Acquisition Agreement

 

 

the outstanding Eagle S-Corp Capital Stock will be converted into the right to receive the Eagle S-Corp Merger Consideration in the manner set forth herein; and as a result of the Merger, Eagle S-Corp will become a wholly-owned direct subsidiary of H&E and 100% of the Eagle S-Corp Capital Stock will be owned by H&E;

 

(ii)           SBN Eagle will sell and transfer to H&E the Eagle LLC Membership Interests as provided in Article III (the “Sale of the Eagle LLC Membership Interests”); and as a result the Sale of the Eagle LLC Membership Interests and the Merger, Eagle LLC will become a wholly-owned direct and indirect subsidiary of H&E and 100% of the Eagle LLC Membership Interests will be owned directly or indirectly by H&E;

 

the foregoing, together with the other transactions contemplated by the Agreement and the other Transaction Document, being herein together referred to individually and collectively as the “Transaction”.

 

D.            The respective Boards of Directors, Board of Managers or managing members of each of H&E, Eagle LLC, Eagle Merger Sub, Eagle S-Corp, SummitBridge and SBN Eagle, and the holders of 100% of the Eagle S-Corp Capital Stock and 100% of the Eagle LLC Membership Interests, have approved the Transaction on the terms and subject to the conditions set forth herein.

 

Agreement

 

Now, therefore, in consideration of the mutual covenants contained herein, and intending to be legally bound, the Parties agree as follows.

 

Article I

Definitions

 

1.1.          Certain Definitions. Capitalized terms used but not otherwise defined herein shall have the meanings set forth in Schedule A.

 

1.2.          Interpretation. Unless otherwise indicated to the contrary herein by the context or use thereof:  (i) the words, “herein,” “hereto,” “hereof” and words of similar import refer to this Agreement as a whole and not to any particular Section or paragraph hereof; (ii) the word “including” means “including, but not limited to” and “including without limitation”; (iii) masculine gender shall also include the feminine and neutral genders, and vice versa; (iv) words importing the singular shall also include the plural, and vice versa; and (v) unless otherwise expressly indicated in the context, all references herein to any “Section”, “Article”, “clause”, “Schedule”, “Disclosure Schedule” or “Exhibit” refer to Sections, Articles, clauses, Schedules, Disclosure Schedules and Exhibits contained in, or attached to, this Agreement.

 

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Article II

Purchase Price Calculations, Payments and Adjustments

 

2.1.          Purchase Price. For purposes hereof:

 

“Adjusted EBITDA” means the combined earnings derived solely from operations (excluding extraordinary transactions) of the Company and the Company Subsidiaries for the 12-month period ending as of the fiscal month immediately preceding the Closing Date, prior to giving effect to the Transaction or the Financing, before any expense or charge in respect of interest, Taxes based on income (but Taxes not based on income of Company and the Company Subsidiaries shall be included in the calculation of Adjusted EBITDA), depreciation and amortization, calculated in the manner, and subject to the additional adjustments, set forth on Schedule B. Based on the Interim Financial Statements as of November 30, 2005 and for the 12-month period ended on such date, the Adjusted EBITDA of Company and the Company Subsidiaries as of such date was $12,695,009.

 

“Adjusted Purchase Price” means an amount equal:

 

(i)            to the Initial Purchase Price;

 

(ii)           less any Excluded Indebtedness;

 

(iii)          less any Working Capital Deficiency or plus any Working Capital Excess,

 

(iv)          less the aggregate of the accrued or accruable but unpaid Tax Liabilities of the Group (except to the extent that adequate cash reserves therefor have been established and maintained by the Group), related to all periods or partial periods ending on or before the Closing Date, including (A) the unpaid sales tax obligation (the “Sales Tax Settlement”) due to the California State Board of Equalization as further described in that certain Letter Agreement dated as of November 4, 2004, by and between the California State Board of Equalization and Eagle S-Corp, and (B) all unpaid or accrued Los Angeles County property taxes which are past due, including such taxes which are payable subsequent to the Closing Date under the “Four Year Payment Plan Agreements” to which reference is made in Disclosure Schedule 6.8 (the “Los Angeles County Property Tax”); excluding, however, the obligation in respect of sales taxes collected and remitted in the Ordinary Course of Business;

 

(v)           less the cost of D&O Insurance, if obtained as provided in Section 9.14, to the extent not paid prior to the Closing;

 

(vi)          less an amount equal to Sellers’ Expenses net of the Sellers’ Expense Allowance, to the extent such expenses are not paid prior to the Closing;

 

(vii)         less any Bonus-Severance-Termination Liabilities;

 

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(viii)        less the accounts payable owed by the Group to H&E relating specifically to fleet equipment, to the extent incurred in compliance with Section 9.3(b) hereof; and

 

(ix)           less any additional amounts, including without limitation any Affiliate Obligations (other than Permitted Affiliate Obligations), set forth on Schedule C (such amounts on Schedule C being herein referred to as the “Additional Purchase Price Adjustments”).

