Option ” means each option to acquire Company Shares outstanding or in effect as of the Effective Time with an exercise price, as adjusted through the date hereof, in excess of $7.50.

     “ Company Disclosure Schedule ” means the disclosure schedules of the Company attached hereto as Schedule I .

     “ Company Financial Statements ” is defined in Section 4.1(g).

     “ Company Indemnified Parties ” is defined in Section 6.4.

     “ Company Leased Properties ” is defined in Section 4.1(u)(ii).

     “ Company Owned Properties ” is defined in Section 4.1(u)(i).

     “ Company Representatives ” is defined in Section 9.2(a).

     “ Company Restricted Stock Units ” means all restricted stock units representing the right to acquire Company Shares outstanding or in effect as of the Effective Time.

     “ Company SEC Documents ” means all forms and other documents (including all amendments thereto and all exhibits and other information incorporated therein) filed or required to be filed by the Company with the SEC since January 1, 2004, including, without limitation, (a) the Registration Statement on Form S-1 (Registration No. 333-131781) filed by the Company with the SEC on February 13, 2006, as amended, (b) its Annual Report on Form 10-K for the year ended December 31, 2005, (c) its Quarterly Reports on Form 10-Q for the periods ended March 31 and June 31, 2006, and (d) all proxy and information statements relating to meetings of, or action by, the Company’s stockholders held or taken since January 1, 2004.

     “ Company Shares ” means the issued and outstanding shares of common stock, $0.0005 par value per share, of the Company.

     “ Company Stockholder Approval ” is defined in Section 4.1(l)(iv).

     “ Company Stock Options ” means the Company Class A Stock Options and the Company Class B Stock Options.

     “ Company Stock Plan ” means any stock option, stock bonus, stock award or stock purchase plan, program or arrangement of the Company or any of its predecessors.

     “ Confidentiality Agreement ” means that certain Confidentiality and Standstill Agreement between the Company and Parent dated July 31, 2006.

     “ DGCL ” means the Delaware General Corporation Law.

     “ Dissenting Shares ” is defined in Section 3.1(d).

     “ Dissenting Stockholders ” is defined in Section 3.1(d).

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     “ Effective Time ” is defined in Section 2.2.

     “ Employer ” means the Company and any member of a controlled group or affiliated service group, as defined in Sections 414(b), (c), (m) and (o) of the Code, or Section 4001 of ERISA, of which the Company is a member.

     “ Environmental Claim ” means any Claim by any Person to, against or involving the Company asserting liability or potential liability (including without limitation, liability or potential liability for investigatory costs, cleanup costs, governmental response costs, natural resource damages, property damage, personal injury, fines or penalties) arising out of, relating to, based on or resulting from (a) the use, presence, disposal, discharge, emission, release or threatened release of any Hazardous Materials at any location, (b) circumstances forming the basis of any violation or alleged violation of any Environmental Laws or Environmental Permits, or (c) otherwise relating to obligations or liabilities of the Company under any Environmental Law or in connection with Hazardous Materials.

     “ Environmental Permits ” means all Permits required under Environmental Laws for the Company to own its properties and conduct its operations as presently conducted.

     “ Environmental Laws ” means all applicable foreign, federal, state and local statutes, rules, regulations, ordinances, orders, decrees and common law relating in any manner to pollution, protection of the environment or the use, storage, treatment or disposal of Hazardous Materials.

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

     “ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

     “ Exchange Agent ” is defined in Section 3.2(a).

     “ Exchange Fund ” is defined in Section 3.2(a).

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

     “ GE Loans ” means the Second Amended and Restated Credit Agreement, dated as of December 16, 2005, among Black Warrior Wireline Corp., as Borrower, the other credit parties from time to time signatory thereto, as credit parties, the lenders signatory thereto from time to time, as Lenders, and General Electric Capital Corporation, as Administrative Agent, Agent and Lender, and GE Capital Markets, Inc., as Lead Arranger (as amended through the date hereof).

     “ Governmental Entity ” means any court, administrative agency or commission or other governmental authority or agency, domestic or foreign, including local authorities.

     “ Hazardous Materials ” means all hazardous or toxic substances, wastes, materials or chemicals, petroleum (including crude oil or any fraction thereof) and petroleum products, asbestos and asbestos-containing materials, pollutants, contaminants, radioactive materials and all other materials and substances regulated pursuant to any Environmental Laws.

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     “ HIPAA ” means the Health Insurance Portability and Accountability Act of 1996, as amended.

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

     “ Intellectual Property ” means any patents, patent rights, trademarks, trademark rights, trade names, trade name rights, service marks, service mark rights, copyrights, technology, know-how, processes and other proprietary intellectual property rights and computer programs.

     “ IRS ” means the United States Internal Revenue Service.

     “ Knowledge ” with respect to (a) the Company means the knowledge of the officers of the Company listed in Schedule II hereto, after reasonable inquiry and (b) Parent and Merger Sub means the knowledge of the officers of Parent listed in Schedule III hereto, after reasonable inquiry.

     “ Leases ” means any executory lease having future rental payments of more than $250,000 in the aggregate.

     “ Lien ” means any lien, mortgage, pledge, security interest, charge, Claim or other encumbrance of any kind or nature.

