-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N1b62V+ZCWMZYGMQzNy5R9ROB5k+OvTZAWVSLpMBY/dWD+UM02Ldh5Eeo179tQhf U4yRr+n3elHA7kemYUc3Sw== 0000943374-08-000084.txt : 20080124 0000943374-08-000084.hdr.sgml : 20080124 20080124151547 ACCESSION NUMBER: 0000943374-08-000084 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20080118 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20080124 DATE AS OF CHANGE: 20080124 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Energy Services Acquisition Corp. CENTRAL INDEX KEY: 0001357971 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 204606266 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-32998 FILM NUMBER: 08547411 BUSINESS ADDRESS: STREET 1: 2450 FIRST AVENUE CITY: HUNTINGTON STATE: WV ZIP: 25703 BUSINESS PHONE: 304-528-2791 MAIL ADDRESS: STREET 1: 2450 FIRST AVENUE CITY: HUNTINGTON STATE: WV ZIP: 25703 8-K 1 form8k_merger12308.txt FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): January 18, 2008 ---------------- Energy Services Acquisition Corp. ---------------------------------- (Exact name of Registrant as specified in its charter) Delaware 001-32998 20-4606266 --------- --------- ---------- (State or Other Jurisdiction (Commission (I.R.S. Employer of Incorporation) File Number) Identification No.) 2450 First Avenue, Huntington, West Virginia 25703 -------------------------------------------------- (Address of principal executive offices) (304) 528-2791 ----------------- Registrant's telephone number, including area code Not Applicable ------------------ (Former Name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 1.01 Entry into a Material Definitive Agreement ------------------------------------------ On January 24, 2008, Energy Services Acquisition Corp. (the "Company"), announced that it had entered into a Stock Purchase Agreement to acquire GasSearch Drilling Services Corporation, Parkersburg, West Virginia, for a purchase price of $23.5 million, payable in cash and stock as follows: (i) $17.5 million in cash to cover current debt and capital expenditures and (ii) a number of shares of Company common stock equaling value to $3.5 million based upon the arithmetic average of the closing price of Company common stock as reported on the American Stock Exchange for the five consecutive trading days beginning three trading days before the announcement of the GasSearch Acquisition and the balance ($2.5 million) in cash. GasSearch Drilling Services Corporation is a wholly-owned subsidiary of GasSearch Corporation. For more specific information related to the GasSearch Drilling Services Acquisition, please see a copy of the Stock Purchase Agreement and a copy of the press release announcing the GasSearch Drilling Services Acquisition which are attached as Exhibits 10.1 and 99.1 to this report, respectively. On January 24, 2008, the Company announced that it entered into an Agreement and Plan of Merger to acquire S.T. Pipeline, Inc., Clendenin, West Virginia. Pursuant to the agreement to acquire S.T. Pipeline, shareholders of S.T. Pipeline shall have a right to receive up to $15,200 per share in cash, or $19.0 million in the aggregate, subject to a reduction to reflect the book value of certain assets and a further reduction of $3.0 million that will be paid to S.T. Pipeline shareholders on a deferred basis. In addition, Energy Services has agreed to enter into a three-year employment agreement with James E. Shafer and a non-compete agreement with Pauletta Sue Shafer, the owners of S.T. Pipeline. Each of Mr. and Mrs. Shafer has agreed to vote their shares in favor of the S.T. Pipeline Acquisition. Any payments to shareholders of S.T. Pipeline will be adjusted upward to reflect the additional tax of S.T. Pipeline's shareholders as a result of the parties' election under Internal Revenue Code Section 338(h)(10). For more specific information related to the S.T. Pipeline Acquisition, please see a copy of the Agreement and Plan of Merger and a copy of the press release announcing the S.T. Pipeline Acquisition which are attached as Exhibits 10.3 and 99.2 to this report, respectively. The closing of each of the GasSearch Drilling Services Acquisition and the S.T. Pipeline Acquisition is subject to various closing conditions, including the acquisition of businesses, such that the total value of the businesses acquired have an aggregate fair value of 80% of the Company's net assets, as defined in its initial public offering. In addition, the closing of the acquisition is further conditioned on holders of less than 20% of the shares of the Company's common stock voting against either of the transactions and electing to convert the Company's common stock into cash from the trust fund established in connection with the Company's initial public offering. Item 9.01 Financial Statements and Exhibits --------------------------------- (d) Exhibits: The following Exhibit is attached as part of this report: 10.1 Stock Purchase Agreement 10.2 Form of Employment Agreement with Denny P. Harton 10.3 Agreement and Plan of Merger 10.4 Form of Employment Agreement with James E. Shafer 10.5 Form of Consulting Agreement with Pauletta Sue Shafer 99.1 Press release of Energy Services Acquisition Corp. to registrant has duly caused this report to be signed on its behalf by January 24, 2008 99.2 Press release of Energy Services Acquisition Corp. to acquire S.T. Pipeline, Inc. dated January 24, 2008 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. ENERGY SERVICES ACQUISITION CORP. DATE: January 24, 2008 By: /s/ Marshall T. Reynolds --------------------------------- Marshall T. Reynolds Chairman, Chief Executive Officer and Secretary (Duly Authorized Representative) EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 10.1 Stock Purchase Agreement 10.2 Form of Employment Agreement with Denny P. Harton 10.3 Agreement and Plan of Merger 10.4 Form of Employment Agreement with James E. Shafer 10.5 Form of Consulting Agreement with Pauletta Sue Shafer 99.1 Press release of Energy Services Acquisition Corp. to acquire GasSearch Drilling Services Corporation dated January 24, 2008 99.2 Press release of Energy Services Acquisition Corp. to acquire S.T. Pipeline, Inc. dated January 24, 2008 EX-10.1 2 form8kmergerex10_1.txt STOCK PURCHASE AGREEMENT Execution Copy ================================================================================ ================================================================================ STOCK PURCHASE AGREEMENT BY AND AMONG ENERGY SERVICES ACQUISITION CORP. (The "Purchaser") And GASSEARCH CORPORATION AND GASSEARCH DRILLING SERVICES CORPORATION ("GDS") DATED AS OF JANUARY 18, 2008 ================================================================================ TABLE OF CONTENTS Page ARTICLE I. CERTAIN DEFINITIONS.................................................1 Section 1.01 Certain Definitions.........................................1 ARTICLE II. SALE AND TRANSFER OF SHARES; CLOSING...............................5 Section 2.01 Shares......................................................5 Section 2.02 Purchase Price..............................................5 Section 2.03 Stock Options...............................................5 Section 2.04 Closing; Closing Date.......................................5 Section 2.05 Additional Transactions.....................................5 ARTICLE III. REPRESENTATIONS AND WARRANTIES OF GASSEARCH CORPORATION AND GDS...6 Section 3.01 Disclosure Letter...........................................6 Section 3.02 GasSearch Corporation Representations.......................6 Section 3.03 Organization................................................7 Section 3.04 Capitalization..............................................7 Section 3.05 Authority; No Violation.....................................8 Section 3.06 Consents....................................................8 Section 3.07 [intentionally omitted].....................................8 Section 3.08 Financial Statements........................................9 Section 3.09 Absence of Certain Changes or Events........................9 Section 3.10 Taxes.......................................................9 Section 3.11 Material Contracts; Leases; Defaults.......................11 Section 3.12 Ownership of Property; Insurance Coverage..................12 Section 3.13 Intellectual Property......................................12 Section 3.14 Labor Matters..............................................13 Section 3.15 Legal Proceedings..........................................13 Section 3.16 Compliance With Applicable Law.............................13 Section 3.17 Employee Benefit Plans.....................................14 Section 3.18 Brokers, Finders and Financial Advisors....................14 Section 3.19 Environmental Matters......................................14 Section 3.20 Related Party Transactions.................................15 Section 3.21 Antitakeover Provisions Inapplicable.......................16 Section 3.22 Registration Obligations...................................16 Section 3.23 Customers and Suppliers....................................16 Section 3.24 Inventory..................................................16 Section 3.25 Accounts Receivable; Bank Accounts.........................16 Section 3.26 Offers.....................................................16 Section 3.27 Warranties.................................................17 Section 3.28 Proxy Statement............................................17 Section 3.29 No Misstatements...........................................17 Section 3.30 Investment Intent..........................................17 ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PURCHASER.......................18 Section 4.01 Organization...............................................18 Section 4.02 Authority; No Violation....................................18 Section 4.03 Consents...................................................18 Section 4.04 Access to Funds............................................19 Section 4.05 Legal Proceedings..........................................19 Section 4.06 Board Approval.............................................19 Section 4.07 Proxy Statement............................................19 Section 4.08 Offers.....................................................19 ARTICLE V. CONDUCT PENDING ACQUISITION........................................20 Section 5.01 Conduct of Business Prior to the Closing Date..............20 Section 5.02 Forbearances of GDS........................................20 Section 5.03 Maintenance of Insurance...................................22 Section 5.04 All Reasonable Efforts.....................................22 ARTICLE VI. COVENANTS.........................................................22 Section 6.01 Current Information........................................22 Section 6.02 Access to Properties and Records...........................22 Section 6.03 Financial and Other Statements.............................23 Section 6.04 Disclosure Letter Supplements..............................23 Section 6.05 Consents and Approvals of Third Parties....................23 Section 6.06 Failure to Fulfill Conditions..............................23 Section 6.07 Employee Benefits..........................................23 Section 6.08 Debt.......................................................23 Section 6.09 Tax Periods Ending On or Before the Closing Date...........24 Section 6.10 Cooperation on Tax Matters.................................24 Section 6.11 Employment of Denny Harton; Appointment to Board of Directors.................................................24 ARTICLE VII. REGULATORY AND OTHER MATTERS.....................................25 Section 7.01 Meeting of Stockholders....................................25 Section 7.02 Proxy Statement............................................25 Section 7.03 Regulatory Approvals.......................................25 ARTICLE VIII. CLOSING CONDITIONS..............................................26 Section 8.01 Conditions to Each Party's Obligations under this Agreement.................................................26 Section 8.02 Conditions to the Obligations of Purchaser under this Agreement............................................26 Section 8.03 Conditions to the Obligations of GDS and GasSearch Corporation under this Agreement..........................27 ARTICLE IX. THE CLOSING.......................................................28 Section 9.01 Time and Place.............................................28 Section 9.02 Deliveries at the Pre-Closing and the Closing..............28 ARTICLE X. TERMINATION, AMENDMENT AND WAIVER..................................28 Section 10.01 Termination................................................28 Section 10.02 Effect of Termination......................................29 Section 10.03 Amendment, Extension and Waiver............................30 ARTICLE XI. MISCELLANEOUS.....................................................30 Section 11.01 Public Announcements.......................................30 Section 11.02 Survival...................................................30 Section 11.03 Notices....................................................30 Section 11.04 Parties in Interest........................................31 Section 11.05 Complete Agreement.........................................31 Section 11.06 Counterparts...............................................31 Section 11.07 Severability...............................................31 Section 11.08 Governing Law..............................................31 Section 11.09 Interpretation.............................................32 Section 11.10 Specific Performance.......................................32 ii STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT ("Agreement"), dated as of January 18, 2008, is among Energy Services Acquisition Corp., a corporation organized under the laws of Delaware (the "Purchaser"), and GasSearch Corporation which is the sole owner of GasSearch Drilling Services Corporation ("GDS"), a corporation organized under the laws of West Virginia and GDS. GasSearch Corporation owns 100% of the issued and outstanding shares of GDS. R E C I T A L S: A. GasSearch Corporation desires to sell its shares of GDS Stock, and the Purchaser desires to purchase all of the outstanding shares of GDS Stock (the "Shares"), all on the terms set forth in this Agreement (the "Acquisition"). B. In order to facilitate the Acquisition, GasSearch Corporation and GDS has been made a party to this Agreement. ARTICLE I. CERTAIN DEFINITIONS Section 1.01 Certain Definitions. As used in this Agreement the following terms have the following meanings (unless the context otherwise requires, references to Articles and Sections refer to Articles and Sections of this Agreement). "Agreement" shall have the meaning set forth in the preamble. "Acquisition Proposal" shall mean any inquiry, proposal or offer from any person relating to, or that could reasonably be expected to lead to, any direct or indirect acquisition or purchase, in one transaction or a series of transactions, of assets (including equity securities of GDS) or businesses that constitute 25% or more of the revenues, net income or assets of GDS, taken as a whole, or 25% or more of any class of equity securities of GDS, any tender offer or exchange offer that if consummated would result in any person beneficially owning 25% or more of any class of equity securities of GDS, or any merger, consolidation, business combination, recapitalization, liquidation, dissolution, joint venture, binding share exchange or similar transaction involving GDS pursuant to which any person would own 25% or more of any class of equity securities of GDS or of any resulting parent company of GDS, in each case other than the transactions contemplated by this Agreement. "Affiliate" means any Person who directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person and, without limiting the generality of the foregoing, includes any executive officer or director of such Person and any Affiliate of such executive officer or director. "Agreement" means this agreement, and any amendment hereto. "Closing" shall have the meaning set forth in Section 2.04. "COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Consideration" shall mean the cash in an aggregate per share amount to be paid by Purchaser for GDS Stock, as set forth in Section 2.02(a). "Disclosure Letter" shall have the meaning set forth Section 3.01. "Environmental Laws" means any applicable Federal, state or local law, statute, ordinance, rule, regulation, code, license, permit, authorization, approval, consent, order, judgment, decree, injunction or agreement with any governmental entity relating to (1) the protection, preservation or restoration of the environment (including, without limitation, air, water vapor, surface water, groundwater, drinking water supply, surface soil, subsurface soil, plant and animal life or any other natural resource), and/or (2) the exposure to, or the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, release or disposal of Materials of Environmental Concern. The term Environmental Law includes without limitation (a) the Comprehensive Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C. ss.9601, et seq; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. ss.6901, et seq; the Clean Air Act, as amended, 42 U.S.C. ss.7401, et seq; the Federal Water Pollution Control Act, as amended, 33 U.S.C. ss.1251, et seq; the Toxic Substances Control Act, as amended, 15 U.S.C. ss.2601, et seq; the Emergency Planning and Community Right to Know Act, 42 U.S.C. ss.11001, et seq; the Safe Drinking Water Act, 42 U.S.C. ss.300f, et seq; the Comprehensive Environmental Response Compensation and Liability Information Systems List and all comparable state and local laws, and (b) any common law (including without limitation common law that may impose strict liability) that may impose liability or obligations for injuries or damages due to the presence of or exposure to any Materials of Environmental Concern. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "GDS" shall mean GasSearch Drilling Services Corporation, a West Virginia corporation with its principal executive offices located at 466 Airport Industrial Park Road, Parkersburg, West Virginia 26104. "GasSearch Corporation," a Illinois corporation that owns all the issued and outstanding shares of GDS Stock. "GDS Stock" shall mean all of the issued and outstanding shares of GDS capital stock par value $1.00 per share. "Governmental Entity" shall mean any federal, state, local or other government, governmental, regulatory or administrative authority, agency or commission or any court, tribunal or judicial or arbitral body. "HIPAA" shall mean the Health Insurance Portability and Accountability Act of 1996, as amended. "Intellectual Property" shall mean all (i) trademarks, service marks, brand names, d/b/a/'s, Internet domain names, logos, symbols, trade dress, trade names, and other indicia of origin, all applications and registrations for the foregoing, and all goodwill associated therewith and symbolized thereby, including all renewals of same, (ii) inventions and discoveries, whether patentable or not, and all patents, registrations, invention disclosures and applications therefor, including divisions, continuations, continuations-in-part 2 and renewal applications, and including renewals, extensions and reissues, (iii) Trade Secrets, (iv) published and unpublished works of authorship, whether copyrightable or not (including without limitation databases and other compilations of information), copyrights therein and thereto, and registrations and applications therefor, and all renewals, extensions, restorations and reversions thereof, and (v) all other intellectual property or proprietary rights. "IRS" shall mean the United States Internal Revenue Service. "IT Assets" shall mean GDS's computers, computer software, firmware, middleware, servers, workstations, routers, hubs, switches, data communications lines, and all other information technology equipment, and all associated documentation. "Knowledge" as used with respect to a Person (including references to such Person being aware of a particular matter) means those facts that are known by any officer with the title ranking not less than vice president or a director of such Person, and includes any facts, matters or circumstances set forth in any written notice from any regulator or any other material written notice received by an officer with the title ranking not less than vice president or a director of that Person. For purposes of this definition, an officer or director will be deemed to have "Knowledge" of a particular fact or other matter if a prudent individual could be expected to discover or otherwise become aware of such fact or other matter in the course of conducting a reasonably comprehensive investigation concerning the existence of such fact or other matter. "Licensed Intellectual Property" means Intellectual Property that GDS is licensed or otherwise permitted by other Persons to use. "Listed Intellectual Property" shall have the meaning set forth in Section 3.12(a). "Material Adverse Effect" shall mean an effect which (A) is material and adverse to the assets, business, financial condition, results of operations or prospects of GDS or Purchaser, as the context may dictate, and its subsidiaries taken as a whole. "Materials of Environmental Concern" means pollutants, contaminants, wastes, toxic substances, petroleum and petroleum products, and any other materials regulated under Environmental Laws, including, but not limited to, radon, radioactive material, asbestos, asbestos-containing material, urea formaldehyde foam insulation, lead, polychlorinated biphenyl, flammables and explosives. "NASD" shall mean the National Association of Securities Dealers, Inc. "Person" shall mean any individual, corporation, partnership, joint venture, association, trust or "group" (as that term is defined under the Exchange Act). "Pre-Effective Time Tax Period" means any taxable period (or the allocable portion of a Straddle Period) ending on or before the close of business on the date the closing occurs. "Proxy Statement" shall have the meaning set forth in Section 7.02. "Purchaser" shall mean Energy Services Acquisition Corp., a Delaware corporation, with its principal executive offices located at 75 West Third Avenue, Huntington, West Virginia 25776. "Rights" shall mean warrants, options, rights, convertible securities, stock appreciation rights and other arrangements or commitments which obligate an entity to issue or dispose of any of its capital stock or other ownership 3 interests or which provide for compensation based on the equity appreciation of its capital stock. "Securities Laws" shall mean the Securities Act of 1933 (the "Securities Act"); the Exchange Act; the Investment Company Act of 1940, as amended; the Investment Advisers Act of 1940, as amended; the Trust Indenture Act of 1939, as amended; and the rules and regulations of the SEC promulgated thereunder. "Stockholder Approval" shall have the meaning set forth in Section 8.01(a). "Straddle Period" means any taxable period that includes (but does not end on) the date the stock purchase is completed. "Superior Proposal" shall mean an Acquisition Proposal, which the Board of Directors of GDS reasonably determines (after consultation with a financial advisor of nationally recognized reputation) to be (i) more favorable to the stockholder of GDS from a financial point of view than the sale of GDS Stock (taking into account all the terms and conditions of such proposal and this Agreement (including any changes to the financial terms of this Agreement proposed by Purchaser in response to such offer or otherwise)) and (ii) reasonably capable of being completed, taking into account all financial, legal, regulatory and other aspects of such proposal. "Tax" means any and all (a) federal, state, local or foreign tax, fee or other like assessment or charge of any kind, including, without limitation, any net income, alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad valorem, value-added, transfer, franchise, profits, license, payroll, employment, social security (or similar), unemployment, disability, registration, estimated, excise, severance, stamp, capital stock, occupation, property, environmental or windfall tax, premium, customs duty or other tax, together with any interest, penalty or additions thereto, whether disputed or not; and (b) transferee or secondary liability in respect of any Tax (whether imposed by law or contractual arrangement). "Tax Return" means any return (including estimated returns), declaration, report, claim for refund, or information return or statement or any amendment thereto relating to Taxes, including any such document prepared on an affiliated, consolidated, combined or unitary group basis and any schedule or attachment thereto. "Taxing Authority" means any governmental or regulatory authority, body or instrumentality exercising any authority to impose, regulate or administer the imposition of Taxes. "Termination Date" shall mean August 30, 2008. "Trade Secrets" means confidential information, trade secrets and know-how, including confidential processes, schematics, business methods, formulae, drawings, prototypes, models, designs, customer lists and supplier lists. "Voting Agreement" shall have the meaning set forth in the recitals to this Agreement. Other terms used herein are defined in the preamble and elsewhere in this Agreement. 4 ARTICLE II. SALE AND TRANSFER OF SHARES; CLOSING Section 2.01 Shares. Subject to the terms and conditions of this Agreement at the closing GasSearch Corporation will sell and transfer 100% of the issued and outstanding shares of GDS Stock to Purchaser, and Purchaser will purchase the shares from GasSearch Corporation. After the Closing Date there will be no further transfer of shares of GDS Stock. Section 2.02 Purchase Price. (a) The total purchase price for the shares will consist of (i) $2.5 million in cash and (ii) a number of shares of Purchaser common stock equal in value to $3.5 million based upon the arithmetic average of the closing price of Purchaser common stock reported on the American Stock Exchange for the five consecutive trading days commencing three trading days before public disclosure of this Agreement is made by the Purchaser (collectively, (i) and (ii) are the "Consideration"). (b) Following the payment of the Consideration GasSearch Corporation shall have no further ownership rights in GDS, except as a holder of Purchaser common stock. (c) The Shares of Purchaser common stock to be issued to GasSearch Corporation as contemplated in Section 2.02(a) will not be registered under the Securities Act or registered or qualified for sale under any state securities Law and cannot be resold without registration or an exemption under the Securities Act. Such shares will therefore be "restricted securities" as defined in rule 144 under the Securities Act. Each certificate representing the Purchaser common stock shall bear a restrictive legend referencing the Securities Act. Purchaser agrees that in the event Purchaser registers with the Securities and Exchange Commission any shares held by its shareholders it will include as part of the registration statement shares issued to GasSearch Corporation. Section 2.03 Stock Options. GDS has no options or other equity based derivative instruments that are outstanding or which are entitled to receive any of the Consideration. Section 2.04 Closing; Closing Date. Subject to the satisfaction or waiver of all conditions to closing contained in Article VIII hereof, the Closing shall occur the later of either (i) five business days following the latest to occur of the receipt of all required Stockholder Approvals, satisfaction of all conditions to closing (to the extent such conditions are not waived) and the expiration of any applicable waiting periods, and Stockholder Approval, (ii) at the discretion of the Purchaser, the month end following receipt of all Stockholder Approval and satisfaction of all conditions to closing (to the extent such conditions are not waived), or (iii) at such other date or time upon which Purchaser and GasSearch Corporation mutually agree (the "Closing" and such date of closing is herein referred to as the "Closing Date"). Section 2.05 Additional Transactions Notwithstanding anything contained in this Agreement, the parties acknowledge that in order to consummate the transactions contemplated by this 5 Agreement the Purchaser must enter into a business combination or combinations in which the fair market value of the business or businesses acquired simultaneously with the transactions contemplated by this Agreement is equal to at least 80% of Purchaser's net assets (excluding any deferred compensation held by Ferris Baker Watts, Incorporated) when combined with the transactions contemplated by this Agreement . GasSearch Corporation acknowledges that the transactions contemplated by this Agreement must be completed simultaneously with such other business combinations or combinations, referenced to in this Section. ARTICLE III. REPRESENTATIONS AND WARRANTIES OF GASSEARCH CORPORATION AND GDS GasSearch Corporation and GDS each represents and warrants to Purchaser that the statements contained in this Article III are true and correct as of the date of this Agreement. For purposes of this Article III, references to GDS shall include GasSearch Corporation unless otherwise indicated by the context. The parties shall notify each other in the event of any material change prior to the Closing Date. References to the Knowledge of GDS shall include the Knowledge of GasSearch Corporation. Section 3.01 Disclosure Letter. On or prior to the date hereof, GDS has delivered to Purchaser a letter (the "Disclosure Letter") setting forth, among other things, facts, circumstances and events the disclosure of which are required or appropriate in relation to any or all of its covenants, representations and warranties (and making specific reference to the section of this Agreement to which such section of the Disclosure Letter relates); provided, that the mere inclusion of a fact, circumstance or event in the Disclosure Letter shall not be deemed an admission by a party that such item represents a material exception or that such item is reasonably likely to result in a Material Adverse Effect. The Disclosure Letter is true, correct and complete. Section 3.02 GasSearch Corporation Representations. (a) Organization. GasSearch Corporation owns all of the issued and outstanding shares of GDS. GasSearch Corporation have all requisite power and authority to own and operate GDS's property and assets and to carry on GDS's business as now conducted. (b) Authority and Enforceability. GasSearch Corporation has full capacity, power and authority to enter into and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby has been approved by shareholders owning a majority of GasSearch Corporation's outstanding voting stock, and no other proceedings or action on the part of GasSearch Corporation is necessary to execute or deliver this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by GasSearch Corporation and constitutes a valid and binding obligation of GasSearch Corporation, enforceable against GasSearch Corporation in accordance with its terms. (c) No Violations. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby and compliance by GasSearch Corporation with the provisions hereof will not, conflict with, result in any violation of or default under, or result in (i) the creation of any lien on any of the properties or assets of GasSearch Corporation or GDS (ii) any loan or credit agreement, note, bond, mortgage, indenture, lease, permit, concession, 6 franchise, license, or material agreement to which GasSearch Corporation or GDS is a party or by which GasSearch Corporation or GDS are bound, or (iii) any judgment, order, decree, or Law applicable to GasSearch Corporation or GDS or their respective properties or assets. (d) Title to Shares. GasSearch Corporation is (and at the Closing will be) the sole record and beneficial owner of, and upon consummation of the transactions contemplated hereby, Purchaser will acquire valid and marketable title to all of GDS Stock then issued and outstanding, free and clear of all liens, equities, proxies, options, or restrictions, other than (i) those that may arise by virtue of any actions taken by or on behalf of Purchaser or its affiliates or (ii) restrictions on transfer that may be imposed by federal or state securities laws. (e) Litigation. There is no Claim by any person or Governmental Entity (including, without limitation, expropriation or forfeiture proceedings), and no legal, administrative, or arbitration proceeding pending or, to Gas Search's knowledge, threatened against GasSearch Corporation or GDS or any of their property, or to which GasSearch Corporation or GDS are a party, that reasonably may be expected to affect or impair in any material respect the ability of GasSearch Corporation or GDS to consummate the transactions contemplated in this Agreement. (f) Governmental Approvals. No authorization, consent, approval, exemption, franchise, permit, or license of, or filing with, any Governmental Entity is required to authorize, or is otherwise required by any Governmental Entity in connection with, the valid execution and delivery by GasSearch Corporation or GDS of this Agreement, the transfer of GDS Stock to Purchaser, or the performance by GasSearch Corporation or GDS of their other obligations hereunder. (g) No Insolvency. There are no bankruptcy, insolvency, reorganization, or arrangement proceedings pending, or to GasSearch Corporation or GDS's knowledge, threatened against GasSearch Corporation or GDS. Section 3.03 Organization. (a) GDS is a corporation duly organized, validly existing and in good standing under the laws of the State of West Virginia. GDS has all requisite corporate power and authority to own, lease and operate its properties and carry on its business as now conducted. GDS is duly licensed or qualified to do business in each jurisdiction where its ownership or leasing of property or the conduct of its business requires such qualification, except where the failure to obtain such license or qualification would not reasonably be expected to have a Material Adverse Effect. (b) GDS has no subsidiaries. There are no entities (whether corporations, partnerships, or similar organizations), in which GDS owns, directly or indirectly, 5% or more of the ownership interests as of the date of this Agreement. GasSearch Corporation owns 1,000 shares of GDS Stock which is 100% of the issued and outstanding shares of GDS Stock. Such shares are validly issued, fully paid, nonassessable and not subject to any preemptive rights and are owned by GasSearch Corporation free and clear of any pledges, security interests, claims, liens, encumbrances or restrictions and there are no agreements or understandings with respect to the voting or disposition of any such shares. (c) Prior to the date of this Agreement, GDS has made available to Purchaser true and correct copies of its Articles of Incorporation. Section 3.04 Capitalization. (a) The authorized capital stock of GDS consists of 1,000 shares of capital stock par value $1.00 per share, all of which are issued and outstanding. 