 

“Adjusted Purchase Price Closing Amount” means (i) the Adjusted Purchase Price, (ii) less the Closing Transaction Escrow Amount (including the Deposit), (iii) less the Closing Eagle Plaza Escrow Amount.

 

“Closing Eagle Plaza Escrow Amount”  means $500,000 in cash.

 

“Closing Transaction Escrow Amount” means $3.5 million in cash (which shall include the Deposit).

 

“Deposit” means $2.0 million in cash.

 

“Eagle Plaza Escrow Amount” has the meaning assigned thereto in the Eagle Plaza Escrow Agreement, including the Closing Eagle Plaza Escrow Amount and any interest or income earned thereon.

 

“Eagle S-Corp Allocated Adjusted Purchase Price Closing Amount” means (i) an amount equal to 50% of the Adjusted Purchase Price Closing Amount, minus an amount equal to 50% of the Priority Amount.

 

“Eagle S-Corp Merger Consideration” means (i) the Eagle S-Corp Allocated Adjusted Purchase Price Closing Amount, (ii) plus 50% of any Escrow Amount Released.

 

“Escrow Amount Released” means any portion of the Transaction Escrow Amount and the Eagle Plaza Escrow Amount which, in accordance with the terms of the Transaction Escrow Agreement and the Eagle Plaza Escrow Agreement, as applicable, may be released from time to time after the Closing Date from the Transaction Escrow or the Eagle Plaza Escrow for the account of Sellers. “Escrow Amount Released” does not mean and include any portion of the Transaction Escrow or the Eagle Plaza Escrow released from time to time after the Closing Date from the Transaction Escrow or the Eagle Plaza Escrow for the account of H&E.

 

“ESIP Trust” means a trust established and maintained by Eagle S-Corp in accordance with Paragraph 1.3(b) of the ESIP Agreements.

 

“ESIP Trust Amount” means an amount in cash equal to (i) the Eagle S-Corp Allocated Adjusted Purchase Price Closing Amount times a fraction the numerator of which is the number of Unvested Shares and the denominator of which is the aggregate of the Equity Equivalents of Eagle S-Corp outstanding as of immediately prior to the Closing and including,

 

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without duplication, the shares of the Eagle S-Corp Common Stock outstanding under the ESIP Agreements, minus (ii) the Unvested Shares’ pro rata portion of the amounts being deposited in the Transaction Escrow and Eagle Plaza Escrow.

 

“Initial Purchase Price” means an amount equal to the product of (i) 4.5 and (ii) the Adjusted EBITDA.

 

“SBN Eagle Allocated Adjusted Purchase Price Closing Amount” means (i) an amount equal to 50% of the Adjusted Purchase Price Closing Amount, (ii) plus an amount equal to 50% of the Priority Amount.

 

“SBN Eagle Purchase Consideration” means (i) the SBN Eagle Allocated Adjusted Purchase Price Closing Amount, (ii) plus 50% of any Escrow Amount Released.

 

“Transaction Escrow Amount” has the meaning assigned thereto in the Transaction Escrow Agreement, including (i) the Closing Transaction Escrow Amount, and (ii) interest and income accrued or earned thereon.

 

2.2.          Deposit, Closing and Other Payments.

 

(a)           Simultaneously with the execution and delivery of this Agreement by all of Parties and the delivery of all of the Spousal Consents, H&E shall deliver the Deposit to the Transaction Escrow Agent pursuant to the Transaction Escrow Agreement.  In the event that the Closing shall occur, the Deposit shall continue to be held by the Transaction Escrow Agent as part of the Closing Transaction Escrow Amount, and the Deposit shall be held or released by the Transaction Escrow Agent in accordance with the terms of the Transaction Escrow Agreement. The Deposit shall be released by the Transaction Escrow Agent to H&E in the event that the Closing shall not occur because of any termination of this Agreement pursuant to Section 10.1, other than (i) because H&E shall not have been able to consummate the Financing for reasons which do not include a Financing Condition Failure or (ii) as a result of any termination of this Agreement pursuant to clause (v) of Section 10.1. The Deposit shall be released by the Transaction Escrow Agent to the Company in the event that the Closing shall not occur because (i) H&E shall not have been able to consummate the Financing for reasons which do not include a Financing Condition Failure or (ii) as a result of any termination of this Agreement pursuant to clause (v) of Section 10.1.

