Conduct of Business Before the Closing. (a) Except (i) as required by applicable Law, (ii) as expressly contemplated, required or permitted by this Agreement or the other Transaction Documents or (iii) as set forth in Section 6.01(a)(iii) of the Disclosure Letter, during the period from the date of this Agreement until the Closing (or such earlier date on which this Agreement is terminated pursuant to Section 9.01), unless Purchaser otherwise consents in writing, the Seller shall use its commercially reasonable efforts to carry on the Business in all material respects in the ordinary course of business and preserve intact its present operations; provided that no action by Seller with respect to matters specifically addressed by Section 6.01(b) shall be deemed to be a breach of this Section 6.01(a) unless such action would constitute a breach of Section 6.01(b). (b) Except (i) as required by applicable Law, (ii) as expressly contemplated, required or permitted by this Agreement or the other Transaction Documents or (iii) as set forth in the applicable subsection of Section 6.01(b) of the Disclosure Letter, during the period from the date of this Agreement until the Closing (or such earlier date on which this Agreement is terminated pursuant to Section 9.01), unless Purchaser otherwise consents in writing (such consent not to be unreasonably withheld, delayed or conditioned with respect to the matters set forth in clauses (i), (ii), (iv), (vii), (viii), (ix), (x) (xi), (xiii) and (xiv)), the Seller shall not, and shall cause the other Seller Entities not to (solely to the extent related to or that would reasonably otherwise affect the Business, the Transferred Assets (including any Included Shared Contract), the Applicable Contract, or the Assumed Liabilities): (i) sell, lease, transfer, license, assign, abandon, cancel, mortgage, pledge, place a Lien upon (other than a Permitted Lien) or otherwise dispose of any Transferred Asset or Shared Contract (other than Intellectual Property, which is addressed in clause (ix) below) with a value, individually or in the aggregate, in excess of One Hundred Thousand Dollars ($100,000), other than the sale or disposal of obsolete, worn-out or excess equipment or assets in the ordinary course of business or sales of goods or services (x) in the ordinary course of business or (y) pursuant to Contracts in existence as of the date of this Agreement that are set forth on Section 6.01(b)(i) of the Disclosure Letter; (ii) acquire any assets that would constitute Transferred Assets outside the ordinary course of business, except for assets with a value, individually or in the aggregate, of less than Five Hundred Thousand Dollars ($500,000), pursuant to Contracts in existence as of the date of this Agreement that are set forth on Section 6.01(b)(ii) of the Disclosure Letter or capital expenditures included on the face of the Interim Financial Statements; (iii) make any loans, advances (other than accounts receivable), capital contributions or investments, in each case that would constitute a Transferred Asset, to any Person outside the Seller Group, other than pursuant to Contracts in existence as of the date of this Agreement that are set forth on Section 6.01(b)(iii) of the Disclosure Letter; (iv) (A) adopt, enter into, negotiate, modify, enter into, extend, amend or terminate any (1) Assumed Benefit Plan, or (2) Seller Benefit Plan (other than actions that apply equally to Business Employees and other similarly-situated employees of Seller Group) or any other benefit or compensation plan, program policy, agreement, or arrangement that would be a Seller Benefit Plan if in effect on the date hereof or recognize or certify any labor union, labor organization, works council or group of employees as the bargaining representatives for any Business Employees, (B) increase or decrease, or commit to increase or decrease, the compensation or benefits of any current or former Business Employee or other individual service provider of the Business except to the extent required by any CBA (other than in respect of increases in base salary in the ordinary course of business consistent with past practice to any Business Employee in connection with Seller’s annual compensation and performance review process, in each case, so long as such increase does not exceed 5% of such Person’s then-current base salary), (C) grant or commit to grant to any current or former Business Employee or other individual service provider of the Business any bonus, incentive, equity or equity-based or phantom equity awards or remove or modify existing restrictions in any such awards made to any current or former Business Employee or other individual service provider of the Business, except to the extent required by any CBA; (D) take any action to accelerate the vesting or payment, or the funding, of any compensation, or benefits, equity or equity-based or phantom equity awards, retention or severance for any current or former Business Employee or other individual service provider of the Business, (E) terminate (other than for “cause”) the employment or service of any Business Employee or other individual service provider of the Business whose annual base compensation exceeds $100,000, or (F) hire any employee as a Business Employee or other individual service provider whose annual base compensation is expected to exceed $100,000 or hire any Business Employee or other individual service provider to fill a vacant role or position, in each case, except (1) as required by the existing terms as of the date hereof of any Seller Benefit Plan in existence as of the date hereof that is set forth on Section 4.11(a) of the Disclosure Letter; or (2) expressly required under the terms of Section 7.06 of this Agreement; (v) transfer internally, or otherwise materially alter the duties and responsibilities of, any individual (except, in either case, if required under a CBA) (A) who is a Business Employee, such that such individual is no longer primarily engaged in the Business, or (B) who is not a Business Employee, such that such individual is primarily engaged in the Business; (vi) (A) make any material changes in financial accounting methods, principles or practices relating to the Business other than as may be required by GAAP (or any interpretation thereof) or by any applicable Law, (B) accelerate the collection or discount of accounts receivable, delay the payment of accounts payable or accrued expenses, or (C) take any action that would reasonably be expected to have the effect of accelerating to pre-Closing periods sales to customers or others that would otherwise be expected to occur after the Closing, in each case of (B) and (C) outside the ordinary course of business or pursuant to the Contracts in existence as of the date of this Agreement that are set forth on Section 6.01(b)(vi) of the Disclosure Letter; (vii) (A) commence any Action or (B) enter into any settlement or release with respect to any Action or enter into any consent decree or settlement agreement with any Governmental Authority relating to the Business, other than any settlement or release (x) that involves no finding or admission of any wrongdoing on the part of the Business, (y) that contemplates only the payment of money without any ongoing limits on the conduct or operation of the Business and (z) that results in a full, complete and irrevocable release of the claims giving rise to such Action by all plaintiffs and all related parties in favor of the Business, and, in any event, does not result in any non-monetary Liability to the Business following the Closing; (viii) knowingly waive any material claims or rights of material value that constitute Transferred Assets; (ix) sell, pledge, place a Lien upon (other than a Permitted Lien), dispose of, permit to lapse, abandon, cancel, transfer, assign or grant any license or sublicense of any rights under or with respect to any material Transferred Intellectual Property other than (A) non-exclusive licenses granted to customers of the Business in the ordinary course of business, (B) pursuant to Contracts in existence as of the date of this Agreement and disclosed on Section 6.01(b)(ix) of the Disclosure Letter, or (C) any Lien automatically released in full in connection with the Closing; (x) (A) amend, waive any right that is not immaterial under or voluntarily terminate any Transferred Permit, Material Business Contract or any Contract entered into after the date of this Agreement that would have been a Material Business Contract if in effect on the date of this Agreement, in each case, except for renewals, terminations or expirations in accordance with the terms of any Material Business Contract or amendments that would not be adverse to the Business or (B) enter into any Contract that, if in effect on the date hereof, would be a Material Business Contract, other than purchase orders with customers, distributor and vendors, in each case, in the ordinary course of business; (xi) except as set forth in the capital budget related to the Business made available to Purchaser prior to the date hereof and attached hereto as Annex A (the “Capital Budget”), (A) commit or authorize any commitment to make any capital expenditures in excess of $500,000 in the aggregate or (B) fail to make material capital expenditures or commitments substantially as provided by, and generally at the times and substantially in the aggregate amounts set forth in, the Capital Budget; (xii) implement or announce any employee layoffs, furloughs, reductions-in-force, plant closings, furloughs, layoffs or other such actions that could implicate the WARN Act with respect to the Business Employees; (xiii) waive or release any noncompetition, nonsolicitation, nondisclosure or other restrictive covenant obligation of any current or former employee (including any Business Employee) or independent contractor of the Business; (xiv) disclose or escrow any trade secrets included in the Transferred Intellectual Property to any Person, other than pursuant to a valid and written Contract entered into in the ordinary course of business with reasonable protections of, and preserving all rights of the Business in such trade secrets and other confidential information; (xv) change, modify, or revise the Specifications (as defined in the Supply Agreement) set forth in Schedule A-3 to the Supply Agreement; (xvi) (A) make, change or rescind any material Tax election (other than in the ordinary course of business consistent with past practice), (B) change or adopt any Tax annual accounting period, Tax accounting or transfer pricing policy or practice, (C) settle or compromise any claim or assessment or enter into any closing agreement, (D) file any amended Tax Return, (E) settle or compromise any Tax audit, claim or assessment, (F) surrender or abandon any right to claim a material Tax refund, offset or other reduction in liability, or (G) extend or waive the applicable statute of limitation with respect to any Taxes or any Tax Return (other than any extension obtained in the ordinary course of business in connection with filing Tax Returns that does not require the consent of a Governmental Authority), in each case that is in respect of a material amount of Taxes and that would have effect on the Purchaser after the Closing; or (xvii) authorize any of, or commit or agree, in writing or otherwise, to take any of, the foregoing actions. (c) Except as expressly contemplated or permitted by this Agreement or the other Transaction Documents or as required by applicable Law, Judgment or a Governmental Authority, during the period from the date of this Agreement to the Closing (or such earlier date on which this Agreement is terminated pursuant to Section 9.01), each of the Seller and Purchaser shall not, and shall cause their respective Affiliates not to, without the prior written consent of the other party, (i) take any action, or fail to take any action, in either case, that would reasonably be expected to result in any of the conditions to effect the Closing set forth in Article VIII to not be satisfied or (ii) authorize any of, or commit or agree, in writing or otherwise, to take any of the foregoing actions. For the avoidance of doubt, nothing in this Section 6.01(c) shall expand the obligations addressed elsewhere in this Agreement, including as contemplated by Section 7.01. (d) During the period from the date of this Agreement until the Closing (or such earlier date on which this Agreement is terminated pursuant to Section 9.01), in the event that the written specifications pursuant to which Seller and its Affiliates have manufactured and packaged the Products (as defined in the Supply Agreement) changes, is modified or is revised, or otherwise does not remain identical to the Specifications (as defined in and provided pursuant to the Supply Agreement), in each case, as of the date hereof, the Seller shall promptly inform the Purchaser of such changes, modifications, revisions and the like in writing in reasonable detail and promptly respond in good faith to any reasonable written questions asked by or on behalf of the Purchaser in response to such notice and subsequent communications. (e) For the avoidance of doubt, nothing contained in this Agreement is intended to give Purchaser, directly or indirectly, the right to control or direct the Seller Group’s businesses, including, prior to the Closing, the Business. Prior to the Closing, the Seller Group shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its businesses and operations.
Appears in 1 contract
Sources: Asset Purchase Agreement (Goodyear Tire & Rubber Co /Oh/)
Conduct of Business Before the Closing. (a) Except (iw) as required by applicable Law, (iix) any good faith, reasonable action or inaction of any member of the Seller Group in response to COVID-19 or any COVID-19 Measures (in each case, to the extent reasonably practicable, after first reasonably consulting with Purchaser and taking into consideration the reasonable concerns of Purchaser), (y) as expressly contemplated, required or permitted by this Agreement or and the other Transaction Documents or (iiiz) as set forth in Section 6.01(a)(iii) 6.01 of the Disclosure Letter, during the period from the date of this Agreement until the Closing (or such earlier date on which this Agreement is validly terminated pursuant to Section 9.01), unless Purchaser otherwise consents in writingwriting (such consent not to be unreasonably withheld, delayed or conditioned), the Seller shall, and shall cause the other members of the Seller Group involved in the conduct of the Business to, use its commercially reasonable efforts to carry on the Business in all material respects in the ordinary course of business and use commercially reasonable efforts to preserve intact the present goodwill and ongoing operations of the Business, including to preserve the present commercial relationships with Persons with whom it does business and keep available the services of its present operationscurrent officers and employees of the Business; provided that no action by any member of the Seller Group with respect to matters specifically addressed by Section 6.01(b) shall be deemed to be a breach of this Section 6.01(a) unless such action would constitute a breach of Section 6.01(b).