7 (b) No bonds, debentures, notes or other indebtedness having the right to vote on any matters on which the shareholder of GDS may vote are issued or outstanding. Set forth in the Disclosure Letter is a listing of all GDS debt outstanding including interest rate and payment terms. (c) As of the date of this Agreement and, except for this Agreement, neither GDS or GasSearch Corporation has or is bound by any Rights obligating GDS or GasSearch Corporation to issue, deliver or sell, or cause to be issued, delivered or sold, any additional shares of capital stock of GDS or obligating GDS to grant, extend or enter into any such Right. Section 3.05 Authority; No Violation. (a) GDS and GasSearch Corporation each has full corporate power and authority to execute and deliver this Agreement, and, to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by GDS and GasSearch Corporation and the completion of the transactions contemplated hereby have been duly and validly approved by the Board of Directors of GasSearch Corporation. This Agreement has been duly and validly executed and delivered by GDS and GasSearch Corporation, and constitutes the valid and binding obligation of GasSearch Corporation, enforceable against GasSearch Corporation in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors' rights generally, and subject, as to enforceability, to general principles of equity, whether applied in a court of law or a court of equity. (b) To GasSearch Corporation's or GDS's knowledge, the consummation of the transactions contemplated hereby and compliance by GDS and GasSearch Corporation with any of the terms or provisions hereof will not: (i) conflict with or result in a breach or violation of or a default under any provision of the Articles of Incorporation or Bylaws of GDS; (ii) violate any statute, code, ordinance, rule, regulation, judgment, order, writ, decree, governmental permit or license or injunction applicable to GDS or any of its properties or assets or enable any person to enjoin the sale of GDS Stock; or (iii) violate, conflict with, result in a breach of any provisions of, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of, accelerate the performance required by, or result in a right of termination or acceleration or the creation of any lien, security interest, charge or other encumbrance upon any of the properties or assets of GDS under any of the terms, conditions or provisions of any material note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which GDS is a party, or by which they or any of their respective properties or assets may be bound or affected. Section 3.06 Consents. No consents, waivers or approvals of, or filings or registrations with, any Governmental Entity are necessary, and no consents, waivers or approvals of, or filings or registrations with, any other third parties are necessary, in connection with the execution and delivery of this Agreement by GDS or GasSearch Corporation, and the sale of GDS Stock by GasSearch Corporation. GDS and GasSearch Corporation have no reason to believe that (i) any required approvals or other required consents or approvals will not be received, or that (ii) any public body or authority, the consent or approval of which is not required or to which a filing is not required, will object to the completion of the transactions contemplated by this Agreement. GDS is not subject to regulation of its business or operations under any Federal law (to the extent GDS is required to register or file reports with any Government Entity) or state public utilities laws. Section 3.07 [intentionally omitted] 8 Section 3.08 Financial Statements. GDS maintains accounting records which fairly and accurately reflect its transactions and operations. GDS has provided Purchaser with pro forma projections of its revenue, earnings and expenses for the 2007 calendar year. GDS has commenced providing Purchaser monthly financial statements commencing with the month ended December 31, 2006. In each case, the monthly financial statements of GDS fairly present in all material respects, the financial position, results of operations and cash flows of GDS as of the respective dates thereof and for the respective periods covered thereby GDS and GasSearch Corporation has no reason to believe that either the pro forma projections or monthly financial statements are incomplete or fail to accurately reflect all material items necessary for an understanding of GDS's financial condition and results of operations. Section 3.09 Absence of Certain Changes or Events. Since December 21, 2006 (i) GDS has not incurred any liability, except in the ordinary course of its business consistent with past practice, (ii) GDS has conducted its business only in the ordinary and usual course of such business and (iii) there has not been any condition, event, change or occurrence that, individually or in the aggregate, has had, or is reasonably likely to have, a Material Adverse Effect. Section 3.10 Taxes. (a) (i) GasSearch Corporation and GDS have filed or caused to be filed, and with respect to Tax Returns due between the date of this Agreement and the Closing Date, will timely file (including any applicable extensions) all Tax Returns required to be filed, (ii) all such Tax Returns are, or in the case of such Tax Returns not yet filed, will be, true, complete and correct in all material respects and such Tax Returns correctly reflected (or in the case of such Tax Returns not yet filed, will correctly reflect) the facts regarding the income, business, assets, operations, activities, status and other matters of GDS and any other information required to be shown thereon, and (iii) all Taxes of GDS (whether or not reflected on any such Tax Returns) attributable to a Pre-Effective Time Tax Period have been, or in the case of Taxes the due date for payment of which is between the date of this Agreement and the date the Closing Date occurs, timely paid in full, including, without limitation, all Taxes which GDS is obligated to withhold for amounts paid or owing to employees, independent contractors, creditors and other third parties other than Taxes that have been reserved or accrued. (b) The most recent financial statements for GDS reflect an adequate reserve for all Taxes payable by GDS for all taxable periods and portions thereof through the date of such financial statements, and, in the case of Taxes owed as of the date hereof, an adequate reserve is (and until the date the Closing Date occurs will continue to be) reflected in the accruals for Taxes payable on the balance sheet as of June 30, 2007, other than accruals established to reflect timing differences and accruals reflected only in the notes thereto. (c) There are no liens for Taxes, except for statutory liens not yet due with respect to any of the assets or properties of GDS. (d) To GasSearch Corporation's and GDS's knowledge: (i) no Tax Return of GasSearch Corporation or GDS have been examined by the Internal Revenue Service, (ii) no Tax Return of GasSearch Corporation or GDS is under audit or examination by any other Taxing Authority, and (iii) no notice of such an audit or examination has been received by GasSearch Corporation or GDS. (e) Each deficiency, if any, resulting from any audit or examination relating to Taxes by any Taxing Authority has been timely paid. No issues 9 relating to Taxes were raised by the relevant Taxing Authority in any completed audit or examination that can reasonably be expected to recur in a later taxable period. The relevant statute of limitations is closed with respect to the Tax Returns of GDS. GDS has made available to Purchaser documents setting forth the dates of the most recent audits or examinations of GDS by any Taxing Authority in respect of Taxes for all taxable periods for which the statute of limitations has not yet expired. (f) GDS is not a party to or is bound by any Tax sharing agreement, Tax indemnity obligation or similar agreement, arrangement or practice with respect to Taxes (including, without limitation, any advance pricing agreement, closing agreement or other agreement relating to Taxes with any Taxing Authority). (g) GDS will not be required to include in a taxable period ending after the Closing Date any taxable income attributable to income that accrued, but was not recognized, in a Pre-Closing Date Tax Period (or the portion of a Straddle Period allocable to the Pre-Effective Time Tax Period) as a result of an adjustment under Section 481 of the Code, the installment method of accounting, the long-term contract method of accounting, the cash method of accounting, any comparable provision of state, local, or foreign Tax law, or for any other reason. (h) There are no outstanding agreements or waivers extending, or having the effect of extending, the statutory period of limitation applicable to any Tax Returns required to be filed with respect to GDS, and GDS has not requested any extension of time within which to file any Tax Return, which return has not yet been filed. No power of attorney with respect to any Taxes has been executed or filed with any Taxing Authority by or on behalf of Seller Group. (i) GDS has complied in all respects with all applicable laws relating to the payment and withholding of Taxes (including withholding of Taxes pursuant to Sections 1441, 1442, 3121 and 3402 of the Code or any comparable provision of any state, local or foreign laws) and have, within the time and in the manner prescribed by applicable law, withheld from and paid over to the proper Taxing Authorities all amounts required to be so withheld and paid over under such laws. (j) GDS has not been a party to any distribution occurring during the last five years in which the parties to such distribution treated the distribution as one to which Section 355 of the Code applied. (k) GDS is not a party to any "listed transaction" as defined in Treasury Regulation Section 1.6011-4(b)(2). (l) No Tax Returns filed by GDS contains a disclosure statement under former Section 6661 of the Code or Section 6662 of the Code (or any similar provision of state, local or foreign Tax law). (m) GDS has not been, at any time during the applicable time period set forth in Section 897(c)(1) of the Code, a United States real property holding company within the meaning of Section 897(c)(2) of the Code. (n) The Disclosure Letter sets forth each state, county, local, municipal or foreign jurisdiction in which GDS files, or is or has been required to file, a Tax Return relating to state and local income, franchise, license, excise, net worth, property or sales and use taxes or is or has been liable for any Taxes on a "nexus" basis at any time for a taxable period for which the relevant statutes of limitation have not expired. GDS has not received notice of any claim by a Taxing Authority in a jurisdiction where GDS does not file Tax Returns that GDS is or may be subject to taxation by such jurisdiction. 10 (o) GDS has made a valid election under Section 1362 of the Code to be treated as an S corporation for federal income tax purposes, and made a similar election under comparable provisions of state, local or foreign Tax law. At all times since making its election to be treated as an S Corporation Seller has been treated as an S Corporation or a QSub (as defined below) for income tax purposes. GDS is in compliance with requirements for maintaining its election as an S Corporation. (p) GDS has one shareholder, GasSearch Corporation. The GasSearch Corporation has been, as of the date of acquisition of GDS stock, and continues to be, an "eligible shareholder" as defined under Section 1361 of the Code. (q) Each controlled corporation that had or has any of its stock owned by Seller was, is, and will be properly treated as a qualified S Corporation Subsidiary (QSubs), as defined under Section 1361 of the Code, of Seller. All QSub elections required to be made to satisfy the condition expressed in the previous sentence were properly made on a timely basis. (r) GDS has no liability or potential liability for any tax under Code Section 1374. GDS has not in the past 10 years, (A) acquired assets from another corporation in a transaction in which GDS's tax basis for the acquired assets was determined, in whole or in part, by reference to the tax basis of the acquired assets (or any other property) in the hands of the transferor or (B) acquired the controlling stock of any corporation that is not a qualified Corporation Subsidiary. Section 3.11 Material Contracts; Leases; Defaults. (a) Except as previously disclosed, GDS is not a party to or subject to: (i) any employment, consulting or severance contract with any present officer, director or employee of GDS, except for "at will" arrangements; (ii) any plan or contract providing for bonuses, pensions, options, or other equity deferred compensation, retirement payments, profit sharing, insurance benefits, death benefits, health, medical or disability benefits or similar material arrangements for or with any past or present officers, directors or employees of GDS; (iii) any collective bargaining agreement with any labor union relating to employees of GDS; (iv) any agreement which by its terms limits the payment of dividends by GDS; (v) any instrument evidencing or related to indebtedness for borrowed money whether directly or indirectly, by way of purchase money obligation, conditional sale, lease purchase, guaranty or otherwise, in respect of which GDS is an obligor to any person, which instrument evidences or relates to indebtedness other than deposits, bankers' acceptances, and "treasury tax and loan" accounts established in the ordinary course of business and transactions in "federal funds" or which contains financial covenants or other restrictions (other than those relating to the payment of principal and interest when due) which would be applicable on or after the Closing Date to Purchaser or any Purchaser Subsidiary; (vi) any other agreement, written or oral, not terminable on 60 days' notice, that obligates GDS for the payment of more than $100,000 annually; or that has a term of no more than one year or (vii) any agreement (other than this Agreement), contract, arrangement, commitment or understanding (whether written or oral) that restricts or limits in any material way the conduct of business by GDS (it being understood that any non-compete or similar provision shall be deemed material) or any other material agreement. (b) Subject to any consents that may be required as a result of the transactions contemplated by this Agreement, neither GDS is not in default under any material contract, agreement, commitment, arrangement, lease, insurance policy or other instrument to which it is a party, by which its assets, business, or operations may be bound or affected, or under which it or its assets, business, or operations receive benefits, and to the Knowledge of GDS there has not occurred any event that, with the lapse of time or the giving of notice or both, would constitute such a default. 11 (c) True and correct copies of agreements, contracts, arrangements and instruments referred to in Sections 3.10(a) and (b) have been made available to Purchaser on or before the date hereof, are listed on the Disclosure Letter and are in full force and effect on the date hereof and enforceable against the counterparty to which it relates. Section 3.12 Ownership of Property; Insurance Coverage. (a) GDS has a good and, as to real property, marketable title to all assets and properties owned by GDS in the conduct of its businesses, whether such assets and properties are real or personal, tangible or intangible, including assets and property reflected in the balance sheet contained in the most recent GasSearch Corporation or GDS Financial Statements or acquired subsequent thereto (except to the extent that such assets and properties have been disposed of in the ordinary course of business, since the date of such balance sheet and except to the extent that the failure to have good title to any personal property would not reasonably be expected to have a Material Adverse Effect), subject to no encumbrances, liens, mortgages, security interests or pledges. GDS, as lessee, has the right under valid and existing leases of real and personal properties used by GDS in the conduct of its business to occupy or use all such properties as presently occupied and used by each of them, except previously disclosed and those in the normal course of business and (iii) encumbrances that do not materially affect the marketability of any title to real property. Such existing leases and commitments to lease constitute or will constitute operating leases for both tax and financial accounting purposes and the lease expense and minimum rental commitments with respect to such leases and lease commitments have been disclosed to Purchaser. Each real estate lease that will require the consent of the lessor or its agent to consummate the effects intended by this Agreement or otherwise as a result of the Agreement by virtue of the terms of any such lease is listed in the Disclosure Letter identifying the section of the lease that contains such prohibition or restriction. (b) GDS currently maintains insurance for reasonable amounts with financially sound and reputable insurance companies, against such risks as companies engaged in a similar business would, in accordance with good business practice, customarily be insured. GDS has not received notice from any insurance carrier that (i) such insurance will be canceled or that coverage thereunder will be reduced or eliminated, or (ii) premium costs with respect to such policies of insurance will be substantially increased. There are presently no material claims pending under such policies of insurance and no notices have been given by GDS under such policies. All such insurance is valid and enforceable and in full force and effect, and GDS has received each type of insurance coverage for which it has applied and during such periods has not been denied indemnification for any claims submitted under any of its insurance policies. The GDS Disclosure Letter identifies all policies of insurance maintained by GDS as well as the other matters required to be disclosed under this Section. Section 3.13 Intellectual Property. (a) The Disclosure Letter sets forth a true and complete list of all (i) Registered and/or material Intellectual Property owned by GDS indicating for each Registered item the registration or application number and the applicable filing jurisdiction (collectively, the "Listed Intellectual Property"). GDS exclusively owns (beneficially, and of record where applicable) all Listed Intellectual Property, free and clear of all encumbrances, exclusive licenses and non-exclusive licenses not granted in the ordinary course of business. The Listed Intellectual Property is valid, subsisting and enforceable, and is not subject to any outstanding order, judgment, decree or agreement adversely affecting GDS's use thereof or its rights thereto. GDS has sufficient rights to use all Intellectual Property used in its business as currently conducted. GDS has not infringed or otherwise violated the Intellectual Property rights of any third party. There is no material litigation, opposition, cancellation, proceeding, objection or claim pending, asserted or threatened against GDS concerning the ownership, validity, registerability, enforceability, 12 infringement or use of, or licensed right to use, any Intellectual Property. To GDS's Knowledge, (x) no valid basis for any such litigation, opposition, cancellation, proceeding, objection or claim exists, (y) no Person is violating any Listed Intellectual Property or other Intellectual Property right owned or held exclusively by GDS, and (z) the Licensed Intellectual Property is valid, subsisting and enforceable and is not subject to any outstanding order, judgment, decree or agreement adversely affecting GDS's use thereof or its rights thereto. Consummation of the transactions contemplated by this Agreement will not terminate or alter the terms pursuant to which GDS is permitted to use any Licensed Intellectual Property and will not create any rights by third parties to use any Intellectual Property owned by the Purchaser (other than any termination, alteration or creation of any rights that results from action of the Purchaser and its Affiliates). (b) GDS has no Trade Secrets, or nondisclosure agreements with any of its employees. (c) To GDS's Knowledge, the IT Assets operate and perform in all respects in accordance with their documentation and functional specifications and otherwise as required by GDS in connection with its business, and have not materially malfunctioned or to any material extent failed within the past three years. To GDS's Knowledge, the IT Assets do not contain any "time bomb," "Trojan horse," "back door," "trap door," "worm," viruses, bugs, faults or other devices or effects that (1) enable or assist any person to access without authorization the IT Assets, or (ii) otherwise significantly adversely affect the functionality of the IT Assets, in either case except as disclosed in its documentation. To GDS's Knowledge, no person has gained unauthorized access to the IT Assets. GDS has implemented commercially reasonable backup and disaster recovery technology consistent with industry practices. (d) To GDS's Knowledge, none of the software owned by it contains any shareware, open source code, or other software whose use requires disclosure or licensing of Intellectual Property, to which GDS have not agreed. Section 3.14 Labor Matters. GDS is not and has not ever been a party to, or is or has ever been bound by, any collective bargaining agreement, contract, or other agreement or understanding with a labor union or labor organization with respect to its employees and no such agreement or contract is currently being negotiated by GDS, nor is GDS the subject of any proceeding asserting that it has committed an unfair labor practice or otherwise relating to labor matters involving any current or former employees of GDS or seeking to compel it to bargain with any labor organization as to wages and conditions of employment, nor is any strike, other labor dispute or organizational effort involving GDS pending or, to the Knowledge of GDS threatened. GDS is in compliance with applicable laws regarding employment of employees and retention of independent contractors, and are in compliance with applicable employment tax laws. Section 3.15 Legal Proceedings. GDS is not a party to any, and there are no pending or, to GDS's Knowledge, threatened legal, administrative, arbitration or other proceedings, claims, actions or governmental investigations or inquiries of any nature, (i) against GDS, (ii) to which GDS's assets are or may be subject, (iii) challenging the validity or propriety of any of the transactions contemplated by this Agreement, or (iv) which could adversely affect the ability of GDS or GasSearch Corporation to perform their obligations under this Agreement. Section 3.16 Compliance With Applicable Law. (a) To GDS's knowledge, GDS is in compliance in all material respects with all applicable federal, state, local and foreign statutes, laws, regulations, 13 ordinances, rules, judgments, orders or decrees applicable to it, its properties, assets, its business, and its conduct of business and its relationship with its employees. (b) GDS has all permits, licenses, authorizations, orders and approvals of, and has made all filings, applications and registrations with, all regulators and government authorities that are required in order to permit it to own or lease its properties and to conduct its business as presently conducted; all such permits, licenses, certificates of authority, orders and approvals are in full force and effect and, to the Knowledge of GDS, no suspension or cancellation of any such permit, license, certificate, order or approval is threatened or will result from the consummation of the transactions contemplated by this Agreement, subject to obtaining the approvals set forth in Section 7.03. (c) GDS has not received any written notification or, to its knowledge, any other communication from any regulator and government authorities (i) asserting that GDS is not in material compliance with any of the statutes, regulations or ordinances under which it operates; (ii) threatening to revoke any license, franchise, permit or governmental authorization; (iii) requiring or threatening to require GDS, or indicating that GDS may be required, to enter into a cease and desist order, agreement or memorandum of understanding or any other agreement with any federal or state governmental agency or authority which is charged with the supervision or regulation gas drilling companies restricting or limiting, or purporting to restrict or limit, in any material respect the operations of GDS; or (iv) directing, restricting or limiting, or purporting to direct, restrict or limit, in any manner the operations of GDS (any such notice, communication, memorandum, agreement or order described in this sentence is hereinafter referred to as a "Regulatory Agreement"). GDS has not consented to or entered into any Regulatory Agreement that is currently in effect. Section 3.17 Employee Benefit Plans. GDS does not maintain, sponsor or participate in any employee contract, arrangement or employee benefit plan other than health, dental, medical and disability insurance plans, and a retirement plan. Section 3.18 Brokers, Finders and Financial Advisors. GDS and its officers, directors, employees or agents, has not employed any broker, finder or financial advisor in connection with the transactions contemplated by this Agreement, or incurred any liability or commitment for any fees or commissions to any such person in connection with the transactions contemplated by this Agreement. Section 3.19 Environmental Matters. (a) Except as may be set forth in any Phase I Environmental Report identified in the Disclosure Letter (a true copy of which has been provided to Purchaser), with respect to GDS: (i) GDS's Property is, and has been, in compliance in all material respects with, and is not liable under, any Environmental Laws; 14 (ii) GDS has received no written notice and does not otherwise have Knowledge that there is any suit, claim, action, demand, executive or administrative order, directive, investigation or proceeding pending and, to GDS's Knowledge, no such action is threatened, before any court, governmental agency or other forum against it or any property owned, leased or operated by GDS (a "Property") (x) for alleged noncompliance (including by any predecessor) with, or liability under, any Environmental Law or (y) relating to the presence of or release into the environment of any Materials of Environmental Concern (as defined herein), whether or not occurring at or on a site owned, leased or operated by it or any Property; (iii) GDS has received no written notice that there is any suit, claim, action, demand, executive or administrative order, directive, investigation or proceeding pending and, to GDS's Knowledge no such action is threatened, before any court, governmental agency or other forum (x) relating to alleged noncompliance (including by any predecessor) with, or liability under, any Environmental Law or (y) relating to the presence of or release into the environment of any Materials of Environmental Concern, whether or not occurring at or on a site owned, leased or operated by a Property; (iv) The properties currently owned or operated by GDS and, to GDS's Knowledge, the Properties (including, without limitation, soil, groundwater or surface water on, or under the properties, and buildings thereon) are not contaminated with and do not otherwise contain any Materials of Environmental Concern; (v) There is no suit from any federal, state, local or foreign governmental entity or any third party indicating that it may be in violation of, or liable under, any Environmental Law; (vi) To GDS's knowledge, there are no underground storage tanks on, in or under any properties owned or operated by GDS, and, to GDS's Knowledge, no underground storage tanks have been closed or removed from any properties owned or operated by GDS; and (vii) During the period of (s) GDS's ownership or operation of any of its current properties or (t) GDS's participation in the management of any Property, there has been no contamination by or release of Materials of Environmental Concern in, on, under or affecting such properties that could reasonably be expected to result in material liability under the Environmental Laws. To GDS's Knowledge, prior to the period of (x) GDS's ownership or operation of any of its respective current properties or (y) GDS's participation in the management of any Property, there was no contamination by or release of Materials of Environmental Concern in, on, under or affecting such properties that could reasonably be expected to result in material liability under the Environmental Laws. (b) To GDS's knowledge, there is no reasonable basis for any suit, claim, action, demand, executive or administrative order, directive or proceeding of a type described in Section 3.19(a)(ii) or (iii). Section 3.20 Related Party Transactions. GDS is not a party to any transaction with any affiliate of GDS, other than transactions with GasSearch Corporation, as previously disclosed. 15 Section 3.21 Antitakeover Provisions Inapplicable. The transactions contemplated by this Agreement are not subject to the requirements of any "moratorium," "control share," "fair price," "affiliate transactions," "business combination" or other antitakeover laws and regulations of any state, applicable to GDS. Section 3.22 Registration Obligations. GDS is not under any obligation, contingent or otherwise, which will survive the Closing Date by reason of any agreement to register any transaction involving any of its securities under the Securities Act. Section 3.23 Customers and Suppliers. The Disclosure Schedule contains a complete list of all customers who individually accounted for more than 2% of GDS's gross revenues for the quarter ended March 31, 2007. No customer listed on the Disclosure Schedule has, within the past 12 months, cancelled or otherwise terminated, or, to the Knowledge of GDS, made any threat to cancel or terminate, its relationship with GDS, or decreased materially its usage of GDS's services or products. Except as set forth in the Disclosure Schedule, no material supplier of GDS has cancelled or otherwise terminated any contract with GDS prior to the expiration of the contract term, or, to the Knowledge of GDS, made any threat to GDS to cancel, reduce the supply or otherwise terminate its relationship with GDS. GDS has not (i) breached (so as to provide a benefit to GDS that was not intended by the parties) any agreement with or (ii) engaged in any fraudulent conduct with respect to, any customer or supplier of GDS. Section 3.24 Inventory. All inventory of GDS consists of a quality and quantity usable and saleable in the ordinary course of business, except for obsolete items and items of below-standard quality, all of which have been written-off or written-down to net realizable value pursuant to GDS's policies and the best estimates of GDS's management in accordance with GAAP. All inventories not written-off have been priced at the lower of cost or market on a first-in, first-out basis. The value of each type of inventory, whether raw materials, work-in process or finished goods, are not excessive in the present circumstances of GDS in the best estimate of GDS's management in accordance with GAAP. Section 3.25 Accounts Receivable; Bank Accounts. All accounts receivable of GDS are valid receivables properly reflected pursuant to GDS's policies and practices and the best estimates of GDS's management, and are subject to no setoffs or counterclaims and are current and collectible (within 90 days after the date on which they first became due and payable). Except as set forth in the Disclosure Schedule, all accounts receivable reflected in the financial or accounting records of GDS that have arisen since March 31, 2007 are valid receivables subject to no setoffs or counterclaims and are current and collectible (within 90 days after the date on which they first became due and payable). The Disclosure Schedule describes each account maintained by or for the benefit of GDS at any bank or other financial institution. Section 3.26 Offers. GDS has suspended or terminated, and has the legal right to terminate or suspend, all negotiations and discussions of any acquisition, merger, consolidation or sale of all or substantially all of the assets or member interests of GDS with parties other than Purchaser. 16 Section 3.27 Warranties. No product or service manufactured, sold, leased, licensed or delivered by GDS is subject to any guaranty, warranty, right of return, right of credit or other indemnity other than (i) the applicable standard terms and conditions of sale or lease of GDS, which are set forth in the Disclosure Schedule and (ii) manufacturers' warranties for which GDS has no liability. The Disclosure Schedule sets forth the aggregate expenses incurred by GDS in fulfilling its obligations under its guaranty, warranty, right of return and indemnity provisions during the past twenty-four (24) months and GDS does not know of any reason why such expenses would reasonably be expected to increase as a percentage of sales in the future. Section 3.28 Proxy Statement. The information to be supplied by GDS for inclusion in Purchaser's proxy statement (such proxy statement, as amended or supplemented is referred to herein as the "Proxy Statement") shall not at the time the Proxy Statement is filed with the SEC, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading. The information to be supplied by GDS for inclusion in the proxy statement to be delivered to Purchaser's stockholders in connection with the meeting of Purchaser's stockholders to consider the approval of this Agreement (the "Purchaser Stockholders' Meeting") shall not, on the date the Proxy Statement is first mailed to Purchaser's stockholders, and at the time of the Purchaser Stockholders' Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not false or misleading; or omit to state any material fact necessary to correct any statement provided by GDS in any earlier communication with respect to the solicitation of proxies for the Purchaser Stockholders' Meeting which has become false or misleading. If at any time prior to the Purchaser Stockholders' Meeting, any event relating to GDS or any of its affiliates, officers or managers should be discovered by GDS which should be set forth in a supplement to the Proxy Statement, GDS shall promptly inform Purchaser of such event. Section 3.29 No Misstatements. No representation or warranty made by GDS in this Agreement, the Disclosure Schedule or any certificate delivered or deliverable pursuant to the terms hereof contains or will contain any untrue statement of a material fact, or omits, or will omit, when taken as a whole, to state a material fact, necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; provided, however, that any representations and warranties made by GDS herein that are qualified by GDS's "Knowledge" or materiality shall be incorporated into the representation and warranty made by this sentence of this Section 3.29. To the Knowledge of GDS, GDS has disclosed to Purchaser all material information relating to the business of GDS or the transactions contemplated by this Agreement. Section 3.30 Investment Intent. GasSearch Corporation and its shareholders acknowledge that the shares of Purchaser Common Stock to be delivered by Purchaser under this Agreement are not registered under the Securities Act or registered or qualified for sale under any state securities law and cannot be resold without registration under, or pursuant to an exemption from, the Securities Act. GasSearch Corporation is acquiring the shares of Purchaser Common Stock for its own account for investment and not with a view toward the sale or distribution of the shares of 17 Purchaser Common Stock. GasSearch Corporation and its shareholders have sufficient knowledge and experience in financial and business matters to enable it to evaluate the risks of acquiring the shares of Purchaser Common Stock and has the ability to bear the economic risks of such investment. ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PURCHASER Purchaser represents and warrants to GDS that the statements contained in this Article IV are true and correct as of the date of this Agreement and will be true and correct as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Article IV). Section 4.01 Organization. Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Purchaser has all requisite corporate power and authority to own, lease and operate its properties and carry on its business as now conducted and is duly licensed or qualified to do business in the states of the United States and foreign jurisdictions where its ownership or leasing of property or the conduct of its business requires such qualification. Section 4.02 Authority; No Violation. (a) Purchaser has full corporate power and authority to execute and deliver this Agreement and, subject to (i) receipt of any required regulatory and stockholder approvals and (ii) stockholders of Purchaser owning less than 20% of the Purchaser securities sold in the Purchaser's initial public offering voting against the Agreement and exercising their conversion rights as set forth in the Purchaser's Certificate of Incorporation, to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Purchaser and the completion by Purchaser of the transactions contemplated hereby, have been duly and validly approved by the Board of Directors of Purchaser, and no other corporate proceedings on the part of Purchaser are necessary to complete the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Purchaser, and subject to the receipt of the regulatory approvals, constitutes the valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors' rights generally, and subject, as to enforceability, to general principles of equity. (b) The execution and delivery of this Agreement by Purchaser, subject to receipt of any required approvals, and compliance by GDS and GasSearch Corporation and Purchaser with any conditions contained therein and stockholder approvals, the consummation of the transactions contemplated hereby and compliance by Purchaser with any of the terms or provisions hereof will not (i) conflict with or result in a breach or violation of, or default under and provision of the certificate of incorporation or bylaws of Purchaser or (ii) violate any statute, code, ordinance, rule, regulation, judgment, order, writ, decree, governmental permit or license or injunction applicable to Purchaser. Section 4.03 Consents. Except for any regulatory approvals and compliance with any conditions contained therein, the filing of the Proxy Statement with the SEC, the approval of this Agreement by the requisite vote of Purchaser's stockholders and the satisfaction of Purchaser's obligations as a special purpose acquisition corporation, no consents, waivers or approvals of, or filings or registrations with, any Governmental Entity are necessary, and, to the Knowledge of Purchaser, 18 no consents, waivers or approvals of, or filings or registrations with, any other third parties are necessary, in connection with (a) the execution and delivery of this Agreement by Purchaser and the completion by Purchaser of the transactions contemplated by this Agreement. Purchaser has no reason to believe that (i) any required consents or approvals will not be received, or that (ii) any public body or authority, the consent or approval of which is not required or to which a filing is not required, will object to the completion of the transactions contemplated by this Agreement. Section 4.04 Access to Funds. Purchaser has, or on the Closing Date will have, access to all funds necessary to consummate the Acquisition and pay the aggregate Consideration. Section 4.05 Legal Proceedings. Purchaser is not a party to any action, suit or proceeding that would materially adversely affect the ability of Purchaser to consummate the transactions contemplated by this Agreement. Section 4.06 Board Approval. Subject to certain conditions contained in Section 8.01 and 8.02, including, but not limited to receiving a third party fairness opinion (the "Opinion"), the Board of Directors of Purchaser (including any required committee or subgroup of the Board of Directors of Purchaser) has, as of the date of this Agreement, unanimously (i) declared the advisability of the Acquisition and approved this Agreement and the transactions contemplated hereby, (ii) determined that the Acquisition is in the best interests of the stockholders of Purchaser and (iii) necessary to effect the intent of this Agreement. Section 4.07 Proxy Statement. The information to be supplied by Purchaser for inclusion in the Proxy Statement shall not at the time the Proxy Statement is filed with SEC contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading. The information to be supplied by Purchaser for inclusion in the Proxy Statement to be delivered to Purchaser's stockholders in connection with the Purchaser Stockholders' Meeting shall not, on the date the Proxy Statement is first mailed to Purchaser's stockholders, and at the time of Purchaser Stockholders' Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not false or misleading; or omit to state any material fact necessary to correct any statement provided by Purchaser in any earlier communication with respect to the solicitation of proxies for the Purchaser Stockholders' Meeting which has become false or misleading. If at any time prior to the Stockholder's Meeting, any event relating to Purchaser or any of its affiliates, officers or managers should be discovered by Purchaser which should be set forth in a supplement to the Proxy Statements, Purchaser shall promptly inform GDS of such event. Section 4.08 Offers. GDS acknowledges that Purchaser is permitted to receive general inquiries from third parties concerning potential transactions that would be in addition to, the transaction contemplated by this Agreement (an "Additional Transaction"), and to enter into an acquisition or stock purchase agreement with respect to one or more Additional Transactions. 