 

(b)           On the Closing Date, but subject to the provisions of Sections 5.2 and 5.3 (including Section 5.3(a)(iii)), H&E shall cause cash to be made available to the Group, except to the extent that cash on hand in the Group is to be used for the purposes set forth in Section 2.2(c), in an amount equal to the Initial Purchase Price, plus an amount equal to the Sellers’ Expense Allowance, less the aggregate of the Tax Liabilities of the Group described in clause (iv) of the definition of Adjusted Purchase Price, less the accounts payable owed by the Group to H&E described in clause (viii) of the definition of Adjusted Purchase Price less any Additional Purchase Price Adjustments which are not required to be paid on the Closing Date, less the Deposit; such amount to be used by the Group for the purposes set forth in clauses (i) through (iv) of Section 2.2(c).

 

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(c)           On the Closing Date, but subject to the provisions of Sections 5.2 and 5.3 (including Section 5.3(a)(iii)), the Group shall, with proceeds from H&E made available to the Group pursuant to Section 2.2(b), or with cash on hand in the Group:

 

(i)            (A) deposit with the Transaction Escrow Agent pursuant to the Transaction Escrow Agreement, the Closing Transaction Escrow Amount (which shall include the Deposit to be retained by the Escrow Agent); and (B) deposit with the Eagle Plaza Escrow Agent pursuant to the Eagle Plaza Escrow Agreement, the Closing Eagle Plaza Escrow Amount;

 

(ii)           deposit with the Eagle S-Corp Shareholders Representative, in his capacity as Eagle S-Corp Exchange Agent, for the benefit of the Eagle S-Corp Shareholders and any other Persons who may be holders of Equity Equivalents of Eagle S-Corp, the Eagle S-Corp Allocated Adjusted Purchase Price Closing Amount minus the portion of the Eagle S-Corp Allocated Purchase Price Closing Amount being deposited into the ESIP Trust;

 

(iii)          deposit into the ESIP Trust pursuant to the ESIP Trust Agreement the portion of the Eagle S-Corp Allocated Purchase Price Closing Amount which constitutes the ESIP Trust Amount; and

 

(iv)          deposit with SBN Eagle, the SBN Eagle Allocated Adjusted Purchase Price Closing Amount.

 

(d)           On or subsequent to the Closing, but subject to the provisions of Sections 5.2 and 5.3 (including Section 5.3(a)(iii)), the Group shall, with proceeds from H&E made available to the Group pursuant to Section 2.2(b), or with cash on hand in the Group at the time the following is required to be paid (the following being herein together referred to as “Funded Excluded Liabilities”):

 

(i)            pay the Excluded Indebtedness and the Tax Liabilities of the Group related to all periods or partial periods ending on or before the Closing Date, to the extent that the Excluded Indebtedness and such Tax Liabilities have been included in the calculation of the Adjusted Purchase Price;

 

(ii)           pay accrued Sellers’ Expenses to the extent that such Sellers’ Expenses have been included in the calculation of the Adjusted Purchase Price or are included in the Sellers’ Expense Allowance; and

 

(iii)          pay any Additional Purchase Price Adjustments, when due, to the extent that such Additional Purchase Price Adjustments have been included in the calculation of the Adjusted Purchase Price.

 

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2.3.          Post-Closing Adjustment of Adjusted Purchase Price Based on Final Calculation of Closing Working Capital.

 

(a)           For purposes of this Agreement:

 

“Accountants” means BDO Seidman, LLP.

 

“Closing Working Capital” means the combined Working Capital of the Group as of the immediately prior to the Effective Time, prior to giving effect to the Transaction and the Financing.

 

“Estimated Closing Working Capital” means an estimate of the average Working Capital over the last 12 full calendar months prior to the Closing to be made in good faith by Eagle S-Corp Shareholders Representative, SBN Eagle and H&E prior to the Closing based on the most recently available Interim Financial Statements and such additional financial and other information as may be available to Eagle S-Corp Shareholders Representative, SBN Eagle and H&E at the time such estimate is made, and with the assistance of the Accountants.

 

“Final Closing Working Capital” means the actual Closing Working Capital as finally determined pursuant to Section 2.3(b).

 

“Required Closing Working Capital” means the average Working Capital of the Group over the last 12 full calendar months prior to the Closing.

 

“Working Capital” of the Group means the excess of (i) the sum of the unbilled revenue, net accounts receivable (accounts receivable less reserve for doubtful accounts), other accounts receivable, net inventory (inventory less reserve for obsolescence) and prepaid expenses of the Group, over (ii) the sum of the current liabilities consisting of its accounts payable and accrued expenses (including the Sales Tax Settlement and the Los Angeles County Property Tax) of the Group as reported in the internal financial statements of the Group prepared in a manner consistent with the Audited Financial Statements less accounts payable for fleet equipment purchases. No deduction from Working Capital shall be made for any amounts paid at or subsequent to Closing pursuant to clause (i) of Section 2.2(d)(i) hereof.