(b) Except (iw) as required by applicable Law, (iix) any good faith, reasonable action or inaction of any member of the Seller Group in response to COVID-19 or any COVID-19 Measures (in each case, to the extent reasonably practicable, after first reasonably consulting with Purchaser and taking into consideration the reasonable concerns of Purchaser), (y) as expressly contemplated, required or permitted by this Agreement or the other Transaction Documents or (iiiz) as set forth in the applicable subsection of Section 6.01(b) 6.01 of the Disclosure Letter, during the period from the date of this Agreement until the Closing (or such earlier date on which this Agreement is validly terminated pursuant to Section 9.01), unless Purchaser otherwise consents in writing (such consent not to be unreasonably withheld, delayed or conditioned with respect to the matters set forth in clauses (i), (ii), (iv), (vii), (viii), (ix), (x) (xi), (xiii) and (xiv)conditioned), the Seller shall not, and shall cause not permit any member of the other Seller Entities not Group to (in each case, solely to the extent related to or that would reasonably otherwise affect the Business, the Transferred Assets (including any Included Shared Contract), the Applicable Contract, or the Assumed Liabilities):
(i) sell, leaselease (or sublease), transfer, license, assign, abandon, cancel, mortgage, pledge, place a Lien upon (other than a Permitted Lien) or otherwise dispose of any material Transferred Asset or Shared Contract (other than Intellectual Property, which is addressed in clause (ix) below) with a value, individually or in the aggregate, in excess of One Hundred Thousand Dollars ($100,000), other than the sale or disposal of obsolete, worn-out or excess equipment or assets in the ordinary course of business or sales of goods or services (x) in the ordinary course of business or (y) pursuant to Contracts in existence as of the date of this Agreement that are set forth on Section 6.01(b)(i) of the Disclosure LetterAgreement;
(ii) acquire any material assets that would constitute Transferred Assets outside of the ordinary course of business, except for assets with a value, individually or in the aggregate, of less than Five Hundred Thousand Dollars ($500,000), pursuant to Contracts in existence as of the date of this Agreement that are set forth on Section 6.01(b)(ii) of the Disclosure Letter or capital expenditures included on the face of the Interim Financial Statements;
(iii) make any loans, advances (other than accounts receivable), capital contributions or investmentsinvestments for the Business, in each case that would constitute a Transferred Asset, to any Person outside the Seller Group, Group other than in the ordinary course of business or pursuant to Contracts in existence as of the date of this Agreement that are set forth on Section 6.01(b)(iii) of the Disclosure LetterAgreement;
(iv) (A) establish, adopt, enter into, negotiate, modify, enter into, extend, amend or terminate any (1) Assumed Benefit Plan, or (2) Seller Business Benefit Plan (other than actions that apply equally or Collective Bargaining Agreement with respect to Business Employees and other similarly-situated employees of Seller Group) or any other benefit or compensation plan, program policy, agreement, or arrangement that would be a Seller Benefit Plan if in effect on the date hereof or recognize or certify any labor union, labor organization, works council or group of employees as the bargaining representatives for any Business EmployeesEmployee, (B) materially increase or decrease, or commit to increase or decrease, the compensation or benefits of any current Business Employee, or former Business Employee grant any retention, change of control, incentive, severance, bonus or other individual service provider of the Business except to the extent required by any CBA (other than in respect of increases in base salary in the ordinary course of business consistent with past practice to termination payment to, any Business Employee in connection with Seller’s annual compensation and performance review process, in each case, so long as such increase does not exceed 5% of such Person’s then-current base salary)Employee, (C) grant or commit to grant to any current or former Business Employee or other individual service provider of the Business any bonus, incentive, equity or equity-based or phantom equity awards or remove or modify existing restrictions in any such awards made to any current or former Business Employee or other individual service provider of the Businesssuch employee, except to the extent required by any CBA; (D) take any action to accelerate the vesting vesting, funding or payment, or the funding, payment of any compensation, compensation or benefits, equity or equity-based or phantom equity awards, retention or severance benefits for any current or former Business Employee or other individual service provider of the Business, (E) terminate (other than for “cause”) the employment or service of any Business Employee or other individual service provider of (E) recognize any labor union, labor organization or works council as the Business whose annual base compensation exceeds $100,000, or (F) hire any employee as a Business Employee or other individual service provider whose annual base compensation is expected to exceed $100,000 or hire collective bargaining representative for any Business Employee or other individual service provider to fill a vacant role or positionEmployee, in each case, except (1) as required by the existing terms as of the date hereof of any Seller applicable Law, any Business Benefit Plan in existence as of the date hereof that is set forth on Section 4.11(a) of the Disclosure Letter; Plan, any employment agreement or any Collective Bargaining Agreement, (2) expressly required in the ordinary course of business, (3) as contemplated in Section 7.06, (4) as may be initiated by the Seller or one or more of their respective Affiliates with respect to their employees generally in the applicable jurisdiction or geographic location, and (5) arrangements that will not result in any Liability under the terms this Agreement or otherwise to Purchaser or any of Section 7.06 of this Agreementits Affiliates;
(v) transfer internally, promote, hire, or otherwise materially alter the duties and responsibilities of, any individual (except, in either case, if required under a CBA) (A) who is a Business Employee, Employee such that such individual is no longer primarily engaged in the Business, Business or (B) who is not a Business Employee, Employee such that such individual is primarily engaged in the Business, in each case, other than actions that are taken in the ordinary course of business (e.g., to fill a vacancy, as part of a normal or planned rotation or upon a termination for cause or due to death or disability);
(vi) (A) make any material changes in financial accounting methods, principles or practices relating to the Business other than (A) changes that are being made to Seller Parent’s businesses generally in the ordinary course of business and (B) as may be required by GAAP (or any interpretation thereof) or by any applicable Law, (B) accelerate the collection or discount of accounts receivable, delay the payment of accounts payable or accrued expenses, or (C) take any action that would reasonably be expected to have the effect of accelerating to pre-Closing periods sales to customers or others that would otherwise be expected to occur after the Closing, in each case of (B) and (C) outside the ordinary course of business or pursuant to the Contracts in existence as of the date of this Agreement that are set forth on Section 6.01(b)(vi) of the Disclosure Letter;
(vii) (A) commence any Action or (B) enter into any waiver, assignment, compromise, settlement or release with respect to any material Action or enter into any consent decree or settlement agreement with any Governmental Authority relating to the BusinessBusiness that is, in whole or in part, an Assumed Liability other than (A) any settlement or release (x) that involves no finding or admission of any wrongdoing on the part of the Business, (y) that contemplates only the payment of money without any material ongoing limits on the conduct or operation of the Business and (z) that results in a full, complete and irrevocable release of the claims giving rise to such Action by all plaintiffs and all related parties in favor Action, (B) any settlement or release involving the payment of the Business, and, in any event, does not result in any non-monetary Liability Liabilities to the Business following extent reflected or reserved against in the ClosingFinancial Statements or (C) to the extent such Action and any associated Liabilities are Excluded Liabilities;
(viii) knowingly waive any material claims or rights that, to the Knowledge of the Seller, are of material value that constitute Transferred AssetsAssets other than waivers granted in the ordinary course of business;
(ix) sell, pledge, place a Lien upon (other than a Permitted Lien), A) dispose of, abandon, permit to lapse, abandon, cancel, transfer, assign or grant any license license, sublicense or sublicense of any other rights under or with respect to any material Transferred Intellectual Property other than (A) non-exclusive licenses granted to customers of the Business in the ordinary course of business, (B) pursuant fail to Contracts in existence as take commercially reasonable measures to protect the confidentiality of the date of this Agreement and disclosed on Section 6.01(b)(ix) material Trade Secrets owned by any member of the Disclosure LetterSeller Group and used in the Business, or (C) permit the disclosure of any Lien automatically released material Trade Secrets held by any member of the Seller Group and used in full in connection with the ClosingBusiness to any Person that is not subject to a written and enforceable confidentiality or non-disclosure obligation;
(x) (A) enter into any Contract after the date of this Agreement that would have been a Material Business Contract if in effect on the date of this Agreement; (B) materially amend, modify, terminate, fail to renew, or waive or grant any right that is not immaterial consent under or voluntarily terminate any Transferred Permit, provisions of any Material Business Contract or any Contract entered into after the date of this Agreement that would have been a Material Business Contract if in effect on the date of this Agreement, in each casecase under clauses (A) and (B), other than in the ordinary course of business and except for renewals, terminations or expirations in accordance with the terms of any Material Business Contract or amendments that would not be adverse to the Business Contract; or (BC) engage in or enter into any Contract that, if in effect on Affiliate Agreement that will not terminate as of the date hereof, would be a Material Business Contract, other than purchase orders with customers, distributor and vendors, in each case, in the ordinary course of businessClosing;
(xi) except as set forth in the capital budget related to the Business made available to Purchaser prior to the date hereof and attached hereto as Annex A (the “Capital Budget”), (A) commit or authorize any commitment to make any capital expenditures in excess of $500,000 in the aggregate commitment or (B) fail to make material capital expenditures or commitments substantially as provided by, and generally at the times and substantially in the aggregate amounts set forth in, the Capital Budget;
(xii) implement or announce any employee layoffs, furloughs, reductions-in-force, plant closings, furloughs, layoffs or other such actions that could implicate the WARN Act with respect to the Business Employees;
(xiii) waive or release any noncompetition, nonsolicitation, nondisclosure or other restrictive covenant obligation of any current or former employee (including any Business Employee) or independent contractor of the Business;
(xiv) disclose or escrow any trade secrets included in the Transferred Intellectual Property to any Person, other than pursuant to a valid and written Contract entered into in the ordinary course of business with reasonable protections of, and preserving all rights of the Business in such trade secrets and other confidential information;
(xv) change, modify, or revise the Specifications (as defined in the Supply Agreement) set forth in Schedule A-3 to the Supply Agreement;
(xvi) (A) make, change or rescind any material Tax election (expenditure other than in the ordinary course of business consistent with past practice), (B) change or adopt any Tax annual accounting period, Tax accounting or transfer pricing policy or practice, (C) settle or compromise any claim or assessment or enter into any closing agreement, (D) file any amended Tax Return, (E) settle or compromise any Tax audit, claim or assessment, (F) surrender or abandon any right to claim a material Tax refund, offset or other reduction in liability, or (G) extend or waive the applicable statute of limitation with respect to any Taxes or any Tax Return (other than any extension obtained in the ordinary course of business in connection with filing Tax Returns that does not require the consent of a Governmental Authority), in each case that is in respect of a material amount of Taxes and that would have effect on the Purchaser after the Closingbusiness; or
(xviixii) authorize any of, or commit or agree, in writing or otherwise, to take any of, the foregoing actions.
(c) Except as expressly contemplated or permitted by this Agreement or the other Transaction Documents or as required by applicable Law, Judgment or a Governmental Authority, during the period from the date of this Agreement to the Closing (or such earlier date on which this Agreement is terminated pursuant to Section 9.01), each of the Seller and Purchaser shall not, and shall cause their respective its Affiliates not to, without the prior written consent of the other partySeller, (i) take any action, or fail to take any action, in either case, that would reasonably be expected to result in any of the conditions to effect the Closing set forth in Article VIII to not be satisfied satisfied, (ii) take any action, or fail to take any action, in either case the result of which would reasonably be expected to materially and adversely impair or materially delay the consummation of the Transactions or (iiiii) authorize any of, or commit or agree, in writing or otherwise, to take any of the foregoing actions. For the avoidance of doubt, nothing in this Section 6.01(c) shall expand the obligations addressed elsewhere in this Agreement, including as contemplated by Section 7.01.