19 ARTICLE V. CONDUCT PENDING ACQUISITION Section 5.01 Conduct of Business Prior to the Closing Date. Except as expressly provided in this Agreement or with the prior written consent of Purchaser, during the period from the date of this Agreement to the Closing Date, GDS shall: (i) conduct its business in the ordinary and usual course consistent with past practices; (ii) maintain and preserve intact its business organization, properties, leases and advantageous business relationships and retain the services of its officers and key employees; (iii) take no action which would adversely affect or delay the ability of GDS and GasSearch Corporation to each perform its covenants and agreements on a timely basis under this Agreement; (iv) take no action which would adversely affect or delay the ability of parties to obtain any necessary approvals, consents or waivers required for the transactions contemplated hereby or which would reasonably be expected to result in any such approvals, consents or waivers containing any material condition or restriction; and (v) take no action that results in or is reasonably likely to have a Material Adverse Effect on GDS. Section 5.02 Forbearances of GDS. Without limiting the covenants set forth in Section 5.01 hereof, from the date hereof until the Closing Date, except as expressly contemplated or permitted by this Agreement, without the prior written consent of Purchaser, which consent shall not be unreasonably withheld, GDS will not: (a) change or waive any provision of its certificate of incorporation, charter or bylaws or any similar governing documents; (b) change the number of authorized or issued shares of its capital stock, issue any shares of GDS Stock that are held as Treasury Stock as of the date of this Agreement, or issue or grant any right or agreement of any character relating to its authorized or issued capital stock or any securities convertible into shares of such stock, or split, combine or reclassify any shares of its capital stock, or declare, set aside or pay any dividend or other distribution in respect of its capital stock; (c) enter into, amend in any material respect or terminate any contract or agreement (including without limitation any settlement agreement with respect to litigation) involving a payment by GDS of $100,000 or more; (d) enter into any new line of business or introduce any new products; (e) grant or agree to pay any bonus, severance or termination payment (including, but not limited to discretionary severance pay) to, or enter into, renew or amend any employment agreement, severance agreement and/or supplemental executive agreement with, or increase in any manner the compensation or fringe benefits of, any of its directors, officers or employees; (f) enter into or, except as may be required by law, materially modify any pension, retirement, stock option, stock purchase, stock appreciation right, stock grant, profit sharing, deferred compensation, supplemental retirement, consulting, bonus, group insurance or other employee benefit, incentive or welfare contract, plan or arrangement, or any trust agreement related thereto, in respect of any of its directors, officers or employees; or make any contributions to any defined contribution or defined benefit plan not in the ordinary course of business consistent with past practice; 20 (g) merge or consolidate GDS with any other corporation; sell or lease all or any substantial portion of the assets or business of GDS; make any acquisition of all or any substantial portion of the business or assets of any other; (h) sell or otherwise dispose of the capital stock of GDS or sell or otherwise dispose of any asset of GDS other than in the ordinary course of business consistent with past practice; (i) incur any indebtedness for borrowed money (or guarantee any indebtedness for borrowed money) or subject any asset of GDS to any lien, pledge, security interest or other encumbrance, other than indebtedness incurred as set forth in Disclosure Schedule 5.02(i).; (j) take any action which would result in any of the representations and warranties of GDS or GasSearch Corporation set forth in this Agreement becoming untrue as of any date after the date hereof or in any of the conditions set forth in Article VIII hereof not being satisfied, except in each case as may be required by applicable law; (k) waive, release, grant or transfer any material rights of value or modify or change in any material respect any existing agreement or indebtedness to which GDS is a party, other than in the ordinary course of business, consistent with past practice; (l) enter into, renew, extend or modify any other transaction with any Affiliate; (m) except for the execution of this Agreement, and actions taken or which will be taken in accordance with this Agreement and performance thereunder, take any action that would give rise to a right of payment to any individual under any employment agreement; (n) make any capital expenditures in excess of $100,000 individually or $250,000 in the aggregate, other than pursuant to binding commitments existing on the date hereof which are set forth in the Disclosure Letter and other than expenditures necessary to maintain existing assets in good repair; (o) purchase or otherwise acquire, or sell or otherwise dispose of, any assets or incur any liabilities other than in the ordinary course of business consistent with past practices and policies; (p) undertake or, enter into any lease, contract or other commitment for its account, involving a payment by GDS of more than $25,000 annually, or containing any financial commitment extending beyond 12 months from the date hereof other than in the ordinary course of business; (q) pay, discharge, settle or compromise any claim, action, litigation, arbitration or proceeding; other than any such payment, discharge, settlement or compromise in the ordinary course of business consistent with past practice that involves solely money damages in the amount not in excess of $50,000 individually or $100,000 in the aggregate; (r) other than in the ordinary course of business consistent with past practice and pursuant to policies currently in effect, sell, transfer, mortgage, encumber or otherwise dispose of any of its material properties, leases or assets to any individual, corporation or other entity or cancel, release or assign any indebtedness of any such person, except pursuant to contracts or agreements in force at the date of this Agreement and which are set forth in the Disclosure Letter; provided, however, that no sales may be made with recourse; (s) fail to maintain all its properties in repair, order and condition no worse than on the date of this Agreement other than as a result of ordinary wear and tear; 21 (t) revoke GDS's election to be taxed as an S Corporation within the meaning of Code Sections 1361 and 1362 or take or allow any action that may result in the termination of GDS's status as a validly electing S Corporation within the meaning of Code Sections 1361 and 1362; (u) make or change any election in respect of Taxes, adopt or change any accounting method in respect of Taxes or otherwise, enter into any closing agreement, settle any claim or assessment in respect of Taxes, or consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of Taxes, except as required by law, rule, regulation or GAAP; or (v) make any withdrawals from retained earnings (including the Accumulated Adjustments Account), other than for the payment of estimated taxes attributed to the income of GDS to be reported on the individual income tax return of GasSearch Corporation or its shareholders; or (w) agree to do any of the foregoing. Section 5.03 Maintenance of Insurance. GDS shall maintain insurance in such amounts as are reasonable to cover such risks as are customary in relation to the character and location of its properties, and the nature of its business. Section 5.04 All Reasonable Efforts. Subject to the terms and conditions herein provided, GDS agrees to use, all commercially reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement. ARTICLE VI. COVENANTS Section 6.01 Current Information. (a) During the period from the date of this Agreement to the Closing Date, GDS will cause one or more of its representatives to confer with representatives of Purchaser and report the general status of its ongoing operations at such times as Purchaser may reasonably request. GDS will promptly notify Purchaser of any material change in the normal course of its business or in the operation of its properties and, to the extent permitted by applicable law, of any governmental complaints, investigations or hearings (or communications indicating that the same may be contemplated), or the institution or the known threat of material litigation involving GDS. (b) GDS shall promptly inform Purchaser upon receiving notice of any legal, administrative, arbitration or other proceedings, demands, notices, audits or investigations (by any federal, state or local commission, agency or board) relating to the alleged liability of GDS under any labor or employment law. Section 6.02 Access to Properties and Records. GDS shall permit Purchaser reasonable access upon reasonable notice to its properties, and shall disclose and make available to Purchaser during normal business hours all of its books, papers and records relating to the assets, properties, operations, obligations and liabilities, including, but not limited to, all books of account (including the general ledger), tax records, minute books of directors' (other than minutes that discuss any of the transactions 22 contemplated by this Agreement or any other subject matter GDS reasonably determines should be treated as confidential) and stockholders' meetings, organizational documents, Bylaws, material contracts and agreements, filings with any regulatory authority, litigation files, plans affecting employees, and any other business activities or prospects in which Purchaser may have a reasonable interest. GDS shall provide and shall request its auditors to provide Purchaser with such historical financial information regarding it (and related audit reports, consents and work papers) as Purchaser may reasonably request. Purchaser shall use commercially reasonable efforts to minimize any interference with GDS's regular business operations during any such access to GDS's property, books and records. GDS shall permit Purchaser, at Purchaser's expense, to cause a "phase I environmental audit" and a "phase II environmental audit" to be performed at any physical location owned or occupied by GDS. Section 6.03 Financial and Other Statements. (a) Promptly upon preparation thereof, GDS will furnish to Purchaser copies of all internal monthly financial statements. (b) With reasonable promptness GDS will furnish to Purchaser such additional financial data that GDS possesses and as Purchaser may reasonably request. Section 6.04 Disclosure Letter Supplements. From time to time prior to the Closing Date, GDS will promptly supplement or amend the Disclosure Letter delivered in connection herewith with respect to any matter hereafter arising which, if existing, occurring or known at the date of this Agreement, would have been required to be set forth or described in such Disclosure Letter or which is necessary to correct any information in such Disclosure Letter which has been rendered materially inaccurate thereby. Section 6.05 Consents and Approvals of Third Parties. In addition to the Obligations of Article VI hereunder, GDS shall use all commercially reasonable efforts to obtain as soon as practicable all consents and approvals of any other persons necessary or desirable for the consummation of the transactions contemplated by this Agreement. Section 6.06 Failure to Fulfill Conditions. In the event that GDS or GasSearch Corporation determines that a condition to their obligations to complete the sale of GDS Stock cannot be fulfilled and that it will not waive that condition, it will promptly notify Purchaser. Section 6.07 Employee Benefits. Purchaser intends to continue to employ all employees of GDS at their current compensation and with their current benefits for a period of at least a year from Closing Date. Section 6.08 Debt. Purchaser agrees that it will pay the following: It will pay to GDS the amount necessary to pay off its indebtedness at the time of Closing. It will then have available the difference between that amount and $17.5 million which GDS will then use for additional capital purchases as necessary in the course of its business. 23 Section 6.09 Tax Periods Ending On or Before the Closing Date. (a) Purchaser and GasSearch Corporation will agree upon the methodology prior to closing, to be employed to determine the allocation of the Consideration among the assets of GDS for purposes of preparing a properly completed form 8594 and any comparable form required under state or local law and such methodology will be reflected in a "Allocation Statement". Purchaser and GasSearch Corporation will report the tax consequences of the transactions contemplated by this Agreement in a manner consistent with such allocation and will not take any position inconsistent therewith. (b) GasSearch Corporation will prepare or cause to be prepared and file or cause to be filed any required tax returns for all periods ending on or prior to the Closing Date which are filed after the Closing Date. GasSearch Corporation will permit Purchaser to review and comment on each such tax return described in the preceding sentence prior to filing. Section 6.10 Cooperation on Tax Matters. (a) The parties hereto will cooperate fully, as and to the extent reasonably requested by any other party in connection with the filing of tax returns pursuant to this Section and any audit, litigation or other proceeding with respect to all taxes. Such cooperation will include the retention and (upon any other party's request) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. GDS and GasSearch Corporation agree (i) to retain all books and records with respect to tax matters pertinent to GDS relating to any taxable period beginning before the Closing Date until the expiration of the statute of limitations (and, to the extent notified by GDS or GasSearch Corporation, any extensions thereof) of the respective taxable periods, and to abide by all record retention agreements entered into with any regulatory authority, and (ii) to give the other parties reasonable written notice prior to transferring, destroying or discarding any such books and records and, if any such person so requests, GDS or GasSearch Corporation, as the case may be, will allow such person to take possession of such books and records. (b) Purchaser and GasSearch Corporation further agree, upon request, to use their best efforts to obtain any certificate or other document from any regulatory authority or any other person as may be necessary to mitigate, reduce or eliminate any tax that could be imposed (including, but not limited to, with respect to the transactions contemplated hereby). (c) Purchaser and GasSearch Corporation further agree, upon request, to provide the other party with all information that such person may be required to report pursuant to Section 6043 of the Code and all Treasury Department Regulations promulgated thereunder. Section 6.11 Employment of Denny Harton; Appointment to Board of Directors. Purchaser agrees to use its best efforts to enter into an employment contract with Denny Harton effective at the Closing Date, in which Mr. Harton shall be an Executive Vice President of Purchaser. Purchaser shall cause Denny Harton to be appointed to its Board of Directors effective at the Closing Date or as soon thereafter as is practicable. 24 ARTICLE VII. REGULATORY AND OTHER MATTERS Section 7.01 Meeting of Stockholders. (a) GDS shall take all steps necessary to duly call, give notice of, convene and hold a meeting of its shareholders for the purpose of considering and voting on approval of this Agreement, and for such other, purposes as may be, in GDS's reasonable judgment, necessary or desirable (the "Seller Stockholder's Meeting"). In lieu of holding a Seller Stockholder's Meeting, if permitted by GDS's Certificate of Incorporation, Bylaws and the WVBCA, GDS may obtain stockholder approval by means of a consent solicitation. (b) Purchaser shall, once it has completed the negotiation of such acquisition(s) as it deems in its best interests and required in order to have a business combination or combinations in which the fair market value of the business or businesses acquired simultaneously is equal to at least 80% of the Purchaser's net assets (excluding any deferred compensation held by Ferris Baker Watts, Incorporated), prepare the Proxy Statement as described in Section 7.02 below. Section 7.02 Proxy Statement. As soon as practicable after entering into the acquisitions referred to in Section 7.01(b), Purchaser shall prepare a Proxy Statement, for the purpose of taking such stockholder action on the Acquisition, this Agreement, any other acquisition(s) it has entered into, and any revisions to its Certificate of Incorporation contemplated by Purchaser, and file such Proxy Statement with the SEC in preliminary form, respond to comments of the staff of the SEC and promptly mail the Proxy Statement to the holders of record (as of the applicable record date) of shares of voting stock of Purchaser. Section 7.03 Regulatory Approvals. Each of GDS and Purchaser will cooperate with the other and use all reasonable efforts to promptly prepare and file any necessary documentation to obtain any necessary regulatory approvals. GDS and Purchaser will furnish each other and each other's counsel with all information concerning themselves, directors, officers and stockholders and such other matters as may be necessary or advisable in connection with any application, petition or other statement made by or on behalf of GDS or Purchaser to any regulatory or governmental body in connection with the Acquisition and the other transactions contemplated by this Agreement. Each party acknowledges that time is of the essence in connection with the preparation and filing of the documentation referred to above. GDS shall have the right to review and approve in advance all characterizations of the information relating to GDS which appears in any filing made in connection with the transactions contemplated by this Agreement with any governmental body. In addition, GDS and Purchaser shall each furnish to the other a copy of each publicly available portion of such filing made in connection with the transactions contemplated by this Agreement with any governmental body promptly after its filing. 25 ARTICLE VIII. CLOSING CONDITIONS Section 8.01 Conditions to Each Party's Obligations under this Agreement. The respective obligations of each party under this Agreement shall be subject to the fulfillment at or prior to the Closing Date of the following conditions, none of which may be waived: (a) Stockholder Approval. (i) Purchaser shall enter into an Additional Transaction to ensure that Purchaser's initial combinations have an aggregate fair market value of at least 80% of Purchaser's net assets (excluding deferred compensation or Ferris Baker Watts, incorporated); (ii) this Agreement and the transactions contemplated hereby, which shall include approval of an Additional Transaction to ensure that Purchaser's initial business combination have an aggregate fair market value of at least 80% of Purchaser's net assets (excluding deferred compensation of Ferris Baker Watts, Incorporated) each shall have been approved by the requisite vote of the stockholders of Purchaser and GDS in accordance with applicable law and regulations. (b) Injunctions. None of the parties hereto shall be subject to any order, decree or injunction of a court or agency of competent jurisdiction, and no statute, rule or regulation shall have been enacted, entered, promulgated, interpreted, applied or enforced by any Governmental Entity or regulatory agency, that enjoins or prohibits the consummation of the transactions contemplated by this Agreement. (c) Regulatory Approvals. All required regulatory approvals, consents, permits and authorizations shall have been obtained and shall remain in full force and effect and all waiting periods relating thereto shall have expired; and no such regulatory approval shall include any condition or requirement, that would, in the judgment of the Board of Directors of Purchaser, have a Material Adverse Effect on (x) GDS or (y) Purchaser. (d) Simultaneous Closing. GDS and GasSearch Corporation acknowledge and agree that the closing of the Acquisition must be simultaneous with such other acquisition(s) that, in the aggregate, have a fair market value of at least 80% of Purchaser's net assets (excluding deferred compensation of Ferris Baker Watts, Incorporated). Section 8.02 Conditions to the Obligations of Purchaser under this Agreement. The obligations of Purchaser under this Agreement shall be further subject to the satisfaction of the conditions set forth in this Section 8.02 at or prior to the Closing Date: (a) Representations and Warranties. Each of the representations and warranties of GDS and GasSearch Corporation set forth in this Agreement that are qualified as to materiality shall be true and correct in all respects and each representation or warranty that is not so qualified shall be true and correct in all material respects, in each case, as of the date of this Agreement and upon the Closing Date with the same effect as though all such representations and warranties had been made at the Closing Date (except to the extent such representations and warranties speak as of an earlier date), and GDS and by GasSearch Corporation shall have delivered to Purchaser a certificate to such effect signed by the Chief Executive Officer and the Chief Financial Officer of GDS as of the Closing Date. (b) Agreements and Covenants. Each of GDS and GasSearch Corporation shall have performed in all material respects all obligations and complied in all material respects with all agreements or covenants to be performed or complied with by it at or prior to the Closing Date, and Purchaser shall have received a 26 certificate signed on behalf of each of GDS and GasSearch Corporation by the Chief Executive Officer and Chief Financial Officer of GDS to such effect dated as of the Closing Date. (c) Good Standing. Purchaser shall have received certificates (such certificates to be dated as of a day as close as practicable to the Closing Date) from appropriate authorities as to the good standing or corporate existence, as applicable, of GDS. (d) Third Party Consents. GDS shall have obtained the consent or approval of each person whose consent or approval shall be required in connection with the transactions contemplated hereby under any loan or credit agreement, note, mortgage, indenture, lease, license or other agreement or instrument to which GDS is a party or is otherwise bound. (e) Other Documents. GDS will furnish Purchaser with such certificates of its officers or others and such other documents to evidence fulfillment of the conditions set forth in this Section 8.02 or as are customary for transaction of the type provided for herein as Purchaser may reasonably request. (f) Objecting/Converting Stockholders. Stockholders of Purchaser holding 20% or more of the shares sold in its initial public offering do not vote against the Acquisition or any Additional Transaction and do not exercise their conversion rights as set forth in the Purchaser's Certificate of Incorporation. (g) Dissenting Shareholders. Neither of the GasSearch Corporation's shareholders shall exercise any dissenter's right of appraisal. (h) Fairness Opinion. Purchaser shall have received an opinion from a firm specializing in the evaluation of businesses to the effect that the fair market value of the GDS plus any Additional Transaction entered into by Purchaser is equal to at least 80% of Purchaser's net assets (excluding any deferred compensation held by Ferris Baker Watts, Incorporated). (i) Delivery of Shares. GasSearch Corporation shall deliver to Purchaser the stock certificates representing all outstanding GDS Stock endorsed to Purchaser. Section 8.03 Conditions to the Obligations of GDS and GasSearch Corporation under this Agreement. The obligations of GDS and GasSearch Corporation under this Agreement shall be further subject to the satisfaction of the conditions set forth in Sections 8.03 at or prior to the Closing Date: (a) Representations and Warranties. Each of the representations and warranties of Purchaser set forth in this Agreement that are qualified as to materiality shall be true and correct in all respects and each representation or warranty that is not so qualified shall be true and correct in all material respects, in each case, as of the date of this Agreement and upon the Closing Date with the same effect as though all such representations and warranties had been made at the Closing Date (except to the extent such representations and warranties speak as of an earlier date), and Purchaser shall have delivered to GDS a certificate to such effect signed by the Chief Executive Officer and the Chief Financial Officer of Purchaser as of the Closing Date. (b) Agreements and Covenants. Purchaser shall have performed in all material respects all obligations and complied in all material respects with all agreements or covenants to be performed or complied with by it at or prior to 27 the Closing Date, and GDS shall have received a certificate signed on behalf of Purchaser by the Chief Executive Officer and Chief Financial Officer of Purchaser to such effect dated as of the Closing Date. (c) Payment of Consideration. Purchaser shall have delivered the Consideration to the Paying Agent on or before the Closing Date. (d) Other Documents. Purchaser will furnish GDS with such certificates of their officers or others and such other documents to evidence fulfillment of the conditions set forth in this Section 8.03 or as are customary for transaction of the type provided for herein as GDS may reasonably request. ARTICLE IX. THE CLOSING Section 9.01 Time and Place. Subject to the provisions of Articles IX and XI hereof, the Closing of the transactions contemplated hereby shall take place at the offices of Luse Gorman Pomerenk & Schick, P.C., 5335 Wisconsin Avenue, NW, Suite 400, Washington, DC 20015, at 10:00 a.m., or at such other place or time upon which Purchaser and GasSearch Corporation mutually agree. A pre-closing of the transactions contemplated hereby (the "Pre-Closing") shall take place at the offices of Luse Gorman Pomerenk & Schick, P.C., 5335 Wisconsin Avenue, NW, Suite 400, Washington, DC 20015, at 10:00 a.m. on the day prior to the Closing Date. Section 9.02 Deliveries at the Pre-Closing and the Closing. At the Pre-Closing there shall be delivered to Purchaser and GasSearch Corporation the certificates, and other documents and instruments required to be delivered at the Closing under Article IX hereof. At or prior to the Closing, Purchaser shall deliver the Consideration as set forth under Section 8.03(c) hereof. ARTICLE X. TERMINATION, AMENDMENT AND WAIVER Section 10.01 Termination. This Agreement may be terminated at any time prior to the Closing Date: (a) At any time by the mutual written agreement of Purchaser on the one hand and GDS and GasSearch Corporation on the other hand; (b) By either party (provided, that the terminating party is not then in breach of any representation, warranty, covenant or other agreement contained herein) if there shall have been a breach of any of the representations or warranties set forth in this Agreement on the part of the other party, which breach by its nature cannot be cured prior to the Termination Date or shall not have been cured within 30 days after written notice of such breach by the terminating party to the other party; (c) By either party (provided, that the terminating party is not then in breach of any representation or warranty or breach of any covenant or other agreement contained herein) if there shall have been a failure to perform or 28 comply in any material respect with any of the covenants or agreements or conditions to the parties' obligations have not been satisfied, all as set forth in this Agreement on the part of the other party, which failure by its nature cannot be cured prior to the Termination Date or shall not have been cured within 30 days after written notice of such failure by the terminating party to the other party; (d) At the election of either party, if the Closing shall not have occurred by the Termination Date, or such later date as shall have been agreed to in writing by Purchaser on the one hand and GDS and GasSearch Corporation on the other hand; provided, that no party may terminate this Agreement pursuant to this Section 10.01(d) if the failure of the Closing to have occurred on or before said date was due to such party's willful breach of any representation or warranty or material breach of any covenant or other agreement contained in this Agreement; (e) By either party if (i) final action has been taken by any regulatory agency whose approval is required in connection with this Agreement and the transactions contemplated hereby, which final action (x) has become unappealable and (y) does not approve this Agreement or the transactions contemplated hereby, (ii) any regulatory agency whose approval or nonobjection is required in connection with this Agreement and the transactions contemplated hereby has stated that it will not issue the required approval or nonobjection, or (iii) any court of competent jurisdiction or other governmental authority shall have issued an order, decree, ruling or taken any other action restraining, enjoining or otherwise prohibiting the Acquisition and such order, decree, ruling or other action shall have become final and unappealable; and (f) By either party, if Stockholder Approval shall have not been obtained for each of the GDS acquisition and the Additional Transaction at the Purchaser Stockholders Meeting duly convened therefor or at any adjournment or postponement thereof; (g) By either party, if Stockholder Approval of the transactions contemplated by this Agreement as well as an Additional Transaction that ensures that Purchaser's initial business combinations have an aggregate fair market value of at least 80% of Purchaser's net assets (excluding deferred compensation of Ferris Baker Watts, Inc.) has not been obtained at the Purchaser Stockholders' Meeting duly convened therefore or at any adjournment or postponement thereof. Section 10.02 Effect of Termination. (a) In the event of termination of this Agreement pursuant to any provision of Section 10.01, this Agreement shall forthwith become void and have no further force, except that (i) the provisions of Sections 10.02, 11.01, 11.06, 11.09, 11.10, and any other Section which, by its terms, relates to post-termination rights or obligations, shall survive such termination of this Agreement and remain in full force and effect. (b) If this Agreement is terminated, expenses and damages of the parties hereto shall be determined as follows: (i) Except as provided below, whether or not the sale of GDS Stock is completed, all costs and expenses incurred in connection with this Agreement and the transactions contemplated by this Agreement shall be paid by the party incurring such expenses. (ii) In the event of a termination of this Agreement because of a willful breach of any representation, warranty, covenant or agreement contained in this Agreement, the breaching party shall be liable for any and all damages, costs and expenses, including all reasonable attorneys' fees, sustained or incurred by 29 the non-breaching party as a result thereof or in connection therewith or with respect to the enforcement of its rights hereunder. Section 10.03 Amendment, Extension and Waiver. Subject to applicable law, at any time prior to the Closing Date, the parties hereto by action of their respective Boards of Directors, may (a) amend this Agreement, (b) extend the time for the performance of any of the obligations or other acts of any other party hereto, (c) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto, or (d) waive compliance with any of the agreements or conditions contained herein. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto. Any agreement on the part of a party hereto to any extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party, but such waiver or failure to insist on strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. ARTICLE XI. MISCELLANEOUS Section 11.01 Public Announcements. GasSearch Corporation and Purchaser shall cooperate in the development and distribution of all news releases and other public disclosures with respect to this Agreement, and except as may be otherwise required by law, neither GasSearch Corporation nor Purchaser shall issue any news release, or other public announcement or communication with respect to this Agreement unless such news release or other public announcement or communication has been mutually agreed upon by the parties hereto. Section 11.02 Survival. All representations, warranties and covenants in this Agreement or in any instrument delivered pursuant hereto shall expire and be terminated and extinguished at the Closing Date, except for those covenants and agreements contained herein which by their terms apply in whole or in part after the Closing Date. Section 11.03 Notices. All notices or other communications hereunder shall be in writing and shall be deemed given if delivered by receipted hand delivery or mailed by prepaid registered or certified mail (return receipt requested) or by recognized overnight courier addressed as follows: If to Purchaser, to: Marshall T. Reynolds Chairman of the Board and Chief Executive Officer Energy Services Acquisition Corp. 2450 First Avenue Huntington, West Virginia 25703 With required copies to: Alan Schick, Esq. Luse Gorman Pomerenk & Schick, P.C. 5335 Wisconsin Avenue, NW, Suite 400 Washington, DC 20015 Fax: (202) 362-2902 30 If to GDS, to: GasSearch Drilling Services Corporation 466 Airport Industrial Park Road Parkersburg, West Virginia 26104 or such other address as shall be furnished in writing by any party, and any such notice or communication shall be deemed to have been given: (a) as of the date delivered by hand; (b) three business days after being delivered to the U.S. mail, postage prepaid; or (c) one business day after being delivered to the overnight courier. Section 11.04 Parties in Interest. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns; provided, however, that neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any party hereto without the prior written consent of the other party, and that (except as specifically provided in this Agreement) nothing in this Agreement is intended to confer upon any other person any rights or remedies under or by reason of this Agreement. Nothing in this Agreement is intended to confer upon any other person any rights or remedies of any nature whatsoever under or by reason of this Agreement. Section 11.05 Complete Agreement. This Agreement, including the Exhibits hereto and the documents and other writings referred to herein or therein or delivered pursuant hereto, contains the entire agreement and understanding of the parties with respect to its subject matter. There are no restrictions, agreements, promises, warranties, covenants or undertakings between the parties other than those expressly set forth herein or therein. This Agreement supersedes all prior agreements and understandings between the parties, both written and oral, with respect to its subject matter. Section 11.06 Counterparts. This Agreement may be executed in two or more counterparts all of which shall be considered one and the same agreement and each of which shall be deemed an original. Section 11.07 Severability. In the event that any one or more provisions of this Agreement shall for any reason be held invalid, illegal or unenforceable in any respect, by any court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement and the parties shall use their reasonable efforts to substitute a valid, legal and enforceable provision which, insofar as practical, implements the purposes and intents of this Agreement. Section 11.08 Governing Law. This Agreement shall be governed by the laws of the State of West Virginia, without giving effect to its principles of conflicts of laws. 31 Section 11.09 Interpretation. When a reference is made in this Agreement to Sections or Exhibits, such reference shall be to a Section of or Exhibit to this Agreement unless otherwise indicated. The recitals hereto constitute an integral part of this Agreement. References to Sections include subsections, which are part of the related Section (e.g., a section numbered "Section 5.02(a)" would be part of "Section 5.02" and references to "Section 5.02" would also refer to material contained in the subsection described as "Section 5.02(a)"). The table of contents, index and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words "include", "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation". The phrases "the date of this Agreement", "the date hereof" and terms of similar import, unless the context otherwise requires, shall be deemed to refer to the date set forth in the Recitals to this Agreement. Section 11.10 Specific Performance. The parties hereto agree that irreparable damage would occur in the event that the provisions contained in this Agreement were not performed in accordance with its specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity. 32 IN WITNESS WHEREOF, the parties below have caused this Agreement to be executed by their duly authorized officers as of the date first set forth above. ENERGY SERVICES ACQUISITION CORP. By:/s/ Marshall T. Reynolds ---------------------------------------- Marshall T. Reynolds Chairman of the Board and Chief Executive Officer GASSEARCH CORPORATION By: /s/ Denny Harton ---------------------------------------- Denny Harton President and Chief Executive Officer GASSEARCH DRILLING SERVICES CORPORATION By: /s/ Denny Harton ---------------------------------------- Denny Harton President and Chief Executive Officer /s/ Denny Harton ------------------------------------------- DENNY HARTON (in his individual capacity) EX-10.3 3 form8kmergerex10_3.txt AGREEMENT AND PLAN OF MERGER EXECUTION COPY ================================================================================ ================================================================================ AGREEMENT AND PLAN OF MERGER BY AND BETWEEN ENERGY SERVICES ACQUISITION CORP. AND S. T. PIPELINE, INC. DATED AS OF JANUARY 22, 2008 ================================================================================ TABLE OF CONTENTS Page ARTICLE I. CERTAIN DEFINITIONS.................................................1 Section 1.01 Certain Definitions.................................1 ARTICLE II. THE MERGER.........................................................5 Section 2.01 Structure of the Merger.............................5 Section 2.02 Effect on Outstanding Shares........................6 Section 2.03 Exchange Procedures.................................6 Section 2.04 Dissenters' Rights..................................7 Section 2.05 Closing; Effective Time.............................7 Section 2.06 Additional Transaction..............................7 ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER..........................7 Section 3.01 Disclosure Letter...................................7 Section 3.02 Organization........................................8 Section 3.03 Capitalization......................................8 Section 3.04 Authority; No Violation.............................8 Section 3.05 Consents............................................9 Section 3.06 Absence of Certain Changes or Events................9 Section 3.07 Taxes...............................................9 Section 3.08 Material Contracts; Leases; Defaults...............12 Section 3.09 Ownership of Property; Insurance Coverage..........12 Section 3.10 Intellectual Property..............................13 Section 3.11 Labor Matters......................................14 Section 3.12 Legal Proceedings..................................14 Section 3.13 Compliance With Applicable Law/Permits.............14 Section 3.14 Employee Benefit Plans.............................14 Section 3.15 Brokers, Finders and Financial Advisors............16 Section 3.16 Environmental Matters..............................16 Section 3.17 Related Party Transactions.........................17 Section 3.18 Antitakeover Provisions Inapplicable...............18 Section 3.19 Customers and Suppliers............................18 Section 3.20 Inventory..........................................18 Section 3.21 Accounts Receivable; Bank Accounts.................18 Section 3.22 Offers.............................................18 Section 3.23 Warranties.........................................19 Section 3.24 Proxy Statement....................................19 Section 3.25 No Misstatements...................................19 ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PURCHASER.......................19 Section 4.01 Organization.......................................20 Section 4.02 Authority; No Violation............................20 Section 4.03 Consents...........................................20 Section 4.04 Access to Funds....................................20 Section 4.05 Legal Proceedings..................................21 Section 4.06 Operations of Merger Sub...........................21 Section 4.07 Board Approval.....................................21 Section 4.08 Proxy Statement....................................21 Section 4.09 Offers.............................................21 ARTICLE V. CONDUCT PENDING ACQUISITION........................................22 Section 5.01 Conduct of Business Prior to the Effective Time....22 Section 5.02 Forbearances of Seller.............................22 i Section 5.03 Maintenance of Insurance...........................24 Section 5.04 All Reasonable Efforts.............................24 ARTICLE VI. COVENANTS.........................................................24 Section 6.01 Current Information................................24 Section 6.02 Access to Properties and Records...................25 Section 6.03 Financial and Other Statements.....................25 Section 6.04 Disclosure Letter Supplements......................25 Section 6.05 Consents and Approvals of Third Parties............25 Section 6.06 Failure to Fulfill Conditions......................25 Section 6.07 Employee Benefits..................................26 Section 6.08 Voting Agreements..................................26 Section 6.09 Tax Periods Ending On or Before the Closing Date...26 Section 6.10 Cooperation on Tax Matters.........................26 Section 6.11 Employment of James E. Shafer......................27 Section 6.12 338(h)10 Election..................................27 Section 6.13 Purchaser to become Guarantor of Seller Debt.......27 Section 6.14 Purchaser Note.....................................27 ARTICLE VII. REGULATORY AND OTHER MATTERS.....................................27 Section 7.01 Meeting of Stockholders............................27 Section 7.02 Proxy Statement....................................28 Section 7.03 Regulatory Approvals...............................28 ARTICLE VIII. CLOSING CONDITIONS..............................................28 Section 8.01 Conditions to Each Party's Obligations under this Agreement.........................................28 Section 8.02 Conditions to the Obligations of Purchaser under this Agreement....................................29 Section 8.03 Conditions to the Obligations of Seller under this Agreement....................................30 ARTICLE IX. THE CLOSING.......................................................31 Section 9.01 Time and Place.....................................31 Section 9.02 Deliveries at the Pre-Closing and the Closing......31 ARTICLE X. TERMINATION, AMENDMENT AND WAIVER..................................31 Section 10.01 Termination........................................31 Section 10.02 Effect of Termination..............................32 Section 10.03 Amendment, Extension and Waiver....................32 ARTICLE XI. MISCELLANEOUS.....................................................33 Section 11.01 Public Announcements...............................33 Section 11.02 Survival...........................................33 Section 11.03 Notices............................................33 Section 11.04 Parties in Interest................................34 Section 11.05 Complete Agreement.................................34 Section 11.06 Counterparts.......................................34 Section 11.07 Severability.......................................34 Section 11.08 Governing Law......................................34 Section 11.09 Interpretation.....................................34 Section 11.10 Specific Performance...............................35 Exhibit A Form of Voting Agreement Exhibit B Form of Plan of Merger ii AGREEMENT AND PLAN OF MERGER This AGREEMENT AND PLAN OF MERGER (this "Agreement") is dated as of January 22, 2008, by and between Energy Services Acquisition Corp., a Delaware corporation (the "Purchaser"), Energy Services Merger Sub ("Merger Sub"), a to-be-formed West Virginia corporation and a wholly-owned subsidiary of Purchaser, and S. T. Pipeline, Inc., a West Virginia corporation (the "Seller"). WHEREAS, the Board of Directors of each of Purchaser and Seller has (i) determined that this Agreement and the business combination and related transactions contemplated hereby are in the best interests of their respective companies and stockholders, and (ii) has approved this Agreement at meetings of each of such Boards of Directors; WHEREAS, in accordance with the terms of this Agreement, Merger Sub will merge with and into Seller; WHEREAS, as a condition to the willingness of Purchaser to enter into this Agreement, each of James E. Shafer and Pauletta Sue Shafer has entered into a Voting Agreement, substantially in the form of Exhibit A hereto, dated as of the date hereof, with Purchaser (the "Voting Agreement"), pursuant to which each of James E. Shafer and Pauletta Sue Shafer has agreed, among other things, to vote all shares of common stock of Seller owned by each such person in favor of the approval of this Agreement and the transactions contemplated hereby, upon the terms and subject to the conditions set forth in such Voting Agreement; and WHEREAS, the parties desire to make certain representations, warranties and agreements in connection with the business transactions described in this Agreement and to prescribe certain conditions thereto. NOW, THEREFORE in consideration of the mutual covenants, representations, warranties and agreements herein contained and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I. CERTAIN DEFINITIONS Section 1.01 Certain Definitions. As used in this Agreement the following terms have the following meanings (unless the context otherwise requires, references to Articles and Sections refer to Articles and Sections of this Agreement). "Agreement" means this agreement, and any written amendment hereto. "Certificate" shall mean a certificate evidencing shares of Seller Common Stock. "Closing" shall have the meaning set forth in Section 2.05. "Closing Date" shall have the meaning set forth in Section 2.05. "COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Compensation and Benefit Plans" shall have the meaning set forth in Section 3.16(a). "Confidentiality Agreements" shall mean the confidentiality agreements referred to in Section 10.01 of this Agreement. "Continuing Employees" shall have the meaning set forth in Section 6.08(c). "DGCL" shall mean the Delaware General Corporation Law. "Disclosure Letter" shall have the meaning set forth in Section 3.01. "Effective Time" shall mean the date and time specified pursuant to Section 2.05 hereof as the effective time of the Merger. "Environmental Laws" means any applicable Federal, state or local law, statute, ordinance, rule, regulation, code, license, permit, authorization, approval, consent, order, judgment, decree, injunction or agreement with any governmental entity relating to (1) the protection, preservation or restoration of the environment (including, without limitation, air, water vapor, surface water, groundwater, drinking water supply, surface soil, subsurface soil, plant and animal life or any other natural resource), and/or (2) the exposure to, or the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, release or disposal of Materials of Environmental Concern. The term Environmental Law includes without limitation (a) the Comprehensive Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C. ss.9601, et seq; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. ss.6901, et seq; the Clean Air Act, as amended, 42 U.S.C. ss.7401, et seq; the Federal Water Pollution Control Act, as amended, 33 U.S.C. ss.1251, et seq; the Toxic Substances Control Act, as amended, 15 U.S.C. ss.2601, et seq; the Emergency Planning and Community Right to Know Act, 42 U.S.C. ss.11001, et seq; the Safe Drinking Water Act, 42 U.S.C. ss.300f, et seq; the Comprehensive Environmental Responses Compensation and Liability Information System List and all comparable state and local laws, and (b) any common law (including without limitation common law that may impose strict liability) that may impose liability or obligations for injuries or damages due to the presence of or exposure to any Materials of Environmental Concern. "EPA" shall mean the Environmental Protection Agency. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended. "ERISA Affiliate" shall have the meaning set forth in Section 3.16(c). "ERISA Affiliate Plan" shall have the meaning set forth in Section 3.16(c). "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "GAAP" shall mean accounting principles generally accepted in the United States of America. "Governmental Entity" shall mean any federal, state, local or other government, governmental, regulatory or administrative authority, agency or commission (including, but not limited to, the SEC, NASDAQ, or EPA) or any court, tribunal or judicial or arbitral body. "HIPAA" shall mean the Health Insurance Portability and Accountability Act of 1996, as amended. 2 "Intellectual Property" shall mean all (i) trademarks, service marks, brand names, d/b/a/'s, Internet domain names, logos, symbols, trade dress, trade names, and other indicia of origin, all applications and registrations for the foregoing, and all goodwill associated therewith and symbolized thereby, including all renewals of same, (ii) inventions and discoveries, whether patentable or not, and all patents, registrations, invention disclosures and applications therefor, including divisions, continuations, continuations-in-part and renewal applications, and including renewals, extensions and reissues, (iii) Trade Secrets, (iv) published and unpublished works of authorship, whether copyrightable or not (including without limitation databases and other compilations of information), copyrights therein and thereto, and registrations and applications therefor, and all renewals, extensions, restorations and reversions thereof, and (v) all other intellectual property or proprietary rights. "IRS" shall mean the United States Internal Revenue Service. "IT Assets" shall mean Seller's computers, computer software, firmware, middleware, servers, workstations, routers, hubs, switches, data communications lines, and all other information technology equipment, and all associated documentation. "Knowledge" as used with respect to a Person (including references to such Person being aware of a particular matter) means those facts that are known by any officer with the title ranking not less than vice president or a director of such Person, or a consultant, or full-time or part-time employee of Seller and includes any facts, matters or circumstances set forth in any written notice from any regulatory agency or any other material written notice received by an officer with the title ranking not less than vice president or a director of that Person. For purposes of this definition, an officer or director will be deemed to have "Knowledge" of a particular fact or other matter if a prudent individual could be expected to discover or otherwise become aware of such fact or other matter in the course of conducting a reasonably comprehensive investigation concerning the existence of such fact or other matter. "Licensed Intellectual Property" means Intellectual Property that Seller has licensed or otherwise permitted by other Persons to use. "Listed Intellectual Property" shall have the meaning set forth in Section 3.10(a). "Material Adverse Effect" shall mean an effect which (A) is material and adverse to the assets, business, financial condition, results of operations or prospects of Seller or Purchaser, as the context may dictate, or (B) adversely affects the ability of Seller or Purchaser, as the context may dictate, to perform its material obligations hereunder or (C) materially and adversely affects the timely consummation of the transactions contemplated hereby. "Materials of Environmental Concern" means pollutants, contaminants, wastes, toxic substances, petroleum and petroleum products, and any other materials regulated under Environmental Laws, including, but not limited to, radon, radioactive material, asbestos, asbestos-containing material, urea formaldehyde foam insulation, lead, polychlorinated biphenyl, flammables and explosives. "Merger" shall mean the merger of Seller with and into Merger Sub pursuant to the terms hereof. "Merger Consideration" shall mean the cash in an aggregate per share amount to be paid by Purchaser for each share of Seller Common Stock, as set forth in Section 2.02(a). "NASD" shall mean the National Association of Securities Dealers, Inc. 3 "Paying Agent" shall mean such bank or trust company or other agent designated by Purchaser, which shall act as agent for Purchaser in connection with the exchange procedures for exchanging Certificates for the Merger Consideration. Purchaser may act as its own Paying Agent. "PBGC" shall mean the Pension Benefit Guaranty Corporation or any successor thereto. "Person" shall mean any individual, consultant (including part-time employee) corporation, partnership, joint venture, association, trust or "group" (as that term is defined under the Exchange Act). "Pre-Effective Time Tax Period" means any taxable period (or the allocable portion of a Straddle Period) ending on or before the close of business on the date the Effective Time occurs. "Proxy Statement" shall have the meaning set forth in Section 7.02. "Purchaser" shall mean Energy Services Acquisition Corp., a Delaware corporation, with its principal executive offices located at 2450 First Avenue, Huntington, West Virginia 25703. "Rights" shall mean warrants, options, rights, convertible securities, stock appreciation rights and other arrangements or commitments which obligate an entity to issue or dispose of any of its capital stock or other ownership interests or which provide for compensation based on the equity appreciation of its capital stock. "SEC" shall mean the Securities and Exchange Commission or any successor thereto. "Securities Act" shall mean the Securities Act of 1933, as amended. "Securities Laws" shall mean the Securities Act; the Exchange Act; the Investment Company Act of 1940, as amended; the Investment Advisers Act of 1940, as amended; the Trust Indenture Act of 1939, as amended; and the rules and regulations of the SEC promulgated thereunder. "Seller" shall have the meaning set forth in the preamble. "Seller Group" means any combined, unitary, consolidated or other affiliated group within the meaning of Section 1504 of the Code or otherwise, of which Seller has been a member for Tax purposes. "Seller Stock" shall mean the shares of issued and outstanding stock of the Seller held by James E. Shafer and Pauletta Sue Shafer. "Seller Stockholders Meeting" shall have the meaning set forth in Section 7.01. "Stockholder Approval" shall have the meaning set forth in Section 8.01(a). "Straddle Period" means any taxable period that includes (but does not end on) the Closing Date. "Superior Proposal" shall mean an Acquisition Proposal, which the Board of Directors of Seller reasonably determines (after consultation with a financial advisor of nationally recognized reputation) to be (i) more favorable to the stockholders of Seller from a financial point of view than the Merger (taking into account all the terms and conditions of such proposal and this Agreement (including any changes to the financial terms of this Agreement proposed by Purchaser in response to such offer or otherwise)) and (ii) reasonably capable of being completed, taking into account all financial, legal, regulatory and other aspects of such proposal. 4 "Surviving Corporation" shall have the meaning set forth in Section 2.01. "Tax" means any and all (a) federal, state, local or foreign tax, fee or other like assessment or charge of any kind, including, without limitation, any net income, alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad valorem, value-added, transfer, franchise, profits, license, payroll, employment, social security (or similar), unemployment, disability, registration, estimated, excise, severance, stamp, capital stock, occupation, property, environmental or windfall tax, premium, customs duty or other tax, together with any interest, penalty or additions thereto, whether disputed or not; (b) liability for the payment of Tax as the result of membership in the Seller Group; and (c) transferee or secondary liability in respect of any Tax (whether imposed by law or contractual arrangement). "Tax Return" means any return (including estimated returns), declaration, report, claim for refund, or information return or statement or any amendment thereto relating to Taxes, including any such document prepared on an affiliated, consolidated, combined or unitary group basis and any schedule or attachment thereto. "Taxing Authority" means any governmental or regulatory authority, body or instrumentality exercising any authority to impose, regulate or administer the imposition of Taxes. "Termination Date" shall mean August 30, 2008. "Trade Secrets" means confidential information, trade secrets and know-how, including confidential processes, schematics, business methods, formulae, drawings, prototypes, models, designs, customer lists and supplier lists. "Treasury Stock" means all shares of Seller Stock held in the treasury of Seller (other than shares held in a fiduciary capacity or in connection with debts previously contracted). "Voting Agreement" shall have the meaning set forth in the recitals to this Agreement. "WVBCA" shall mean the West Virginia Business Corporation Act. Other terms used herein are defined in the preamble and elsewhere in this Agreement. ARTICLE II. THE MERGER Section 2.01 Structure of the Merger. Subject to the terms and conditions of this Agreement, Purchaser will cause a West Virginia corporation to be organized as a wholly owned special purpose Subsidiary of Purchaser ("Merger Sub"). At the Effective Time, Merger Sub will merge with and into Seller, with Seller being the surviving entity (the "Surviving Corporation"), pursuant to the provisions of, and with the effect provided in, the WVBCA and pursuant to the terms and conditions of an agreement and plan of merger ("Plan of Merger") to be entered into between Merger Sub and Seller in the form attached hereto as Exhibit B. The separate corporate existence of Merger Sub shall thereupon cease. The Surviving Corporation shall be governed by the laws of the State of West Virginia and its separate corporate existence with all of its rights, privileges, immunities, powers and franchises shall continue unaffected by the Merger. At the Effective Time, the certificate 5 of incorporation and bylaws of Seller shall be amended in their entirety to conform to the certificate of incorporation and bylaws of Merger Sub in effect immediately prior to the Effective Time and shall become the certificate of incorporation and bylaws of the Surviving Corporation. At the Effective Time, the directors and officers of Merger Sub shall become the directors and officers of the Surviving Corporation. As part of the Merger, each share of Seller Common Stock will be converted into the right to receive the Merger Consideration pursuant to the terms of Section 2.03. Seller acknowledges that the structure may change in the event Purchaser enters into an agreement to engage in an "Additional Transaction" as defined in Section 4.09. Notwithstanding the foregoing, Purchaser may, at its own discretion, alter the means by which the Merger is affected provided that such alteration does not change the (i) form and amount of the Merger Consideration or (ii) tax consequences of the Merger to Seller's shareholders. Section 2.02 Effect on Outstanding Shares. (a) By virtue of the Merger, automatically and without any action on the part of the holder thereof, each share of Seller Stock, issued and outstanding at the Effective Time shall become and be converted into the right to receive up to $15,200 in cash without interest (the "Merger Consideration"), provided that the total cash payment due shall not exceed $19.0 million which shall be reduced by the book value of certain assets set forth at Schedule 2.02 and a reduction of $3.0 million. The $3.0 million reduction shall constitute a deferred payment to be paid proportionally to each shareholder based on their respective ownership interests in Seller three annual installments on the anniversary date of the Closing Date, and the installment payments shall earn interest at a simple rate of 7.5% per annum. The third installment shall be reduced in an amount equal to 50% of any loss (up to $2.0 million) on the Equitrans Project reflected in the financial statements from the Closing Date until the Equitrans Project is completed. Purchaser reserves the right, in its sole discretion, to make the deferred payments prior to the installment due date. Any such payments due under this Section 2.02 shall be adjusted to reflect any payments due pursuant to Section 6.12. Any such payments due under Section 6.12 shall be due no later than 30 days following the execution of IRS Form 8023. (b) As of the Effective Time, all shares of Seller Stock shall no longer be outstanding and shall be automatically cancelled and retired and shall cease to exist, and each holder of a Certificate formerly representing any such share of Seller Stock shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration. After the Effective Time, there shall be no transfers on the stock transfer books of Seller. Section 2.03 Exchange Procedures. (a) Immediately prior to the Effective Time, each Certificate previously representing shares of Seller Stock shall represent only the right to receive the Merger Consideration. (b) As of the Effective Time, Purchaser shall deposit, or shall cause to be deposited with the Paying Agent pursuant to the terms of an agreement (the "Paying Agent Agreement") in form and substance reasonably satisfactory to Purchaser, for the benefit of the holders of shares of Seller Stock, for exchange in accordance with this Section 2.03, an amount of cash sufficient to pay the aggregate Merger Consideration to be paid pursuant to Section 2.02(a). Purchaser may act as its own paying agent. (c) At the Effective Time, each Seller shall present their stock certificate to Purchaser for payment of the Merger Consideration as described at Section 2.02. (d) From and after the Effective Time, there shall be no transfers on the stock transfer records of Seller of any shares of Seller Stock that were outstanding immediately prior to the Effective Time. If after the Effective Time 6 Certificates are presented to Purchaser or the Surviving Corporation, they shall be canceled and exchanged for the Merger Consideration deliverable in respect thereof pursuant to this Agreement in accordance with the procedures set forth in this Section 2.03. Section 2.04 Dissenters' Rights. Each of the holders of Seller Stock hereby waive their rights to perfect their dissenters' rights of appraisal under the WVBCA. Section 2.05 Closing; Effective Time. Subject to the satisfaction or waiver of all conditions to closing contained in Article VIII hereof, the Closing shall occur (i) no later than five business days following the latest to occur of (a) the receipt of all required regulatory approvals and the expiration of any applicable waiting periods, or (b) the approval of the Merger by the stockholders of Seller, or (ii) at such other date or time upon which Purchaser and Seller mutually agree (the "Closing"). The Merger shall be effected by the filing of a certificate of merger with the West Virginia Secretary of State on the day of the Closing (the "Closing Date"), in accordance with the WVBCA. The "Effective Time" means the date and time upon which the certificate of merger is filed with the Delaware and the West Virginia Office of the Secretary of State, or as otherwise stated in the certificate of merger, in accordance with the WVBCA. Section 2.06 Additional Transaction. Notwithstanding anything contained in this Agreement, the parties acknowledge that in order to consummate the Merger the Purchaser must enter into a business combination or combinations in which the fair market value of the business or businesses acquired simultaneously with the transaction contemplated by this Agreement is equal to at least 80% of Purchaser's net assets (excluding any deferred compensation held by Ferris Baker Watts, Incorporated) when combined with the transactions contemplated by this Agreement. The Seller acknowledges that the Merger must be completed simultaneously with such other business combination or combinations, referenced to in this Section. ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER Seller represents and warrants to Purchaser that the statements contained in this Article III are true and correct as of the date of this Agreement and will be true and correct as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Article III), except as set forth in the Disclosure Letter (as defined below) delivered by Seller to Purchaser prior to the execution of this Agreement. Section 3.01 Disclosure Letter. On or prior to the date hereof, Seller has delivered to Purchaser a letter (the "Disclosure Letter") setting forth, among other things, facts, circumstances and events the disclosure of which are required or appropriate in relation to any or all of its covenants, representations and warranties (and making specific reference to the section of this Agreement to which such section of the Disclosure Letter relates); provided, that the mere inclusion of a fact, circumstance or event in the Disclosure Letter shall not be deemed an admission by a party that such item represents a material exception or that such item is reasonably likely to result in a Material Adverse Effect. The Disclosure Letter is true, correct and complete in all material respects. 7 Section 3.02 Organization. (a) Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of West Virginia. Seller has all requisite corporate power and authority to own, lease and operate its properties and carry on its business as now conducted. Seller is duly licensed or qualified to do business in each jurisdiction where its ownership or leasing of property or the conduct of its business requires such qualification. (b) Seller has no subsidiaries. The Disclosure Letter sets forth all entities (whether corporations, partnerships, or similar organizations), including the corresponding percentage ownership in which Seller owns, directly or indirectly, 5% or more of the ownership interests as of the date of this Agreement, indicates its jurisdiction of organization and the jurisdiction wherein it is qualified to do business. (c) Prior to the date of this Agreement, Seller has made available to Purchaser true and correct copies of the certificate of incorporation or charter and bylaws of Seller. Section 3.03 Capitalization. (a) The authorized capital stock of Seller consists of 1,250 shares of Seller Stock. As of the date of this Agreement: 1,250 shares of Seller Stock were issued and outstanding. James E. Shafer owns 610 shares of Seller Stock and Pauletta Sue Shafer owns 640 shares of Seller Stock. All outstanding shares of Seller Stock are validly issued, fully paid and nonassessable and not subject to any preemptive rights and, with respect to shares held by Seller in its treasury, are free and clear of all liens, claims, encumbrances or restrictions and there are no agreements or understandings with respect to the voting or disposition of any such shares. (b) No bonds, debentures, notes or other indebtedness having the right to vote on any matters on which stockholders of Seller may vote are issued or outstanding. Set forth in the Disclosure Letter is a listing of all the seller debt outstanding including interest rate and payment terms. (c) As of the date of this Agreement and, except for this Agreement, Seller does not have or is bound by any Rights obligating Seller to issue, deliver or sell, or cause to be issued, delivered or sold, any additional shares of capital stock of Seller or obligating Seller to grant, extend or enter into any such Right. As of the date hereof, there are no outstanding contractual obligations of Seller to repurchase, redeem or otherwise acquire any shares of capital stock of Seller. Section 3.04 Authority; No Violation. (a) Seller has full corporate power and authority to execute and deliver this Agreement, the Plan of Merger and, subject to the receipt of any required regulatory approvals and the approval of this Agreement by Seller's stockholders, to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Seller and the completion by Seller of the transactions contemplated hereby have been duly and validly approved by the Board of Directors of Seller. This Agreement has been duly and validly executed and delivered by Seller, and subject to approval by the stockholders of Seller and receipt of any required approvals or consents, constitutes the valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors' rights generally, and subject, as to enforceability, to general principles of equity, whether applied in a court of law or a court of equity. 8 (b) Subject to receipt of any required approvals and consents and receipt of the approval of the stockholders of Seller, the consummation of the transactions contemplated hereby and compliance by Seller with any of the terms or provisions hereof will not: (i) conflict with or result in a breach or violation of or a default under any provision of the Certificate of Incorporation or Bylaws of Seller; (ii) violate any statute, code, ordinance, rule, regulation, judgment, order, writ, decree, governmental permit or license or injunction applicable to Seller or any of their respective properties or assets or enable any person to enjoin the Merger or the other transactions contemplated hereby; or (iii) violate, conflict with, result in a breach of any provisions of, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of, accelerate the performance required by, or result in a right of termination or acceleration or the creation of any lien, security interest, charge or other encumbrance upon any of the properties or assets of Seller under any of the terms, conditions or provisions of any material note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which Seller is a party, or by which they or any of their respective properties or assets may be bound or affected. Section 3.05 Consents. Except for any required vote of the stockholders of Seller and Purchaser, no consents, waivers or approvals of, or filings, registrations or authorizations with, any Governmental Entity is necessary, and no consents, waivers or approvals of, or filings, registrations or authorizations with, any other third parties are necessary, in connection with (a) the execution and delivery of this Agreement by Seller, and the completion by Seller of the Merger. Seller has no reason to believe that (i) any required approvals or other required consents or approvals will not be received, or that (ii) any public body or authority, the consent or approval of which is not required or to which a filing is not required, will object to the completion of the transactions contemplated by this Agreement. Seller is not subject to regulation of its business or operations under any Federal law (to the extent Seller is required to register or file reports with any Government Entity) or state public utilities laws. Section 3.06 Absence of Certain Changes or Events. Since December 31, 2005 (i) Seller has not incurred any liability, except in the ordinary course of its business consistent with past practice; (ii) Seller has conducted its business only in the ordinary and usual course of such business; and (iii) there has not been any condition, event, change or occurrence that, individually or in the aggregate, has had, or is reasonably likely to have, a Material Adverse Effect. Section 3.07 Taxes. (a) (i) Seller has filed or caused to be filed, and with respect to Tax Returns due between the date of this Agreement and the date the Effective Time occurs, will timely file (including any applicable extensions) all Tax Returns required to be filed, (ii) all such Tax Returns are, or in the case of such Tax Returns not yet filed, will be, true, complete and correct in all material respects and such Tax Returns correctly reflected (or in the case of such Tax Returns not yet filed, will correctly reflect) the facts regarding the income, business, assets, operations, activities, status and other matters of Seller and any other information required to be shown thereon, and (iii) all Taxes of Seller (whether or not reflected on any such Tax Returns) attributable to a Pre-Effective Time Tax Period have been, or in the case of Taxes the due date for payment of which is between the date of this Agreement and the date the Effective Time occurs, timely paid in full, including, without limitation, all Taxes which Seller is obligated to withhold for amounts paid or owing to employees, independent contractors, stockholders creditors and other third parties other than Taxes that have been reserved or accrued and which the Seller is contesting in good faith. 