     “ Material Adverse Effect ” or “ Material Adverse Change ” means, when used in connection with any Person, any event, circumstance, condition, development or occurrence causing, resulting in or having (or with the passage of time likely to cause, result in or have) a material adverse effect on the condition (financial or otherwise), business, properties, assets or results of operations of that Person and its Subsidiaries, taken as a whole; provided that, in no event shall any of the following be deemed to constitute or be taken into account in determining whether there has been a Material Adverse Effect with respect to a Person:

     (i) the performance of obligations under this Agreement in accordance herewith;

     (ii) changes in applicable law, rule or regulation or the application thereof;

     (iii) changes affecting the economy or the oilfield services industry generally;

     (iv) changes in the market price of oil or natural gas or the number of active drilling rigs operating;

     (v) changes in the market price of the Company Shares or the Parent Common Stock; or

     (vi) the public announcement or pending nature of the Merger.

     “ Material Contract ” means any contract, lease, indenture, agreement, arrangement or understanding to which the Company is a party or subject or by which the Company or any of its

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assets are bound that is currently in effect and (a) is of a type that would be required to be included as an exhibit to a Registration Statement on Form S-1 pursuant to the rules and regulations of the SEC if such registration statement were filed by the Company, (b) provides for future payments by or to the Company in excess of $500,000 in the aggregate (excluding master service agreements and other similar agreements) and that (i) is not terminable upon 30 days’ notice or involve commitments of six months or longer (excluding Leases) and (ii) even if so terminable, contains no post-termination obligations, termination penalties, buy-back obligations or similar obligations, (c) grants a right of first refusal or first negotiation or other preferential right to a third Person, (d) contains covenants limiting the freedom of the Company to engage in any line of business or compete with any Person or operate at any location, (e) requires payment of more than $50,000 to any officer, director or employee of the Company, (f) involves the acquisition, disposition, sale or lease of any material property or asset of the Company, (g) pertains to any joint venture agreement or partnership with regard to the assets of the Company, (h) provides any environmental indemnity or other similar right related to the business or operations of the Company (excluding master service agreements and other similar agreements), (i) secures or guarantees the payment of an obligation of another Person or (j) provides for the deferred payment of any purchase price, including any “earn-out” or other contingent payment arrangement.

     “ Merger ” is defined in the recitals hereof.

     “ Merger Consideration ” is defined in Section 3.1(b).

     “ Merger Sub ” is defined in the first paragraph hereof.

     “ Nasdaq ” means the Nasdaq Stock Market.

     “ Notice of Superior Proposal ” is defined in Section 9.2(b).

     “ NYSE ” means the New York Stock Exchange.

     “ Parent ” is defined in the first paragraph hereof.

     “ Parent Charter Documents ” means the Certificate of Incorporation and Bylaws of Parent, each as amended through the date hereof.

     “ Parent Common Stock ” means the common stock, $0.001 par value per share, of Parent.

     “ Parent Common Stock Closing FMV ” means the average of the closing sale prices of Parent Common Stock on the NYSE, as reported by Bloomberg Financial Markets or such other service as the parties may agree in writing, over the ten (10) consecutive trading days immediately preceding the third trading day before the Closing.

     “ Parent SEC Documents ” is defined in Section 4.2(f).

     “ Permit ” means any federal, state, provincial, local or foreign permit, license, variance, exemption, order, franchise and approval of a Governmental Entity.

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     “ Permitted Liens ” means (a) Liens for Taxes, assessments or similar governmental charge not yet due and payable or which are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained by the applicable party on their books in accordance with GAAP, (b) mechanic’s, workmen’s, landlord’s, operator’s, materialmen’s, maritime or other similar Liens with respect to amounts not yet due and payable or which are being contested in good faith by appropriate proceedings with adequate reserves with respect thereto maintained on the applicable Person’s books in accordance with GAAP and (c) purchase money Liens incurred in connection with the acquisition of assets permitted under Section 5.1(a)(vii).

     “ Person ” means an individual, corporation, partnership, limited liability company, association, trust, unincorporated organization or other entity.

     “ Personal Property ” means all machinery, equipment, furniture, fixtures and other tangible or intangible personal property used by a Person to carry on its business as presently conducted.

     “ Proxy Statement / Prospectus ” means the proxy statement and prospectus that are part of the Registration Statement to be mailed to the stockholders of the Company in connection with the Stockholder Meeting.

     “ Registration Statement ” means the Registration Statement on Form S-4 (or such successor form as shall then be appropriate) pursuant to which the shares of Parent Common Stock to be issued in the Merger will be registered by Parent under the Securities Act and to be sent to the stockholders of the Company in connection with the Stockholder Meeting, including any amendments or supplements thereto.

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

     “ Securities Act ” means the Securities Act of 1933, as amended.

     “ SOX ” is defined in Section 4.1(g).

     “ Stockholder Meeting ” means the special meeting of the Company’s stockholders convened for the purpose of obtaining Company Stockholder Approval.

     a “ Subsidiary ” of any Person means any corporation, partnership, association, joint venture, limited liability company or other entity in which such Person owns more than 50% of the stock or other equity interests, the holders of which are generally entitled to vote for the election of directors or other governing body of such other legal entity.

     “ Superior Proposal ” is defined in Section 9.2(c).

     “ Surviving Company ” is defined in Section 2.1.

     “ Tax ” or “ Taxes ” shall mean (a) all taxes of any kind, including, without limitation, those on or measured by or referred to as federal, state, local or foreign income, gross receipts, property, sales, use, ad valorem, franchise, profits, license, withholding, payroll, alternative or

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added minimum, employment, estimated, excise, transfer, severance, stamp, occupation, premium, value added, or windfall profits taxes, customs, duties or similar fees, assessments or charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts imposed by any Governmental Entity, (b) any transferee or secondary liability in respect of any tax, and (c) any liability in respect of any tax as a result of being a member of any affiliated, consolidated, combined, unitary or similar group.