(d) During Notwithstanding anything in this Agreement to the period from contrary, Purchaser acknowledges and agrees that on or prior to the date Closing Date, the Seller or any of its Affiliates may (but shall have no obligation to) (i) take commercially reasonable actions that would otherwise require the prior written consent of Purchaser under this Section 6.01 to the extent the Seller reasonably deems such action to be required by Law or otherwise reasonably necessary to prevent the occurrence of, or mitigate the existence of, emergency situations or to address (A) imminent or substantial risks to human health or safety or (B) material damage to the environment, Transferred Real Property, material equipment or other material assets of the Seller Group and (ii) take actions, including (A) contributions, transfers, assignments and acceptances of assets and Liabilities, (B) the repayment of Indebtedness and the extinguishment of Liens and (C) the settlement, capitalization or cancellation of any intercompany Indebtedness or Contracts and other agreements that will not constitute Material Business Contracts, in the case of clauses (A) through (C) of this Agreement until the Closing clause (or such earlier date on which this Agreement is terminated pursuant to Section 9.01ii), in order to facilitate the event that the written specifications pursuant to which Seller and its Affiliates have manufactured and packaged the Products (as defined in the Supply Agreement) changes, is modified or is revised, or otherwise does not remain identical to the Specifications (as defined in and provided pursuant to the Supply Agreement), in each case, as consummation of the date hereof, the Seller shall promptly inform the Purchaser of such changes, modifications, revisions and the like in writing in reasonable detail and promptly respond in good faith to any reasonable written questions asked by or on behalf of the Purchaser in response to such notice and subsequent communications.
(e) Transactions. For the avoidance of doubt, nothing contained in this Agreement is intended to give Purchaser, directly or indirectly, the right to control or direct the Seller Group’s businessesbusiness, including, prior to the Closing, the Business. Prior to the Closing, the Seller Group shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its businesses and operations.
Appears in 1 contract
Sources: Purchase and Sale Agreement (Ashland Global Holdings Inc)
Conduct of Business Before the Closing. (a) Except (iw) as required by applicable Law, Judgment or a Governmental Authority, (iix) as expressly contemplated, required or permitted by this Agreement or and the other Transaction Documents (including as contemplated by the Internal Reorganization pursuant to Section 6.02(a)), (y) as required pursuant to the organizational documents of any of the Transferred JVs or (iiiz) as set forth in Section 6.01(a)(iii) 6.01 of the Disclosure Letter, during the period from the date of this Agreement until the Closing (or such earlier date on which this Agreement is validly terminated pursuant to Section 9.01), unless the Purchaser otherwise consents in writingwriting (such consent not to be unreasonably withheld, delayed or conditioned), the Seller (A) shall, and shall cause the Transferred Entities (other than the Transferred Non-Control JVs, where the Seller’s obligation shall be to use its such efforts to the extent permitted under the organizational documents of such Transferred Non-Control JVs) to, use their commercially reasonable efforts to carry on (i) conduct the Business in all material respects in the ordinary course of business in substantially the same manner as previously conducted, (ii) preserve the goodwill and organization of the Business and the relationships with the Business’ customers, suppliers, employees and other business relations, including with Governmental Authorities, (iii) maintain and preserve intact its in all material respects the Transferred Entities’ and the Business’ present operationsbusiness organization and operations and (iv) maintain the Business Assets in their present repair, order and condition, except for ordinary wear and tear and casualty, and (B) shall cause the Transferred Entities (other than the Transferred Non-Control JVs, where the Seller’s obligation shall be to use such efforts to the extent permitted under the organizational documents of such Transferred Non-Control JVs) not to enter into any new line of businesses outside of the Business; provided that no action by Seller any Transferred Entity with respect to matters specifically addressed by Section 6.01(b) shall be deemed to be a breach of this Section 6.01(a) unless such action would constitute a breach of Section 6.01(b).
(b) Except (iw) as required by applicable Law, Judgment or a Governmental Authority, (iix) as expressly contemplated, required or permitted by this Agreement or and the other Transaction Documents (including as contemplated by the Internal Reorganization pursuant to Section 6.02(a)), (y) as required pursuant to the organizational documents of any of the Transferred JVs or (iiiz) as set forth in the applicable subsection of Section 6.01(b) 6.01 of the Disclosure Letter, during the period from the date of this Agreement until the Closing (or such earlier date on which this Agreement is validly terminated pursuant to Section 9.01), unless the Purchaser otherwise consents in writing (such consent not to be unreasonably withheld, delayed or conditioned with respect to the matters set forth in clauses (i), (ii), (iv), (vii), (viii), (ix), (x) (xi), (xiii) and (xiv)conditioned), the Seller shall notnot (solely with respect to the Business), and shall cause each Transferred Entity (other than the other Seller Entities not Transferred Non-Control JVs, where the Seller’s obligation shall be to (solely use such efforts to the extent related to or that would reasonably otherwise affect permitted under the Businessorganizational documents of such Transferred Non-Control JVs) not to, do any of the Transferred Assets (including any Included Shared Contract), the Applicable Contract, or the Assumed Liabilities):following:
(i) (A) issue, redeem, sell, grant, deliver, pledge, transfer, encumber or subject to any Lien (other than transfer restrictions under applicable securities Laws or under the organizational documents of the Transferred Entities) any Transferred Interests or other equity interests of any Transferred Entity, (B) grant any option, warrant or right to acquire any Transferred Interests or other equity interest of any Transferred Entity or (C) issue any security convertible into or exchangeable for such securities;
(ii) create, incur, assume or guarantee any Indebtedness for borrowed money of a Transferred Entity in excess of $5,000,000 in the aggregate other than such Indebtedness that will be repaid at or prior to Closing;
(iii) sell, lease, transfer, license, assign, abandon, cancel, mortgage, pledge, place a Lien upon (other than a Permitted Lien) or otherwise dispose of any material asset of a Transferred Asset or Shared Contract Entity (other than Intellectual Property, which is addressed in clause (ixxvi) below) with a value, individually or in the aggregate, in excess of One Hundred Thousand Dollars ($100,000), other than (A) the sale or disposal of obsolete, worn-out or excess equipment or assets in the ordinary course of business or business, (B) sales of goods or services (x) in the ordinary course of business or (yC) as required pursuant to Contracts any Material Business Contract in existence as of the date of this Agreement that are set forth on Section 6.01(b)(i) of the Disclosure LetterAgreement;
(iiiv) acquire any material assets that would constitute assets of a Transferred Assets Entity outside the ordinary course of business, except for assets with a value, individually or in the aggregate, of less than Five Hundred Thousand Dollars ($500,000), as required pursuant to Contracts any Material Business Contract in existence as of the date of this Agreement that are set forth on Section 6.01(b)(ii) of the Disclosure Letter or capital expenditures included on the face of the Interim Financial StatementsAgreement;
(iiiv) make any loans, advances (other than accounts receivable), capital contributions or investmentsinvestments for the Business, in each case that would constitute a loan, advance, capital contribution or investment of a Transferred AssetEntity, to any Person outside the Seller Group, Parent Group other than in the ordinary course of business, except as required pursuant to Contracts any Material Business Contract in existence as of the date of this Agreement that are set forth on Section 6.01(b)(iii) of the Disclosure LetterAgreement;
(ivvi) (A) adopt, enter intoestablish, negotiateextend, modify, enter into, extend, amend or terminate any (1) Assumed Business Benefit Plan, or (2) Seller Benefit Plan (other than actions that apply equally to Business Employees and other similarly-situated employees of Seller Group) or any other benefit or compensation plan, program policyprogram, agreementContract, agreement or arrangement that would be a Seller Business Benefit Plan if in effect on the date hereof or recognize or certify any labor unionhereof, labor organization, works council or group of employees as the bargaining representatives for with respect to any Business EmployeesEmployee, other service provider of the Transferred Entities, or Collective Bargaining Agreement, (B) increase or decrease, or commit to increase or decrease, the compensation or benefits of any current or former Business Employee or other individual service provider of the Business except to the extent required by any CBA (other than in respect of increases in base salary in the ordinary course of business consistent with past practice to any Business Employee in connection with Seller’s annual compensation and performance review process, in each case, so long as such increase does not exceed 5% of such Person’s then-current base salary)Transferred Entities, (C) grant or commit agree to grant to any current incentive compensation (whether equity-based or former otherwise) or any severance or termination pay to any Business Employee or other individual service provider of the Business any bonusTransferred Entities, incentive, equity or equity-based or phantom equity awards or remove or modify existing restrictions in any such awards made to any current or former Business Employee or other individual service provider of the Business, except to the extent required by any CBA; (D) take any action to accelerate the vesting vesting, timing or payment, or the funding, payment of any compensation, compensation or benefits, equity or equity-based or phantom equity awards, retention or severance benefits for any current or former Business Employee or other individual service provider of the Business, (E) terminate (other than for “cause”) the employment or service of any Business Employee or other individual service provider of the Business whose annual base compensation exceeds $100,000, or (F) hire any employee as a Business Employee or other individual service provider whose annual base compensation is expected to exceed $100,000 or hire any Business Employee or other individual service provider to fill a vacant role or positionTransferred Entity, in each case, except (1) as required by the existing terms as of the date hereof of applicable Law, any Seller Business Benefit Plan in existence as of the date hereof that is set forth on Section 4.11(a) of the Disclosure Letter; or any Collective Bargaining Agreement, (2) expressly required under in the terms ordinary course of business and consistent with past practice, (3) as contemplated in Section 7.06 7.05 of this Agreement, or (4) as may be initiated by the Seller or one or more of their respective Affiliates with respect to similarly-situated employees of the Seller generally in the applicable jurisdiction or geographic location or (5) arrangements that will not result in any Liability under this Agreement or otherwise to the Purchaser or any of its Affiliates, or (E) hire, retain or terminate the employment or service (other than for cause) of any Business Employee or other service provider of the Transferred Entities, other than (x) with respect to a Business Employee or other service provider of the Transferred Entities (or individual who would be a Business Employee or other service provider of the Transferred Entities) below the level of Vice President or (y) hiring individuals to replace departed Business Employees or other service providers of the Transferred Entities in the ordinary course of business consistent with past practice provided that such replacement hire does not cause the annual target cash compensation for the role of the departed Business Employees to materially increase;
(vvii) accept the transfer of sponsorship of, or any Liabilities relating to, any Business Benefit Plan that is not an Assumed Benefit Plan;
(viii) transfer internallyany Business Employee into or out of the Transferred Entities, or otherwise materially alter the duties and responsibilities of, any individual (except, in either case, if required under a CBA) (A) who is a Business Employee, Employee such that such individual is no longer primarily engaged in the Business, a Business Employee or (B) who is an employee of the Seller or its Affiliates who is not a Business Employee such that he or she would be a Business Employee, such in each case, other than (1) as contemplated in Section 7.05 of this Agreement (including in connection with the Updated Business Employee List) and (2) actions that such individual is primarily engaged are taken in the Businessordinary course of business consistent with past practice (e.g., to fill a vacancy, as part of a normal or planned rotation or upon a termination for cause or due to death or disability);