9 (b) The most recent financial statements for Seller reflect an adequate reserve for all Taxes payable by Seller for all taxable periods and portions thereof through the date of such financial statements, and, in the case of Taxes owed as of the date hereof, an adequate reserve is (and until the date the Effective Time occurs will continue to be) reflected in the accruals for Taxes payable, other than accruals established to reflect timing differences and accruals reflected only in the notes thereto. (c) There are no liens for Taxes, except for statutory liens not yet due with respect to any of the assets or properties of Seller. (d) (i) No Tax Return of Seller has within the past ten (10) years been examined by the Internal Revenue Service or state taxing authority, (ii) no Tax Return of Seller is under audit or examination by any other Taxing Authority, and (iii) no notice of such an audit or examination has been received by Seller. (e) Each deficiency, if any, resulting from any audit or examination relating to Taxes by any Taxing Authority has been timely paid. No issues relating to Taxes were raised by the relevant Taxing Authority in any completed audit or examination that can reasonably be expected to recur in a later taxable period. The relevant statute of limitations is closed with respect to the Tax Returns of Seller for all years through 2001. Seller has made available to Purchaser documents setting forth the dates of the most recent audits or examinations of the Seller by any Taxing Authority in respect of Taxes for all taxable periods for which the statute of limitations has not yet expired. (f) Seller is not a party to or is bound by any Tax sharing agreement, Tax indemnity obligation or similar agreement, arrangement or practice with respect to Taxes (including, without limitation, any advance pricing agreement, closing agreement or other agreement relating to Taxes with any Taxing Authority). (g) Seller will not be required to include in a taxable period ending after the date of the Effective Time any taxable income attributable to income that accrued, but was not recognized, in a Pre-Effective Time Tax Period (or the portion of a Straddle Period allocable to the Pre-Effective Time Tax Period) as a result of an adjustment under Section 481 of the Code, the installment method of accounting, the long-term contract method of accounting, the cash method of accounting, any comparable provision of state, local, or foreign Tax law, or for any other reason. (h) There are no outstanding agreements or waivers extending, or having the effect of extending, the statutory period of limitation applicable to any Tax Returns required to be filed with respect to Seller, and Seller has not requested any extension of time within which to file any Tax Return, which return has not yet been filed. No power of attorney with respect to any Taxes has been executed or filed with any Taxing Authority by or on behalf of Seller. (i) Seller has complied in all respects with all applicable laws relating to the payment and withholding of Taxes (including withholding of Taxes pursuant to Sections 1441, 1442, 3121 and 3402 of the Code or any comparable provision of any state, local or foreign laws) and have, within the time and in the manner prescribed by applicable law, withheld from and paid over to the proper Taxing Authorities all amounts required to be so withheld and paid over under such laws. (j) Seller has not been a party to any distribution occurring during the last five years in which the parties to such distribution treated the distribution as one to which Section 355 of the Code applied. 10 (k) Seller is not a party to any "listed transaction" as defined in Treasury Regulation Section 1.6011-4(b)(2). (l) The Tax Returns filed by Seller do not contain a disclosure statement under former Section 6661 of the Code or Section 6662 of the Code (or any similar provision of state, local or foreign Tax law). (m) Seller has not been, at any time during the applicable time period set forth in Section 897(c)(1) of the Code, a United States real property holding company within the meaning of Section 897(c)(2) of the Code. (n) Seller has made available to Purchaser for inspection (i) complete and correct copies of all material Tax Returns of Seller relating to Taxes for all taxable periods for which the applicable statute of limitations has not yet expired, and (ii) complete and correct copies of all private letter rulings, revenue agent reports, information document requests, notices of proposed deficiencies, deficiency notices, protests, petitions, closing agreements, settlement agreements, pending ruling requests, and any similar documents, submitted by, received by or agreed to by or on behalf of Seller or, to the extent related to the income, business, assets, operations, activities or status of Seller and relating to Taxes for all taxable periods for which the statute of limitations has not yet expired. (o) The Disclosure Letter sets forth each state, county, local, municipal or foreign jurisdiction in which Seller files, or is or has been required to file, a Tax Return relating to state and local income, franchise, license, excise, net worth, property or sales and use taxes or is or has been liable for any Taxes on a "nexus" basis at any time for a taxable period for which the relevant statutes of limitation have not expired. Seller has not received notice of any claim by a Taxing Authority in a jurisdiction where Seller does not file Tax Returns that Seller is or may be subject to taxation by such jurisdiction. (p) Seller has made a valid election under Section 1362 of the Code to be treated as an S corporation for federal income tax purposes, and made a similar election under comparable provisions of state, local or foreign Tax law. At all times since making its election to be treated as an S Corporation Seller has been treated as an S Corporation or a QSub (as defined below) for income tax purposes. Seller is in compliance with requirements for maintaining its election as an S Corporation. (q) Seller has two stockholders. Each stockholder of Seller has been, as of the date they acquired Seller Stock, and continue to be "eligible shareholders" as defined under Section 1361 of the Code. (r) Each controlled corporation that had or has any of its stock owned by Seller was, is, and will be properly treated as a qualified S Corporation Subsidiary (QSubs), as defined under Section 1361 of the Code, of Seller. All QSub elections required to be made to satisfy the condition expressed in the previous sentence were properly made on a timely basis. (s) Seller has no liability or potential liability for any tax under Code Section 1374. Seller has not in the past 10 years, (A) acquired assets from another corporation in a transaction in which Seller's tax basis for the acquired assets was determined, in whole or in part, by reference to the tax basis of the acquired assets (or any other property) in the hands of the transferor or (B) acquired the controlling stock of any corporation that is not a qualified Corporation Subsidiary. 11 Section 3.08 Material Contracts; Leases; Defaults. (a) Except as set forth in the Disclosure Letter, Seller is not a party to or subject to: (i) any employment, consulting or severance contract with any past or present officer, director or employee of Seller, except for "at will" arrangements; (ii) any plan or contract providing for bonuses, pensions, options, or other equity deferred compensation, retirement payments, profit sharing, insurance benefits, death benefits, health, medical or disability benefits or similar material arrangements for or with any past or present officers, directors or employees of Seller; (iii) any collective bargaining agreement with any labor union relating to employees of Seller; (iv) any agreement which by its terms limits the payment of Dividends by Seller; (v) any instrument evidencing or related to indebtedness for borrowed money whether directly or indirectly, by way of purchase money obligation, conditional sale, lease purchase, guaranty or otherwise; (vi) any other agreement, written or oral, not terminable on 60 days' notice, that obligates Seller for the payment of more than $100,000 annually; or (vii) any agreement (other than this Agreement), contract, arrangement, commitment or understanding (whether written or oral) that restricts or limits in any material way the conduct of business by Seller (it being understood that any non-compete or similar provision shall be deemed material). (b) Subject to any consents that may be required as a result of the transactions contemplated by this Agreement, Seller is not in default under any material contract, agreement, commitment, arrangement, lease, insurance policy or other instrument to which it is a party, by which its assets, business, or operations may be bound or affected, or under which it or its assets, business, or operations receive benefits, and there has not occurred any event that, with the lapse of time or the giving of notice or both, would constitute such a default. (c) True and correct copies of agreements, contracts, leases, arrangements and instruments referred to in Sections 3.08(a) and (b) have been made available to Purchaser on or before the date hereof, are listed on the Disclosure Letter and are in full force and effect on the date hereof and enforceable against the counterparty to which it relates. (d) The Disclosure Letter provides a complete and accurate description of all debt and guaranties of debt of Seller outstanding as of the date of this Agreement. Section 3.09 Ownership of Property; Insurance Coverage. (a) Except as set forth in the Disclosure Letter, Seller has good and, as to real property, marketable title to all assets and properties owned by Seller in the conduct of its businesses, whether such assets and properties are real or personal, tangible or intangible, including assets and property reflected in the balance sheet contained in the most recent Seller financial statements or acquired subsequent thereto (except to the extent that such assets and properties have been disposed of in the ordinary course of business, since the date of such balance sheet and except to the extent that the failure to have good title to any personal property would not reasonably be expected to have a Material Adverse Effect), subject to no encumbrances, liens, mortgages, security interests or pledges. All existing leases and commitments to lease constitute or will constitute operating leases for both tax and financial accounting purposes and the lease expense and minimum rental commitments with respect to such leases and lease commitments are as disclosed in all respects in the notes to the Seller financial statements. Each real estate lease that will require the consent of the lessor or its agent to consummate the effects intended by the Merger or otherwise as a result of the Merger by virtue of the terms of any such lease is listed in the Disclosure Letter identifying the section of the lease that contains such prohibition or restriction. (b) With respect to all agreements pursuant to which Seller has purchased securities subject to an agreement to resell, if any, Seller, as the case may 12 be, has a lien or security interest (which to Seller's Knowledge is a valid, perfected first lien) in the securities or other collateral securing the repurchase agreement, and the value of such collateral equals or exceeds the amount of the debt secured thereby. (c) Seller currently maintains insurance for reasonable amounts with financially sound and reputable insurance companies, against such risks as companies engaged in a similar business would, in accordance with good business practice, customarily be insured. Seller has not received notice from any insurance carrier that (i) such insurance will be canceled or that coverage thereunder will be reduced or eliminated, or (ii) premium costs with respect to such policies of insurance will be substantially increased. There are presently no material claims pending under such policies of insurance and no notices have been given by Seller under such policies. All such insurance is valid and enforceable and in full force and effect. The Seller Disclosure Letter identifies all policies of insurance maintained by Seller as well as the other matters required to be disclosed under this Section. Section 3.10 Intellectual Property. (a) The Disclosure Letter sets forth a true and complete list of all (i) registered and/or material Intellectual Property owned by Seller indicating for each registered item the registration or application number and the applicable filing jurisdiction (collectively, the "Listed Intellectual Property"). Seller exclusively owns (beneficially, and of record where applicable) all Listed Intellectual Property, free and clear of all encumbrances, exclusive licenses and non-exclusive licenses not granted in the ordinary course of business. The Listed Intellectual Property is valid, subsisting and enforceable, and is not subject to any outstanding order, judgment, decree or agreement adversely affecting the Seller's use thereof or its rights thereto. Seller has sufficient rights to use all Intellectual Property used in its business as currently conducted. To Seller's Knowledge, Seller does not and has not in the past five years infringed or otherwise violated the Intellectual Property rights of any third party. There is no material litigation, opposition, cancellation, proceeding, objection or claim pending, asserted or threatened against the Seller concerning the ownership, validity, registerability, enforceability, infringement or use of, or licensed right to use, any Intellectual Property. To the Seller's Knowledge, (x) no valid basis for any such litigation, opposition, cancellation, proceeding, objection or claim exists, (y) no Person is violating any Listed Intellectual Property or other Intellectual Property right owned or held exclusively by Seller, and (z) the Licensed Intellectual Property is valid, subsisting and enforceable and is not subject to any outstanding order, judgment, decree or agreement adversely affecting the Seller's use thereof or its rights thereto. Consummation of the transactions contemplated by this Agreement will not terminate or alter the terms pursuant to which the Seller is permitted to use any Licensed Intellectual Property and will not create any rights by third parties to use any Intellectual Property owned by the Purchaser (other than any termination, alteration or creation of any rights that results from action of the Purchaser and its Affiliates). (b) The Seller has taken commercially reasonable measures to protect the confidentiality of all Trade Secrets that are owned, used or held by Seller, and to the Seller's Knowledge, such Trade Secrets have not been used, disclosed to or discovered by any Person except pursuant to valid and appropriate non-disclosure and/or license agreements which have not been breached. Seller has exercised commercially reasonable efforts to ensure that Seller's current and prior employees who have access to confidential information have executed valid intellectual property and confidentiality agreements or are obligated, pursuant to Seller policies, to maintain the confidentiality of such information for the benefit of Seller on terms and conditions consistent with industry standards. All Intellectual Property developed under contract to Seller has been assigned to Seller. (c) To Seller's Knowledge, the IT Assets operate and perform in all respects in accordance with their documentation and functional specifications and otherwise as required by Seller in connection with its business, and have not malfunctioned or failed within the past three years. To Seller's Knowledge, 13 the IT Assets do not contain any "time bombs," "Trojan horses," "back doors," "trap doors," "worms," viruses, bugs, faults or other devices or effects that (i) enable or assist any person to access without authorization the IT Assets, or (ii) otherwise significantly adversely affect the functionality of the IT Assets, in either case except as disclosed in its documentation. To Seller's Knowledge, no person has gained unauthorized access to the IT Assets. Seller has implemented commercially reasonable backup and disaster recovery technology consistent with industry practices. (d) To Seller's Knowledge, none of the software owned by it contains any shareware, open source code, or other software whose use requires disclosure or licensing of Intellectual Property. Section 3.11 Labor Matters. Other than as set forth in the Disclosure Letter, Seller is not, and has not ever been, a party to, or is or has ever been bound by, any collective bargaining agreement, contract, or other agreement or understanding with a labor union or labor organization with respect to its employees and no such agreement or contract is currently being negotiated by Seller, nor is Seller the subject of any proceeding asserting that it has committed an unfair labor practice or otherwise relating to labor matters involving any current or former employees of Seller or seeking to compel it to bargain with any labor organization as to wages and conditions of employment, nor is any strike, other labor dispute or organizational effort involving Seller pending or, to the Knowledge of Seller, threatened. Seller is in compliance with applicable laws regarding employment of employees and retention of independent contractors, and are in compliance with applicable employment tax laws. Section 3.12 Legal Proceedings. Seller is not a party to any, and there are no pending or, to Seller's Knowledge, threatened legal, administrative, arbitration or other proceedings, claims (whether asserted or unasserted), actions or governmental investigations or inquiries of any nature, (i) against Seller, (ii) to which Seller's assets are or may be subject, (iii) challenging the validity or propriety of any of the transactions contemplated by this Agreement, or (iv) which could adversely affect the ability of Seller to perform under this Agreement. Section 3.13 Compliance With Applicable Law/Permits. (a) Seller is in compliance in all material respects with all applicable federal, state, local and foreign statutes, laws, regulations, ordinances, rules, judgments, orders or decrees applicable to it, its properties, assets and deposits, its business, and its conduct of business and its relationship with its employees. (b) Seller has all permits, licenses, authorizations, orders and approvals of, and has made all filings, applications and registrations that are required in order to permit it to own or lease its properties and to conduct its business as presently conducted; all such permits, licenses, consents, certificates of authority, orders and approvals are in full force and effect and, to the Knowledge of Seller, no suspension or cancellation of any such permit, license, certificate, consents, order or approval is threatened or will result from the consummation of the transactions contemplated by this Agreement. Section 3.14 Employee Benefit Plans. (a) The Disclosure Letter includes a descriptive list of all plans, programs, policies, payroll practices, contracts, agreements and other arrangements providing for bonus, incentive compensation, deferred compensation, pension, retirement benefits or payments, profit-sharing, employee stock 14 ownership, stock bonus, stock purchase, restricted stock, stock option, stock appreciation, phantom stock, and other stock and stock related awards, severance, welfare benefits, fringe benefits, employment, severance and change in control benefits or payments and all other types of compensation and types of compensation and compensation and benefit practices, policies and arrangements, in each case, sponsored or contributed to, required to be contributed to or maintained by Seller in which any employee or former employee, consultant or former consultant or director or former director of Seller participates or to which any such employee, consultant or director is a party or is otherwise entitled to receive benefits (the "Compensation and Benefit Plans"). Other than as set forth in the Disclosure Letter, Seller has no commitment to create any additional Compensation and Benefit Plan or to modify, change or renew any existing Compensation and Benefit Plan (any modification or change that increases the cost of such plans would be deemed material), except as required by law or regulation to maintain the qualified status thereof. Seller has made available to Purchaser true and correct copies of the Compensation and Benefit Plans and amendments thereto. The Disclosure Letter identifies all payments made by Seller to labor unions in connection with the hiring or contracting of union employees during the past 12 months. (b) Each Compensation and Benefit Plan has been operated and administered in all material respects in accordance with its terms and with applicable law, including, but not limited to, ERISA, the Code, the Age Discrimination in Employment Act, COBRA, HIPAA and any regulations or rules promulgated thereunder, and all filings, disclosures and notices required by ERISA, the Code, the Exchange Act, the Age Discrimination in Employment Act and any other applicable law have been timely made or any interest, fines, penalties or other impositions for late filings have been paid in full. Each Compensation and Benefit Plan which is an "employee pension benefit plan" within the meaning of Section 3(2) of ERISA and which is intended to be qualified under Section 401(a) of the Code is, and since its inception has been, so qualified, and has received a favorable determination letter from the IRS, and Seller is not aware of any circumstances which are reasonably likely to result in revocation of any such favorable determination letter. There is no pending or, to the Knowledge of Seller threatened, action, suit or claim relating to any of the Compensation and Benefit Plans (other than routine claims for benefits). Neither Seller has not engaged in a transaction, or omitted to take any action, with respect to any Compensation and Benefit Plan that would reasonably be expected to subject Seller to an unpaid tax or penalty imposed by either Section 4975 of the Code or Section 502 of ERISA. (c) Seller does not sponsor or contribute on behalf of its employees to any tax-qualified defined benefit pension plans within the meaning of ERISA Section 3(2) subject to the minimum funding standards of Section 412 of the Internal Revenue Code. Similarly, Seller does not sponsor or contribute to any nonqualified plans or deferred compensation subject to Section 409A of the Internal Revenue Code that would be considered defined benefit pension plans. (d) All contributions required to be made under the terms of any Compensation and Benefit Plan or ERISA Affiliate Plan or any employee benefit arrangements to which Seller is a party or a sponsor have been timely made, and all anticipated contributions and funding obligations are accrued on Seller's financial statements to the extent required by GAAP. Seller has expensed and accrued as a liability the present value of future benefits under each applicable Compensation and Benefit Plan for financial reporting purposes as required by GAAP. (e) Except as set forth in the Disclosure Letter, Seller has no obligations to provide retiree health, life insurance, disability insurance, or death benefits under any Compensation and Benefit Plan, other than benefits mandated by Section 4980B of the Code and there has been no communication to employees by Seller that would reasonably be expected to promise or guarantee such benefits. (f) With respect to each Compensation and Benefit Plan, if applicable, Seller has provided or made available to Purchaser copies of the: (A) trust instruments and insurance contracts; (B) two most recent Forms 5500 filed with the IRS; (C) two most recent actuarial reports and financial statements; (D) 15 most recent summary plan description; (E) most recent determination letter issued by the IRS; and (F) any Form 5310 or Form 5330 filed with the IRS within the last two years. (g) The consummation of the Merger will not, directly or indirectly (including, without limitation, as a result of any termination of employment or service at any time prior to or following the Effective Time): (A) entitle any current or former employee, consultant, independent contractor or director to any payment or benefit (including severance pay, change in control benefit, or similar compensation) or any increase in compensation, (B) result in the vesting or acceleration of any benefits under any Compensation and Benefit Plan, (C) result in any material increase in benefits payable under or the obligation to fund benefits under any Compensation and Benefit Plan or (D) result in the triggering or imposition of any restrictions or limitations on the rights of Seller or the Purchaser to amend or terminate any Compensation and Benefit Plan. The consummation of the Merger will not, directly or indirectly (including without limitation, as a result of any termination of employment or service at any time prior to or following the Effective Time), entitle any current or former employee, director, consultant or independent contractor of Seller to any actual or deemed payment (or benefit) which could constitute an "excess parachute payment" (as such term is defined in Section 280G of the Code). (h) Seller does not maintain any compensation plans, programs or arrangements under which (i) payment is reasonably likely to become non-deductible, in whole or in part, for tax reporting purposes as a result of the limitations under Section 162(m) of the Code and the regulations issued thereunder, or (ii) any payment is reasonably likely to become subject to an excise tax under section 409A or 4999 of the Code. (i) There are no stock option, stock appreciation or similar rights, earned dividends or dividend equivalents, or shares of restricted stock, outstanding under any of the Compensation and Benefit Plans or otherwise as of the date hereof and none will be granted, awarded, or credited after the date hereof. (j) Each Compensation and Benefit Plan can be amended, terminated or otherwise discontinued without liability to the Seller, Purchaser or any ERISA Affiliate. Section 3.15 Brokers, Finders and Financial Advisors. Neither Seller nor any of its respective officers, directors, employees or agents, has employed any broker, finder or financial advisor in connection with the transactions contemplated by this Agreement, or incurred any liability or commitment for any fees or commissions to any such person in connection with the transactions contemplated by this Agreement. Section 3.16 Environmental Matters. (a) Except as may be set forth in any Phase I Environmental Report identified in the Disclosure Letter (a true copy of which has been provided to Purchaser), with respect to Seller: (i) Seller's Property is, and has been, in compliance in all material respects with, and is not liable under, any Environmental Laws; 16 (ii) Seller has received no written notice and does not otherwise have Knowledge that there is any suit, claim, action, demand, executive or administrative order, directive, investigation or proceeding pending and, to Seller's Knowledge, no such action is threatened, before any court, governmental agency or other forum against it or any Property (x) for alleged noncompliance (including by any predecessor) with, or liability under, any Environmental Law or (y) relating to the presence of or release into the environment of any Materials of Environmental Concern (as defined herein), whether or not occurring at or on a site owned, leased or operated by it or any Property; (iii) Seller has received no written notice that there is any suit, claim, action, demand, executive or administrative order, directive, investigation or proceeding pending and, to Seller's Knowledge no such action is threatened, before any court, governmental agency or other forum (x) relating to alleged noncompliance (including by any predecessor) with, or liability under, any Environmental Law or (y) relating to the presence of or release into the environment of any Materials of Environmental Concern, whether or not occurring at or on a site owned, leased or operated by a Property; (iv) The properties currently owned or operated by Seller and, to the Seller's Knowledge, the Properties (including, without limitation, soil, groundwater or surface water on, or under the properties, and buildings thereon) are not contaminated with and do not otherwise contain any Materials of Environmental Concern; (v) There is no suit from any federal, state, local or foreign governmental entity or any third party indicating that it may be in violation of, or liable under, any Environmental Law; (vi) There are no underground storage tanks on, in or under any properties owned or operated by Seller, and, to Seller's Knowledge, no underground storage tanks have been closed or removed from any properties owned or operated by Seller; and (vii) During the period of (s) Seller's ownership or operation of any of their respective current properties or (t) Seller's participation in the management of any property, there has been no contamination by or release of Materials of Environmental Concern in, on, under or affecting such properties that could reasonably be expected to result in material liability under the Environmental Laws. To Seller's Knowledge, prior to the period of (x) Seller's ownership or operation of any of their respective current properties or (y) Seller's participation in the management of any property, there was no contamination by or release of Materials of Environmental Concern in, on, under or affecting such properties that could reasonably be expected to result in material liability under the Environmental Laws. (viii) To Seller's knowledge, there is no reasonable basis for any suit, claim, action, demand, executive or administrative order, directive or proceeding of a type described in Section 3.16(a)(ii) or (iii). Section 3.17 Related Party Transactions. Seller is not a party to any transaction (including any loan or other credit accommodation) with any affiliate of Seller. 17 Section 3.18 Antitakeover Provisions Inapplicable. The transactions contemplated by this Agreement are not subject to the requirements of any "moratorium," "control share," "fair price," "affiliate transactions," "business combination" or other antitakeover laws and regulations of any state, including the provisions of West Virginia Corporate Law applicable to Seller. Section 3.19 Customers and Suppliers. The Disclosure Letter contains a complete list of all customers who individually accounted for more than 2% of the Seller's gross revenues during the fiscal years ended December 31, 2005 and 2006 or the three-month period ended March 31, 2007. No customer listed on the Disclosure Letter has, within the past 12 months, cancelled or otherwise terminated, or, to the Knowledge of the Seller, made any threat to cancel or terminate, its relationship with the Seller, or decreased materially its usage of the Seller's services or products. Except as set forth in the Disclosure Letter, no material supplier of the Seller has cancelled or otherwise terminated any contract with the Seller prior to the expiration of the contract term, or, to the Knowledge of the Seller, made any threat to the Seller to cancel, reduce the supply or otherwise terminate its relationship with the Seller. The Seller has not (i) breached (so as to provide a benefit to the Seller that was not intended by the parties) any agreement with or (ii) engaged in any fraudulent conduct with respect to, any customer or supplier of the Seller. Section 3.20 Inventory. All inventory of the Seller consists of a quality and quantity usable and saleable in the ordinary course of business, except for obsolete items and items of below-standard quality, all of which have been written-off or written-down to net realizable value pursuant to the Seller's policies and the best estimates of the Seller's management in accordance with GAAP. All inventories not written-off have been priced at the lower of cost or market on a first-in, first-out basis. The value of each type of inventory, whether raw materials, work-in process or finished goods, are not excessive in the present circumstances of the Seller in the best estimate of Seller's management in accordance with GAAP. Section 3.21 Accounts Receivable; Bank Accounts. All accounts receivable of the Seller are valid receivables properly reflected pursuant to the Seller's policies and practices and the best estimates of the Seller's management in accordance with GAAP, and are subject to no setoffs or counterclaims and are current and collectible (within 90 days after the date on which they first became due and payable). Except as set forth in the Disclosure Letter, all accounts receivable reflected in the financial or accounting records of the Seller that have arisen since December 31, 2006 are valid receivables subject to no setoffs or counterclaims and are current and collectible (within 90 days after the date on which they first became due and payable). The Disclosure Letter describes each account maintained by or for the benefit of the Seller at any bank or other financial institution. Section 3.22 Offers. The Seller has suspended or terminated, and has the legal right to terminate or suspend, all negotiations and discussions of any acquisition, merger, consolidation or sale of all or substantially all of the assets or member interests of the Seller with partiers other than Purchaser. 18 Section 3.23 Warranties. No product or service manufactured, sold, leased, licensed or delivered by the Seller is subject to any guaranty, warranty, right of return, right of credit or other indemnity other than (i) the applicable standard terms and conditions of sale or lease of the Seller, which are set forth in the Disclosure v and (ii) manufacturers' warranties for which the Seller has no liability. The Disclosure Letter sets forth the aggregate expenses incurred by the Seller in fulfilling its obligations under its guaranty, warranty, right of return and indemnity provisions during the past twenty-four (24) months and the Seller does not know of any reason why such expenses would reasonably be expected to increase as a percentage of sales in the future. Section 3.24 Proxy Statement. The information to be supplied by the Seller for inclusion in Purchaser's proxy statement (such proxy statement, as amended or supplemented is referred to herein as the "Proxy Statement") shall not at the time the Proxy Statement is filed with the SEC, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading. The information to be supplied by the Seller for inclusion in the proxy statement to be delivered to Purchaser's stockholders in connection with the meeting of Purchaser's stockholders to consider the approval of this Agreement (the "Purchaser Stockholders' Meeting") shall not, on the date the Proxy Statement is first mailed to Purchaser's stockholders, and at the time of the Purchaser Stockholders' Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not false or misleading; or omit to state any material fact necessary to correct any statement provided by the Seller in any earlier communication with respect to the solicitation of proxies for the Purchaser Stockholders' Meeting which has become false or misleading. If at any time prior to the Purchaser Stockholders' Meeting, any event relating to the Seller or any of its affiliates, officers or managers should be discovered by the Seller which should be set forth in a supplement to the Proxy Statement, the Seller shall promptly inform Purchaser of such event. Section 3.25 No Misstatements. No representation or warranty made by the Seller in this Agreement, the Disclosure Letter or any certificate delivered or deliverable pursuant to the terms hereof contains or will contain any untrue statement of a material fact, or omits, or will omit, when taken as a whole, to state a material fact, necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; provided, however, that any representations and warranties made by the Seller herein that are qualified by the Seller's "Knowledge" or materiality shall be incorporated into the representation and warranty made by this sentence of this Section 3.25. To the Knowledge of the Seller, the Seller has disclosed to Purchaser all material information relating to the business of the Seller or the transactions contemplated by this Agreement. ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PURCHASER Purchaser represents and warrants to Seller that the statements contained in this Article IV are true and correct as of the date of this Agreement and will be true and correct as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Article IV). 19 Section 4.01 Organization. Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Purchaser has all requisite corporate power and authority to own, lease and operate its properties and carry on its business as now conducted and is duly licensed or qualified to do business in the states of the United States and foreign jurisdictions where its ownership or leasing of property or the conduct of its business requires such qualification. Section 4.02 Authority; No Violation. (a) Purchaser has full corporate power and authority to execute and deliver this Agreement and, subject to (i) receipt of any required regulatory and stockholder approvals and (ii) stockholders of Purchaser owning less than 20% of the Purchaser securities sold in the Purchaser's initial public offering voting against the Merger and exercising their conversion rights as set forth in the Purchaser's Certificate of Incorporation, to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Purchaser and the completion by Purchaser of the transactions contemplated hereby, have been duly and validly approved by the Board of Directors of Purchaser, and no other corporate proceedings on the part of Purchaser are necessary to complete the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Purchaser, and subject to the receipt of the regulatory approvals, constitutes the valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors' rights generally, and subject, as to enforceability, to general principles of equity. (b) The execution and delivery of this Agreement by Purchaser, subject to receipt of any required regulatory approvals, and compliance by Seller and Purchaser with any conditions contained therein and stockholder approvals, the consummation of the transactions contemplated hereby and compliance by Purchaser with any of the terms or provisions hereof will not (i) conflict with or result in a breach or violation of, or default under and provision of the certificate of incorporation or bylaws of Purchaser or (ii) violate any statute, code, ordinance, rule, regulation, judgment, order, writ, decree, governmental permit or license or injunction applicable to Purchaser. Section 4.03 Consents. Except for any regulatory approvals and compliance with any conditions contained therein, the filing of the Proxy Statement with the SEC contemplated by Section 7.02 hereof, the approval of this Agreement by the requisite vote of the stockholders and the satisfaction of Purchaser's obligations as a special purpose acquisition corporation, no consents, waivers or approvals of, or filings or registrations with, any Governmental Entity are necessary, and, to the Knowledge of Purchaser, no consents, waivers or approvals of, or filings or registrations with, any other third parties are necessary, in connection with (a) the execution and delivery of this Agreement by Purchaser and the completion by Purchaser of the Merger. Purchaser has no reason to believe that (i) any required consents or approvals will not be received, or that (ii) any public body or authority, the consent or approval of which is not required or to which a filing is not required, will object to the completion of the transactions contemplated by this Agreement. Section 4.04 Access to Funds. Purchaser has, or on the Closing Date will have, access to all funds necessary to consummate the Merger and pay the aggregate Merger Consideration. 20 Section 4.05 Legal Proceedings. Purchaser is not a party to any action, suit or proceeding that would materially adversely affect the ability of Purchaser to consummate the transactions contemplated by this Agreement. Section 4.06 Operations of Merger Sub. Merger Sub will be formed by Purchaser solely for the purpose of engaging in the transactions contemplated by this Agreement, has engaged in no other business activities and has conducted its operations only as contemplated by this Agreement. Merger Sub has no liabilities and, except for a subscription agreement pursuant to which all of its authorized capital stock was issued to Purchaser, is not a party to any agreement other than as is necessary to effect the intent of this Agreement. Section 4.07 Board Approval. Subject to certain conditions contained in Section 8.01 and 8.02, including, but not limited to receiving a third party fairness opinion (the "Opinion"), the Board of Directors of Purchaser (including any required committee or subgroup of the Board of Directors of Purchaser) has, as of the date of this Agreement, unanimously (i) declared the advisability of the Merger and approved this Agreement and the transactions contemplated hereby, (ii) determined that the Merger is in the best interests of the stockholders of Purchaser and (iii) necessary to effect the intent of this Agreement. Section 4.08 Proxy Statement. The information to be supplied by Purchaser for inclusion in the Proxy Statement shall not at the time the Proxy Statement is filed with SEC contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading. The information to be supplied by Purchaser for inclusion in the Proxy Statement to be delivered to Purchaser's stockholders in connection with the Purchaser Stockholders' Meeting shall not, on the date the Proxy Statement is first mailed to Purchaser's stockholders, and at the time of Purchaser Stockholders' Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not false or misleading; or omit to state any material fact necessary to correct any statement provided by Purchaser in any earlier communication with respect to the solicitation of proxies for the Purchaser Stockholders' Meeting which has become false or misleading. If at any time prior to the Stockholder's Meeting, any event relating to Purchaser or any of its affiliates, officers or managers should be discovered by Purchaser which should be set forth in a supplement to the Proxy Statements, Purchaser shall promptly inform Seller of such event. Section 4.09 Offers. The Seller acknowledges that Purchaser is permitted to receive general inquiries from third parties concerning potential transactions that would be in addition to, the transaction contemplated by this Agreement (an "Additional Transaction"), and to enter into an acquisition or stock purchase agreement with respect to one or more Additional Transactions. 21 ARTICLE V. CONDUCT PENDING ACQUISITION Section 5.01 Conduct of Business Prior to the Effective Time. Except as expressly provided in this Agreement or with the prior written consent of Purchaser, during the period from the date of this Agreement to the Effective Time, Seller shall: (i) conduct its business in the ordinary and usual course consistent with past practices; (ii) maintain and preserve intact its business organization, properties, leases and advantageous business relationships and retain the services of its officers and key employees; (iii) take no action which would adversely affect or delay the ability of each of Seller to perform its covenants and agreements on a timely basis under this Agreement; (iv) take no action which would adversely affect or delay the ability of parties to obtain any necessary approvals, consents or waivers required for the transactions contemplated hereby or which would reasonably be expected to result in any such approvals, consents or waivers containing any material condition or restriction; and (v) take no action that results in or is reasonably likely to have a Material Adverse Effect on Seller. Section 5.02 Forbearances of Seller. Without limiting the covenants set forth in Section 5.01 hereof, from the date hereof until the Effective Time, except as expressly contemplated or permitted by this Agreement, without the prior written consent of Purchaser, which consent shall not be unreasonably withheld, Seller will not: (a) change or waive any provision of its certificate of incorporation, charter or bylaws or any similar governing documents; (b) change the number of authorized or issued shares of its capital stock, issue any shares of Seller Common Stock that are held as Treasury Stock as of the date of this Agreement, or issue or grant any right or agreement of any character relating to its authorized or issued capital stock or any securities convertible into shares of such stock, or split, combine or reclassify any shares of its capital stock, or declare, set aside or pay any dividend or other distribution in respect of its capital stock, or purchase or redeem or otherwise acquire any shares of its capital stock, except that Seller may pay a preclosing dividend of certain Seller assets as set forth at Disclosure Letter 5.02; (c) enter into, amend in any material respect or terminate any contract or agreement (including without limitation any settlement agreement with respect to litigation) involving a payment by Seller of $100,000 or more; (d) enter into any new line of business or introduce any new products; (e) grant or agree to pay any bonus (other than bonuses in the ordinary course of business, consistent with past practice), severance or termination payment (including, but not limited to discretionary severance pay) to, or enter into, renew or amend any employment agreement, severance agreement and/or supplemental executive agreement with, or increase in any manner the compensation or fringe benefits of, any of its directors, officers or employees; (f) enter into or, except as may be required by law, materially modify any pension, retirement, stock option, stock purchase, stock appreciation right, stock grant, profit sharing, deferred compensation, supplemental retirement, consulting, bonus, group insurance or other employee benefit, incentive or 22 welfare contract, plan or arrangement, or any trust agreement related thereto, in respect of any of its directors, officers or employees; or make any contributions to any defined contribution or defined benefit plan not in the ordinary course of business consistent with past practice; (g) merge or consolidate Seller with any other corporation; sell or lease all or any substantial portion of the assets or business of Seller; make any acquisition of all or any substantial portion of the business or assets of any other; (h) sell or otherwise dispose of the capital stock of Seller or sell or otherwise dispose of any asset of Seller other than in the ordinary course of business consistent with past practice; (i) incur any indebtedness for borrowed money (or guarantee any indebtedness for borrowed money) or subject any asset of Seller to any lien, pledge, security interest or other encumbrance; (j) take any action which would result in any of the representations and warranties of Seller set forth in this Agreement becoming untrue as of any date after the date hereof or in any of the conditions set forth in Article VIII hereof not being satisfied, except in each case as may be required by applicable law; (k) waive, release, grant or transfer any material rights of value or modify or change in any material respect any existing agreement or indebtedness to which Seller is a party, other than in the ordinary course of business, consistent with past practice; (l) enter into, renew, extend or modify any other transaction with any Affiliate; (m) except for the execution of this Agreement, and actions taken or which will be taken in accordance with this Agreement and performance thereunder, take any action that would give rise to a right of payment to any individual under any employment agreement; (n) make any capital expenditures in excess of $100,000 individually or $250,000 in the aggregate, other than pursuant to binding commitments existing on the date hereof which are set forth in the Disclosure Letter and other than expenditures necessary to maintain existing assets in good repair; (o) purchase or otherwise acquire, or sell or otherwise dispose of, any assets or incur any liabilities other than in the ordinary course of business consistent with past practices and policies; (p) undertake or, enter into any lease, contract or other commitment for its account, involving a payment by Seller of more than $25,000 annually, or containing any financial commitment extending beyond 12 months from the date hereof; (q) pay, discharge, settle or compromise any claim, action, litigation, arbitration or proceeding; other than any such payment, discharge, settlement or compromise in the ordinary course of business consistent with past practice that involves solely money damages in the amount not in excess of $50,000 individually or $100,000 in the aggregate; (r) other than in the ordinary course of business consistent with past practice and pursuant to policies currently in effect, sell, transfer, mortgage, encumber or otherwise dispose of any of its material properties, leases or assets to any individual, corporation or other entity or cancel, release or assign any indebtedness of any such person, except pursuant to contracts or agreements in force at the date of this Agreement and which are set forth in the Disclosure Letter; provided, however, that no sales may be made with recourse; 23 (s) fail to maintain all its properties in repair, order and condition no worse than on the date of this Agreement other than as a result of ordinary wear and tear; (t) revoke Seller's election to be taxed as an S Corporation within the meaning of Code Sections 1361 and 1362 or take or allow any action that may result in the termination of Seller's status as a validly electing S Corporation within the meaning of Code Sections 1361 and 1362; (u) make or change any election in respect of Taxes, adopt or change any accounting method in respect of Taxes or otherwise, enter into any closing agreement, settle any claim or assessment in respect of Taxes, or consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of Taxes, except as required by law, rule, regulation or GAAP; or (v) make any withdrawals from retained earnings (including the Accumulated Adjustments Account), other than for the payment of estimated taxes attributed to the income of Seller to be reported on the individual income tax return of Sellers exclusive of income reported as a result of the 338(h)(10) election contemplated in this agreement and exclusive of income reported as a result of the distribution of assets and except that Sellers may withdraw an amount equal to the earnings from January 1, 2007 through December 31, 2007 less $7.0 million ($4.2 million net of taxes) and also an amount equal to: the result obtained from multiplying the net earnings from January 1, 2008 through the end of the month prior to closing by 95%; or (w) agree to do any of the foregoing. Section 5.03 Maintenance of Insurance. Seller shall maintain insurance in such amounts as are reasonable to cover such risks as are customary in relation to the character and location of its properties, and the nature of its business. Section 5.04 All Reasonable Efforts. Subject to the terms and conditions herein provided, Seller agrees to use, all commercially reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement. ARTICLE VI. COVENANTS Section 6.01 Current Information. (a) During the period from the date of this Agreement to the Effective Time, Seller will cause one or more of its representatives to confer with representatives of Purchaser and report the general status of its ongoing operations at such times as Purchaser may reasonably request. Seller will promptly notify Purchaser of any material change in the normal course of its business or in the operation of its properties and, to the extent permitted by applicable law, of any governmental complaints, investigations or hearings (or communications indicating that the same may be contemplated), or the institution or the known threat of material litigation involving Seller. (b) Seller shall promptly inform Purchaser upon receiving notice of any legal, administrative, arbitration or other proceedings, demands, notices, 24 audits or investigations (by any federal, state or local commission, agency or board) relating to the alleged liability of Seller under any labor or employment law. Section 6.02 Access to Properties and Records. Seller shall permit Purchaser reasonable access upon reasonable notice to its properties, and shall disclose and make available to Purchaser during normal business hours all of its books, papers and records relating to the assets, properties, operations, obligations and liabilities, including, but not limited to, all books of account (including the general ledger), tax records, minute books of directors' (other than minutes that discuss any of the transactions contemplated by this Agreement or any other subject matter Seller reasonably determines should be treated as confidential) and stockholders' meetings, organizational documents, Bylaws, material contracts and agreements, filings with any regulatory authority, litigation files, plans affecting employees, and any other business activities or prospects in which Purchaser may have a reasonable interest. Seller shall provide and shall request its auditors to provide Purchaser with such historical financial information regarding it (and related audit reports, consents and work papers) as Purchaser may reasonably request. Purchaser shall use commercially reasonable efforts to minimize any interference with Seller's regular business operations during any such access to Seller's property, books and records. Seller shall permit Purchaser, at Purchaser's expense, to cause a "phase I environmental audit" and a "phase II environmental audit" to be performed at any physical location owned or occupied by Seller. Section 6.03 Financial and Other Statements. (a) Promptly upon receipt thereof, Seller will furnish to Purchaser copies of the audit of the financial statements of Seller made by its independent accountants and copies of all internal control reports submitted to Seller by such accountants in connection with such audit of the financial statements of Seller. (b) With reasonable promptness Seller will furnish to Purchaser such additional financial data that Seller possesses and as Purchaser may reasonably request, including without limitation, detailed monthly financial statements. Section 6.04 Disclosure Letter Supplements. From time to time prior to the Effective Time, Seller will promptly supplement or amend the Disclosure Letter delivered in connection herewith with respect to any matter hereafter arising which, if existing, occurring or known at the date of this Agreement, would have been required to be set forth or described in such Disclosure Letter or which is necessary to correct any information in such Disclosure Letter which has been rendered materially inaccurate thereby. Section 6.05 Consents and Approvals of Third Parties. In addition to the Obligations of Article VI hereunder, Seller shall use all commercially reasonable efforts to obtain as soon as practicable all consents and approvals of any other persons necessary or desirable for the consummation of the transactions contemplated by this Agreement. Section 6.06 Failure to Fulfill Conditions. In the event that Seller determines that a condition to its obligation to complete the Merger cannot be fulfilled and that it will not waive that condition, it will promptly notify Purchaser. 25 Section 6.07 Employee Benefits. (a) In the event there are suitably qualified employees of Seller whose positions do not continue after the Effective Time, the Purchaser intends to approach them to fill vacancies within the Purchaser wherever possible. Purchaser will review all Compensation and Benefit Plans to determine whether to maintain, terminate or continue such plans. Section 6.08 Voting Agreements. James E. Shafer and Pauletta Sue Shafer shall each execute a voting agreement substantially in the form attached as Exhibit A as of the date hereof. Section 6.09 Tax Periods Ending On or Before the Closing Date. (a) Purchaser and Seller have agreed upon the methodology to be employed to determine the allocation of the Merger Consideration among the assets of Seller for purposes of preparing a properly completed form 8594 and any comparable form required under state or local law and such methodology is reflected on the Disclosure Letter (the "Allocation Statement"). Purchaser and Seller will agree upon an allocation on and as of the Closing Date employing the methodology included in the Allocation Statement. Purchaser and Seller will report the tax consequences of the transactions contemplated by this Agreement in a manner consistent with such allocation and will not take any position inconsistent therewith. (b) Seller (or its shareholders) will prepare or cause to be prepared and file or cause to be filed all tax returns for all periods ending on or prior to the Closing Date which are filed after the Closing Date other than income tax returns with respect to periods for which a consolidated income tax return of Seller will include the operations of Merger Sub. Seller (or its shareholders) will permit Purchaser to review and comment on each such tax return described in the preceding sentence prior to filing. Section 6.10 Cooperation on Tax Matters. (a) The parties hereto will cooperate fully, as and to the extent reasonably requested by any other party or the Seller shareholders, in connection with the filing of tax returns pursuant to this Section and any audit, litigation or other proceeding with respect to all taxes. Such cooperation will include the retention and (upon any other party's request) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. Merger Sub and Seller agree (i) to retain all books and records with respect to tax matters pertinent to Seller relating to any taxable period beginning before the Closing Date until the expiration of the statute of limitations (and, to the extent notified by Seller or its shareholders, any extensions thereof) of the respective taxable periods, and to abide by all record retention agreements entered into with any regulatory authority, and (ii) to give the other parties (and Seller shareholders) reasonable written notice prior to transferring, destroying or discarding any such books and records and, if any such person so requests, Merger Sub or Seller, as the case may be, will allow such person to take possession of such books and records. (b) Purchaser and Seller further agree, upon request, to use their best efforts to obtain any certificate or other document from any regulatory authority or any other person as may be necessary to mitigate, reduce or eliminate any tax that could be imposed (including, but not limited to, with respect to the transactions contemplated hereby). 26 (c) Purchaser and Seller further agree, upon request, to provide the other party (or Seller shareholders) with all information that such person may be required to report pursuant to Section 6043 of the Code and all Treasury Department Regulations promulgated thereunder. Section 6.11 Employment of James E. Shafer. Purchaser agrees to enter into a three year employment contract with James E. Shafer effective at the Closing Date substantially in the form attached. Such agreement has been reviewed by Mr. Shafer. Section 6.12 338(h)10 Election. (a) ss.338(h)(10) Election. Purchaser, Seller and each Seller shareholder shall join in making an election under Internal Revenue Code ss.338(h)(10) (and any corresponding election under state, local, and foreign tax law) with respect to the purchase and sale of stock hereunder (collectively, a "ss.338(h)(10) Election"). Each Seller shareholder shall include any income, gain, loss, deduction, or other tax item resulting from the ss.338(h)(10) Election on his or her tax returns to the extent required by applicable law. Purchaser further agrees that it will provide as additional consideration to the Seller shareholder the amount equal to any additional tax liability resulting from this election as mutually agreed to by the Purchaser and Seller. (b) Purchase Price Allocation. Purchaser, Seller and Seller shareholders agree that the per share Consideration and Seller liabilities (plus other relevant items) will be allocated to the assets of Seller for all purposes (including tax and financial accounting) in a manner consistent with Code ss.ss.338 and 1060 and the regulations thereunder. The parties further agree that the fair market value of the Seller's fixed assets shall be equal to their tax basis. Purchaser, Seller and each Seller shareholder shall file all tax returns (including amended returns and claims for refund) and information reports in a manner consistent with such values. Section 6.13 Purchaser to become Guarantor of Seller Debt. Purchaser agrees to use its best efforts prior to closing, to arrange to become the guarantor of Seller debt, effective at closing, in which James E. Shafer and Pauletta Sue Shafer currently act as guarantor. Section 6.14 Purchaser Note In the event that Seller does not have sufficient cash available to make the payments contemplated by Section 5.02(v), Purchaser agrees to issue to James E. Shafer and Pauletta Sue Shafer a note in such amount. Such note shall be repaid from account receivables attributable to Seller's business as such receivables are collected. The note shall bear interest equal to the prevailing federal funds rate. ARTICLE VII. REGULATORY AND OTHER MATTERS Section 7.01 Meeting of Stockholders. (a) Seller shall take all steps necessary to duly call, give notice of, convene and hold a meeting of its stockholders for the purpose of considering and voting on approval of this Agreement and the Merger, and for such other, purposes as may be, in Seller's reasonable judgment, necessary or desirable (the "Seller Stockholders Meeting"). In lieu of holding a Seller Stockholders Meeting, if permitted by Seller's Certificate of Incorporation, Bylaws and the WVBCA, Seller may obtain stockholder approval by means of a consent 27 solicitation. In connection with the solicitation of proxies with respect to the Seller Stockholders Meeting, the Board of Directors of Seller shall recommend approval of this Agreement to the Seller Stockholders and cooperate and consult with Purchaser with respect to each of the foregoing matters. Seller shall use its best efforts to solicit approval of the Merger. (b) Purchaser shall, once it has completed the negotiation of such acquisition(s) as it deems in the best interests of its stockholders and required in order to have a business combination or combinations in which the fair market value of the business or businesses acquired simultaneously is equal to at least 80% of the Purchaser's net assets (excluding any deferred compensation held by Ferris Baker Watts, Incorporated), prepare the Proxy Statement as described in Section 7.02 below. Section 7.02 Proxy Statement. As soon as practicable after entering into the acquisitions referred to in Section 7.01(b), Purchaser shall prepare a Proxy Statement, for the purpose of taking such stockholder action on the Merger, this Agreement, any other acquisition(s) it has entered into, and any revisions to its Certificate of Incorporation contemplated by Purchaser, and file such Proxy Statement with the SEC in preliminary form, respond to comments of the staff of the SEC and promptly mail the Proxy Statement to the holders of record (as of the applicable record date) of shares of voting stock of Purchaser. Section 7.03 Regulatory Approvals. Each of Seller and Purchaser will cooperate with the other and use all reasonable efforts to promptly prepare and file any necessary documentation to obtain any necessary regulatory approvals. Seller and Purchaser will furnish each other and each other's counsel with all information concerning themselves, directors, officers and stockholders and such other matters as may be necessary or advisable in connection with any application, petition or other statement made by or on behalf of Seller or Purchaser to any regulatory or governmental body in connection with the Merger and the other transactions contemplated by this Agreement. Each party acknowledges that time is of the essence in connection with the preparation and filing of the documentation referred to above. Seller shall have the right to review and approve in advance all characterizations of the information relating to Seller which appears in any filing made in connection with the transactions contemplated by this Agreement with any governmental body. In addition, Seller and Purchaser shall each furnish to the other a copy of each publicly available portion of such filing made in connection with the transactions contemplated by this Agreement with any governmental body promptly after its filing. ARTICLE VIII. CLOSING CONDITIONS Section 8.01 Conditions to Each Party's Obligations under this Agreement. The respective obligations of each party under this Agreement shall be subject to the fulfillment at or prior to the Closing Date of the following conditions, none of which may be waived: (a) Stockholder Approval. (i) Seller shall enter into an Additional Transaction to ensure that Seller's initial combinations have an aggregate fair market value of at least 80% of Seller's net assets (excluding deferred compensation or Ferris Baker Watts, incorporated); (ii) this Agreement and the transactions contemplated hereby, which shall include approval of another business combination to ensure that Purchaser's initial business combinations have an aggregate fair market value of at least 80% of Purchaser's net assets 28 (excluding deferred compensation of Ferris Baker Watts, Incorporated) shall have been approved by the requisite vote of the stockholders of Purchaser and Seller in accordance with applicable law and regulations. (b) Injunctions. None of the parties hereto shall be subject to any order, decree or injunction of a court or agency of competent jurisdiction, and no statute, rule or regulation shall have been enacted, entered, promulgated, interpreted, applied or enforced by any Governmental Entity or regulatory agency, that enjoins or prohibits the consummation of the transactions contemplated by this Agreement. (c) Regulatory Approvals. All required regulatory approvals, consents, permits and authorizations shall have been obtained and shall remain in full force and effect and all waiting periods relating thereto shall have expired; and no such regulatory approval shall include any condition or requirement, that would, in the judgment of the Board of Directors of Purchaser, have a Material Adverse Effect on (x) Seller or (y) Purchaser. (d) Simultaneous Closing. Seller acknowledges and agrees that the closing of the Merger must be simultaneous with such other acquisition(s) that, in the aggregate, have a fair market value of at least 80% of Purchaser's net assets (excluding deferred compensation of Ferris Baker Watts, Incorporated). Section 8.02 Conditions to the Obligations of Purchaser under this Agreement. The obligations of Purchaser under this Agreement shall be further subject to the satisfaction of the conditions set forth in this Section 8.02 at or prior to the Closing Date: (a) Representations and Warranties. Each of the representations and warranties of Seller set forth in this Agreement that are qualified as to materiality shall be true and correct in all respects and each representation or warranty that is not so qualified shall be true and correct in all material respects, in each case, as of the date of this Agreement and upon the Effective Time with the same effect as though all such representations and warranties had been made at the Effective Time (except to the extent such representations and warranties speak as of an earlier date), and Seller shall have delivered to Purchaser a certificate to such effect signed by the Chief Executive Officer and the Chief Financial Officer of Seller as of the Effective Time. (b) Agreements and Covenants. Seller shall have performed in all material respects all obligations and complied in all material respects with all agreements or covenants to be performed or complied with by it at or prior to the Effective Time, and Purchaser shall have received a certificate signed on behalf of Seller by the Chief Executive Officer and Chief Financial Officer of Seller to such effect dated as of the Effective Time. (c) Good Standing. Purchaser shall have received certificates (such certificates to be dated as of a day as close as practicable to the Closing Date) from appropriate authorities as to the good standing or corporate existence, as applicable, of Seller. (d) Third Party Consents. Seller shall have obtained the consent or approval of each person whose consent or approval shall be required in connection with the transactions contemplated hereby under any loan or credit agreement, note, mortgage, indenture, lease, license or other agreement or instrument to which Seller is a party or is otherwise bound. (e) Other Documents. Seller will furnish Purchaser with such certificates of its officers or others and such other documents to evidence fulfillment of the conditions set forth in this Section 8.02 or as are customary for transaction of the type provided for herein as Purchaser may reasonably request. 29 (f) Objecting/Converting Stockholders. Stockholders of Purchaser holding 20% or more of the shares sold in its initial public offering do not vote against the Acquisition and any Additional Transaction and do not exercise their conversion rights as set forth in the Purchaser's Certificate of Incorporation. (g) Dissenting Shareholders. None of the Seller's shareholders have indicated their intent to exercise their dissenter's right of appraisal. (h) Fairness Opinion. Purchaser shall have received an opinion from a firm specializing in the evaluation of businesses to the effect that the fair market value of the Seller plus any Additional Transaction entered into by Purchaser is equal to at least 80% of Purchaser's net assets (excluding any deferred compensation held by Ferris Baker Watts, Incorporated). Section 8.03 Conditions to the Obligations of Seller under this Agreement. The obligations of Seller under this Agreement shall be further subject to the satisfaction of the conditions set forth in Sections 8.03 at or prior to the Closing Date: (a) Representations and Warranties. Each of the representations and warranties of Purchaser set forth in this Agreement that are qualified as to materiality shall be true and correct in all respects and each representation or warranty that is not so qualified shall be true and correct in all material respects, in each case, as of the date of this Agreement and upon the Effective Time with the same effect as though all such representations and warranties had been made at the Effective Time (except to the extent such representations and warranties speak as of an earlier date), and Purchaser shall have delivered to Seller a certificate to such effect signed by the Chief Executive Officer and the Chief Financial Officer of Purchaser as of the Effective Time. (b) Agreements and Covenants. Purchaser shall have performed in all material respects all obligations and complied in all material respects with all agreements or covenants to be performed or complied with by it at or prior to the Effective Time, and Seller shall have received a certificate signed on behalf of Purchaser by the Chief Executive Officer and Chief Financial Officer of Purchaser to such effect dated as of the Effective Time. (c) Payment of Merger Consideration. Purchaser shall have delivered the Merger Consideration to the Paying Agent on or before the Closing Date and the Paying Agent shall provide Seller with a certificate evidencing such delivery. (d) Good Standing. Seller shall have received a certificate (such certificate to be dated as of a day as close as practicable to the Closing Date) from the appropriate authority as to the good standing or corporate existence, as applicable of each of Purchaser and Merger Sub. (e) Other Documents. Purchaser will furnish Seller with such certificates of their officers or others and such other documents to evidence fulfillment of the conditions set forth in this Section 8.03 or as are customary for transaction of the type provided for herein as Seller may reasonably request. 