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EXECUTION COPY
EXHIBIT 2
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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
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TABLE OF CONTENTS
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PAGE
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ARTICLE 1
DEFINITIONS.............................................................................................3
Section 1.1
Definitions.............................................................................3
ARTICLE 2 THE
MERGER.............................................................................................10
Section 2.1 The
Merger.............................................................................10
Section 2.2 Effective
Time.........................................................................10
Section 2.3 Effects of
The
Merger..................................................................11
Section 2.4
Certificate of Incorporation and
Bylaws................................................11
Section 2.5
Officers...............................................................................11
Section 2.6 Further
Assurances.....................................................................11
Section 2.7
Closing................................................................................11
ARTICLE 3 EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT COMPANIES; EXCHANGE OF CERTIFICATES.......12
Section 3.1 Effect on
Capital
Stock................................................................12
Section 3.2 Surviving
Company to Make Certificates
Available.......................................14
Section
3.3 Dividends;
Transfer
Taxes..............................................................15
Section 3.4 No
Fractional
Shares...................................................................15
Section 3.5 Return of
Exchange
Fund................................................................15
Section 3.6 Further
Ownership Rights in Company Common
Stock.......................................16
Section 3.7 Closing of
the Company's Transfer
Books................................................16
Section 3.8
Withholding
Rights.....................................................................16
Section 3.9
Adjustments............................................................................16
ARTICLE 4 REPRESENTATIONS AND
WARRANTIES.........................................................................17
Section 4.1
Representations and Warranties of The
Company..........................................17
Section 4.2
Representations and Warranties of Parent and Merger
Sub................................32
ARTICLE 5 COVENANTS RELATING TO CONDUCT OF
BUSINESS..............................................................36
Section 5.1 Conduct of
Business of The
Company.....................................................36
Section 5.2 Conduct of
Business of Parent and Merger
Sub...........................................39
ARTICLE 6 ADDITIONAL
AGREEMENTS..................................................................................39
Section 6.1
Registration Statement; Stockholder
Approval...........................................39
Section 6.2 Access to
Information..................................................................41
Section 6.3 Reasonable
Efforts;
Notification.......................................................41
Section 6.4
Indemnification and
Insurance..........................................................43
Section 6.5 Fees and
Expenses......................................................................43
Section 6.6 Public
Announcements...................................................................44
Section 6.7 Agreement
to
Defend....................................................................44
Section 6.8 Benefit
Matters........................................................................44
Section 6.9 Affiliate
Agreements; Tax
Treatment....................................................45
ARTICLE 7 CONDITIONS
PRECEDENT...................................................................................45
Section 7.1 Conditions
to Each Party's Obligation to Effect The
Merger.............................45
Section 7.2 Conditions
to Obligations of Parent and Merger
Sub.....................................46
Section 7.3 Condition
to Obligations of The
Company................................................47
ARTICLE 8 TERMINATION, AMENDMENT AND
WAIVER......................................................................47
Section 8.1
Termination............................................................................47
Section 8.2 Procedure
for Termination, Amendment, Extension or
Waiver..............................49
Section 8.3 Effect of
Termination..................................................................49
Section 8.4
Amendment..............................................................................49
Section 8.5 Extension;
Waiver......................................................................49
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ARTICLE 9 SPECIAL PROVISIONS AS TO CERTAIN
MATTERS...............................................................50
Section 9.1 Takeover
Defenses of The
Company.......................................................50
Section 9.2 No
Solicitation........................................................................50
Section 9.3 Fee and
Expense
Reimbursements.........................................................52
ARTICLE 10 GENERAL
PROVISIONS....................................................................................53
Section 10.1
Survival..............................................................................53
Section 10.2
Notices...............................................................................53
Section 10.3
Interpretation........................................................................54
Section 10.4
Counterparts..........................................................................54
Section 10.5 Entire
Agreement; No Third-Party
Beneficiaries........................................54
Section 10.6 Governing
Law.........................................................................55
Section 10.7
Assignment............................................................................55
Section 10.8
Enforcement of the
Agreement..........................................................55
Section 10.9 Attorney's
Fees.......................................................................55
Section
10.10 Performance by
Merger
Sub.............................................................55
Section 10.11
Severability..........................................................................55
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
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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.
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"Cash Consideration" means the aggregate amount payable pursuant
to
Section 3.1(b)(i).
"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.
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"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.
"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.
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"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).
"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).
6
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"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.
"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;
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(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 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).
8
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"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.
"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.
9
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"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
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").
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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.
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, Carrere & Denegre, 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.
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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.
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.
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(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 an
after the
Effective Time, except as provided in this Section 3.1, no Person
shall have any
rights under any Company Stock Plan.
(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.
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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). 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.
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<PAGE>
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 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.
15
<PAGE>
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 been 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 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.
16
<PAGE>
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 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.
17
<PAGE>
(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 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.
18
<PAGE>
(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
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.
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<PAGE>
(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;
20
<PAGE>
(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;
(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.
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<PAGE>
(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 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.
22
<PAGE>
(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 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
Benefi