 

“Working Capital Deficiency” means the amount, if any, by which the Closing Working Capital is less than the Required Closing Working Capital.

 

“Working Capital Excess” means the amount, if any, by which the Closing Working Capital exceeds the Required Closing Working Capital.

 

(b)           The Estimated Closing Working Capital shall be determined prior to the Closing Date. In the event that the Estimated Closing Working Capital indicates that there may be a Working Capital Deficiency, then the Adjusted Purchase Price determined for purposes of the Closing shall be decreased in accordance with the definition of Adjusted Purchase Price. In the event that the Estimated Closing Working Capital indicates that there may be a Working

 

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Capital Excess, then the Adjusted Purchase Price determined for purposes of the Closing shall be increased in accordance with the definition of Adjusted Purchase Price.

 

(c)           (i)            The Final Closing Working Capital and Required Closing Working Capital shall be determined within 60 days (or 120 days if the Closing Balance Sheet is audited, as hereinafter provided) following the Closing Date. Such determination shall be made in connection with the preparation by H&E of a combined balance sheet for the Group as of immediately following the Effective Time and after giving effect to the Transaction (the “Closing Balance Sheet”). The Closing Balance Sheet may be audited by the Accountants if requested by H&E.

 

(ii)           In the event that the Final Closing Working Capital is greater or lesser than the Required Closing Working Capital, then any increase or decrease in the Adjusted Purchase Price which was previously made on the Closing Date shall be adjusted accordingly (without duplication of any increase or decrease in the Adjusted Purchase Price which was previously made on the Closing Date). In the event that such adjustment would entitle Sellers to additional Adjusted Purchase Price (whether in the form of a greater Working Capital Excess or a lesser Working Capital Deficiency that was assumed for purposes of the calculating the Adjusted Purchase Price on the Closing Date), then the amount of such additional Adjusted Purchase Price shall be paid promptly, 50% each, to SBN Eagle and the Eagle S Corp Shareholders Representative. In the event that such adjustment would entitle Sellers to less Adjusted Purchase Price (whether in the form of a lesser Working Capital Excess or a greater Working Capital Deficiency that was assumed for purposes of the calculating the Adjusted Purchase Price on the Closing Date), then the amount of such lesser Adjusted Purchase Price shall be repaid promptly by Sellers to H&E from the Transaction Escrow Account.

 

(iii)          In the event of any dispute between Eagle S-Corp Shareholders Representative, SBN Eagle and H&E as to the Final Working Capital which cannot be resolved within 30 days following the preparation of the Closing Balance Sheet, such dispute shall be referred to the Accountants for determination.  The Accountants shall be requested to make a determination regarding such dispute as soon as practicable, and in any event within 30 days following the referral of such dispute to the Accountants.  The determination of the Accountants shall be final and binding on the Parties.

 

2.4.          Post-Closing Adjustment of Adjusted Purchase Price Based on Final Calculation of Adjusted EBITDA.

 

(a)           For purposes of this Agreement:

 

“Estimated Adjusted EBITDA” means an estimate of the Adjusted EBITDA to be made in good faith by Eagle S-Corp Shareholders Representative, SBN Eagle and H&E prior to the Closing based on the most recently available Interim Financial Statements and such additional financial and other information as may be available to Eagle S-Corp Shareholders Representative, SBN Eagle and H&E at the time such estimate is made, and with the assistance of the Accountants.

 

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“Final Adjusted EBITDA” means the actual Adjusted EBITDA as finally determined pursuant to Section 2.4(c).

 

(b)           The Estimated Adjusted EBITDA shall be determined prior to the Closing Date. The Initial Purchase Price shall, solely for purposes of the Closing, be calculated based on the Estimated Adjusted EBITDA.

 

(c)           (i)            The actual Adjusted EBITDA shall be determined within 60 days (or 120 days if the Closing Balance Sheet is audited, as hereinafter provided) following the Closing Date. Such determination shall be made in connection with the preparation by H&E of the Closing Balance Sheet.

 

(ii)           In the event that the Final Adjusted EBITDA is greater or lesser than the Estimated Adjusted EBITDA, then any calculation of the Initial Purchase Price which was previously made on the Closing Date shall be adjusted accordingly. In the event that such adjustment would entitle Sellers to additional Adjusted Purchase Price, then the amount of such additional Adjusted Purchase Price shall be paid promptly, 50% each, to SBN Eagle and the Eagle S Corp Shareholders Representative.  In the event that such adjustment would entitle Sellers to less Adjusted Purchase Price, then the amount of such lesser Adjusted Purchase Price shall be repaid promptly by Sellers to H&E. In order to facilitate any payment required to be made by Sellers to H&E pursuant to the preceding sentence, SBN Eagle and Eagle S-Corp Shareholders Representative shall retain, and not distribute to SummitBridge or Eagle S-Corp Shareholders, as applicable, $2.0 million of the Adjusted Purchase Price Closing Amount received by SBN Eagle and Eagle S-Corp Shareholders on the Closing Date until the Final Adjusted EBITDA is determined and any payment required to be made to H&E has been effected as aforesaid, provided that the Final Adjusted EBITDA is determined within 180 days following the Closing Date.