30 ARTICLE IX. THE CLOSING Section 9.01 Time and Place. Subject to the provisions of Articles VIII and X hereof, the Closing of the transactions contemplated hereby shall take place at the offices of Luse Gorman Pomerenk & Schick, P.C., at 10:00 a.m., or at such other place or time upon which Purchaser and Seller mutually agree. A pre-closing of the transactions contemplated hereby (the "Pre-Closing") shall take place at the offices of Luse Gorman Pomerenk & Schick, P.C., at 10:00 a.m. on the day prior to the Closing Date. Section 9.02 Deliveries at the Pre-Closing and the Closing. At the Pre-Closing there shall be delivered to Purchaser and Seller the opinions, certificates, and other documents and instruments required to be delivered at the Closing under Article IX hereof. At or prior to the Closing, Purchaser shall deliver the Merger Consideration as set forth under Section 8.03(c) hereof. ARTICLE X. TERMINATION, AMENDMENT AND WAIVER Section 10.01 Termination. This Agreement may be terminated at any time prior to the Closing Date, whether before or after approval of the Merger by the stockholders of Seller: (a) At any time by the mutual written agreement of Purchaser and Seller; (b) By either party (provided, that the terminating party is not then in breach of any representation, warranty, covenant or other agreement contained herein) if there shall have been a breach of any of the representations or warranties set forth in this Agreement (subject to the standard set forth in Section 8.02(a) or 8.03(a), as applicable) on the part of the other party, which breach by its nature cannot be cured prior to the Termination Date or shall not have been cured within 30 days after written notice of such breach by the terminating party to the other party; (c) By either party (provided, that the terminating party is not then in breach of any representation or warranty or breach of any covenant or other agreement contained herein) if there shall have been a failure to perform or comply in any material respect with any of the covenants, agreements or conditions to each parties' obligations have not been satisfied, all as set forth in this Agreement on the part of the other party, which failure by its nature cannot be cured prior to the Termination Date or shall not have been cured within 30 days after written notice of such failure by the terminating party to the other party; (d) At the election of either party, if the Closing shall not have occurred by the Termination Date, or such later date as shall have been agreed to in writing by Purchaser and Seller; provided, that no party may terminate this Agreement pursuant to this Section 10.01(d) if the failure of the Closing to have occurred on or before said date was due to such party's willful breach of any representation or warranty or material breach of any covenant or other agreement contained in this Agreement; 31 (e) By either party if (i) final action has been taken by any regulatory agency whose approval is required in connection with this Agreement and the transactions contemplated hereby, which final action (x) has become unappealable and (y) does not approve this Agreement or the transactions contemplated hereby, (ii) any regulatory agency whose approval or nonobjection is required in connection with this Agreement and the transactions contemplated hereby has stated that it will not issue the required approval or nonobjection, or (iii) any court of competent jurisdiction or other governmental authority shall have issued an order, decree, ruling or taken any other action restraining, enjoining or otherwise prohibiting the Merger and such order, decree, ruling or other action shall have become final and unappealable; (f) By either party, if Stockholder Approval shall have not been obtained at the Seller Stockholders Meeting duly convened therefor or at any adjournment or postponement thereof; (g) By Purchaser if prior to obtaining Stockholder Approval the Board of Directors of Seller fails to publicly reaffirm its adoption and recommendation of this Agreement, the Merger or the other transactions contemplated by this Agreement within ten business days of receipt of a request by Purchaser to provide such reaffirmation. (h) By either party, if Stockholder Approval of the transactions contemplated by this Agreement as well as an Additional Transaction that ensures that Purchaser's initial business combinations have an aggregate fair market value of at least 80% of Purchaser's net assets (excluding deferred compensation of Ferris Baker Watts, Inc.) has not been obtained at the Purchaser Stockholders Meeting duly convened therefore or at any adjournment or postponement thereof. Section 10.02 Effect of Termination. (a) In the event of termination of this Agreement pursuant to any provision of Section 10.01, this Agreement shall forthwith become void and have no further force, except that (i) the provisions of Sections 10.02, 11.01, 11.06, 11.09, 11.10, and any other Section which, by its terms, relates to post-termination rights or obligations, shall survive such termination of this Agreement and remain in full force and effect. (b) If this Agreement is terminated, expenses and damages of the parties hereto shall be determined as follows: (i) Except as provided below, whether or not the Merger is consummated, all costs and expenses incurred in connection with this Agreement and the transactions contemplated by this Agreement shall be paid by the party incurring such expenses. (ii) (ii) In the event of a termination of this Agreement because of a willful breach of any representation, warranty, covenant or agreement contained in this Agreement, the breaching party shall be liable for any and all damages, costs and expenses, including all reasonable attorneys' fees, sustained or incurred by the non-breaching party as a result thereof or in connection therewith or with respect to the enforcement of its rights hereunder. Section 10.03 Amendment, Extension and Waiver. Subject to applicable law, at any time prior to the Effective Time (whether before or after approval thereof by the stockholders of Seller), the parties hereto by action of their respective Boards of Directors, may (a) amend this Agreement, (b) extend the time for the performance of any of the obligations or other acts of any other party hereto, (c) waive any inaccuracies in the 32 representations and warranties contained herein or in any document delivered pursuant hereto, or (d) waive compliance with any of the agreements or conditions contained herein; provided, however, that after any approval of this Agreement and the transactions contemplated hereby by the stockholders of Seller, there may not be, without further approval of such stockholders, any amendment of this Agreement which reduces the amount or value, or changes the form of, the Merger Consideration to be delivered to Seller's stockholders pursuant to this Agreement. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto. Any agreement on the part of a party hereto to any extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party, but such waiver or failure to insist on strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Any termination of this Agreement pursuant to Article X may only be effected upon a vote of a majority of the entire Board of Directors of the terminating party. ARTICLE XI. MISCELLANEOUS Section 11.01 Public Announcements. Seller and Purchaser shall cooperate with each other in the development and distribution of all news releases and other public disclosures with respect to this Agreement, and except as may be otherwise required by law, neither Seller nor Purchaser shall issue any news release, or other public announcement or communication with respect to this Agreement unless such news release or other public announcement or communication has been mutually agreed upon by the parties hereto. Section 11.02 Survival. All representations, warranties and covenants in this Agreement or in any instrument delivered pursuant hereto shall expire and be terminated and extinguished at the Effective Time, except for those covenants and agreements contained herein which by their terms apply in whole or in part after the Effective Time. Section 11.03 Notices. All notices or other communications hereunder shall be in writing and shall be deemed given if delivered by receipted hand delivery or mailed by prepaid registered or certified mail (return receipt requested) or by recognized overnight courier addressed as follows: If to Seller, to: Marshall T. Reynolds Chairman of the Board and Chief Executive Officer Energy Services Acquisition Corp. 2450 First Avenue Huntington, West Virginia 25703 With required copies to: Alan Schick, Esq. Luse Gorman Pomerenk & Schick, P.C. 5335 Wisconsin Avenue, NW, Suite 400 Washington, DC 20015 Fax: (202) 362-2902 33 If to Purchaser, to: James E. Shafer and Pauletta Sue Shafer 359 Spencer Road Clendenin, West Virginia 25045 or such other address as shall be furnished in writing by any party, and any such notice or communication shall be deemed to have been given: (a) as of the date delivered by hand; (b) three business days after being delivered to the U.S. mail, postage prepaid; or (c) one business day after being delivered to the overnight courier. Section 11.04 Parties in Interest. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns; provided, however, that neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any party hereto without the prior written consent of the other party, and that (except as specifically provided in this Agreement) nothing in this Agreement is intended to confer upon any other person any rights or remedies under or by reason of this Agreement. Nothing in this Agreement is intended to confer upon any other person any rights or remedies of any nature whatsoever under or by reason of this Agreement. Section 11.05 Complete Agreement. This Agreement, including the Exhibits hereto and the documents and other writings referred to herein or therein or delivered pursuant hereto, contains the entire agreement and understanding of the parties with respect to its subject matter. There are no restrictions, agreements, promises, warranties, covenants or undertakings between the parties other than those expressly set forth herein or therein. This Agreement supersedes all prior agreements and understandings between the parties, both written and oral, with respect to its subject matter. Section 11.06 Counterparts. This Agreement may be executed in two or more counterparts all of which shall be considered one and the same agreement and each of which shall be deemed an original. Section 11.07 Severability. In the event that any one or more provisions of this Agreement shall for any reason be held invalid, illegal or unenforceable in any respect, by any court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement and the parties shall use their reasonable efforts to substitute a valid, legal and enforceable provision which, insofar as practical, implements the purposes and intents of this Agreement. Section 11.08 Governing Law. This Agreement shall be governed by the laws of the State of West Virginia, without giving effect to its principles of conflicts of laws. Section 11.09 Interpretation. When a reference is made in this Agreement to Sections or Exhibits, such reference shall be to a Section of or Exhibit to this Agreement unless otherwise 34 indicated. The recitals hereto constitute an integral part of this Agreement. References to Sections include subsections, which are part of the related Section (e.g., a section numbered "Section 5.01(a)" would be part of "Section 5.01" and references to "Section 5.01" would also refer to material contained in the subsection described as "Section 5.01(a)"). The table of contents, index and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words "include", "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation". The phrases "the date of this Agreement", "the date hereof" and terms of similar import, unless the context otherwise requires, shall be deemed to refer to the date set forth in the Recitals to this Agreement. Section 11.10 Specific Performance. The parties hereto agree that irreparable damage would occur in the event that the provisions contained in this Agreement were not performed in accordance with its specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity. 35 IN WITNESS WHEREOF, Purchaser and Seller have caused this Agreement to be executed under seal by their duly authorized officers as of the date first set forth above. ENERGY SERVICES ACQUISITION CORP. By: /s/ Marshall T. Reynolds ------------------------------------- Marshall T. Reynolds Chairman of the Board and Chief Executive Officer S. T. PIPELINE, INC. By: /s/ James E. Shafer ------------------------------------- James E. Shafer President and Chief Executive Officer By: /s/ Pauletta Sue Shafer -------------------------------------- Pauletta Sue Shafer /s/ James E. Shafer -------------------------------------- James E. Shafer (In his individual capacity) /s/ Pauletta Sue Shafer ------------------------------------- Pauletta Sue Shafer (In her individual capacity) 36 EXHIBIT A VOTING AGREEMENT January 22, 2008 Energy Services Acquisition Corp. Ladies and Gentlemen: Energy Services Acquisition Corp. (the "Purchaser") and S.T. Pipeline, Inc. (the "Seller") have entered into an Agreement and Plan of Merger dated as of January 22, 2008 (the "Merger Agreement"), pursuant to which, subject to the terms and conditions set forth therein, (a) Seller will merge with and into a corporation to be formed as a wholly owned Subsidiary of the Energy Services Acquisition Corp. (the "Merger") and (b) stockholders of Seller will receive the Merger Consideration stated in the Merger Agreement. Capitalized terms not otherwise defined herein shall have the meanings set forth in the Merger Agreement. Purchaser has requested, as a condition to its execution and delivery of the Merger Agreement, that the undersigned, being a director or officer of Seller, execute and deliver to Purchaser this Letter Agreement (the "Agreement"). The undersigned (the "Stockholder"), in order to induce Purchaser to execute and deliver the Merger Agreement, and intending to be legally bound, hereby irrevocably: (a) Agrees to be present (in person or by proxy) at all meetings of stockholders of Seller called to vote for approval of the Merger so that all shares of common stock of Seller over which the undersigned or a member of the undersigned's immediate family now has sole or shared voting power (including any shares acquired by the Stockholder prior to the record date for such meetings) will be counted for the purpose of determining the presence of a quorum at such meetings and to vote, or cause to be voted, all such shares (i) in favor of approval and adoption of the Merger Agreement and the transactions contemplated thereby (including any amendments or modifications of the terms thereof approved by the Board of Directors of Seller), and (ii) against approval or adoption of any other merger, business combination, recapitalization, partial liquidation or similar transaction involving Seller, it being understood that as to immediate family members, the undersigned will use his/her reasonable efforts to cause the shares to be present and voted in accordance with (i) and (ii) above; (b) Agrees not to vote or execute any written consent to rescind or amend in any manner any prior vote or written consent, as a stockholder of Seller, to approve or adopt the Merger Agreement; (c) Agrees not to sell, transfer or otherwise dispose of any Seller Common Stock on or prior to the date of any meeting of Seller Stockholders to vote on the Merger Agreement, except for transfers to charities, charitable trusts, or other charitable organizations under Section 501(c)(3) of the Internal Revenue Code, lineal descendants or the spouse of the undersigned, or to a trust or other entity for the benefit of one or more of the foregoing persons, provided that the transferee agrees in writing to be bound by the terms of this letter agreement; (d) Represents that Stockholder (i) has full power, corporate or otherwise, to enter into this Agreement and that it is a valid and binding obligation enforceable against the undersigned in accordance with its terms, subject to A-1 bankruptcy, insolvency and other laws affecting creditors' rights and general equitable principles, (ii) is the beneficial owner of all shares of Seller Common Stock as indicated on the final page of this Agreement (the "Shares"), which at the date hereof are, and at all times up until the Termination Date will be, free and clear of any liens, claims, options, charges, proxies or voting restrictions or other encumbrances, and (iii) does not beneficially own any shares of capital stock of Seller other than the Shares; (e) Agrees that Stockholder will not, and will cause his or her representatives and agents not to, directly or indirectly (i) initiate, solicit or knowingly encourage (including by way of furnishing non-public information or assistance) the making of any proposal that constitutes, or may reasonably be expected to lead to, any Acquisition Proposal, or (ii) enter into or maintain or continue discussions or negotiate with any Person in furtherance of or to obtain an Acquisition Proposal or agree to or endorse any Acquisition Proposal, or authorize any of its representatives or agents to take any such action; provided, however, that nothing in this clause (e) shall prohibit Stockholder from taking actions in such Stockholder's capacity as director or executive officer of the Seller in accordance with Section 6.07 of the Merger Agreement; (f) Agrees to execute and deliver any additional documents necessary, in the reasonable opinion of Purchaser, to carry out the intent of this Agreement; (g) Agrees not to assert, demand or exercise any rights of appraisal or dissenters in connection with the Merger; (h) Agrees that if any term or other provision of this Agreement is determined to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to the Purchaser. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, Stockholder and Purchaser shall negotiate in good faith to modify this Agreement so as to effect the original intent of this Agreement as closely as possible to the fullest extent permitted by applicable law in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible; (i) Agrees that this Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of Stockholder and Purchaser and their respective successors and permitted assigns, but, except as otherwise specifically provided herein, neither this Agreement nor any of the rights, interests or obligations of Stockholder and Purchaser may be assigned by either Stockholder or Purchaser without the prior written consent of the other; (j) Agrees that irreparable damage would occur in the event any provision of this Agreement was not performed in accordance with the terms hereof or was otherwise breached. It is accordingly agreed that Purchaser shall be entitled to specific relief hereunder, including, without limitation, an injunction or injunctions to prevent and enjoin breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof, in any state or federal court in the State of New York, in addition to any other remedy to which Purchaser may be entitled at law or in equity. Any requirements for the securing or posting of any bond with respect to any such remedy are hereby waived; (k) Agrees that this Agreement shall be governed by, and interpreted in accordance with the laws of the State of West Virginia, without regarding to conflicts of laws principles thereof; and (l) The obligations set forth herein shall terminate concurrently with any termination of the Merger Agreement. A-2 ------------------------------------------- The undersigned intends to be legally bound hereby. Sincerely, ---------------------------------------- Name: Title: Address for Notice: ---------------------------------------- ---------------------------------------- ---------------------------------------- Shares beneficially owned: ---------------------------------------- shares of Common Stock of ____________ A-3 EXHIBIT B PLAN OF MERGER This PLAN OF MERGER dated as of ___________, 2008 (the "Plan of Merger") is entered into by and between Energy Services Merger Sub, Inc. (the "Merger Sub"), a West Virginia corporation, and S.T. Pipeline, Inc., a West Virginia corporation (the "Seller"). Capitalized terms not otherwise defined herein shall have the meanings set forth in the Merger Agreement (as defined below). WHEREAS, pursuant to an Agreement and Plan of Merger, dated as of January 22, 2008 (the "Merger Agreement"), by and between Energy Services Acquisition Corp. (the "Purchaser") and Seller, Seller will merge with and into Merger Sub, a wholly owned Subsidiary of Purchaser (the "Merger"); and NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein and in the Merger Agreement and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: Section 1. The Merger. On the effective date, Merger Sub shall be merged with and into Seller, with Seller being the surviving entity (the "Merger"). The Merger shall be subject to the terms and conditions of the Merger Agreement. Upon completion of the Merger, the separate corporate existence of Merger Sub shall thereupon cease. Seller shall continue to be governed by the laws of the State of West Virginia and its separate corporate existence with all of its rights, privileges, immunities, powers and franchises shall continue unaffected by the Merger. Section 2. Name of Surviving Corporation. The name of the surviving corporation in the Merger (the "Surviving Corporation") shall be "____________________". Section 3. Location of Offices. The business of the Surviving Corporation shall be conducted at its administrative office at ____________________________________________________, and at all other locations where Seller was legally authorized to carry out its business immediately prior to the Merger. Section 4. Effect on Outstanding Shares. (a) By virtue of the Merger, automatically and without any action on the part of the holder thereof, each share of Seller Common Stock issued and outstanding at the effective time of the Merger (the "Effective Time"), (i) shares held directly or indirectly by Purchaser (other than shares held in a fiduciary capacity or in satisfaction of a debt previously contracted), and (ii) Treasury Stock shall become and be converted into the right to receive the merger consideration set forth at Section 2.02 of the Merger Agreement. (b) At the Effective Time, each share of Seller Common Stock held directly or indirectly by Purchaser (other than shares held in a fiduciary capacity or in satisfaction of a debt previously contracted) and Treasury Stock shall be cancelled and retired and cease to exist, and no exchange or payment shall be made with respect thereto. (c) The shares of common stock of Merger Sub issued and outstanding immediately prior to the Effective Time shall become shares of the Surviving Corporation at the Effective Time by virtue of the Merger, automatically and without any action on the part of the holder thereof, and shall thereafter constitute all of the issued and outstanding shares of the capital stock of the Surviving Corporation. B-1 Section 5. Assets and Liabilities. At the Effective Time, all assets and property (real, personal, and mixed, tangible and intangible, choses in action, rights, and credits) then owned by Seller shall pass to and vest in the Surviving Corporation without any conveyance or other transfer. The Surviving Corporation shall be deemed to be a continuation of Seller. The rights and obligations, including liabilities, of Seller shall become the rights and obligations of the Surviving Corporation. Section 6. Directors and Officers. At the Effective Time, the directors and officers of Merger Sub shall become the directors and officers of the Surviving Corporation. Section 7. Certificate of Incorporation and Bylaws. At the Effective Time, the certificate of incorporation and bylaws of Seller shall be amended in their entirety to conform to the certificate of incorporation and bylaws of Merger Sub in effect immediately prior to the Effective Time and shall become the certificate of incorporation and bylaws of the Surviving Corporation. Section 8. Termination. This Plan of Merger shall be terminated automatically without further act or deed of either of the parties hereto in the event of the termination of the Merger Agreement in accordance with Article X thereof. Section 9. Stockholder Approval. The transactions contemplated by this Plan of Merger have been approved by the affirmative vote of a majority of the outstanding shares of Seller as sole shareholder of Merger Sub. Section 10. Amendments. This Plan of Merger may be amended by a subsequent writing signed by the parties hereto upon the approval of the board of directors of each of the parties hereto. Section 11. Counterparts. This Plan of Merger may be executed in two or more counterparts, each of which shall be deemed to be an original and all of which taken together shall constitute one instrument. Section 12. Successors. This Plan of Merger shall be binding upon the successors of Seller. Section 13. Governing Law. This Plan of Merger shall be governed by, and interpreted in accordance with the laws of West Virginia, without regarding to conflicts of laws. Section 14. Severability. In the event that any one or more provisions of this Plan of Merger shall for any reason be held invalid, illegal or unenforceable in any respect, by any court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provisions of this Plan of Merger and the parties shall use their reasonable efforts to substitute a valid, legal and enforceable provision which, insofar as practical, implements the purposes and intents of this Plan of Merger. Section 15. Captions and References. The captions contained in this Plan of Merger are for convenience of reference only and do not form a part of this Plan of Merger. [Signature page follows] B-2 IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan of Merger to be duly executed as of the date first above written. ENERGY SERVICES MERGER SUB, INC. By: -------------------------------- Name Title I, ________________, the duly elected, qualified and acting Secretary of Energy Services Merger Sub, Inc., hereby certify that this Agreement and Plan of Merger has been approved and adopted by Energy Services Acquisition Corp., the sole stockholder of Energy Services Merger Sub, Inc., as of ____________________, 2008. By: ----------------------- [Name] Secretary S.T. PIPELINE, INC. By: --------------------------- [Name] [Title] I, _________________________, the duly elected, qualified and acting Secretary of Energy Services Acquisition Corp. hereby certify that this Agreement and Plan of Merger has been approved and adopted by Energy Services Acquisition Corp., as of ___________________, 2008. ------------------------------ Marshall T. Reynolds Chairman of the Board and Chief Executive Officer B-3 EX-10.4 4 form8kmergerex10_4.txt EMPLOYMENT AGREEMENT Execution Copy ENERGY SERVICES ACQUISITION CORP. EMPLOYMENT AGREEMENT FOR JAMES E. SHAFER This employment agreement ("Agreement") by and between Energy Services Acquisition Corp., a Delaware corporation (the "Company") and James E. Shafer ("Employee"), is made to be effective as of the Effective Time (as defined in the "Merger Agreement," defined below) of the merger ("Merger") of the Company with S.T. Pipeline, Inc. ("STP"), pursuant to that certain Agreement and Plan of Merger by and between the Company and STP dated as of January 22, 2008 (the "Merger Agreement"). WHEREAS, Employee is an employee and a significant shareholder of STP; and WHEREAS, in connection with the Merger, Energy Services Merger Sub ("Merger Sub"), a to-be-formed West Virginia corporation and a wholly-owned subsidiary of the Company, shall merge with and into STP, with STP as the surviving entity; and WHEREAS, the Company wishes to retain Employee as an employee of the Company or an affiliate or subsidiary of the Company following the Merger, and the Company and Employee desire to enter into this Agreement to reflect the terms of Employee's employment hereunder. NOW, THEREFORE, in consideration of the mutual covenants herein contained, and upon the other terms and conditions hereinafter provided, the parties hereby agree as follows: 1. POSITION AND RESPONSIBILITIES. During the Term (as herein defined), Employee agrees to serve as President of STP. 2. TERM AND DUTIES. (a) The period of Employee's employment under this Agreement shall begin as of the Effective Date and shall continue thereafter for thirty-six (36) full calendar months (the "Term"). (b) During the Term, except for periods of absence occasioned by illness, or vacation periods, Employee shall devote substantially all his business time, attention, skill, and efforts to the faithful performance of his duties. (c) Employee's principal place of employment shall be Clendenin, West Virginia. 3. COMPENSATION AND BENEFITS. (a) The compensation specified under this Agreement shall constitute the salary and benefits paid for the duties described in Section 2(b). The Company shall pay Employee as compensation a salary of not less than Two Thousand Five Hundred Dollars ($2,500) per week ("Base Salary") beginning on the Effective Date. Such Base Salary shall be payable semi-weekly, or with such other frequency as employees are generally paid in accordance with the Company's normal payroll practices. In addition to the Base Salary provided in this Section 3(a), the Company shall provide Employee with all such other benefits as are provided or made available to Company employees generally, including, but not limited to, participation in Company health and medical plans or paid vacation periods at the Company's discretion. (b) In consideration of Employee's efforts in performing the requirements of the position set forth in Section 1, and in addition to Base Salary and other benefits to which Employee may be entitled as set forth in Section 3(a) hereof, Employee will receive an annual incentive payment ("Incentive Bonus") during the Term, or until such later period as Employee leaves the employ of the Company or an affiliate or subsidiary of the Company, in an amount equal to 5% of the pre-tax earnings generated from STP operations. The annual Incentive Bonus shall be payable by the Company within ninety days after the end of the twelve month period following the last day of the month in which occurs the Effective Time of the Merger, and thereafter on or about each anniversary date of such payment. Notwithstanding the foregoing, no Incentive Bonus will be payable to Employee at any time after he leaves the employ of the Company, or any affiliate or subsidiary of the Company. For the purpose of this Agreement, pre-tax earnings shall be computed in accordance with the Company's normal accounting practices in accordance with U.S. Generally Accepted Accounting Principles ("GAAP") consistently applied. 4. TERMINATION FOR CAUSE. The term "Termination for Cause" shall mean termination because of Employee's (i) conviction of, or the entering into a plea of guilty to, a crime involving a felonious act or acts, including dishonesty, fraud or moral turpitude, and which is detrimental to the business, reputation, character of the Company or any of its subsidiaries; (ii) willful misconduct by Employee in the performance of his duties, any material breach of fiduciary duty involving personal profit, or the intentional failure to perform his stated duties; or (iii) a repeated and material breach of any provision of this Agreement. For purposes of this paragraph, no act or failure to act on the part of Employee shall be considered "willful" unless done, or omitted to be done, by Employee not in good faith and without reasonable belief that Employee's action or omission was in the best interest of the Company. Notwithstanding the foregoing, Employee shall not be deemed to have been Terminated for Cause unless and until there shall have been delivered to him a letter after not less than ten (10) business days notice to Employee and a reasonable opportunity for him, together with counsel, to be heard before a representative of the Company, finding that in the good faith opinion of management, Employee was guilty of conduct justifying Termination for Cause and specifying the particulars thereof in detail. Employee shall not have the right to receive compensation or other benefits for any period after Termination for Cause. 5. RESIGNATION. Employee shall provide not less than sixty (60) days' advance written notice of resignation. In the event of Employee's voluntary resignation from the Company, Employee shall not be entitled to receive his Base Salary or any other benefits to which he may be entitled under this Agreement for any period thereafter. 2 6. NOTICE. (a) Any purported termination by the Company for Cause shall be communicated by Notice of Termination to Employee. For purposes of this Agreement, a "Notice of Termination" shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Employee's employment under the provision so indicated. (b) Any other purported termination by the Company or by Employee shall be communicated by a Notice of Termination to the other party. For purposes of this Agreement, a "Notice of Termination" shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in detail the facts and circumstances claimed to provide a basis for termination of employment under the provision so indicated. 7. SOURCE OF PAYMENTS. All payments provided in this Agreement shall be timely paid in cash, check or direct deposit from the general funds of STP. 8. NON-COMPETE/CONFIDENTIALITY. (a) For a period of two (2) years from the date the Employee's employment under this Agreement terminates, Employee, will not, directly or indirectly, compete in any manner with the Company or STP, including, but not limited to: (i) soliciting any client of the Company or STP to transact business; (ii) transacting business with a competitor of the Company or STP; (iii) interfering or damaging a relationship between the Company or STP and any of their customers; (iv) soliciting an employee of the Company or STP; or (v) selling products similar to the products sold by the Company or STP in their market area. The parties acknowledge that this Agreement shall not preclude the Employee from entering into an agreement with another company that does not compete, directly or indirectly with the Company or STP. Moreover, Employee shall treat as confidential information, all information pertaining to the Company or STP. (b) The parties hereto acknowledge that the potential restrictions on Employee's future activities as set forth at Section 8(a) is reasonable in both duration and geographic scope and in all other respects. In the event that the provisions of Section 8(a) should ever be deemed to exceed the duration or geographic limitations or scope permitted by applicable law, then such provisions shall be reformed to the maximum time or geographic limitations or scope, as the case may be, permitted by applicable law, and the parties agree that the restrictions and prohibitions contained herein shall be effective to the fullest extent allowed under applicable law in such jurisdiction. (c) The parties acknowledge that it would be impossible to determine the amount of damages that would result from any breach of any of the provisions of Section 8(a) and that the remedy at law for any breach, or threatened breach, of any of such provisions would likely be inadequate and accordingly, each party agrees that in addition to any other rights or remedies which it may have at law or in equity, the non-breaching party would be entitled to seek such equitable 3 and injunctive relief as may be available from any court of competent jurisdiction to restrain a party from violating any of the provisions of this Agreement. In connection with any action or proceeding for such equitable or injunctive relief, each party hereby waives any claim or defense that a remedy at law alone is adequate and agrees, to the maximum extent permitted by law, to have each such provision of Section 8(a) specifically enforced against a violating party, without the necessity of posting bond or other security against the violating party, and consents to the entry of equitable or injunctive relief against the violating party enjoining or restraining any breach or threatened breach of Section 8(a). 9. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS. This Agreement contains the entire understanding between the parties hereto with respect to the subject matter hereof and supersedes any prior employment agreement between the Company or any predecessor of the Company and Employee, except that this Agreement shall not affect or operate to reduce any benefit or compensation inuring to Employee of a kind elsewhere provided. No provision of this Agreement shall be interpreted to mean that Employee is subject to receiving fewer benefits than those available to him without reference to this Agreement. 10. NO ATTACHMENT; BINDING ON SUCCESSORS. (a) Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation, or to execution, attachment, levy, or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to affect any such action shall be null, void, and of no effect. (b) This Agreement shall be binding upon, and inure to the benefit of, Employee and the Company and their respective successors and assigns. 11. MODIFICATION AND WAIVER. (a) This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto. (b) No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future as to any act other than that specifically waived. 12. MISCELLANEOUS PROVISIONS. The Company may terminate Employee's employment at any time, but any termination, other than Termination for Cause, shall not prejudice Employee's right to compensation or other benefits under this Agreement. 4 13. SEVERABILITY. If, for any reason, any provision of this Agreement, or any part of any provision, is held invalid, such invalidity shall not affect any other provision of this Agreement or any part of such provision not held so invalid, and each such other provision and part thereof shall to the full extent consistent with law continue in full force and effect. 