     “ Tax Return ” means any return, declaration, report, statement, other document or information required to be filed with any Governmental Entity with respect to Taxes and any Claims for refunds of Taxes, including any amendments or supplements to any of the foregoing.

     “ Warrants ” is defined in Section 4.1(c).

ARTICLE 2
THE MERGER

      Section 2.1 The Merger . Upon the terms and subject to the conditions set forth in this Agreement and in accordance with the DGCL, the Company shall be merged with and into Merger Sub at the Effective Time (as defined below). Following the Merger, the separate corporate existence of the Company shall cease and Merger Sub shall continue as the surviving corporation (the “ Surviving Company ”) and shall succeed to and assume all the rights and obligations of the Company in accordance with the DGCL.

      Section 2.2 Effective Time . At or as soon as practicable following the Closing, the parties shall file a certificate of merger or other appropriate documents with the Secretary of State of Delaware with respect to the Merger executed in accordance with the relevant provisions of the DGCL (the “ Certificate of Merger ”). The Merger shall become effective at such time as the Certificate of Merger is duly filed with the Secretary of State of Delaware or at such other time as Parent, Merger Sub and the Company shall agree should be specified in the Certificate of Merger (the time the Merger becomes effective being referred to herein as the “ Effective Time ”).

      Section 2.3 Effects of The Merger . The Merger shall have the effects specified in the DGCL.

      Section 2.4 Certificate of Incorporation and Bylaws .

          (a) The Certificate of Incorporation of Merger Sub, as in effect at the Effective Time, shall be the Certificate of Incorporation of the Surviving Company until thereafter changed or amended as provided therein or by applicable law; provided, however, that the Certificate of Merger shall contain a provision pursuant to which the Certificate of Incorporation of the Surviving Corporation shall be amended to change the name of the Surviving Corporation to “Warrior Energy Services Corporation” effective as of the Effective Time.

          (b) The bylaws of Merger Sub as in effect at the Effective Time shall be the bylaws of the Surviving Company until thereafter changed or amended as provided therein or by applicable law.

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      Section 2.5 Officers . The officers of the Company at the Effective Time shall be the officers of the Surviving Company and shall hold office until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be.

      Section 2.6 Further Assurances . If at any time after the Effective Time, the Surviving Company shall consider or be advised that any deeds, bills of sale, assignments or assurances or any other acts or things are necessary, desirable or proper (a) to vest, perfect or confirm, of record or otherwise, in the Surviving Company, its right, title or interest in, to or under any of the rights, privileges, powers, franchises, properties or assets of either of the constituent corporations to the Merger or (b) otherwise to carry out the purposes of this Agreement, the Surviving Company and its appropriate officers and directors or their designees shall be authorized to execute and deliver, in the name and on behalf of either of the constituent corporations to the Merger, all such deeds, bills of sale, assignments and assurances and do, in the name and on behalf of such constituent corporations, all such other acts and things necessary, desirable or proper to vest, perfect or confirm its right, title or interest in, to or under any of the rights, privileges, powers, franchises, properties or assets of such constituent corporation and otherwise to carry out the purposes of this Agreement.

      Section 2.7 Closing . The closing of the transactions contemplated by this Agreement (the “ Closing ”) shall take place at the offices of Jones, Walker, Waechter, Poitevent, Carrère & Denègre, LLP, 201 St. Charles Avenue, Suite 5100, New Orleans, Louisiana, at 9:00 a.m., New Orleans time, no later than the third business day after the day on which the last of the conditions set forth in Article 7 shall have been fulfilled or waived (other than those conditions that by their terms cannot be satisfied until the Closing) or at such other time and place as Parent, Merger Sub and the Company shall agree.

ARTICLE 3
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT COMPANIES;
EXCHANGE OF CERTIFICATES

      Section 3.1 Effect on Capital Stock . As of the Effective Time, by virtue of the Merger and without any action on the part of the holders of any of the Company Shares, the following shall occur:

          (a) Cancellation of Treasury Shares . All Company Shares that are owned directly or indirectly by the Company as treasury stock shall be canceled, and no consideration shall be delivered in exchange therefor.

          (b) Conversion of Company Shares . Subject to the provisions of Sections 3.1(a), 3.1(c), 3.1(d) and 3.4, each Company Share issued and outstanding immediately prior to the Effective Time (excluding Company Shares cancelled pursuant to Section 3.1(a)) shall be converted into the right to receive (collectively, the “ Merger Consideration ”):

     (i) $14.50 in cash; and

     (ii) .452 shares of Parent Common Stock.

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All such Company Shares, when so converted, shall no longer be outstanding and shall automatically be canceled and retired and each holder of a Certificate representing any such shares shall cease to have any rights with respect thereto, except the right to receive certain dividends and other distributions as contemplated by Section 3.3, the Cash Consideration, shares of Parent Common Stock and any cash, without interest, in lieu of fractional shares to be issued or paid in consideration therefor upon the surrender of such Certificate in accordance with Section 3.2.

          (c) Treatment of Company Stock Options .