 

(iii)          In the event of any dispute between Eagle S-Corp Shareholders Representative, SBN Eagle and H&E as to the Final Adjusted EBITDA which cannot be resolved within 30 days following the preparation of the Closing Balance Sheet, such dispute shall be referred to the Accountants for determination.  The Accountants shall be requested to make a determination regarding such dispute as soon as practicable, and in any event within 30 days following the referral of such dispute to New Accountant.  The determination of the Accountants shall be final and binding on the Parties.

 

2.5.          Pre-Closing Tax Liabilities of the Group.

 

(a)           Sellers shall be responsible for all Taxes of the Group for all Tax periods or portions thereof ending on or prior to the Closing Date as provided in Section 11.3. In calculating the Adjusted Purchase Price, there shall be subtracted from the Initial Purchase Price the estimated unpaid Tax Liability, if any, of the Group described in clause (iv) of the definition of Adjusted Purchase Price, such reduction to be estimated and made on the Closing Date, with any adjustment based on the final determination thereof (including without limitation the final determination for the full 2005 Tax year), together with any adjustment required with respect to such Taxes, to be made promptly following the filing of the applicable Tax Returns (the

 

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foregoing being herein referred to as the “Tax Liability Adjustment”). Any disputes regarding any Tax Liability Adjustment shall be determined by the Accountants, and the determination thereof shall be final and binding on the Parties. The Accountants shall be requested to make a determination regarding such dispute as soon as practicable, and in any event within 30 days following the referral of such dispute to the Accountants. Any Tax Liability Adjustment after the Closing Date shall be made

 

(i)            by a payment by Sellers or, at the election of H&E, from the Transaction Escrow Amount to H&E in the case of any cumulative net Taxes payable by the Group in excess of any previously effected Tax Liability Adjustment, or

 

(ii)           by a payment by the Group to Sellers in the case of (A) any cumulative net Tax refund received by the Group with respect to the applicable Tax periods or portions thereof, (B) any estimated Taxes for any pre-Closing partial Tax period in excess of actual Taxes for all pre-Closing partial Tax periods not yet paid on the Closing Date, or (C) any adjustment to reverse any previously effected Tax Liability Adjustment if it is determined that any previously effected Tax Liability Adjustment was in excess of the actual Tax Liability.

 

With respect to jurisdictions where the Group has filed Tax Returns, the Tax Liability Adjustment shall include only (i) Taxes with respect to Tax periods for which no Tax Return has yet been filed, and (ii) with respect to Tax periods for which a Tax Return has been filed, (A) Taxes shown on any Tax Return as owing but that have not yet been paid, or (B) Taxes attributable to income not reflected on a Tax Return. Nothing in this Section 2.6(a) shall limit the indemnity rights set forth in Section 11.3.

 

(b)           At least five Business Days prior to the Closing Date, H&E shall provide Eagle S-Corp Shareholders Representative and SBN Eagle with a list and preliminary calculation for purposes of Closing, based on information which Sellers and the Group have provided to H&E, of all Taxes required to be withheld from the Adjusted Purchase Price and remitted to any state, local or foreign Governmental Authority by H&E or the Group (either on its own behalf or on behalf of any of Sellers with respect to the Transaction (the “Sellers’ Withholding Taxes”). Sellers shall provide to H&E, within 10 days prior to the Closing Date, any comments on the proposed calculation, and any proposed reasonable adjustment to the amount of Sellers’ Withholding Taxes will be made. H&E may withhold and timely remit (or cause the Group to withhold and timely remit) Sellers’ Withholding Taxes to the appropriate Governmental Authority; and the Group may withhold and timely remit to the appropriate Governmental Authority any withholding Taxes with respect to the Bonus-Severance-Termination Liabilities.

 

2.6.          Post-Closing Distributions.

 

(a)           Transaction Escrow.  On the earlier of: (a) March 31, 2007, and (b) the third business day following the delivery of the audited financial statements of H&E which include the Group for the fiscal year ending December 31, 2006, $1,750,000 of the Transaction Escrow Amount shall be released to the Sellers, in accordance with the Transaction Escrow Agreement (i) except to the extent that the remaining Transaction Escrow Amount would be

 

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insufficient to cover any pending indemnification claims and (ii) provided that Sellers are not in material breach of their other obligations under this Agreement and the other Transaction Documents.  The balance of the Transaction Escrow Amount will be released to the Sellers on December 31, 2007, in accordance with the Transaction Escrow Agreement; (i) except to the extent that the remaining Transaction Escrow Amount would be insufficient to cover any pending indemnification claims and (ii) provided that SummitBridge, SBN Eagle and the Eagle S-Corp Shareholders are not in material breach of their other obligations under this Agreement and the other Transaction Documents.