(viix) (A) (1) modify, extend, terminate or enter into any Collective Bargaining Agreement or (2) recognize or certify any labor union, labor organization, works council, employee representative or group of employees as the bargaining representative for any Business Employees, (B) implement or announce any employee layoffs, reductions in force, plant closings, material reductions in compensation, or other similar actions that would trigger the notice obligations of WARN, or (C) waive or release any noncompetition, nonsolicitation, nondisclosure or other restrictive covenant obligation of any current or former employee or independent contractor of the Transferred Entities or, with respect to the Business, of the Seller or any of its other Affiliates;
(x) make any material changes in financial accounting methods, principles or practices relating other than (A) changes that are being made to the Business other than Seller’s businesses generally in the ordinary course of business or (B) as may be required by GAAP (or any interpretation thereof) or by any applicable Law;
(xi) amend the organizational documents of any Transferred Entity, (B) accelerate other than immaterial changes as may be required to effect the collection Transactions or discount of accounts receivable, delay the payment of accounts payable or accrued expenses, or (C) take any action that would reasonably be expected to have the effect of accelerating to pre-Closing periods sales to customers or others that would otherwise be expected to occur after the Closingother ministerial changes, in each case of (B) and (C) outside the ordinary course of business or pursuant case, in a manner that is not adverse to the Contracts in existence as of the date of this Agreement that are set forth on Section 6.01(b)(vi) of the Disclosure LetterPurchaser;
(vii) (A) commence any Action or (Bxii) enter into any settlement or release with respect to any Action or enter into any consent decree or settlement agreement with any Governmental Authority relating to in an amount greater than $25,000,000 in the Businessaggregate, other than (A) any settlement or release (x) that involves no finding or admission of any wrongdoing on the part of the Business, (y) that contemplates only the payment of money without any material ongoing limits on the conduct or operation of the Business and (z) that results in a full, complete and irrevocable release of the claims giving rise to such Action by all plaintiffs and all related parties in favor Action, (B) any settlement or release involving the payment of the Business, and, in any event, does not result in any non-monetary Liability Liabilities to the Business following extent reflected or reserved against in the ClosingFinancial Statements or (C) any Tax Action;
(viiixiii) knowingly waive (A) change or revoke any material claims Tax election or rights Tax accounting method or make (other than in the ordinary course of business) any material value Tax election, (B) settle or compromise any material Tax Action (including by entering into any “closing agreement” as described in Section 7121 of the Code), (C) file any material amended Tax Return or surrender the right to claim any material refund of Taxes, or (D) request or consent to an extension or waiver of the limitation period applicable to any material Tax claim or assessment (other than pursuant to an automatic extension of the due date for filing a Tax Return), in each case, to the extent such action could reasonably be expected to result in a Tax Liability for a Transferred Entity in a Post-Closing Tax Period; provided, however, that constitute Transferred Assetsnothing in this Section 6.01(b)(xiii) shall prevent the Seller from taking any action with respect to any Taxes or any Tax Return of a Seller Consolidated Group;
(ixxiv) sellamend any material Permit, pledge, place a Lien upon (other than a Permitted Lien(A) routine renewals (and any amendments related to such renewals) or (B) in the ordinary course consistent with past practice, in the case of each of clauses (A) and (B), that do not impose additional material limitations on the Business or operations of the Transferred Entities;
(xv) liquidate, dissolve, recapitalize, reorganize or otherwise wind up the business or operations of, or fail to maintain the existence of, any Transferred Entity;
(xvi) dispose of, permit to lapselapse or expire, abandon, cancel, transfer, assign or grant any license or sublicense of any rights under or with respect to any material Transferred Company Owned Intellectual Property other than (A) non-exclusive licenses granted to customers of the Business in the ordinary course of business, (B) pursuant to Contracts in existence as business or the expiration of Registered Intellectual Property at the date end of this Agreement and disclosed on Section 6.01(b)(ix) of the Disclosure Letter, or (C) any Lien automatically released in full in connection with the Closingits statutory term;
(xxvii) (A) enter into any Material Business Contract described in Section 4.17(a)(vii), Section 4.17(a)(ix) or Section 4.17(a)(xi), or (B) materially amend, waive any right that is not immaterial under transfer or voluntarily terminate any Transferred Permit, Material Business Contract or any Contract entered into after the date of this Agreement that would have been a Material Business Contract if in effect on the date of this Agreement, in each case, other than in the ordinary course of business and except for renewals, terminations or expirations in accordance with the terms of any Material Business Contract Contract;
(xviii) except as provided in Section 7.17 or amendments that would not be adverse to the Business or (B) enter into any Contract that, if in effect on the date hereof, would be a Material Business Contract, other than purchase orders connection with customers, distributor and vendors, in each case, routine maintenance in the ordinary course of business;
(xi) except as set forth in the , enter into any Contract for capital budget related to the Business made available to Purchaser prior to the date hereof and attached hereto as Annex A (the “Capital Budget”), expenditures (A) commit or authorize any commitment to make any capital expenditures in excess outside of $500,000 in the aggregate or (B) fail to make material capital expenditures or commitments substantially as provided by, and generally at the times and substantially in the aggregate amounts set forth in, the Capital Budget;
(xii) implement or announce any employee layoffs, furloughs, reductions-in-force, plant closings, furloughs, layoffs or other such actions that could implicate the WARN Act with respect to the Business Employees;
(xiii) waive or release any noncompetition, nonsolicitation, nondisclosure or other restrictive covenant obligation of any current or former employee (including any Business Employee) or independent contractor of the Business;
(xiv) disclose or escrow any trade secrets included in the Transferred Intellectual Property to any Person, other than pursuant to a valid and written Contract entered into in the ordinary course of business with reasonable protections of, and preserving all rights of the Business in such trade secrets and other confidential information;
(xv) change, modify, or revise the Specifications (as defined in the Supply Agreement) set forth in Schedule A-3 to the Supply Agreement;
(xvi) (A) make, change or rescind any material Tax election (other than in the ordinary course of business consistent with past practice), (B) change or adopt any Tax annual accounting period, Tax accounting or transfer pricing policy or practice, (C) settle or compromise any claim or assessment or enter into any closing agreement, (D) file any amended Tax Return, (E) settle or compromise any Tax audit, claim or assessment, (F) surrender or abandon any right to claim a material Tax refund, offset or other reduction in liability, or (G) extend or waive the applicable statute of limitation with respect to any Taxes or any Tax Return (other an amount greater than any extension obtained $25,000,000 in the ordinary course of business in connection with filing Tax Returns that does not require the consent of a Governmental Authority), in each case that is in respect of a material amount of Taxes and that would have effect on the Purchaser after the Closingaggregate; or
(xviixix) authorize any of, or commit or agree, in writing or otherwise, to take any of, the foregoing actions.
(c) Except as expressly contemplated or permitted by this Agreement or the other Transaction Documents or as required by applicable Law, Judgment or a Governmental Authority, during the period from the date of this Agreement to the Closing (or such earlier date on which this Agreement is terminated pursuant to Section 9.01), each of the Seller and Purchaser shall not, and shall cause their respective its Affiliates not to, without the prior written consent of the other partySeller, (i) take any action, or fail to take any action, in either case, that would reasonably be expected to result in any of the conditions to effect the Closing set forth in Article VIII to not be satisfied or (ii) authorize any of, or commit or agree, in writing or otherwise, to take any of the foregoing actions. For the avoidance of doubt, nothing in this Section 6.01(c) shall expand the obligations addressed elsewhere in this Agreement, including as contemplated by Section 7.01.
(d) During the period from the date of Notwithstanding anything in this Agreement until to the contrary, the Purchaser acknowledges and agrees that on or prior to the Closing (Date, the Seller or such earlier date on which this Agreement is terminated pursuant to Section 9.01), in the event that the written specifications pursuant to which Seller and any of its Affiliates may (but shall have manufactured and packaged no obligation to) (i) cause or consent to any Transferred Entity distributing Cash to the Products Seller or any of its Affiliates, (as defined in ii) take commercially reasonable actions that would otherwise require the Supply Agreement) changes, is modified or is revisedprior written consent of the Purchaser under this Section 6.01 to the extent the Seller reasonably deems such action to be required by Law, or otherwise does not remain identical reasonably necessary to prevent the occurrence of, or mitigate the existence of, emergency situations or to address (A) an imminent and substantial risk to human health or safety or (B) imminent and material damage to the Specifications (as defined in and provided pursuant to the Supply Agreement)environment, in each caseCompany Site, as material equipment or other material assets of the date hereofParent Group and (iii) take actions, including (A) the Seller shall promptly inform the Purchaser repayment of such changes, modifications, revisions Indebtedness and the like in writing in reasonable detail extinguishment of Liens and promptly respond in good faith to (B) the settlement, capitalization or cancellation of any reasonable written questions asked by intercompany Indebtedness or on behalf of the Purchaser in response to such notice Contracts and subsequent communications.
(e) any other intercompany agreements. For the avoidance of doubt, nothing contained in this Agreement is intended to give the Purchaser, directly or indirectly, the right to control or direct the Seller Parent Group’s businessesbusiness, including, prior to the Closing, the Business. Prior to the Closing, the Seller Parent Group shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its businesses and operations.
Appears in 1 contract
Sources: Purchase and Sale Agreement (Occidental Petroleum Corp /De/)
Conduct of Business Before the Closing. (a) Except (iw) as required by applicable Law, Judgment or a Governmental Authority, (iix) any good faith action or inaction of any Transferred Entity in response to COVID-19 or any COVID-19 Measures, (y) as expressly contemplated, required or specifically permitted by this Agreement or and the other Transaction Documents or (iiiz) as set forth in Section 6.01(a)(iii) 6.01 of the Disclosure Letter, during the period from the date of this Agreement until the Closing (or such earlier date on which this Agreement is terminated pursuant to Section 9.01), unless the Purchaser otherwise consents in writingwriting (such consent not to be unreasonably withheld, delayed or conditioned), the Seller shall cause the Transferred Entities to use its their commercially reasonable efforts to carry on the Business in all material respects in the ordinary course of business and to (A) preserve intact its the present operationsbusiness organizations and goodwill of the Transferred Entities and the present relationships of the Transferred Entities with customers, employees, suppliers and others having business dealings with the Transferred Entities and (B) maintain and keep in good repair (ordinary wear and tear expected) the properties and assets of the Transferred Entities and the Transferred Czech Assets; provided that no action by Seller any Transferred Entity with respect to matters specifically addressed by Section 6.01(b) shall be deemed to be a breach of this Section 6.01(a) unless such action would constitute a breach of Section 6.01(b).