               (i) Prior to the Effective Time, the Company shall cause each Company Class A Stock Option to be vested and shall cancel each such Company Class A Stock Option immediately prior to the Effective Time for consideration payable by Parent at or as promptly as practicable following the Closing equal to the Company Class A Option Value, and all such options shall terminate immediately prior to the Effective Time. The Company Class A Option Value with respect to each Company Stock Option shall be paid as follows: $14.50 of the Company Class A Option Value shall be paid in cash and the remainder of the Company Class A Option Value shall be paid in shares of Parent Common Stock. The number of shares of Parent Common Stock to be paid in respect of the Company Class A Stock Options shall be determined by dividing (i) the amount of the Class A Option Value to be paid in the form of Parent Common Stock by (ii) the Parent Common Stock Closing FMV.

               (ii) Prior to the Effective Time, the Company shall cause each Company Class B Stock Option to be vested and shall cancel each such Company Class B Stock Option immediately prior to the Effective Time for consideration payable by Parent at or as promptly as practicable following the Closing equal to the Company Class B Option Value, and all such options shall terminate immediately prior to the Effective Time. The Company Class B Option Value with respect to each Company Stock Option shall be paid in shares of Parent Common Stock. The number of shares of Parent Common Stock to be paid in respect of the Company Class B Stock Options shall be determined by dividing (i) the amount of the Class B Option Value to be paid by (ii) the Parent Common Stock Closing FMV.

               (iii) The Board of Directors of the Company (or an appropriate committee thereof) shall adopt such resolutions or take such other actions as may be required prior to the Effective Time to cause all restrictions on the then outstanding Company Restricted Stock Units to lapse as of immediately prior to the Effective Time and to cause the Company Shares issuable upon vesting of the outstanding Company Restricted Stock Units to be issued immediately prior to the Effective Time. Each holder of Company Restricted Stock Units shall be treated as a holder of Company Shares issued and outstanding as of immediately prior to the Effective Time.

               (iv) As of the Effective Time, except as provided in this Section 3.1, all rights under any Company Stock Option or Company Restricted Stock Unit and any provision of any Company Stock Plans providing for the issuance or grant of any other interest in respect of the capital stock of the Company shall be cancelled. The Company shall ensure that, as of and after the Effective Time, except as provided in this Section 3.1, no Person shall have any rights under any Company Stock Plan.

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               (v) Any amounts payable pursuant to this Section 3.1(c) shall be subject to any required withholding of taxes and shall be paid without interest.

          (d) Dissenting Shares . Notwithstanding anything in this Agreement to the contrary, Company Shares that are outstanding immediately prior to the Effective Time and that are held by dissenting stockholders of the Company (the “ Dissenting Stockholders ”) who shall have perfected dissenters’ rights in accordance with Section 262 of the DGCL (the “ Dissenting Shares ”) shall not be converted into or represent the right to receive the Merger Consideration (but instead shall be converted into the right to receive payment from the Surviving Company with respect to such Dissenting Shares in accordance with the DGCL), unless and until such Dissenting Stockholder shall have failed to perfect or shall have effectively withdrawn or lost such Dissenting Stockholder’s rights to appraisal under the DGCL. If any such Dissenting Stockholder shall have failed to perfect or shall have effectively withdrawn or lost such holder’s rights to appraisal of such Company Shares under the DGCL, such Dissenting Stockholder’s Company Shares shall thereupon be deemed to have been converted into and to have become exchangeable for, at the Effective Time, the right to receive, upon surrender as provided above, the Merger Consideration for the Certificate or Certificates that formerly evidenced such Company Shares. The Company shall, prior to the Effective Time, use all reasonable efforts to give Parent and Merger Sub prompt notice of any written demands for payment of the fair value of any Company Shares, withdrawals of such demands, and any other instruments served on the Company pursuant to the DGCL received by the Company relating to stockholders’ rights of appraisal. Except with the prior written consent of Parent and Merger Sub, the Company shall not voluntarily make any payment with respect to any demands for appraisal, or settle or offer to settle any such demands.

      Section 3.2 Surviving Company to Make Certificates Available .

          (a) Exchange of Certificates . The Company and Parent shall authorize American Stock Transfer & Trust Company (or such other Person or Persons as shall be reasonably acceptable to the Company and Parent) to act as exchange agent hereunder (the “ Exchange Agent ”). As soon as practicable after the Effective Time, the Surviving Company shall deposit with the Exchange Agent for the benefit of the holders of certificates which immediately prior to the Effective Time represented Company Shares (the “ Certificates ”), the Cash Consideration and certificates representing the shares of Parent Common Stock (such Cash Consideration and shares of Parent Common Stock, together with any dividends or distributions with respect thereto payable as provided in Section 3.3, being hereinafter referred to as the “ Exchange Fund ”) issuable pursuant to Section 3.1(c) in exchange for outstanding Company Shares.

          (b) Exchange Procedures . Promptly after the Effective Time, the Exchange Agent shall mail or deliver to each holder of record of a Certificate whose shares were converted pursuant to Section 3.1 into shares of Parent Common Stock a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon actual and proper delivery of the Certificates to the Exchange Agent and shall contain instructions for use in effecting the surrender of the Certificates in exchange for the Cash Consideration and certificates representing shares of Parent Common Stock and shall be in such form and contain such other provisions as the Company and Parent may reasonably specify).

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Upon surrender of a Certificate for cancellation to the Exchange Agent, together with such letter of transmittal, duly executed, the holder of such Certificate shall be entitled to receive in exchange therefor the Cash Consideration and a certificate representing that number of whole shares of Parent Common Stock which such holder has the right to receive pursuant to this Article 3, and the Certificate so surrendered shall forthwith be canceled. Until surrendered as contemplated by this Section 3.2, each Certificate shall, at and after the Effective Time, be deemed to represent only the right to receive, upon surrender of such Certificate, the Cash Consideration, the certificate representing the appropriate number of shares of Parent Common Stock, cash in lieu of fractional shares, if any, as provided in Section 3.4 and certain dividends and other distributions as contemplated by Section 3.3.

