Conduct of Business by Target. Except as set forth in Section 4.01(a) of the Target Disclosure Schedule, as otherwise expressly contemplated by this Agreement or as consented to in writing by Parent, during the period from the date of this Agreement to the Effective Time, Target shall carry on its business only in the ordinary course consistent with past practice and in compliance in all material respects with all applicable laws and regulations and, to the extent consistent therewith, use all reasonable efforts to preserve intact its current business organization, use reasonable efforts to keep available the services of its current officers and other key employees and preserve its relationships with those persons having business dealings with it to the end that its goodwill and ongoing business shall be unimpaired at the Effective Time. Without limiting the generality of the foregoing (but subject to the above exceptions), during the period from the date of this Agreement to the Effective Time, Target shall not, without the prior written consent of Parent, which consent shall not be unreasonably withheld: (i) (x) declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock, property or otherwise) in respect of, any of its capital stock, (y) split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, or (z) purchase, redeem or otherwise acquire, directly or indirectly, any shares of capital stock of Target or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities; (ii) issue, deliver, sell, pledge or otherwise encumber or subject to any Lien (w) any shares of its capital stock, (x) any other voting securities, (y) any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or (z) any "phantom" stock or stock rights, SARs or stock-based performance units other than (A) the issuance of Target Stock Options granted in the ordinary course of business consistent with past practice to new or promoted employees, so long as (I) the vesting of such Target Stock Options will not accelerate as a result of this Agreement, the Target Stockholder Agreement or the transactions contemplated hereby or thereby and (II) the exercise of such Target Stock Options would not result in the Target Stockholders failing to hold of record more than 50% of the outstanding shares of Target Common Stock (calculated on a fully diluted basis assuming the exercise of all outstanding securities of Target that are then, or may become on or prior to August 31, 2000, convertible into or exchangeable or exercisable for, shares of capital stock or other voting securities of Target), and (B) the issuance of Target Common Stock upon the exercise of Target Stock Options or the Warrants outstanding as of the date hereof in accordance with their present terms, or upon the exercise of Target Stock Options referred to in clause (A) in accordance with their terms; (iii) amend Target's certificate of incorporation or by-laws; (iv) acquire or agree to acquire by merging or consolidating with, or by purchasing assets of, or by any other manner, any business or any person; (v) sell, lease, license, sell and leaseback, mortgage or otherwise encumber or subject to any Lien or otherwise dispose of any of its properties or assets (including securitizations), other than sales or licenses of finished goods or services in the ordinary course of business consistent with past practice; (vi) incur any indebtedness in excess of an aggregate principal amount of $250,000 for borrowed money or guarantee any such indebtedness of another person, issue or sell any debt securities or warrants or other rights to acquire any debt securities of Target, guarantee any debt securities of another person, enter into any "keep well" or other agreement to maintain any financial statement condition of another person or enter into any arrangement having the economic effect of any of the foregoing, except for short-term borrowings incurred in the ordinary course of business (or to refund existing or maturing indebtedness) consistent with past practice; 56 50 (vii) make any loans, advances or capital contributions to, or investments in, any other person; (viii) make or agree to make any new capital expenditures, or enter into any agreements providing for payments which, individually, are in excess of $500,000 or, in the aggregate, are in excess of $5,000,000; (ix) make any tax election that, individually or in the aggregate, is reasonably likely to adversely affect in any material respect the tax liability or tax attributes of Target or settle or compromise any material income tax liability; (A) pay, discharge, settle or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), or litigation (whether or not commenced prior to the date of this Agreement) other than the payment, discharge, settlement or satisfaction, in the ordinary course of business consistent with past practice or in accordance with their terms, of liabilities recognized or disclosed in the most recent financial statements (or the notes thereto) of Target included in the Target Filed SEC Documents or incurred since the date of such financial statements, or (B) waive the benefits of, agree to modify in any manner, terminate, release any person from or fail to enforce any confidentiality, standstill or similar agreement to which Target is a party or of which Target is a beneficiary; (xi) except as