14. HEADINGS FOR REFERENCE ONLY. The headings of sections and paragraphs herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement. 15. GOVERNING LAW. This Agreement shall be governed by the laws of the State of West Virginia but only to the extent not superseded by federal law. 16. NOTICE. For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below: To the Company: Marshall T. Reynolds Chairman of the Board and Chief Executive Officer Energy Services Acquisition Corp. 2450 First Avenue Huntington, West Virginia 25703 With a copy to: Luse Gorman Pomerenk & Schick, P.C. 5335 Wisconsin Avenue NW, Suite 400 Washington, D.C. 20015 Attention: Alan Schick To Employee: James E. Shafer 359 Spencer Road Clendenin, West Virginia 25045 5 SIGNATURES IN WITNESS WHEREOF, the Company has caused this Agreement to be executed and its seal to be affixed hereunto by its duly authorized officers, and Employee has signed this Agreement, on the day and date first above written. ATTEST: ENERGY SERVICES ACQUISITION CORP. By: - ------------------------- -------------------------------- Secretary Marshall Reynolds Chairman of the Board and Chief Executive Officer WITNESS: EMPLOYEE: By: - ------------------------- -------------------------------- Secretary James E. Shafer EX-10.5 5 form8kmergerex10_5.txt NON-COMPETITION AGREEMENT EXECUTION COPY Non-Competition Agreement Between Energy Services Acquisition Corp., S.T. Pipeline, Inc. and Pauletta Sue Shafer WHEREAS, Energy Services Acquisition Corp. (the "Company") and Ms. Shafer acknowledge that an essential element to the Company's decision to acquire S.T. Pipeline, Inc. ("STP") is predicated upon her willingness to agree to enter into this non-competition agreement (the "Agreement") and to restrict her activities in accordance with the terms and conditions of this Agreement. NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which each party acknowledges, the parties agree as follows: 1. Non-Compete/Confidentiality. (a) For a period of two (2) years from the Closing Date of the acquisition of STP by the Company, Ms. Shafer, will not, directly or indirectly, compete in any manner with the Company or STP, including, but not limited to: (i) soliciting any client of the Company or STP to transact business; (ii) transacting business with a competitor of the Company or STP; (iii) interfering or damaging a relationship between the Company or STP and any of their customers; (iv) soliciting an employee of the Company or STP; or (v) selling products similar to the products sold by the Company or STP in their market area. Moreover, Ms. Shafer shall treat as confidential information, all information pertaining to the Company or STP. The parties acknowledge that this Agreement shall not preclude Ms. Shafer from entering into an agreement with another company that does not compete, directly or indirectly with the Company or STP. (b) The parties hereto acknowledge that the potential restrictions on Employee's future activities as set forth at Section 1(a) is reasonable in both duration and geographic scope and in all other respects. In the event that the provisions of Section 1(a) should ever be deemed to exceed the duration or geographic limitations or scope permitted by applicable law, then such provisions shall be reformed to the maximum time or geographic limitations or scope, as the case may be, permitted by applicable law, and the parties agree that the restrictions and prohibitions contained herein shall be effective to the fullest extent allowed under applicable law in such jurisdiction. (c) The parties acknowledge that it would be impossible to determine the amount of damages that would result from any breach of any of the provisions of Section 1(a) and that the remedy at law for any breach, or threatened breach, of any of such provisions would likely be inadequate and accordingly, each party agrees that in addition to any other rights or remedies which it may have at law or in equity, the non-breaching party would be entitled to seek such equitable and injunctive relief as may be available from any court of competent jurisdiction to restrain a party from violating any of the provisions of this Agreement. In connection with any action or proceeding for such equitable or injunctive relief, each party hereby waives any claim or defense that a remedy at law alone is adequate and agrees, to the maximum extent permitted by law, to have each such provision of Section 1(a) specifically enforced against a violating party, without the necessity of posting bond or other security against the violating party, and consents to the entry of equitable or injunctive relief against the violating party enjoining or restraining any breach or threatened breach of Section 1(a). 2. Reformation. Each party hereto acknowledges that the potential restrictions on Ms. Shafer's future activities as set forth at Section 1 is reasonable in both duration and geographic scope and in all other respects. In the event that the provisions of Section 1 should ever be deemed to exceed the duration or geographic limitations or scope permitted by applicable law, then such provisions shall be reformed to the maximum time or geographic limitations or scope, as the case may be, permitted by applicable law, and the parties agree that the restrictions and prohibitions contained herein shall be effective to the fullest extent allowed under applicable law in such jurisdiction. 3. Specific Performance. Each party acknowledges that it would be impossible to determine the amount of damages that would result from any breach of any of the provisions of Section 1 and that the remedy at law for any breach, or threatened breach, of any of such provisions would likely be inadequate and accordingly, each party agrees that in addition to any other rights or remedies which it may have at law or in equity, the non-breaching party would be entitled to seek such equitable and injunctive relief as may be available from any court of competent jurisdiction to restrain a party from violating any of the provisions of this Agreement. In connection with any action or proceeding for such equitable or injunctive relief, each party hereby waives any claim or defense that a remedy at law alone is adequate and agrees, to the maximum extent permitted by law, to have each such provision of Section 1 specifically enforced against a violating party, without the necessity of posting bond or other security against the violating party, and consents to the entry of equitable or injunctive relief against the violating party enjoining or restraining any breach or threatened breach of Section 1. 4. Miscellaneous. (a) Amendment; Waiver. This Agreement shall not be amended, altered or modified in any manner whatsoever, except by a written instrument executed by the parties hereto. No waiver of any breach or default hereunder shall be considered valid unless in writing and signed by the party giving such waiver, and no such waiver shall be deemed a waiver of any subsequent breach of the same or similar nature. (b) Counterparts. This Agreement may be executed in two or more counterparts (including by facsimile), each of which shall be deemed to be an original, but all of which shall constitute one and the same instrument. (c) Governing Law. This Agreement shall be deemed to be made in and in all respects shall be interpreted, construed and governed by and in accordance with the laws of the State of Illinois, without regard to conflict of law principles. (d) Jurisdiction. Any legal action or proceeding with respect to this Agreement may be brought in the courts of the State of West Virginia and, by execution and notice as provided in this Agreement, each party hereby accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. Each party irrevocably consents to the service of process out of any of the aforementioned courts in any such action or 2 proceeding by the delivery of notice as provided in this Agreement, such service to become effective upon such delivery. (e) Notices. All notices, requests, instructions and other communications to be given hereunder by any party to the other shall be in writing and shall be deemed given if personally delivered, telecopied (with confirmation) or mailed by registered or certified mail, postage prepaid (return receipt requested), to such party at its address set forth below or such other address as such party may specify to the other party by notice provided in accordance with this Section 5(e). If to Employer: Energy Services Acquisition Corp. 2450 First Avenue Huntington, West Virginia 25703 Telephone: (304) 399-2318 Facsimile: with a copy (which shall not constitute notice) to: Alan Schick, Esq. Luse Gorman Pomerenk & Schick, P.C. 5335 Wisconsin Avenue, NW, Suite 400 Washington, DC 20015 Telephone: (202) 274-2008 Facsimile: (202) 362-2902 If to Ms. Shafer: Pauletta Sue Shafer 359 Spencer Road Clendenin, West Virginia 25045 Telephone: Facsimile: (f) Parties In Interest. This Agreement shall be binding upon and inure solely to the benefit of each party hereto and their respective successors, assigns, estate, heirs, executors, administrators, subsidiaries, affiliated entities, officers, directors, employees, agents, representatives and other legal representatives, as the case may be. Nothing in this Agreement, express or implied, is intended to confer upon any other person, other than parties hereto and their respective successors, assigns, estate, heirs, executors, administrators and other legal representatives, as the case may be, any rights remedies, obligations or liabilities under or by reason of this Agreement. (g) Assignment. This Agreement shall not be assigned by law or otherwise without the prior written consent of the other party hereto. 3 (h) Compliance. A party's failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right that such party may have hereunder shall not be deemed to be waiver of such provision or right or any other provision or right of this Agreement. (i) Captions. The section and paragraph captions herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof. (j) Severability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity and unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable. 4 IN WITNESS WHEREOF, the parties have executed this Agreement on this date. Energy Services Acquisition Corp. By: --------------------------------- Name: Title: S.T. Pipeline, Inc. By: --------------------------------- Name: Title: --------------------------------- Pauletta Sue Shafer EX-99.1 6 form8kmergerex99_1.txt PRESS RELEASE Contact Edsel R. Burns For Immediate Release (304) 522-3868 January 24, 2008 Energy Services Acquisition Corp. Enters into Agreement to Acquire GasSearch Drilling Services Corporation Huntington, West Virginia, January 24, 2008-Energy Services Acquisition Corp. (AMEX: ESA, ESA-U, ESA-W) ("Energy Services") announced today that it has entered into a Stock Purchase Agreement to acquire GasSearch Drilling Services Corporation, Parkersburg, West Virginia (the "GasSearch Drilling Acquisition"). The agreed upon total acquisition cost to ESA is $23.5 million, payable in a combination of cash and stock as follows: (i) $17.5 million in cash to cover current debt and capital expenditures already planned and (ii) a number of shares of Energy Services common stock equal in value to $3.5 million based upon the arithmetic average of the closing price of Energy Services common stock as reported on the American Stock Exchange for the five consecutive trading days beginning three trading days before the announcement of the GasSearch Acquisition and the balance in cash. GasSearch Drilling Service Corporation's entire management team will remain with the company and its President and CEO, Denny Harton, will continue to serve in that capacity. In addition, Energy Services has agreed to enter into an employment agreement with Mr. Harton, whereby Mr. Harton will become an Executive Vice President of Energy Services. In addition, at the closing or as soon thereafter as practicable, Mr. Harton will be appointed to Energy Services Board of Directors. The closing of the GasSearch Drilling Acquisition is subject to various closing conditions including the acquisition of another business or businesses, such that the total value of the businesses acquired have an aggregate fair value of 80% of Energy Services net assets, as defined in its initial public offering In addition, the closing of the acquisition is further conditioned on holders of less than 20% of the shares of Energy Services common stock voting against the transaction and electing to convert their Energy Services common stock into cash from the trust fund established in connection with Energy Services initial public offering. About GasSearch Drilling GasSearch Drilling (GDS) is a company founded in December of 2006 that began doing business in 2007. Its primary business is the drilling and servicing of Oil and Gas wells. It is a wholly owned subsidiary of GasSearch Corporation. While GDS is a newly formed company, its management team has a long and proven track record in the oil and gas industry. Denny Harton from GasSearch Drilling said " I believe this transaction provides the rare opportunity for our company to become part of a larger, more agile and diverse organization that will enable us to provide more efficient services to our customers and have the support of a strong infrastructure that encourages growth. About Energy Services Corp. Based in Huntington, West Virginia Energy Services is a publicly traded, special purpose acquisition company ("SPAC") formed to invest in or acquire companies in the energy services industry. The contemplated transaction is subject to shareholder approval, along with certain regulatory approvals including the filing of a proxy statement with the Securities and Exchange Commission. "I couldn't be more pleased than I am to have the opportunity to bring such a high caliber Company and management team into the Energy Services Family. Denny Harton has an outstanding history and reputation in his businesses" said Marshall Reynolds, the Chairman and CEO of Energy Services. "We look forward with great anticipation to the closing of the transaction with this fine company". Forward Looking Statements This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These forward-looking statements are based on current expectations and projections about future events and no party assumes on obligation to update any such forward-looking statements. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about Energy Services, and GasSearch Drilling that may cause actual results to be materially different from any future results expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "could," "would," "expect," "plan," "anticipate," "believe," "estimate," "continue," or the negative of such terms or other similar expressions. Factors that might cause our future results to differ from those statements include, but are not limited to, the failure of Energy Services' stockholders to approve the acquisition and the transactions contemplated thereby; the number and percentage of Energy Services' stockholders voting against the acquisition and electing to exercise their redemption rights; changing and interpretations of generally accepted accounting principles; costs associated with continued compliance with government regulations; legislation or regulatory environments, requirements or changes adversely affecting the businesses in which GasSearch Drilling is engaged; the continued ability of GasSearch Drilling to successfully execute their business plan involving the proper management of its human resources and assets; demand for the products and services that GasSearch Drilling provide. Additional Information This communication is being made in respect of the proposed transactions involving GasSearch Drilling and Energy Services. In connection with the 2 proposed transactions, Energy Services will file with the Securities and Exchange Commission ("SEC") a proxy statement on Schedule 14A for the stockholders of Energy Services describing the proposed transaction. BEFORE MAKING ANY VOTING OR INVESTMENT DECISIONS, INVESTORS ARE ADVISED TO READ, WHEN AVAILABLE, ENERGY SERVICES DEFINITIVE PROXY STATEMENT IN CONNECTION WITH THE SOLICITATION OF PROXIES FOR THE MEETING OF ITS SHAREHOLDERS BECAUSE THIS PROXY STATEMENT WILL CONTAIN IMPORTANT INFORMATION. The definitive proxy statement will be mailed to stockholders as of a record date to be established for voting on the proposed transaction. Stockholders will also be able to obtain a copy of the definitive proxy statement and other documents related to the transaction that are filed with the SEC, without charge, once available, at the SEC's Internet site (http://www.sec.gov) or by directing a request to Energy Services Acquisition Corp. at 2450 First Avenue, Huntington, West Virginia. As a result of the review by the SEC of the proxy statement, Energy Services may be required to make changes to its description of the acquired business or other financial or statistical information contained in the proxy statement. Energy Services and its directors and officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction with GasSearch Drilling. Information regarding Energy Services' directors and executive officers is set forth in Energy Services final prospectus dated August 30, 2006 and the proxy statement relating to the proposed transaction with Energy Services and their stockholders when it becomes available. Energy Services final prospectus also contains a description of the security holdings of the Energy Services' officers and directors and of Ferris Baker Watts, the managing underwriter of Energy Services initial public offering consummated on September 6, 2006, and their respective interests in the successful consummation of this business combination. 3 EX-99.2 7 form8kmergerex99_2.txt PRESS RELEASE Contact Edsel R. Burns For Immediate Release (304) 522-3868 January 24, 2008 Energy Services Acquisition Corp. Enters into Agreement to Acquire S.T. Pipeline, Inc. Huntington, West Virginia, January 24, 2008-Energy Services Acquisition Corp. (AMEX: ESA, ESA-U, ESA-W) ("Energy Services") announced today that it has entered into an Agreement and Plan of Merger to acquire S.T. Pipeline, Inc., Clendenin, West Virginia (the "S.T. Pipeline Acquisition") Pursuant to the agreement to acquire S.T. Pipeline, shareholders of S.T. Pipeline shall have a right to receive up to $15,200 per share in cash, or $19.0 million in the aggregate, subject to a reduction to reflect the book value of certain assets and a further reduction of $3.0 million that will be paid to S.T. Pipeline shareholders on a deferred basis. In addition, Energy Services has agreed to enter into a three-year employment agreement with James E. Shafer and a non-compete agreement with Pauletta Sue Shafer, the owners of S.T. Pipeline. Each of Mr. and Mrs. Shafer has agreed to vote their shares in favor of the S.T. Pipeline Acquisition. Any payments to shareholders of S.T. Pipeline will be adjusted upward to reflect the additional tax of S.T. Pipeline's Shareholders as a result of the parties' election under Internal Revenue Code Section 338(h)(10). The closing of the S.T. Pipeline Acquisition is subject to various closing conditions, including the acquisition of another business or businesses, such that the total value of the businesses acquired have an aggregate fair value of 80% of Energy Services net assets, as defined in its initial public offering. In addition, the closing of the acquisition is further conditioned on holders of less than 20% of the shares of Energy Services common stock voting against the transaction and electing to convert their Energy Services common stock into cash from the trust fund established in connection with Energy Services initial public offering. About S.T. Pipeline S.T. Pipeline is a company that began business in 1984 and converted to its current structure in 1990. It was founded by Jim and Sue Shaffer. The company is engaged in servicing the oil and gas industry primarily through the installation and repairs of pipelines. The company has an excellent record and reputation in the business community. Mr. Jim Shafer from S.T. Pipeline said that he "was looking forward to the opportunity to align his company with Energy Services, which he felt would provide his company with a strong capital position that would enable S.T. Pipeline to continue to grow and expand to meet the needs of its customers." About Energy Services Corp. Based in Huntington, West Virginia Energy Services is a publicly traded, special purpose acquisition company ("SPAC") formed to invest in or acquire companies in the energy services industry. The contemplated transaction is subject to shareholder approval, along with certain regulatory approvals including the filing of a proxy statement with the Securities and Exchange Commission. "This is truly an exciting time to be in the energy services business and we feel very fortunate to have Jim and Sue Shafer bring their great company into the Energy Services family," said Marshall Reynolds, the Chairman and CEO of Energy Services. Forward Looking Statements This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These forward-looking statements are based on current expectations and projections about future events and no party assumes on obligation to update any such forward-looking statements. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about Energy Services or S.T. Pipeline that may cause actual results to be materially different from any future results expressed or implied by such forward-looking statements., In some cases, you can identify forward-looking statements by terminology such as "may," "should," "could," "would," "expect," "plan," "anticipate," "believe," "estimate," "continue," or the negative of such terms or other similar expressions. Factors that might cause our future results to differ from those statements include, but are not limited to, the failure of Energy Services' stockholders to approve the acquisition and the transactions contemplated thereby; the number and percentage of Energy Services' stockholders voting against the acquisition and electing to exercise their redemption rights; changing and interpretations of generally accepted accounting principles; costs associated with continued compliance with government regulations; legislation or regulatory environments, requirements or changes adversely affecting the businesses in which S.T. Pipeline is engaged; the continued ability of S.T. Pipeline to successfully execute their business plan involving the proper management of its human resources and assets; demand for the products and services that S.T. Pipeline provides. Additional Information This communication is being made in respect of the proposed transactions involving S.T. Pipeline and Energy Services. In connection with the proposed transaction, Energy Services will file with the Securities and Exchange Commission ("SEC") a proxy statement on Schedule 14A for the stockholders of Energy Services describing the proposed transaction. BEFORE MAKING ANY VOTING OR INVESTMENT DECISIONS, INVESTORS ARE ADVISED TO READ, WHEN AVAILABLE, ENERGY SERVICES DEFINITIVE PROXY STATEMENT IN CONNECTION WITH THE SOLICITATION OF PROXIES FOR THE MEETING OF ITS SHAREHOLDERS BECAUSE THIS PROXY STATEMENT WILL CONTAIN IMPORTANT INFORMATION. 2 The definitive proxy statement will be mailed to stockholders as of a record date to be established for voting on the proposed transaction. Stockholders will also be able to obtain a copy of the definitive proxy statement and other documents related to the transaction that are filed with the SEC, without charge, once available, at the SEC's Internet site (http://www.sec.gov) or by directing a request to Energy Services Acquisition Corp. at 2450 First Avenue, Huntington, West Virginia. As a result of the review by the SEC of the proxy statement, Energy Services may be required to make changes to its description of the acquired business or other financial or statistical information contained in the proxy statement. Energy Services and its directors and officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction with S.T. Pipeline. Information regarding Energy Services' directors and executive officers is set forth in Energy Services final prospectus dated August 30, 2006 and the proxy statement relating to the proposed transaction with Energy Services and their stockholders when it becomes available. Energy Services final prospectus also contains a description of the security holdings of the Energy Services' officers and directors and of Ferris Baker Watts, the managing underwriter of Energy Services initial public offering consummated on September 6, 2006, and their respective interests in the successful consummation of this business combination. 3 EX-10.2 8 form8kmergerex10_2.txt EMPLOYMENT AGREEMENT EXECUTION COPY ENERGY SERVICES ACQUISITION CORP. EMPLOYMENT AGREEMENT FOR DENNY HARTON This employment agreement ("Agreement") by and between Energy Services Acquisition Corp., a Delaware corporation (the "Company") and Denny Harton ("Employee"), is made to be effective as of the Closing Date (as defined in the "Acquisition Agreement," defined below) of the acquisition ("Acquisition") of all the issued and outstanding shares of GasSearch Drilling Services Corporation ("GasSearch") by the Company, pursuant to that certain Stock Purchase Agreement by and among the Company, GasSearch and Denny Harton dated as of January 18, 2008 (the "Acquisition Agreement"). WHEREAS, Employee is an employee and sole shareholder of GasSearch; and WHEREAS, in connection with the Acquisition, the Company will acquire all the issued and outstanding shares of GasSearch; and WHEREAS, the Company wishes to retain Employee as an employee of the Company or an affiliate or subsidiary of the Company following the Acquisition, and the Company and Employee desire to enter into this Agreement to reflect the terms of Employee's employment hereunder. NOW, THEREFORE, in consideration of the mutual covenants herein contained, and upon the other terms and conditions hereinafter provided, the parties hereby agree as follows: 1. POSITION AND RESPONSIBILITIES. During the Term (as herein defined), Employee agrees to serve as Executive Vice President of Energy Services Acquisition Corp. and President of GasSearch. 2. TERM AND DUTIES. (a) The period of Employee's employment under this Agreement shall begin as of the Closing Date and shall continue thereafter for thirty-six (36) full calendar months (the "Term"). (b) During the Term, except for periods of absence occasioned by illness, or vacation periods, Employee shall devote substantially all his business time, attention, skill, and efforts to the faithful performance of his duties. (c) Employee's principal place of employment shall be Parkersburg, West Virginia. 3. COMPENSATION AND BENEFITS. (a) The compensation specified under this Agreement shall constitute the salary and benefits paid for the duties described in Section 2(b). The Company shall pay Employee as compensation a salary of not less than Two Hundred and Forty Thousand Dollars ($240,000) per annum ("Base Salary") beginning on the Closing Date. Such Base Salary shall be payable semi-weekly, or with such other frequency as employees are generally paid in accordance with the Company's normal payroll practices. In addition to the Base Salary provided in this Section 3(a), the Company shall provide Employee with all such other benefits as are provided or made available to Company employees generally, including, but not limited to, participation in Company health and medical plans which shall not be less than those currently provided by GasSearch. Also, vacation shall accrue to the Employee at the rate of one (1) week every three (3) months and may be carried over on a year to year basis. (b) In consideration of Employee's efforts in performing the requirements of the position set forth in Section 1, and in addition to Base Salary and other benefits to which Employee may be entitled as set forth in Section 3(a) hereof, Employee will receive an annual incentive payment ("Incentive Bonus") during the Term, or until such later period as Employee leaves the employ of the Company or an affiliate or subsidiary of the Company, in an amount equal to 4.5% of the pre-tax earnings generated from GasSearch operations. The annual Incentive Bonus shall be payable by the Company within ninety days after the end of the twelve month period following the last day of the month in which occurs the Closing Date of the Acquisition, and thereafter on or about each anniversary date of such payment. In the event the employee leaves employment, any bonus which has accrued up to that date shall be paid within ninety (90) days. For the purpose of this Agreement, pre-tax earnings shall be computed in accordance with the Company's normal accounting practices in accordance with U.S. Generally Accepted Accounting Principles ("GAAP") consistently applied. 4. TERMINATION FOR CAUSE. The term "Termination for Cause" shall mean termination because of Employee's (i) conviction of, or the entering into a plea of guilty to, a crime involving a felonious act or acts, including dishonesty, fraud or moral turpitude, and which is detrimental to the business, reputation, character of the Company or any of its subsidiaries; (ii) willful misconduct by Employee in the performance of his duties, any material breach of fiduciary duty involving personal profit, or the intentional failure to perform his stated duties; or (iii) a repeated and material breach of any provision of this Agreement. For purposes of this paragraph, no act or failure to act on the part of Employee shall be considered "willful" unless done, or omitted to be done, by Employee not in good faith and without reasonable belief that Employee's action or omission was in the best interest of the Company. Notwithstanding the foregoing, Employee shall not be deemed to have been Terminated for Cause unless and until there shall have been delivered to him a letter after not less than ten (10) business days notice to Employee and a reasonable opportunity for him, together with counsel, to be heard before a representative of the Company, finding that in the good faith opinion of management, Employee was guilty of conduct justifying Termination for Cause and specifying the particulars thereof in detail. Employee shall not have the right to receive compensation or other benefits for any period after Termination for Cause. 5. RESIGNATION. Employee shall provide not less than sixty (60) days' advance written notice of resignation. In the event of Employee's voluntary resignation from the 2 Company, Employee shall not be entitled to receive his Base Salary or any other benefits to which he may be entitled under this Agreement for any period thereafter. 6. NOTICE. (a) Any purported termination by the Company for Cause shall be communicated by Notice of Termination to Employee. For purposes of this Agreement, a "Notice of Termination" shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Employee's employment under the provision so indicated. (b) Any other purported termination by the Company or by Employee shall be communicated by a Notice of Termination to the other party. For purposes of this Agreement, a "Notice of Termination" shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in detail the facts and circumstances claimed to provide a basis for termination of employment under the provision so indicated. 7. SOURCE OF PAYMENTS. All payments provided in this Agreement shall be timely paid in cash, check or direct deposit from the general funds of the Company. 8. NON-COMPETE/CONFIDENTIALITY. (a) For a period of two (2) years from the date of termination, and subject to the provisions of Paragraph 12 below, Employee, will not, directly or indirectly, compete in any manner with the Company or GasSearch, including, but not limited to: (i) soliciting any client of the Company or GasSearch to transact business; (ii) transacting business with a competitor of the Company or GasSearch; (iii) interfering or damaging a relationship between the Company or GasSearch and any of their customers; (iv) soliciting an employee of the Company or GasSearch; or (v) selling products similar to the products sold by Employee in the Company's or GasSearch's market area. Moreover, Employee shall treat as confidential information, all information pertaining to the Company or GasSearch. (b) The parties hereto acknowledge that the potential restrictions on Employee's future activities as set forth at Section 8(a) is reasonable in both duration and geographic scope and in all other respects. In the event that the provisions of Section 8(a) should ever be deemed to exceed the duration or geographic limitations or scope permitted by applicable law, then such provisions shall be reformed to the maximum time or geographic limitations or scope, as the case may be, permitted by applicable law, and the parties agree that the restrictions and prohibitions contained herein shall be effective to the fullest extent allowed under applicable law in such jurisdiction. (c) The parties acknowledge that it would be impossible to determine the amount of damages that would result from any breach of any of the provisions of Section 8(a) and that the remedy at law for any breach, or threatened breach, of 3 any of such provisions would likely be inadequate and accordingly, each party agrees that in addition to any other rights or remedies which it may have at law or in equity, the non-breaching party would be entitled to seek such equitable and injunctive relief as may be available from any court of competent jurisdiction to restrain a party from violating any of the provisions of this Agreement. In connection with any action or proceeding for such equitable or injunctive relief, each party hereby waives any claim or defense that a remedy at law alone is adequate and agrees, to the maximum extent permitted by law, to have each such provision of Section 8(a) specifically enforced against a violating party, without the necessity of posting bond or other security against the violating party, and consents to the entry of equitable or injunctive relief against the violating party enjoining or restraining any breach or threatened breach of Section 8(a). 9. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS. This Agreement contains the entire understanding between the parties hereto with respect to the subject matter hereof and supersedes any prior employment agreement between the Company or any predecessor of the Company and Employee, except that this Agreement shall not affect or operate to reduce any benefit or compensation inuring to Employee of a kind elsewhere provided. No provision of this Agreement shall be interpreted to mean that Employee is subject to receiving fewer benefits than those available to him without reference to this Agreement. 10. NO ATTACHMENT; BINDING ON SUCCESSORS. (a) Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation, or to execution, attachment, levy, or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to affect any such action shall be null, void, and of no effect. (b) This Agreement shall be binding upon, and inure to the benefit of, Employee and the Company and their respective successors and assigns. 11. MODIFICATION AND WAIVER. (a) This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto. (b) No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future as to any act other than that specifically waived. 12. MISCELLANEOUS PROVISIONS. The Company may terminate Employee's employment at any time, but any termination, other than Termination for Cause, shall not prejudice Employee's 4 right to compensation or other benefits under this Agreement. In the event the Company terminates Employee's employment for any reason other than Termination for Cause, then Paragraph 8 "Non-Compete/Confidentiality" shall not apply. 13. [INTENTIONALLY OMITTED] 14. SEVERABILITY. If, for any reason, any provision of this Agreement, or any part of any provision, is held invalid, such invalidity shall not affect any other provision of this Agreement or any part of such provision not held so invalid, and each such other provision and part thereof shall to the full extent consistent with law continue in full force and effect. 15. HEADINGS FOR REFERENCE ONLY. The headings of sections and paragraphs herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement. 16. GOVERNING LAW. This Agreement shall be governed by the laws of the State of West Virginia but only to the extent not superseded by federal law. 17. NOTICE. For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below: 5 To the Company: Marshall T. Reynolds Chairman of the Board and Chief Executive Officer Energy Services Acquisition Corp. 2450 First Avenue Huntington, West Virginia 25703 With a copy to: Luse Gorman Pomerenk & Schick, P.C. 5335 Wisconsin Avenue NW, Suite 400 Washington, D.C. 20015 Attention: Alan Schick To Employee: Denny Harton GasSearch Drilling Services Corporation 466 Airport Industrial Park Road Parkersburg, West Virginia 26104 6 SIGNATURES IN WITNESS WHEREOF, the Company has caused this Agreement to be executed and its seal to be affixed hereunto by its duly authorized officers, and Employee has signed this Agreement, on the day and date first above written. ATTEST: ENERGY SERVICES ACQUISITION CORP. By: - ------------------------ ----------------------------- Secretary Marshall T. Reynolds Chairman of the Board and Chief Executive Officer WITNESS: EMPLOYEE: By: - ----------------------- ------------------------------ Secretary Denny Harton -----END PRIVACY-ENHANCED MESSAGE-----