      Section 3.3 Dividends; Transfer Taxes . No dividends or other distributions that may be declared on or after the Effective Time on Parent Common Stock or are payable to the holders of record thereof on or after the Effective Time will be paid to Persons entitled by reason of the Merger to receive certificates representing Parent Common Stock until such Persons surrender their Certificates, as provided in Section 3.2, and no Cash Consideration or cash payment in lieu of fractional shares shall be paid to any such holder pursuant to Section 3.4 until such holder of such Certificate shall so surrender such Certificate. Subject to the effect of applicable law, there shall be paid to the record holder of the certificates representing such Parent Common Stock (a) at the time of such surrender or as promptly as practicable thereafter, the amount of any dividends or other distributions theretofore paid with respect to whole shares of such Parent Common Stock and having a record date on or after the Effective Time and a payment date prior to such surrender and (b) at the appropriate payment date or as promptly as practicable thereafter, the amount of dividends or other distributions payable with respect to whole shares of Parent Common Stock and having a record date on or after the Effective Time but prior to surrender and a payment date subsequent to surrender. In no event shall the Person entitled to receive such dividends or other distributions be entitled to receive interest on such dividends or other distributions. If any cash or certificate representing shares of Parent Common Stock is to be paid to or issued in a name other than that in which the Certificate surrendered in exchange therefor is registered, it shall be a condition of such exchange that the Certificate so surrendered shall be properly endorsed and otherwise in proper form for transfer and that the Person requesting such exchange shall pay to the Exchange Agent any transfer or other taxes required by reason of the issuance of certificates for such shares of Parent Common Stock in a name other than that of the registered holder of the Certificate surrendered, or shall establish to the satisfaction of the Exchange Agent that such tax has been paid or is not applicable.

      Section 3.4 No Fractional Shares . No certificates representing fractional shares of Parent Common Stock shall be issued upon the surrender for exchange of Certificates pursuant to this Article 3, and no Parent dividend or other distribution or stock split or combination shall relate to any fractional security, and such fractional interests shall not entitle the owner thereof to vote or to any rights of a security holder of Parent. In lieu of any such fractional shares, each holder of Company Shares who would otherwise have been entitled to receive a fraction of a share of Parent Common Stock (after taking into account all Company Shares then held of record by such holder) shall receive cash (without interest) in an amount equal to the product of such fractional part of a share and the average closing sale price of Parent Common Stock on the New York Stock Exchange, as reported by Bloomberg Financial Markets or such other service as the

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parties may agree in writing, for the ten (10) consecutive trading days immediately preceding the third trading day before the Closing.

      Section 3.5 Return of Exchange Fund . Any portion of the Exchange Fund that remains undistributed to the former stockholders of the Company for one year after the Effective Time shall be delivered to Parent, upon demand of Parent, and any former stockholders of the Company who have not theretofore complied with this Article 3 shall thereafter look only to Parent for payment of their claim for Parent Common Stock, Cash Consideration, any cash in lieu of fractional shares of Parent Common Stock and any dividends or distributions with respect to Parent Common Stock. None of the Company, Parent, Merger Sub or the Surviving Company shall be liable to any holder of Company Shares for shares (or dividends or distributions with respect thereto) or cash in lieu of fractional shares of Parent Common Stock delivered to a public official pursuant to any applicable abandoned property, escheat or similar law.

      Section 3.6 Further Ownership Rights in Company Common Stock . All shares of Parent Common Stock issued upon the surrender of Certificates for exchange in accordance with the terms hereof (including any cash paid pursuant to Sections 3.3 or 3.4) shall be deemed to have been issued in full satisfaction of all rights pertaining to the Company Shares, subject, however, to the Surviving Company’s obligation to pay any dividends or make any other distribution with a record date prior to the Effective Time which may have been declared or made by the Company on Company Shares in accordance with the terms of this Agreement.

      Section 3.7 Closing of the Company’s Transfer Books . At the Effective Time, the stock transfer books of the Company shall be closed and no transfer of Company Shares shall thereafter be made. If, after the Effective Time, Certificates are presented to the Surviving Company, they shall be canceled and exchanged as provided in this Article 3.

      Section 3.8 Withholding Rights . Parent and Surviving Company shall be entitled to deduct and withhold from the consideration otherwise payable to any holder of the Company Shares, Company Stock Options or Company Restricted Stock Units pursuant to this Agreement such amounts as may be required to be deducted and withheld with respect to the making of such payment under the Code, or under any provision of Federal, state or local tax law. To the extent amounts are so withheld and paid over to the appropriate taxing authority by Parent, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holders of Company Shares, Company Stock Options or Company Restricted Stock Units in respect of which such deduction and withholding was made by Parent.

      Section 3.9 Adjustments .

          (a) Stock Split, Stock Dividend, Recapitalization . Notwithstanding anything contained in this Article III to the contrary (but without limiting the covenants set forth in Article V hereof), if between the date of this Agreement and the Effective Time, the outstanding shares of Parent Common Stock shall be changed into a different number of shares or a different class by reason of the occurrence or record date of any stock dividend, subdivision, reclassification, recapitalization, stock split, combination, exchange of shares or similar transaction, then the exchange ratio provided for in Section 3.1(b)(ii), the Company Class A Option Value and the Company Class B Option Value shall be appropriately and proportionately

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adjusted to reflect such stock dividend, subdivision, reclassification, recapitalization, stock split, combination, exchange of shares or similar transaction.