 

(b)           Eagle Plaza Escrow.  On the date six (6) months after the Closing Date, the Eagle Plaza Escrow Amount remaining at such time shall be paid to the account of the Sellers in accordance the Eagle Plaza Escrow Agreement; (i) except to the extent that the remaining Eagle Plaza Escrow Amount would be insufficient to cover any pending indemnification claims and (ii) provided no Eagle Plaza Indemnity Default has occurred or exists.

 

Article III

Sale of the Eagle LLC Membership Interests

 

3.1.          Sale and Purchase. Upon the terms and subject to the conditions of this Agreement, simultaneously with the Merger, SBN Eagle shall sell and transfer to H&E or its assigns, and H&E or its assigns shall purchase from SBN Eagle, the Eagle LLC Membership Interests owned by SBN Eagle. The Eagle LLC Membership Interests shall be transferred to H&E or its assigns free and clear of all Liens.

 

Article IV

Merger

 

4.1.          General. Upon the terms and subject to the conditions of this Agreement, the Merger shall be effected. Eagle S-Corp shall be the surviving corporation in Merger. The separate corporate existence of Eagle S-Corp with all its rights, privileges, powers and franchises shall continue unaffected by the Merger. The Merger shall have the effects specified in the DGCL and the CCL. From and after the Effective Time, Eagle S-Corp is sometimes referred to herein as the “Surviving Corporation”.

 

4.2.          Effective Time. On the Closing Date, Eagle Merger Sub and Eagle S-Corp shall cause (i) a certificate of merger, complying with the requirements of the DGCL and in form and substance satisfactory to H&E, SBN Eagle and Eagle S-Corp Shareholders Representative (the “Delaware Certificate of Merger”), to be filed with the Secretary of State of the State of Delaware, and (ii) an agreement of merger and officers’ certificates of each of Eagle Merger Sub and Eagle S-Corp, complying with the requirements of the CCL and in form and substance satisfactory to H&E, SBN Eagle and Eagle S-Corp Shareholders Representative (the “California Merger Documents”), to be filed with the Secretary of State of the State of California. The Delaware Certificate of Merger and the California Merger Documents are herein together referred to as the “Merger Documents”. The time at which both the Delaware Certificate of Merger has been accepted for filing by the Secretary of State of the State of Delaware and the

 

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California Merger Documents have been accepted for filing by the Secretary of State of the State of California is herein referred to as the “Effective Time”.

 

4.3.          Articles of Incorporation; By-Laws. The Articles of Incorporation and the By-laws of Eagle S-Corp shall be the articles of incorporation and the by-laws of the Surviving Corporation until thereafter amended in accordance with applicable law.

 

4.4.          Directors and Officers. The directors and officers of Eagle S-Corp shall resign as of immediately following the Effective Time. The directors and officers of Eagle Merger Sub shall be the directors and officers of Eagle S-Corp as of immediately following the Effective Time and will serve until their successors are duly elected or appointed and qualify, or until they are removed, in accordance with the Articles of Incorporation and By-laws of the Surviving Corporation.

 

4.5.          Effect on Capital Stock of Eagle S-Corp. As of the Effective Time, by virtue of the Merger and without any action on the part of the Parties or the holders of any of the following securities:

 

(a)           Conversion of Eagle Merger Sub Common Stock. Each share of the Common Stock, par value $0.01 per share (the “Eagle Merger Sub Common Stock”), of Eagle Merger Sub issued and outstanding as of immediately prior to the Effective Time shall be converted into an equal number of shares of the Common Stock, no par value (the “Eagle S-Corp Common Stock”), of Eagle S-Corp.

 

(b)           Conversion of Eagle S-Corp Common Stock. Each share of Eagle S-Corp Common Stock issued and outstanding as of immediately prior to the Effective Time shall be converted into the right to receive in cash, upon surrender of a Eagle S-Corp Stock Certificate formerly representing such share in the manner provided in Section 4.8, the Per Share Eagle S-Corp Common Stock Merger Consideration. The “Per Share Eagle S-Corp Common Stock Merger Consideration” means an amount per share of the Eagle S-Corp Common Stock set forth on Schedule D based on the “classifications” of the Eagle S-Corp Common Stock as shown on Schedule D.