(b) Except (iw) as required by applicable Law, Judgment or a Governmental Authority, (iix) except with respect to Sections 6.01(b)(vi) and (vii), any good faith action or inaction of any member of the Seller Group in response to COVID-19 or any COVID-19 Measures, (y) as expressly contemplated, required or specifically permitted by this Agreement or the other Transaction Documents or (iiiz) as set forth in the applicable subsection of Section 6.01(b) 6.01 of the Disclosure Letter, during the period from the date of this Agreement until the Closing (or such earlier date on which this Agreement is terminated pursuant to Section 9.01), unless the Purchaser otherwise consents in writing (such consent not to be unreasonably withheld, delayed or conditioned with respect to the matters set forth in clauses (i), (ii), (iv), (vii), (viii), (ix), (x) (xi), (xiii) and (xiv)conditioned), the Seller shall not, and shall cause the other Seller Entities not to (solely to the extent related to or that would reasonably otherwise affect the Business, the permit any Transferred Assets (including any Included Shared Contract), the Applicable Contract, or the Assumed Liabilities):Entity to:
(i) issue, sell, grant, deliver, pledge, transfer, encumber or subject to any Lien (other than transfer restrictions under applicable securities Laws or under the organizational documents of the Transferred Entities) any Transferred Interests or grant or promise to grant any option, warrant or right to acquire any Transferred Interests or other equity securities of any Transferred Entity or issue any security convertible into or exchangeable for such securities;
(ii) create, incur, assume or guarantee any Indebtedness for borrowed money of a Transferred Entity in excess of $1,000,000 in the aggregate;
(iii) sell, lease, transfer, license, assign, abandon, cancel, mortgage, pledge, place a Lien upon (other than a Permitted Lien) or otherwise dispose of any material asset of a Transferred Asset or Shared Contract Entity (other than Intellectual Property, which is addressed in clause (ixxv) below) with a value, individually or in the aggregate, in excess of One Hundred Thousand Dollars ($100,000), other than the sale or disposal of obsolete, worn-out or excess equipment or assets in the ordinary course of business or sales of goods or services (x) in the ordinary course of business or (y) pursuant to Contracts in existence as of the date of this Agreement that are set forth on Section 6.01(b)(i) of the Disclosure LetterAgreement;
(iiiv) acquire any material assets that would constitute assets of a Transferred Assets Entity outside the ordinary course of business, except for assets with a value, individually or in the aggregate, of less than Five Hundred Thousand Dollars ($500,000), pursuant to Contracts a Contract in existence as of the date of this Agreement that are set forth on Section 6.01(b)(ii) of the Disclosure Letter or capital expenditures included on the face of the Interim Financial StatementsAgreement;
(iiiv) make any loans, advances (other than accounts receivable), capital contributions or investmentsinvestments for the Business, in each case that would constitute a loan, advance, capital contribution or investment of a Transferred AssetEntity, to any Person outside the Seller Group, Group other than in the ordinary course of business or pursuant to Contracts in existence as of the date of this Agreement that are set forth on Section 6.01(b)(iii) of the Disclosure LetterAgreement;
(ivvi) (A) adopt, enter into, negotiate, modify, enter into, extendextent, amend or terminate any (1) Assumed Benefit PlanPlan or Collective Bargaining Agreement, or (2) Seller or, any Benefit Plan (other than actions that apply equally with respect to Business Employees and other similarly-situated employees of Seller Group) or any other benefit or compensation plan, program policy, agreement, or arrangement that would be a Seller Benefit Plan if in effect on the date hereof or recognize or certify any labor union, labor organization, works council or group of employees as the bargaining representatives for any Business EmployeesEmployee, (B) increase or decrease, or commit to increase or decrease, the compensation or benefits of any current or former Business Employee or other individual service provider of the Business except to the extent required by any CBA (other than in respect of increases in base salary in the ordinary course of business consistent with past practice to any Business Employee in connection with Seller’s annual compensation and performance review process, in each case, so long as such increase does not exceed 5% of such Person’s then-current base salary), (C) grant or commit to grant to any current or former Business Employee or other individual service provider of the Business any bonus, incentive, equity or equity-based or phantom equity awards or remove or modify existing restrictions in any such awards made to any current or former Business Employee or other individual service provider of the Business, except to the extent required by any CBA; (D) take any action to accelerate the vesting or payment, or the funding, payment of any compensation, compensation or benefits, equity or equity-based or phantom equity awards, retention or severance benefits for any current or former Business Employee or other individual service provider of the Business, (E) terminate (other than for “cause”) the employment or service of any Business Employee or other individual service provider of the Business whose annual base compensation exceeds $100,000, or (F) hire any employee as a Business Employee or other individual service provider whose annual base compensation is expected to exceed $100,000 or hire any Business Employee or other individual service provider to fill a vacant role or positionEmployee, in each case, except (1) as required by the existing terms as of the date hereof of any Seller Benefit Plan in existence as of the date hereof that is set forth on Section 4.11(a) of the Disclosure Letter; or any Collective Bargaining Agreement, (2) expressly required under for increases in wages, salaries, bonuses and incentives in the terms ordinary course of business consistent with past practice, (3) as contemplated in Section 7.06 7.05 of this Agreement, (4) as may be initiated by the Seller or one or more of their respective Affiliates with respect to employees generally in the applicable jurisdiction or geographic location or (5) arrangements that will not result in any Liability under this Agreement or otherwise to Purchaser or any of its Affiliates;
(vvii) transfer internally, or otherwise materially alter the duties and responsibilities of, any individual (except, in either case, if required under a CBA) (A) who is a Business Employee, Employee such that such individual is no longer primarily engaged in the Business, a Business Employee or (B) who is an employee of the Seller or its Affiliates who is not a Business Employee such that he or she would become a Business Employee, such in each case, other than actions that such individual is primarily engaged are taken in the Businessordinary course of business consistent with past practice to fill a vacancy, as part of a normal or planned rotation or upon a termination of employment for cause or due to death or disability;
(vi) (Aviii) make any material changes in financial accounting methods, principles or practices relating other than (A) changes that are being made to the Business other than Seller’s businesses generally in the ordinary course of business or (B) as may be required by GAAP (or any interpretation thereof) or by any applicable Law, (B) accelerate the collection or discount of accounts receivable, delay the payment of accounts payable or accrued expenses, or (C) take any action that would reasonably be expected to have the effect of accelerating to pre-Closing periods sales to customers or others that would otherwise be expected to occur after the Closing, in each case of (B) and (C) outside the ordinary course of business or pursuant to the Contracts in existence as of the date of this Agreement that are set forth on Section 6.01(b)(vi) of the Disclosure Letter;
(viiix) amend the organizational documents of any Transferred Entity;
(Ax) commence except with respect to any Action or (B) Tax Action, enter into any settlement or release with respect to any Action or enter into any consent decree or settlement agreement with any Governmental Authority relating to the Business, other than (A) any settlement or release (x) that involves no finding or admission of any wrongdoing on the part of the Business, (y) that contemplates only the payment of money to be paid prior to the Closing or reflected in Closing Working Capital without any material ongoing limits on the conduct or operation of the Business and (z) that results in a full, complete and irrevocable release of the claims giving rise to such Action by all plaintiffs and all related parties Action; provided, that the aggregate amount of such payments shall not exceed $3,250,000 in favor the aggregate, or (B) any settlement or release involving the payment of the Business, and, in any event, does not result in any non-monetary Liability Liabilities to the Business following extent reflected or reserved against in the ClosingFinancial Statements;
(viiixi) knowingly waive any material claims or rights of material value that constitute Transferred Assetsother than waivers granted in the ordinary course of business;
(ixxii) discharge, cancel or settle any debts (other than notes or accounts receivable, which are addressed in clause (xvii) below) owed to any Transferred Entity, other than in the ordinary course of business consistent with past practice;
(xiii) (A) make, change or revoke any Tax election or Tax accounting method, (B) amend any income Tax Return or other material Tax Return, (C) settle or compromise any material Tax Action, (D) enter into any closing agreement or similar agreement relating to Taxes, (E) otherwise settle any dispute relating to a material amount of Taxes, (F) surrender any right to claim a Tax refund, offset or other reduction in Tax liability, (G) request any ruling or similar guidance with respect to Taxes, (H) prepare or file any Tax Return materially inconsistent with past practice (except as required by applicable Tax law), or (I) consent to an extension or waiver of the limitation period applicable to any material Tax claim or assessment, in each case with respect to any Transferred Entity, except, in each case, with respect to Taxes or a Tax Return of a Seller Consolidated Group;
(xiv) liquidate, dissolve, recapitalize, reorganize or otherwise wind up the business or operations of, or fail to maintain the existence of, any Transferred Entity;
(xv) sell, pledgelease, place a Lien upon (other than a Permitted Lien)encumber, dispose of, permit to lapse, abandon, cancel, transfer, assign or grant any license or sublicense of any material rights under or with respect to any material Transferred Intellectual Property other than (A) non-exclusive licenses granted to customers of the Business in the ordinary course of business, (B) business or disclose any material trade secrets or other material confidential information that is part of the Transferred Intellectual Property other than in the ordinary course of business pursuant to Contracts a written confidentiality agreement;
(xvi) make any commitments for capital expenditures by the Transferred Entities in existence as excess of the date of this Agreement and disclosed budgets for the capital expenditure projects set forth on Section 6.01(b)(ix6.01(b) of the Disclosure LetterLetter except for those (A) reasonably required in the event of an emergency, disaster, catastrophe or other similar emergency condition to protect life, employee safety, property or the environment or comply with public health requirements applicable thereto or (CB) any Lien automatically released that don’t exceed $250,000 individually or $500,000 in full in connection with the Closingaggregate;
(xxvii) materially accelerate or delay collection of any notes or accounts receivable generated by the Business in advance of or beyond their regular due dates or the dates when the same would have been collected in the ordinary course of the business consistent with past practice;
(Axviii) renew, amend, voluntarily terminate or waive any right that is not immaterial material rights under or voluntarily terminate any Transferred Permit, Material Business Contract or Real Property Lease any Contract entered into after the date of this Agreement that would have been a Material Business Contract or Real Property Lease if in effect on the date of this Agreement, in each case, other than customary modifications in the ordinary course of business and except for renewals, terminations or expirations in accordance with the terms of any Material Business Contract or amendments that would not be adverse to the Business or (B) enter into any Contract that, if in effect on the date hereof, would be a Material Business Contract, other than purchase orders with customers, distributor and vendors, in each case, in the ordinary course of business;
(xi) except as set forth in the capital budget related to the Business made available to Purchaser prior to the date hereof and attached hereto as Annex A (the “Capital Budget”), (A) commit or authorize any commitment to make any capital expenditures in excess of $500,000 in the aggregate or (B) fail to make material capital expenditures or commitments substantially as provided by, and generally at the times and substantially in the aggregate amounts set forth in, the Capital Budget;
(xii) implement or announce any employee layoffs, furloughs, reductions-in-force, plant closings, furloughs, layoffs or other such actions that could implicate the WARN Act with respect to the Business Employees;
(xiii) waive or release any noncompetition, nonsolicitation, nondisclosure or other restrictive covenant obligation of any current or former employee (including any Business Employee) or independent contractor of the Business;
(xiv) disclose or escrow any trade secrets included in the Transferred Intellectual Property to any Person, other than pursuant to a valid and written Contract entered into in the ordinary course of business with reasonable protections of, and preserving all rights of the Business in such trade secrets and other confidential information;
(xv) change, modify, or revise the Specifications (as defined in the Supply Agreement) set forth in Schedule A-3 to the Supply Agreement;
(xvi) (A) make, change or rescind any material Tax election (other than in the ordinary course of business consistent with past practice), (B) change or adopt any Tax annual accounting period, Tax accounting or transfer pricing policy or practice, (C) settle or compromise any claim or assessment or enter into any closing agreement, (D) file any amended Tax Return, (E) settle or compromise any Tax audit, claim or assessment, (F) surrender or abandon any right to claim a material Tax refund, offset or other reduction in liability, or (G) extend or waive the applicable statute of limitation with respect to any Taxes or any Tax Return (other than any extension obtained in the ordinary course of business in connection with filing Tax Returns that does not require the consent of a Governmental Authority), in each case that is in respect of a material amount of Taxes and that would have effect on the Purchaser after the Closing; or
(xviixix) authorize any of, or commit or agree, in writing or otherwise, to take any of, the foregoing actions.