          (b) Merger . In the event that, prior to the Effective Time, Parent shall consummate a merger, consolidation, share exchange or other reorganization, or any other transaction pursuant to which the holders of Parent Common Stock receive or become entitled to receive securities, cash or other assets or any combination thereof, each holder of Company Shares as of immediately prior to the Effective Time shall be entitled to receive at the Effective Time for each Company Share, the amount of cash included in the Merger Consideration plus the amount of securities, cash or other assets that such holder would have been entitled to receive or become entitled to receive had such holder been the record holder of the number of shares of Parent Common Stock issuable to such holder of Company Shares pursuant to Section 3.1(b) had the Effective Time occurred immediately prior to the consummation of such transaction.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES

      Section 4.1 Representations and Warranties of The Company . The Company represents and warrants to Parent and Merger Sub as follows:

          (a) Organization, Standing and Power . The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. The Company is duly qualified to do business and is in good standing in each jurisdiction in which the operation of its business or the ownership or leasing of its properties makes such qualification necessary, except to the extent the failure of the Company to be so qualified and in good standing would not, or could not reasonably be expected to, have a Material Adverse Effect on the Company.

          (b) Subsidiaries . The Company has no Subsidiaries and does not own, directly or indirectly, any capital stock, equity interest or other ownership interest in any other Person.

          (c) Capital Structure . As of the date hereof, the authorized capital stock of the Company consists of 35,000,000 Company Shares, of which (i) 11,076,265 shares are issued and outstanding, and 2,500,000 shares of preferred stock, $0.0005 par value per share, of which none have been issued or are outstanding, (ii) 664,074 Company Shares are reserved for issuance upon the exercise of outstanding Company Stock Options, (iii) 33,500 Company Shares are reserved for issuance upon the exercise of outstanding warrants to purchase Company Shares (the “ Warrants ”) and (iv) 347,929 Company Shares are reserved for issuance upon the vesting of outstanding Company Restricted Stock Units. As of the Effective Time, the Warrants shall have been repurchased by the Company, terminated or amended to the reasonable satisfaction of Parent. The Company Shares are listed on Nasdaq. Section 4.1(c) of the Company Disclosure Schedule sets forth an accurate and complete list and brief description (including, if applicable, the exercise price) of all outstanding or authorized Warrants, Company Stock Options and Company Restricted Stock Units. Except for the Warrants, Company Stock Options or Company Restricted Stock Units or except as otherwise set forth in Section 4.1(c) of the

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Company Disclosure Schedule, there are no other securities, options, warrants, calls, rights, commitments, preemptive rights, agreements, arrangements or undertakings of any kind to which the Company is a party, or by which the Company is bound, obligating the Company to issue, deliver or sell, or cause to be issued, delivered or sold, any shares of capital stock or other equity or voting securities of, or other ownership interests in, the Company or obligating the Company to issue, grant, extend or enter into any such security, option, warrant, call, right, commitment, agreement, arrangement or undertaking. All outstanding Company Shares are, and all Company Shares issuable upon the exercise of any outstanding Company Stock Options or Warrants or vesting of Company Restricted Stock Units will be when issued in accordance with their terms thereunder, validly issued, fully paid and nonassessable and not subject to preemptive rights. Except as set forth in Section 4.1(c) of the Company Disclosure Schedule, no capital stock has been issued by the Company since the Company Balance Sheet Date, other than Company Shares issued pursuant to the exercise of Warrants or Company Stock Options or vesting of Company Restricted Stock Units outstanding on or prior to such date in accordance with their terms. There are not as of the date of this Agreement any stockholder agreements, voting trusts or other agreements or understandings to which the Company is a party or by which it is bound relating to the voting of any shares of the capital stock of the Company, and there will be no such agreements at the Effective Time.

          (d) Authority . The Company has the requisite corporate power and authority to enter into this Agreement and, subject to obtaining Company Stockholder Approval, to consummate the Merger and the other transactions contemplated hereby. The execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company, subject to obtaining Company Stockholder Approval. This Agreement has been duly and validly executed and delivered by the Company and constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except to the extent that (i) such enforcement may be subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws or judicial decisions now or hereafter in effect relating to creditors’ rights generally and (ii) general principles of equity, whether considered in a proceeding at law or in equity.

          (e) Non-Contravention . Except as set forth in Section 4.1(e) of the Company Disclosure Schedule, and except for the GE Loans, the execution and delivery of this Agreement by the Company does not, and the consummation of the transactions contemplated hereby and compliance with the provisions hereof by the Company will not, conflict with, or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of or “put” right with respect to any obligation or to loss of a material benefit under, or result in the creation of any Lien on, any of the properties or assets of the Company under, any provision of (i) the Company Charter Documents, (ii) any Material Contract or license or permit applicable to the Company or any of its properties or assets or (iii) any judgment, order, decree, statute, law, ordinance, rule or regulation or arbitration award applicable to the Company or any of its properties or assets, except for such violations, conflicts, losses, defaults, rights, accelerations or Liens that do not or could not reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.