 

(c)           Cancellation of Eagle S-Corp Common Stock. Each share of Eagle S-Corp Common Stock issued and outstanding as of immediately prior to the Effective Time shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each holder of a certificate which immediately prior to the Effective Time represented any such shares of Eagle S-Corp Common Stock (each, a “Eagle S-Corp Stock Certificate“) shall, to the extent such Eagle S-Corp Stock Certificate represents such shares, cease to have any rights with respect thereto, except the right to receive the Per Share Eagle S-Corp Merger Consideration with respect thereto as set forth in Section 4.5(b).

 

(d)           Cancellation of Eagle S-Corp Treasury Stock. Each share of Eagle S-Corp Common Stock held in the treasury of Eagle S-Corp immediately prior to the Effective Time shall be canceled and retired without any conversion thereof and no payment of cash or any other distribution shall be made with respect thereto.

 

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4.6.          Further Assurances. At and after the Effective Time, the officers and directors of the Surviving Corporation will be authorized to execute and deliver, in the name and on behalf of Eagle S-Corp and Eagle Merger Sub, any deeds, bills of sale, assignments or assurances and to take and do, in the name and on behalf of Eagle S-Corp and Eagle Merger Sub, any other actions and things to vest, perfect or confirm of record or otherwise in the Surviving Corporation any and all right, title and interest in, to and under any of the rights, properties or assets acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger.

 

4.7.          Eagle S-Corp Exchange Agent; Payment and Deposit of Funds.

 

(a)           Eagle S-Corp Shareholders Representative shall be the Eagle S-Corp Exchange Agent for the exchange and payment of the Eagle S-Corp Merger Consideration.

 

(b)           Promptly following the Effective Time, H&E shall cause to be deposited in a special account established by the Eagle S-Corp Exchange Agent in the United States an aggregate amount in cash equal to the Eagle S-Corp Allocated Adjusted Purchase Price Closing Amount less the ESIP Trust Amount which shall be deposited into the ESIP Trust. Any cash deposited with the Eagle S-Corp Exchange Agent or the ESIP Trust in trust for the benefit of holders of the Eagle S-Corp Common Stock shall hereinafter be referred to as the “Eagle S-Corp Exchange Fund“. The funds deposited in such special accounts shall be held in trust for the benefit of holders of the Eagle S-Corp Common Stock.

 

4.8.          Exchange Procedures. Prior to the Effective Time, Eagle S-Corp shall deliver to each record holder of the Eagle S-Corp Common Stock (i) a letter of transmittal in a form approved by H&E (the “Letter of Transmittal“) and (ii) instructions of Eagle S-Corp for effecting the surrender of certificates evidencing the Eagle S-Corp Common Stock in exchange for the Per Share Eagle S-Corp Merger Consideration with respect thereto. Upon surrender of each such certificate to the Eagle S-Corp Exchange Agent together with such Letter of Transmittal, duly executed and completed in accordance with the instructions thereto, the holder of such certificate shall be entitled to receive promptly the Per Share Eagle S-Corp Merger Consideration for each share of Eagle S-Corp Common Stock formerly represented by such certificate subject to the provisions of the ESIP Trust.  The Per Share Eagle S-Corp Consideration on account of Unvested Shares shall be deposited into the ESIP Trust.  No interest will be paid or will accrue for the benefit of holders of the Eagle S-Corp Common Stock on the Per Share Eagle S-Corp Merger Consideration payable upon the surrender of the certificates therefor. In the event of a transfer of ownership of any Eagle S-Corp Common Stock which is not registered in the transfer records of Eagle S-Corp, payment of the Per Share Eagle S-Corp Merger Consideration may be made with respect to such Eagle S-Corp Common Stock to such a transferee if the certificate formerly representing such shares of Eagle S-Corp Common Stock is presented to the Eagle S-Corp Exchange Agent, accompanied by all documents required to evidence and effect such transfer and to evidence that any applicable stock transfer taxes have been paid or is not applicable.

 

4.9.          No Further Ownership Rights in Eagle S-Corp Common Stock. The Per Share Eagle S-Corp Merger Consideration paid upon conversion of shares of Eagle S-Corp Common

 

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Stock in accordance with the terms of this Article IV shall be deemed to have been paid in full satisfaction of all rights pertaining to the shares of Eagle S-Corp Common Stock. If any certificates evidencing shares of Eagle S-Corp Common Stock shall not have been surrendered prior to two years after the Effective Time (or immediately prior to such earlier date on which any Per Share Eagle S-Corp Merger Consideration with respect thereto would otherwise escheat to or become the property of any Governmental Authority), any such cash shall, to the extent permitted by applicable law, become property of the Surviving Corporation, free and clear of all claims or interest of any Person previously entitled thereto. If, after the Effective Time, subject to the terms and conditions of this Agreement, certificates formerly representing shares of Eagle S-Corp Common Stock are presented to the Surviving Corporation, they shall be canceled and exchanged for Per Share Eagle S-Corp Merger Consideration in accordance with this Article IV.