(c) Except as expressly contemplated or permitted by this Agreement or the other Transaction Documents or as required by applicable Law, Judgment or a Governmental Authority, during the period from the date of Notwithstanding anything in this Agreement to the contrary, the Purchaser acknowledges and agrees that on or prior to the Closing (or such earlier date on which this Agreement is terminated pursuant to Section 9.01)Date, each of the Seller and Purchaser or any of its Affiliates may (but shall not, and shall cause their respective Affiliates not have no obligation to, without the prior written consent of the other party, ) (i) take cause or consent to any action, Transferred Entity distributing Cash to the Seller or fail to take any action, in either case, that would reasonably be expected to result in any of the conditions to effect the Closing set forth in Article VIII to not be satisfied or its Affiliates, (ii) authorize cause (A) the repayment of Indebtedness and the extinguishment of Liens and (B) the settlement, capitalization or cancellation of any of, intercompany Indebtedness or commit or agreeintercompany Contracts, in writing or otherwise, to take any the case of the foregoing actions. For the avoidance of doubt, nothing in this Section 6.01(cclauses (A) shall expand the obligations addressed elsewhere in this Agreement, including as contemplated by Section 7.01.
and (dB) During the period from the date of this Agreement until the Closing clause (or such earlier date on which this Agreement is terminated pursuant to Section 9.01ii), in order to facilitate the event that the written specifications pursuant to which Seller and its Affiliates have manufactured and packaged the Products (as defined in the Supply Agreement) changes, is modified or is revised, or otherwise does not remain identical to the Specifications (as defined in and provided pursuant to the Supply Agreement), in each case, as consummation of the date hereof, Transactions or (iii) take the Seller shall promptly inform the Purchaser of such changes, modifications, revisions and the like in writing in reasonable detail and promptly respond in good faith to any reasonable written questions asked actions required by or on behalf of the Purchaser in response to such notice and subsequent communications.
(e) Section 7.18. For the avoidance of doubt, nothing contained in this Agreement is intended to give the Purchaser, directly or indirectly, the right to control or direct the Seller Group’s businessesbusiness, including, prior to the Closing, the Business. Prior to the Closing, the Seller Group shall exercise, consistent subject to compliance with the terms and conditions of this Agreement, complete control and supervision over its businesses and operations. The Seller shall use its commercially reasonable efforts to take or cause to take such actions as are reasonably necessary to prevent the occurrence of, or mitigate the existence of, emergency situations or to address (A) imminent or substantial risks to human health or safety or (B) material damage to the environment, Real Property, material equipment or other material assets of the Seller Group.
Appears in 1 contract
Sources: Purchase and Sale Agreement (Altra Industrial Motion Corp.)
Conduct of Business Before the Closing. (a) Except During the Pre-Closing Period, except (i) as required or prohibited (as applicable) by applicable Law, (ii) as expressly contemplatedcontemplated by the Transaction Agreements, required or permitted by this Agreement or the other Transaction Documents or (iii) as set forth on Schedule 6.01, (iv) in Section 6.01(a)(iii) of connection with any COVID-19 Measure (provided that, in the Disclosure Letter, during the period from the date case of this Agreement until the Closing clause (or such earlier date on which this Agreement is terminated pursuant to Section 9.01iv), unless Purchaser otherwise consents in writingdoing so is impracticable due to emergency or urgent circumstances, the Seller shall use provide advance notice to and reasonably consult with Buyer prior to (A) the taking of any action that would be prohibited or otherwise restricted by this Section 6.01(a) or (B) any failure to take any action if such failure would violate this Section 6.01(a)) or (v) as Buyer otherwise requests or consents to in writing in advance, which consent shall not be unreasonably withheld, conditioned or delayed, Seller will, and will cause its commercially reasonable efforts to carry on Subsidiaries to, (x) conduct the Business in all material respects in the ordinary course of business and preserve intact its present operations; provided that no action by Seller consistent with respect to matters specifically addressed by Section 6.01(b) shall be deemed to be a breach of this Section 6.01(a) unless such action would constitute a breach of Section 6.01(b).
(b) Except (i) as required by applicable Lawpast practice, (iiy) as expressly contemplateduse commercially reasonable efforts to (A) preserve substantially intact the existing material relationships of the Business with its employees, required or permitted by this Agreement or the customers, vendors, suppliers, contractors and other Transaction Documents or (iii) as set forth material business partners in the applicable subsection ordinary course of Section 6.01(bbusiness consistent with past practice, (B) keep available the services of the Disclosure LetterBusiness Employees and any Business Contractors of the Seller Parties who provide service to the Business in the ordinary course of business consistent with past practice, during (C) pay all maintenance and similar fees and take such other actions required in connection with the period from prosecution, registration, protection, enforcement and maintenance of Business Intellectual Property in the date of this Agreement until ordinary course consistent with past practice, (D) maintain in effect, in all material respects, all Permits Related to the Closing Business, including Product Authorizations, and (or such earlier date on which this Agreement is terminated pursuant to Section 9.01)E) maintain the Transferred Books and Records in the ordinary course consistent with past practice, unless Purchaser otherwise consents in writing and (such consent not to be unreasonably withheld, delayed or conditioned z) solely with respect to the matters set forth in clauses (i)Business and any Transferred Entities, (ii), (iv), (vii), (viii), (ix), (x) (xi), (xiii) and (xiv)), not do any of the Seller shall not, and shall cause the other Seller Entities not to (solely to the extent related to or that would reasonably otherwise affect the Business, the Transferred Assets (including any Included Shared Contract), the Applicable Contract, or the Assumed Liabilities):following:
(i) sell, lease, license, transfer, license, assign, abandon, cancel, mortgage, pledge, place a Lien upon (other than a Permitted Lien) acquire or otherwise dispose of any Transferred Asset or Shared Contract (excluding Business Intellectual Property) other than Intellectual Property, which is addressed in clause (ixA) below) with a value, individually or in the aggregate, in excess sales of One Hundred Thousand Dollars ($100,000), other than the sale or disposal of obsolete, worn-out or excess equipment or assets Inventory in the ordinary course of business consistent with past practice, (B) other sales, assignments, licenses, expirations or sales dispositions of goods assets, rights or services (x) properties with a value not exceeding $1,000,000 individually or $3,000,000 in the ordinary course of business aggregate or (yC) expiration of any contract or agreement pursuant to Contracts in existence as the terms thereof, provided that clauses (A)-(C) shall not include (i) the sale, lease, license, transfer, acquisition or disposal of any Transferred Real Property beyond the date expiration of this Agreement that are set forth on Section 6.01(b)(i) a Transferred Real Property Lease pursuant to the terms thereof or any sale, lease, license, transfer, acquisition or disposal of the Disclosure Letterany Product Authorization;
(ii) acquire any assets that would constitute Transferred Assets outside the ordinary course of business, except for assets with a value, individually business or in the aggregate, of less than Five Hundred Thousand Dollars ($500,000), pursuant to Contracts in existence as of the date of this Agreement that are set forth on Section 6.01(b)(ii) of the Disclosure Letter or capital expenditures included on the face of the Interim Financial Statements;
(iii) make any loans, advances (other than accounts receivable), capital contributions or investments, in each case that would constitute a Transferred Asset, to any Person outside the Seller Groupentity, other than pursuant to Contracts in existence as of the date of this Agreement that are set forth on Section 6.01(b)(iii) of the Disclosure Letter;
(iv) (A) adopt, enter into, negotiate, modify, enter into, extend, amend for an amount not exceeding $1,000,000 individually or terminate $3,000,000 in the aggregate (but which shall not include any (1) Assumed Benefit Plan, or (2) Seller Benefit Plan (other than actions that apply equally to Business Employees and other similarly-situated employees of Seller Groupreal property) or any other benefit or compensation plan, program policy, agreement, or arrangement that would be a Seller Benefit Plan if in effect on the date hereof or recognize or certify any labor union, labor organization, works council or group of employees as the bargaining representatives for any Business Employees, (B) increase or decrease, or commit to increase or decrease, the compensation or benefits purchases of any current or former Business Employee or other individual service provider of the Business except to the extent required by any CBA (other than in respect of increases in base salary Inventory in the ordinary course of business consistent with past practice or pursuant to existing contracts made available to Buyer prior to the Agreement Date;
(iii) (A) increase or commit to increase the wages, salaries, compensation, severance, bonuses, deferred compensation or incentives payable to any Business Employee in connection with Seller’s an annual compensation and performance review processbase salary above $50,000 or (B) establish, adopt, terminate, amend, increase or promise to increase any benefits, or accelerate any vesting or time of payment, under any Business Employee Plan or to any Business Employee, except, in each case, so long as such increase does not exceed 5% of such Person’s then-current base salary), (C) grant required by Law or commit to grant to any current or former Business Employee or other individual service provider of the Business any bonus, incentive, equity or equity-based or phantom equity awards or remove or modify existing restrictions in any such awards made to any current or former Business Employee or other individual service provider of the Business, except pursuant to the extent required by any CBA; (D) take any action to accelerate the vesting or payment, or the funding, of any compensation, or benefits, equity or equity-based or phantom equity awards, retention or severance for any current or former Business Employee or other individual service provider of the Business, (E) terminate (other than for “cause”) the employment or service written terms of any Business Employee or other individual service provider of the Business whose annual base compensation exceeds $100,000, or (F) hire any employee as a Business Employee or other individual service provider whose annual base compensation is expected to exceed $100,000 or hire any Business Employee or other individual service provider to fill a vacant role or position, in each case, except (1) as required by the existing terms as of the date hereof of any Seller Benefit Plan in existence on the Agreement Date and made available to Buyer;
(iv) make any change in any method of accounting or accounting methodology, practice or policy used by the Business in the preparation of its financial statements, other than such changes as are consistent with the Transaction Accounting Principles or changes required by GAAP or applicable Law or other changes adopted by Seller to generally apply to all or substantially all of the date hereof that is set forth on Section 4.11(a) of the Disclosure Letter; or (2) expressly required under the terms of Section 7.06 of this Agreementits businesses;
(v) transfer internally, or otherwise materially alter the duties and responsibilities of, any individual (except, in either case, if required under a CBA) (A) who is a Business Employee, such that such individual is no longer primarily engaged in the Business, or (B) who is not a Business Employee, such that such individual is primarily engaged in the Business;
(vi) (A) make any material changes in financial accounting methods, principles or practices relating to the Business other than as may be required by GAAP (or any interpretation thereof) or by any applicable Law, (B) accelerate the collection or discount of accounts receivable, delay the payment of accounts payable or accrued expenses, or (C) take any action that would reasonably be expected to have the effect of accelerating to pre-Closing periods sales to customers or others that would otherwise be expected to occur after the Closing, in each case of (B) and (C) outside the ordinary course of business or pursuant to the Contracts in existence as of the date of this Agreement that are set forth on Section 6.01(b)(vi) of the Disclosure Letter;
(vii) (A) commence any Action or (B) enter into any settlement or release with respect to any Action or enter into any consent decree or settlement agreement with any Governmental Authority relating to the Business, other than (A) any settlement or release (x) that involves no finding or admission of any wrongdoing on Action reflected or reserved against in the part Unaudited Statements of the BusinessBusiness to the extent that, with respect to any such matter, the settlement payment does not exceed the applicable amount reflected or reserved against in the Unaudited Statements of the Business and (yB) any other settlement or release that contemplates only the payment of money without in an amount not exceeding $1,000,000 individually and $3,000,000 in the aggregate;