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          (f) Governmental Approvals . Except as set forth in Section 4.1(f) of the Company Disclosure Schedule, no consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required by or with respect to the Company in connection with the execution and delivery of this Agreement by the Company or the consummation by the Company of the transactions contemplated hereby, except for (i) the filing of a premerger notification and report form by the Company under the HSR Act, (ii) the filing with the SEC of such reports under Section 13 or 14 of the Exchange Act as may be required in connection with this Agreement and the transactions contemplated hereby, (iii) the filing of the Certificate of Merger with the Secretary of State of Delaware with respect to the Merger as provided in the DGCL and appropriate documents with the relevant authorities of other jurisdictions in which the Company is qualified to do business, (iv) filings or notices required by the rules of Nasdaq and (v) those consents, approvals, orders, authorizations, registrations, declarations or filings which, if not obtained or made, do not or could not reasonably be expected to (A) impair the ability of the Company to perform its obligations hereunder or prevent or delay the consummation of the transactions contemplated by this Agreement or, (B) individually or in the aggregate, have a Material Adverse Effect on the Company.

          (g) Company SEC Documents .

               (i) As of their initial effective dates (in the case of registration statements filed under the Securities Act) or filing dates (in the case of all other Company SEC Documents), the Company SEC Documents complied in all material respects with the requirements of the Securities Act and the Exchange Act (as applicable) and the rules and regulations of the SEC promulgated thereunder applicable to the Company SEC Documents, and none of the Company SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the Company SEC Documents (the “ Company Financial Statements ”) comply in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments and other adjustments described therein). Management of the Company has established and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are effective to ensure that all material information concerning the Company is made known on a timely basis to the individuals responsible for preparing the Company’s SEC filings and other public disclosure by the Company and that are effective to ensure that the Company is otherwise in compliance in all material respects with the applicable provisions of the Sarbanes-Oxley Act of 2002, as amended (“ SOX ”) and the applicable listing standards of Nasdaq. Except as set forth in Section 4.1(g) of the Company Disclosure Schedule, the management of the Company (i) has established and maintains a system of internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) designed to provide reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of the Company’s financial statements for external

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purposes in accordance with GAAP and (ii) has disclosed, based on its most recent evaluation of its internal controls over financial reporting, to the Company’s outside auditors (A) all significant deficiencies and material weaknesses in the design or operation of its internal controls over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting. The Company has disclosed to Parent in writing prior to the date hereof all disclosures described in clauses (A) and (B) of the immediately preceding sentence.

               (ii) The chief executive officer and chief financial officer of the Company have made all certifications (without qualification or exception to the matters certified) required by, and would be able to make such certifications (without qualification or exception to the matters certified) as of the date hereof and as of the date of the Closing as if required to be made as of such dates pursuant to, SOX and any related rules and regulations promulgated by the SEC, and the statements contained in any such certifications are true and correct. Neither the Company nor its officers have received any notice from any Governmental Entity questioning or challenging the accuracy, completeness, form or manner of filing or submission of such certifications.

          (h) Accounts Receivable . All of the accounts receivable reflected on the Company Balance Sheet or created thereafter (i) have arisen only from bona fide transactions in the ordinary course of business, (ii) represent valid obligations owing to the Company thereof, (iii) except as may be reserved against in the Company Financial Statements (or the Company’s accounting records as such reserves may be adjusted consistent with past practice for operations and transactions through the Effective Time) or set forth on Schedule 4.1(h) of the Company Disclosure Schedule, are subject to no material valid counterclaims or setoffs, and (iv) have been accrued in accordance with GAAP. Section 4.1(h) of the Company Disclosure Schedule sets forth a summary listing of all accounts receivable of the Company as of the date specified therein and reflects receivables aged less than 90 days from the date of invoice as a group and sets forth all receivables aged more than 90 days individually by customer, invoice and amount.

          (i) Absence of Certain Changes or Events . Except as set forth in Section 4.1(i) of the Company Disclosure Schedule, since the Company Balance Sheet Date, the Company has conducted its business only in the ordinary course consistent with past practice and as permitted by Article 5, and there has not been, except as permitted pursuant to Section 5.1:

               (i) any event, occurrence, circumstance or development that has had, or could reasonably be expected to have, a Material Adverse Effect with respect to the Company;

               (ii) any declaration, setting aside or payment of any dividend (whether in cash, stock or property) with respect to any of the Company’s capital stock or any repurchase, redemption or other acquisition by the Company of any amount of outstanding shares of capital stock or other equity securities of, or other ownership interests in, the Company;

               (iii) any amendment of any term of any outstanding security of the Company that would increase the obligations of the Company under such security;

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               (iv) (A) any incurrence or assumption by the Company of any indebtedness for borrowed money, or (B) any guaranty, endorsement or other incurrence or assumption of liability, whether directly, contingently or otherwise, by the Company for the obligations of any other Person;

               (v) any creation or assumption by the Company of any Lien on any material asset of the Company, other than Permitted Liens;

               (vi) any making of any loan, advance or capital contribution to or investment in any Person by the Company other than loans, advances, capital contributions or investments, in each case not exceeding $50,000 or to the Company;

               (vii) (A) any Material Contract entered into by the Company on or prior to the date hereof, or (B) any (i) modification, amendment, assignment, in a manner adverse to the Company, or (ii) termination or relinquishment by the Company, of any Material Contract or other material contract, license or other right (including any insurance policy naming it as a beneficiary or loss payable payee), in each case except with respect to the execution and delivery of this Agreement;

               (viii) (A) any granting by the Company to any director, officer or key employee of the Company of any increase in compensation, (B) any granting by the Company to any such director, officer or key employee of any increase in severance or termination pay, except as was required under employment, severance or termination agreements in effect as of the Company Balance Sheet Date, or (C) any entry by the Company into any employment, severance or termination agreement with any such director, officer or key employee;

               (ix) any damage, destruction or loss suffered or incurred by the Company not covered by insurance that has or reasonably could be expected to exceed $500,000;

               (x) any change in accounting methods, principles or practices by the Company materially affecting its assets, liabilities or business, except insofar as may have been required by a change in GAAP; or

               (xi) any event which, if it had taken place following the execution of this Agreement, would not have been permitted by Section 5.1.