 

4.10.        Termination of Eagle S-Corp Exchange Fund. Any portion of the Eagle S-Corp Exchange Fund constituting the Eagle S-Corp Merger Consideration that remains undistributed to the holders of Eagle S-Corp Common Stock or the ESIP Trust for two years after the Effective Time shall be delivered to the Surviving Corporation or otherwise on the instruction of the Surviving Corporation, and any holders of Eagle S-Corp Common Stock who have not theretofore complied with this Article IV shall thereafter cease to have any rights to receive any portion of the Per Share Eagle S-Corp Merger Consideration with respect to the shares of Eagle S-Corp Common Stock formerly represented thereby to which such holders are entitled pursuant to this Article IV.

 

4.11.        No Liability. None of H&E, Eagle Merger Sub, Eagle S-Corp, the Surviving Corporation or the Eagle S-Corp Exchange Agent shall be liable to any Person in respect of any Eagle S-Corp Merger Consideration from the Eagle S-Corp Exchange Fund properly delivered to a public official pursuant to any applicable abandoned property, escheat or similar law.

 

4.12.        Lost Certificates. If any certificate evidencing Eagle S-Corp Common Stock shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such certificate to be lost, stolen or destroyed and, if required by the Surviving Corporation, the provision of an indemnity against any claim that may be made against it with respect to such certificate, the Eagle S-Corp Exchange Agent will deliver in exchange for such lost, stolen or destroyed certificate the Per Share Eagle S-Corp Merger Consideration with respect to the shares of Eagle S-Corp Common Stock formerly represented thereby in accordance with this Article IV.

 

4.13.        Stock Transfer Books. At 5:00 p.m., New York City time, on the day the Effective Time occurs, the stock transfer books of Eagle S-Corp shall be closed and there shall be no further registration of transfers of shares of Eagle S-Corp Common Stock thereafter on the records of Eagle S-Corp. From and after the Effective Time, the holders of certificates evidencing Eagle S-Corp Common Stock shall cease to have any rights with respect to such shares of Eagle S-Corp Common Stock formerly represented thereby, except as otherwise provided herein or by law. On or after the Effective Time, any certificates presented to the Eagle S-Corp Exchange Agent or Eagle S-Corp for any reason shall be exchanged for the Per Share Eagle S-Corp Merger Consideration with respect to the shares of Eagle S-Corp Common Stock formerly represented thereby in accordance with this Article IV.

 

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Article V

Closing

 

5.1.          Closing Date and Place.

 

(a)           The closing of the Transaction (the “Closing”) shall take place at the offices of Dechert, 30 Rockefeller Plaza, New York, New York, at 10:00 A.M. (Eastern Standard Time) as soon as practicable following the satisfaction or waiver of the conditions set forth in Section 5.3, or on such other date and at such other place and time as the Parties shall mutually agree. The date of the Closing is herein called the “Closing Date”.

 

(b)           The Closing shall occur no later than February 28, 2006.

 

5.2.          Closing Deliveries.

 

(a)           By Sellers. On the Closing Date, subject to the satisfaction or waiver of the conditions set forth in Sections 5.3(a) and 5.3(c), Sellers shall deliver, or cause to be delivered, to H&E or its assigns the following (in each case as to Eagle SBN and Eagle S-Corp Shareholders, respectively, to the extent within their several or mutual, direct or indirect control):

 

(i)            an Assignment of the Eagle LLC Membership Interests in form and substance satisfactory to H&E duly executed by SBN Eagle;

 

(ii)           the Interim Financial Statements;

 

(iii)          resignations duly executed by all of the directors and officers of the Group, such resignations to be effective as of immediately following the Effective Time;

 

(iv)          the minute books and the stock and membership registry of the Group;

 

(v)           certificates of “good standing and existence” issued by the Secretary of State of the State of Delaware with respect to Eagle LLC, and by the Secretary of State of the State of California with respect to Eagle S-Corp;

 

(vi)          a certificate of the President and the Chief Financial Officer of Eagle LLC, Eagle S-Corp Shareholders Representative, on behalf of the Eagle S-Corp Shareholders, and SBN Eagle, as to the satisfaction of the Closing Conditions set forth in Sections 5.3(b)(i), (ii) and (ix);

 

(vii)         an opinion of Reed Smith LLP, as counsel to SummitBridge and SBN Eagle (but which opinion shall cover matters applicable to the Company), an opinion of Downey Brand LLP, as counsel to Eagle S-Corp Shareholders, and an opinion of Reed Smith LLP, as counsel to the Company, to the effect of the legal conclusions set