(vi) after formation of any ongoing limits on the conduct Transferred Entity, amend any Governing Documents thereof;
(vii) adopt a plan of complete or operation partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization, bankruptcy or other reorganization under applicable Law of any of the Business and (z) that results in a full, complete and irrevocable release of the claims giving rise to such Action by all plaintiffs and all related parties in favor of the Business, and, in any event, does not result in any non-monetary Liability to the Business following the ClosingTransferred Entities;
(viii) knowingly waive acquire by merging or consolidating with, or by purchasing a substantial equity interest in or substantial portion of the assets of, any material claims Person or rights division thereof, in each case if the assets of material value that constitute such entity would be included in the Transferred Assets;
(ix) (A) issue, sell, pledgegrant, place a Lien upon (other than a Permitted Lien)deliver, dispose ofof or otherwise transfer, permit or offer to do any of the foregoing with respect to, any shares of capital stock or other equity interests of any of the Transferred Entities, or any securities convertible into or exchangeable or exercisable for, or options with respect to, or warrants to purchase or rights to subscribe for, any shares of capital stock or other equity interests of any of the Transferred Entities, (B) split, combine, redeem or reclassify any shares of capital stock or other equity interests of any of the Transferred Entities, or any securities convertible into or exchangeable or exercisable for, or options with respect to, or warrants to purchase or rights to subscribe for, any shares of capital stock or other equity interests of any of the Transferred Entities or (C) declare or pay any non-cash dividends or make non-cash distributions or other transfers in respect of any shares of capital stock or other equity interests of any of the Transferred Entities;
(x) grant any Lien on the Transferred Equity Interests or, except for Permitted Liens, grant any Lien on any Transferred Asset (whether tangible or intangible);
(xi) sell, lease, transfer, assign, license, sublicense or allow to lapse, abandon, cancel, transfer, assign expire or grant any license abandon or sublicense otherwise relinquish or dispose of any rights under or Business Intellectual Property, except for the expiration of Business Intellectual Property in accordance with respect its statutory terms and except pursuant to any material Transferred Intellectual Property other than (A) agreement entered into by a Seller Party granting a non-exclusive licenses granted license to customers of the Business Intellectual Property in the ordinary course of businessbusiness consistent with past practices where the grant of rights to such Business Intellectual Property is incidental, and not material, to performance under such agreement;
(xii) make aggregate capital expenditures in excess of 110 % of the applicable capital expenditure budget set forth on Schedule 6.01(a)(xii) (the “Capex Budget”), except for unanticipated capital expenditures that are necessary to maintain the value or functionality of the facilities of the Business (whether as a result of casualty or otherwise and whether or not covered by insurance);
(xiii) (A) incur any Debt with respect to the Business, any of the Transferred Entities, or any of the Transferred Assets other than any Debt that constitutes Excluded Liabilities or (B) pursuant make any loans or advances to Contracts in existence as of the date of this Agreement and disclosed on Section 6.01(b)(ix) of the Disclosure Letter, or (C) any Lien automatically released in full other Person in connection with the Closing;
(x) (A) amend, waive any right that is not immaterial under or voluntarily terminate any Transferred Permit, Material Business Contract or any Contract entered into after the date of this Agreement that would have been a Material Business Contract if in effect on the date of this AgreementBusiness, in each case, except for renewals, terminations in excess of $1,000,000 individually or expirations $4,000,000 in accordance with the terms of any Material Business Contract or amendments that would not be adverse to the Business or (B) enter into any Contract that, if in effect on the date hereof, would be a Material Business Contractaggregate, other than purchase orders with customersroutine advances to employees and consultants for business expenses, distributor or extensions of trade credit and vendorssupplier advances, in each case, in the ordinary course of businessbusiness consistent with past practice;
(xixiv) except as set forth in the capital budget related to the Business made available to Purchaser prior to the date hereof and attached hereto as Annex A (the “Capital Budget”), (A) commit enter into, amend, extend or authorize terminate any commitment to make CBA (other than ordinary course of business negotiations consistent with past practice involving any capital expenditures in excess of $500,000 in the aggregate labor union, works council, or equivalent Employee Representative Body representing any Business Employees) or (B) fail to make material capital expenditures voluntarily recognize or commitments substantially certify any labor union or organization, works council, or group of employees as provided by, and generally at the times and substantially in the aggregate amounts set forth in, the Capital Budget;
(xii) implement or announce bargaining representative for any employee layoffs, furloughs, reductions-in-force, plant closings, furloughs, layoffs or other such actions that could implicate the WARN Act with respect to the Business Employees;
(xiiixv) waive (A) hire or release terminate (other than for “cause”) any noncompetitionBusiness Employee with annual base compensation above $50,000 or (B) implement or effect any reduction in force, nonsolicitationlay-off, nondisclosure early retirement program, severance or other restrictive covenant obligation program concerning the termination of any current or former employee (including any employment of Business Employee) or independent contractor of the BusinessEmployees;
(xivA) disclose accelerate the delivery or escrow sale of Products (including in any trade secrets included in manner constituting “channel stuffing” or “front loading” of products), or offer material discounts or material price protection on the Transferred Intellectual Property to any Personsale of Products, other than pursuant such offer discounts or price protection similar in value to those outstanding at Closing or such offer discounts or price protection similar to those offered by competitors, (B) make any material changes in the selling, distribution, advertising, promotion, terms of sale or collection, purchase or payment practices with respect to any of the Products, or (C) purchase, order or otherwise acquire Inventory in excess of reasonably forecasted requirements;
(xvii) (A) assign, amend any material term of, or waive any material right under, or voluntarily terminate any Material Contract, or (B) enter into any agreement that, if existing on the Agreement Date, would be a valid Material Contract, in each case of clauses (A) and written (B), other than (x) entering into a purchase order with a Material Customer or Material Supplier or (y) renewing any such Material Contract entered into upon the same terms and conditions as in effect as of the date hereof, in each case clause (x) and (y), in the ordinary course of business consistent with reasonable protections of, and preserving all rights of the Business in such trade secrets and other confidential informationpast practice;
(xvxviii) changetransfer any tangible Transferred Asset physically located at the premises of a Transferred Real Property to any Retained Real Property, modify, or revise the Specifications (as defined in the Supply Agreement) set forth in Schedule A-3 to the Supply Agreement;
(xvi) (A) make, change or rescind any material Tax election (other than in the ordinary course of business consistent with past practice), (B) change or adopt any Tax annual accounting period, Tax accounting or transfer pricing policy or practice, (C) settle or compromise any claim or assessment or enter into any closing agreement, (D) file any amended Tax Return, (E) settle or compromise any Tax audit, claim or assessment, (F) surrender or abandon any right to claim a material Tax refund, offset or other reduction in liability, or (G) extend or waive the applicable statute of limitation with respect to any Taxes or any Tax Return (other than any extension obtained in the ordinary course of business in connection with filing Tax Returns that does not require the consent of a Governmental Authority), in each case that is in respect of a material amount of Taxes and that would have effect on the Purchaser after the Closing; or
(xviixix) authorize enter into any oflegally binding agreement with respect to, or commit or agreeto do, any of the foregoing.
(b) Notwithstanding anything in writing or otherwise, this Agreement to take any ofthe contrary, the foregoing actionsbank accounts maintained by the Seller Parties in connection with the Business shall continue to be subject to the Seller Parties daily cash sweep in its sole discretion.
(c) Except as expressly contemplated or permitted by this Agreement or Notwithstanding the other Transaction Documents or as required by applicable Law, Judgment or a Governmental Authority, during the period from the date of this Agreement to the Closing (or such earlier date on which this Agreement is terminated pursuant to Section 9.01), each of the Seller and Purchaser shall not, and shall cause their respective Affiliates not to, without the prior written consent of the other party, (i) take any action, or fail to take any action, in either case, that would reasonably be expected to result in any of the conditions to effect the Closing set forth in Article VIII to not be satisfied or (ii) authorize any of, or commit or agree, in writing or otherwise, to take any of the foregoing actions. For the avoidance of doubt, nothing in this Section 6.01(c) shall expand the obligations addressed elsewhere in this Agreement, including as contemplated by Section 7.01.
(d) During the period from the date of this Agreement until the Closing (or such earlier date on which this Agreement is terminated pursuant to Section 9.01), in the event that the written specifications pursuant to which Seller and its Affiliates have manufactured and packaged the Products (as defined in the Supply Agreement) changes, is modified or is revised, or otherwise does not remain identical to the Specifications (as defined in and provided pursuant to the Supply Agreement), in each case, as of the date hereof, the Seller shall promptly inform the Purchaser of such changes, modifications, revisions and the like in writing in reasonable detail and promptly respond in good faith to any reasonable written questions asked by or on behalf of the Purchaser in response to such notice and subsequent communications.
(e) For the avoidance of doubtforegoing, nothing contained in this Agreement is intended to herein will give PurchaserBuyer, directly or indirectly, the right rights to control or direct the Seller Group’s businesses, including, prior to the Closing, the Business. Prior to the Closing, operations of the Seller Group shall Parties or the Business during the Pre-Closing Period. During the Pre-Closing Period, Seller will exercise, consistent with the terms and conditions of this Agreementhereof, complete control and supervision over of its businesses and the other Seller Parties’ respective operations.
Appears in 1 contract
Sources: Asset Purchase Agreement (Elanco Animal Health Inc)
Conduct of Business Before the Closing. (a) Except (i) as required by applicable Law, (ii) as expressly contemplated, required or permitted by this Agreement or the other Transaction Documents or (iii) as set forth in Section 6.01(a)(iii) of the Disclosure Letter, during 5.1 During the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement in accordance with its terms and the Closing (the “Pre-Closing Period”), except (a) as set forth on Schedule 5.1 of the Seller Disclosure Schedule, (b) as expressly permitted by the terms of this Agreement, or such earlier date on which this Agreement is terminated pursuant to Section 9.01)(c) as required by Applicable Law, unless Purchaser shall otherwise consents consent to in writingwriting (which shall not be unreasonably withheld, conditioned or delayed), Seller shall, and shall cause the other members of the Seller shall Group to, use its commercially their reasonable best efforts to carry on (i) continue to own and use the Purchased Assets and to conduct and operate the Business in all material respects in the ordinary course of business consistent with past practice, (ii) preserve the present goodwill of the Purchased Assets, (iii) not engage in any extraordinary transaction involving Seller or any other member of the Seller Group that would reasonably be expected to materially impact the Purchased Assets, (iv) not engage in any action that would reasonably be expected to impair or impact the rights of Purchaser from and preserve intact its present operations; provided that no action after the Closing under the Patent Portfolio License Agreement or the 5G License Agreement as they relate to any Intellectual Property Used by Seller with respect to matters specifically addressed by Section 6.01(b) shall be deemed to be a breach as of the date of this Section 6.01(aAgreement and immediately prior to the Closing that will be subject to the Patent Portfolio License Agreement or the 5G License Agreement, (v) unless such not engage in any action that would result in a Source Code Disclosure or the release, disclosure or delivery to any Person of any Seller Source Code, or otherwise permit any Person to convey, license, sublicense, or otherwise alienate any Seller Source Code, and (vi) not engage in any action that would constitute a breach of Section 6.01(b)the Acquired IP License Agreement if the Acquired IP License Agreement were in effect as of the date hereof.