          (j) No Undisclosed Liabilities . As of the date hereof, except (a) as specifically disclosed or provided for in Section 4.1(j) of the Company Disclosure Schedules or in the Company Balance Sheet and (b) for liabilities and obligations incurred in the ordinary course of business consistent with past practices since the Company Balance Sheet Date, the Company has not incurred any liabilities or obligations of any nature (contingent or otherwise) that would or could reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect on the Company.

          (k) No Default . The Company is not in default or violation (and no event has occurred which, with notice or the lapse of time or both, would constitute such a default or violation) of any term, condition or provision of (i) the Company Charter Documents, or (ii) any order, writ, injunction, decree, statute, rule or regulation applicable to the Company except in the

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case of clause (ii) for such defaults or violations that do not or could not reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.

          (l)  State Takeover Statutes; Corporate Approvals .

               (i) Neither this Agreement, the Merger nor any of the other transactions contemplated hereby is subject to the requirements of any moratorium, control share, fair price, affiliate transaction, business combination or other anti-takeover laws and regulations of any jurisdiction, including without limitation, Section 203 of the DGCL.

               (ii) The Board of Directors of the Company, at a meeting duly called and held, has unanimously (i) determined that this Agreement and the transactions contemplated hereby, including the Merger, are fair to and in the best interests of the stockholders of the Company, (ii) approved this Agreement and the transactions contemplated hereby, including the Merger, and (iii) recommended adoption and approval of this Agreement and the Merger by the stockholders of the Company and the transactions contemplated thereby.

               (iii) The Company’s Board of Directors has received a written opinion from Simmons & Company International to the effect that, as of the date of such opinion, the consideration to be received in the Merger by the holders of Company Shares is fair, from a financial point of view, to the holders of the Company Shares. True and complete copies of such opinion have been given to Parent.

               (iv) Except for the adoption of the Merger by holders of at least a majority of the outstanding Company Shares (the “ Company Stockholder Approval ”), no consent or other vote of the stockholders of the Company is required by applicable law, the Company Charter Documents or otherwise in order for the Company to consummate the Merger and the other transactions contemplated hereby.

          (m) Litigation . Except as set forth in Section 4.1(m) of the Company Disclosure Schedule, (i) there are no pending, or to the Company’s Knowledge, threatened, Claims against or involving the Company, (ii) neither the Company nor any of its assets or properties is subject to any order, writ, judgment, award, injunction or decree of any Governmental Entity and (iii) there is no judgment, decree, injunction, rule or order of any Governmental Entity or arbitrator outstanding against the Company, in each case, which could reasonably be expected to prevent, hinder or materially delay the ability of the Company to consummate the transactions contemplated by this Agreement.

          (n) Employee Benefit Matters .

               (i) Section 4.1(n)(i) of the Company Disclosure Schedule contains a complete and correct list of all Company Benefit Plans. With respect to each Company Benefit Plan, to the extent applicable: (A) the plan is in compliance in all material respects with the Code, ERISA, HIPAA, all other applicable laws, and the regulations thereunder, including all reporting and disclosure requirements of Part 1 of Subtitle B of Title I of ERISA; (B) the appropriate Form 5500s have been timely filed; (C) there has been no transaction described in Section 406 or Section 407 of ERISA or Section 4975 of the Code unless exempt under Section 408 of ERISA or Section 4975 of the Code, as applicable; (D) there is no issue pending nor any

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issue resolved adversely to the Employer which may subject the Employer to the payment of a penalty, interest, Tax or other amount, (E) each Company Benefit Plan can be unilaterally terminated or amended by the Employer; (F) all contributions or other amounts payable by the Employer as of the Effective Time with respect to each Company Benefit Plan have either been paid or accrued in the most recent Company Financial Statements; and (G) there are no pending or, to the Company’s Knowledge, threatened or anticipated Claims (other than routine Claims for benefits), by, on behalf of, against or relating to any Company Benefit Plan or their related trusts, the plan sponsor, the plan administrator, or any fiduciary of such plan.

               (ii) With respect to each Company Benefit Plan, the Company has made available to Parent true and correct copies of each of the following documents, to the extent applicable: (A) the Company Benefit Plan document(s), including but not limited to, trust agreements, insurance policies, service agreements and formal and informal amendments to each (or if the Company Benefit Plan is not a written agreement, a description thereof); (B) the most recent annual Form 5500 reports filed with the IRS, with all required attachments; (C) all “top-hat” statements filed with the Department of Labor pursuant to Department of Labor Regulation Section 2520.104-23; (D) the most recent IRS opinion letter or determination letter; (E) all notices the IRS, Department of Labor, or any other governmental agency or entity issued to the Company within the four (4) years preceding the date of this Agreement; and (F) the most recent summary plan description and summaries of material modifications thereof.

               (iii) Since September 1, 2000, the Employer has not maintained, had any obligation to contribute to, or incurred any liability with respect to a pension plan that is or was subject to Title IV of ERISA or Section 412 of the Code or made or been obligated to make or reimbursed or been obligated to reimburse another employer for, contributions to any multiemployer plan (as defined in Section 3(37) of ERISA). During the last six years, the Employer has not maintained, had an obligation to contribute to or in


 
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