5.2 Without limiting the generality of Section 5.1, during the Pre-Closing Period, except (bx) Except as set forth on Schedule 5.2 of the Seller Disclosure Schedule, (iy) as expressly permitted by the terms of this Agreement, or (z) as required by applicable Applicable Law, (ii) as expressly contemplated, required or permitted by this Agreement or the other Transaction Documents or (iii) as set forth in the applicable subsection of Section 6.01(b) of the Disclosure Letter, during the period from the date of this Agreement until the Closing (or such earlier date on which this Agreement is terminated pursuant to Section 9.01), unless Purchaser shall otherwise consents consent to in writing (such consent which shall not to be unreasonably withheld, delayed conditioned or conditioned with respect to the matters set forth in clauses (idelayed), (ii), (iv), (vii), (viii), (ix), (x) (xi), (xiii) and (xiv)), the Seller shall not, and shall cause the other members of the Seller Entities Group not to to, take any of the following actions:
(solely to the extent related to or that would reasonably otherwise affect the Business, the Transferred Assets (including any Included Shared Contract), the Applicable Contract, or the Assumed Liabilities):
a) (i) sell, lease, transfer, license, assign, abandon, cancel, mortgage, pledge, place a Lien upon (other than a Permitted Lien) or otherwise dispose of enter into any Transferred Asset or Shared Contract (other than Intellectual Property, which is addressed in clause (ix) below) with a value, individually or in the aggregate, in excess of One Hundred Thousand Dollars ($100,000), other than the sale or disposal of obsolete, worn-out or excess equipment or assets in the ordinary course of business or sales of goods or services (x) in the ordinary course of business or (y) pursuant to Contracts in existence as of the date of this Agreement that are set forth on Section 6.01(b)(i) of the Disclosure Letter;
(ii) acquire any assets that would constitute Transferred Assets outside the ordinary course of business, except for assets with have been a value, individually or in the aggregate, of less than Five Hundred Thousand Dollars ($500,000), pursuant to Contracts in existence as of the date of this Agreement that are set forth on Section 6.01(b)(ii) of the Disclosure Letter or capital expenditures included on the face of the Interim Financial Statements;
(iii) make any loans, advances (other than accounts receivable), capital contributions or investments, in each case that would constitute a Transferred Asset, to any Person outside the Seller Group, other than pursuant to Contracts in existence as of the date of this Agreement that are set forth on Section 6.01(b)(iii) of the Disclosure Letter;
(iv) (A) adopt, enter into, negotiate, modify, enter into, extend, amend or terminate any (1) Assumed Benefit Plan, or (2) Seller Benefit Plan (other than actions that apply equally to Business Employees and other similarly-situated employees of Seller Group) or any other benefit or compensation plan, program policy, agreement, or arrangement that would be a Seller Benefit Plan Material Contract if in effect on the date hereof or recognize or certify any labor union, labor organization, works council or group of employees as the bargaining representatives for any Business Employees, (B) increase or decrease, or commit to increase or decrease, the compensation or benefits of any current or former Business Employee or other individual service provider of the Business except to the extent required by any CBA (other than in respect of increases in base salary in the ordinary course of business consistent with past practice to any Business Employee in connection with Seller’s annual compensation and performance review process, in each case, so long as such increase does not exceed 5% of such Person’s then-current base salary), (C) grant or commit to grant to any current or former Business Employee or other individual service provider of the Business any bonus, incentive, equity or equity-based or phantom equity awards or remove or modify existing restrictions in any such awards made to any current or former Business Employee or other individual service provider of the Business, except to the extent required by any CBA; (D) take any action to accelerate the vesting or payment, or the funding, of any compensation, or benefits, equity or equity-based or phantom equity awards, retention or severance for any current or former Business Employee or other individual service provider of the Business, (E) terminate (other than for “cause”) the employment or service of any Business Employee or other individual service provider of the Business whose annual base compensation exceeds $100,000, or (F) hire any employee as a Business Employee or other individual service provider whose annual base compensation is expected to exceed $100,000 or hire any Business Employee or other individual service provider to fill a vacant role or position, in each case, except (1) as required by the existing terms as of the date hereof of any Seller Benefit Plan in existence as of the date hereof that is set forth on Section 4.11(a) of the Disclosure Letterthis Agreement; or (2ii) expressly required under the terms of Section 7.06 of this Agreement;
(v) transfer internallyamend, modify, terminate, fail to renew, or otherwise materially alter the duties and responsibilities of, waive or grant any individual (except, in either case, if required right or consent under a CBA) (A) who is a Business Employee, such that such individual is no longer primarily engaged in the Business, or (B) who is not a Business Employee, such that such individual is primarily engaged in the Business;
(vi) (A) make any material changes in financial accounting methods, principles or practices relating to the Business other than as may be required by GAAP (or any interpretation thereof) or by any applicable Law, (B) accelerate the collection or discount of accounts receivable, delay the payment of accounts payable or accrued expenses, or (C) take any action that would reasonably be expected to have the effect of accelerating to pre-Closing periods sales to customers or others that would otherwise be expected to occur after the Closing, in each case provision of (B) and (C) outside the ordinary course of business or pursuant to the Contracts in existence as including taking any of the date of this Agreement that are set forth on Section 6.01(b)(vi) of the Disclosure Letter;
(vii) (A) commence any Action or (B) enter into any settlement or release with respect to any Action or enter into any consent decree or settlement agreement with any Governmental Authority relating to the Business, other than any settlement or release (x) that involves no finding or admission of any wrongdoing on the part of the Business, (y) that contemplates only the payment of money without any ongoing limits on the conduct or operation of the Business and (z) that results foregoing actions which would result in a full, complete and irrevocable release reduction or diminution of the claims giving rise to such Action by all plaintiffs and all related parties rights in favor of the Business, and, in any event, does not result in any non-monetary Liability to the Business following the Closing;
(viii) knowingly waive any material claims or rights of material value that constitute Transferred Assets;
(ix) sell, pledge, place a Lien upon (other than a Permitted LienSeller Group), dispose of, permit to lapse, abandon, cancel, transfer, assign or grant any license or sublicense of any rights under or with respect to any material Transferred Intellectual Property other than (A) non-exclusive licenses granted to customers of the Business in the ordinary course of business, (B) pursuant to Contracts in existence as of the date of this Agreement and disclosed on Section 6.01(b)(ix) of the Disclosure Letter, or (C) any Lien automatically released in full in connection with the Closing;
(x) (A) amend, waive any right that is not immaterial under or voluntarily terminate any Transferred Permit, Material Business Contract or any Contract entered into after the date of this Agreement that would have been a Material Business Contract if in effect on the date of this Agreement, in each case, except for renewals, terminations other than pursuant to any automatic extension or expirations renewal or expiration in accordance with the terms of any such Material Business Contract or amendments Contract; provided that the restrictions imposed by this Section 5.2(a) shall only apply to such Material Contract or Contract which would not reasonably be adverse expected to impair or impact (A) Purchaser’s ownership or use of the Business Purchased Assets or (B) the rights of Purchaser from and after the Closing under the Patent Portfolio License Agreement or the 5G License Agreement as they relate to any Intellectual Property Used by Seller as of the date of this Agreement and immediately prior to the Closing that will be subject to the Patent Portfolio License Agreement or the 5G License Agreement;
(b) sell, lease (or sublease), transfer, license, assign, abandon, cancel or otherwise dispose of or place an Encumbrance (other than a Permitted Encumbrance) upon any of the Purchased Assets or any of the Intellectual Property subject to the Patent Portfolio License Agreement or the 5G License Agreement;
(c) acquire any material assets that would constitute a Purchased Asset;
(d) enter into any Contract that, if in effect settlement of any pending or threatened Action containing continuing obligations or restrictions on the date hereof, would be a Material Business Contract, other than purchase orders with customers, distributor and vendorsPurchased Assets or the Intellectual Property subject to the Patent Portfolio License Agreement or the 5G License Agreement, in each case, in from and following the ordinary course of businessClosing;
(xie) except as set forth in the capital budget related to the Business made available to Purchaser prior to the date hereof and attached hereto as Annex A (the “Capital Budget”), (Ai) commit amend or authorize terminate any commitment to make Seller Employee Plan or adopt any capital expenditures in excess of $500,000 in the aggregate plan that would constitute a Seller Employee Plan or (B) fail to make material capital expenditures collective bargaining agreement or commitments substantially as provided by, and generally at the times and substantially in the aggregate amounts set forth in, the Capital Budget;
(xii) implement or announce any employee layoffs, furloughs, reductions-in-force, plant closings, furloughs, layoffs or other such actions that could implicate the WARN Act works council with respect to any Identified Employee, (ii) hire any new employee, promote, transfer internally, terminate or otherwise change the Business Employees;
employment status or position or otherwise alter the duties and responsibilities of, any Identified Employee, (xiiiiii) waive other than ordinary course annual salary increases, increase the annual compensation level of any Identified Employee or release grant any noncompetitionseverance arrangements or any unusual or extraordinary bonuses, nonsolicitation, nondisclosure benefits or other restrictive covenant obligation forms of any current direct or former employee (including any Business Employee) or independent contractor of the Business;
(xiv) disclose or escrow any trade secrets included in the Transferred Intellectual Property to any Person, other than pursuant to a valid and written Contract entered into in the ordinary course of business with reasonable protections of, and preserving all rights of the Business in such trade secrets and other confidential information;
(xv) change, modifyindirect compensation, or revise the Specifications (as defined in the Supply Agreementiv) set forth in Schedule A-3 to the Supply Agreement;
(xvi) (A) make, change or rescind any material Tax election (other than in the ordinary course of business consistent with past practice), (B) change or adopt any Tax annual accounting period, Tax accounting or transfer pricing policy or practice, (C) settle or compromise any claim or assessment recognize or enter into any closing agreementagreement with any works council, (D) file any amended Tax Returnunion, (E) settle or compromise any Tax auditlabor organizations, claim or assessment, (F) surrender or abandon any right to claim a material Tax refund, offset or other reduction in liability, or (G) extend or waive the applicable statute of limitation with respect to any Taxes or any Tax Return (other than any extension obtained in the ordinary course of business in connection with filing Tax Returns that does not require the consent of a Governmental Authority), in each case that is in respect of a material amount of Taxes and that would have effect on the Purchaser after the Closingemployee representative body; or
(xviif) authorize any ofauthorize, or commit or agree, in writing or otherwise, to take do any ofof the foregoing; provided that, in relation to the foregoing actions.
(c) Except as expressly contemplated or permitted by this Intellectual Property subject to the Patent Portfolio License Agreement or the other Transaction Documents 5G License Agreement, the restrictions imposed by this Section 5.2 shall only apply where such action would reasonably be expected to impair or impact the rights of Purchaser from and after the Closing under the Patent Portfolio License Agreement or the 5G License Agreement as required they relate to any Intellectual Property Used by applicable Law, Judgment or a Governmental Authority, during the period from Seller as of the date of this Agreement and immediately prior to the Closing (or such earlier date on which this Agreement is terminated pursuant to Section 9.01), each of the Seller and Purchaser shall not, and shall cause their respective Affiliates not to, without the prior written consent of the other party, (i) take any action, or fail to take any action, in either case, that would reasonably will be expected to result in any of the conditions to effect the Closing set forth in Article VIII to not be satisfied or (ii) authorize any of, or commit or agree, in writing or otherwise, to take any of the foregoing actions. For the avoidance of doubt, nothing in this Section 6.01(c) shall expand the obligations addressed elsewhere in this Agreement, including as contemplated by Section 7.01.
(d) During the period from the date of this Agreement until the Closing (or such earlier date on which this Agreement is terminated pursuant to Section 9.01), in the event that the written specifications pursuant to which Seller and its Affiliates have manufactured and packaged the Products (as defined in the Supply Agreement) changes, is modified or is revised, or otherwise does not remain identical subject to the Specifications (as defined in and provided pursuant to Patent Portfolio License Agreement or the Supply 5G License Agreement), in each case, as of the date hereof, the Seller shall promptly inform the Purchaser of such changes, modifications, revisions and the like in writing in reasonable detail and promptly respond in good faith to any reasonable written questions asked by or on behalf of the Purchaser in response to such notice and subsequent communications.
(e) For the avoidance of doubt, nothing contained in this Agreement is intended to give Purchaser, directly or indirectly, the right to control or direct the Seller Group’s businesses, including, prior to the Closing, the Business. Prior to the Closing, the Seller Group shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its businesses and operations.
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