required by law or contemplated hereby and except for labor agreements negotiated in the ordinary course, (x) establish, enter into, adopt or amend or terminate any Target Benefit Plan or Target Benefit Agreement, (y) change any actuarial or other assumption used to calculate funding obligations with respect to any Target Pension Plan, or change the manner in which contributions to any Target Pension Plan are made or the basis on which such contributions are determined or (z) take any action to accelerate any rights or benefits, or make any material determinations not in the ordinary course of business consistent with past practice, under any collective bargaining agreement, Target Benefit Plan or Target Benefit Agreement; (xii) (w) increase the compensation, bonus or other benefits of any current or former director, consultant, officer or other employee, except for (A) salary increases for non-officer employees as part of an annual review process or part of a promotion in job title or responsibility in an amount not to exceed 15% of such employee's salary as of the date of this Agreement individually and 5% of the total salary base of all non-officer employees of Target in the aggregate for all such increases or (B) salary increases for officers consistent with the salary for the respective officer set forth in such officer's Employment Agreement with Parent, (x) grant any current or former director, consultant, officer or other employee any increase in severance or termination pay, (y) amend or modify any Target Stock Option or (z) pay any benefit or amount not required by a plan or arrangement as in effect on the date of this Agreement to any such person;
Appears in 1 contract
Sources: Merger Agreement (Exactis Com Inc)
Conduct of Business by Target. Except as set forth in Section 4.01(a) of Pending the Merger. Target Disclosure Schedulecovenants and agrees that, as otherwise expressly contemplated by this Agreement or as consented to in writing by Parent, during the period from between the date of this Agreement to and the Effective Time, unless Acquiror shall otherwise agree in writing, the business of Target shall carry on its business be conducted only in in, and Target shall not take any action except in, the ordinary course of business and in a manner consistent with past practice practice; and in compliance in all material respects with all applicable laws and regulations and, to the extent consistent therewith, Target shall use all reasonable its best efforts to preserve substantially intact its current the business organizationorganization of Target, use reasonable efforts to keep available the services of its current officers the present officers, employees and consultants of Target and to preserve the present relationships of Target with customers, suppliers and other key employees persons with which Target has significant business relations. By way of amplification and preserve its relationships with those persons having business dealings with it to the end that its goodwill and ongoing business shall be unimpaired at the Effective Time. Without limiting the generality of the foregoing (but subject to the above exceptions)not limitation, during the period from the date of except as contemplated by this Agreement to the Effective TimeAgreement, Target shall not, directly or indirectly, do, or propose to do, any of the following without the prior written consent of ParentAcquiror, which consent shall not be unreasonably withheld:
(a) amend or otherwise change its Articles of Incorporation or Bylaws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, encumber or authorize the issuance, sale, pledge, disposition or encumbrance of (i) any shares of capital stock of any class, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of capital stock, or any other ownership interest, of Target or (xii) any assets of Target or any other material assets of Target other than in the ordinary course of business consistent with past practices;
(c) declare, set aside aside, make or pay any dividends ondividend or other distribution, or make any other distributions (whether payable in cash, stock, property or otherwise) in , with respect of, to any of its capital stock;
(d) reclassify, (y) combine, split, combine subdivide or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect ofredeem, in lieu of or in substitution for shares of its capital stock, or (z) purchase, redeem purchase or otherwise acquire, directly or indirectly, any shares of capital stock of Target or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber or subject to any Lien (w) any shares of its capital stock;
(i) acquire (by merger, (xconsolidation or acquisition of stock or assets) any corporation, partnership or other voting securitiesbusiness organization or division thereof; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, (y) guaranty or endorse or otherwise as an accommodation become responsible for, the obligations of any securities convertible intoperson, or make any rightsloans or advances, warrants or options to acquire, any such shares, voting securities or convertible securities or (z) any "phantom" stock or stock rights, SARs or stock-based performance units other than (A) the issuance of Target Stock Options granted except in the ordinary course of business and consistent with past practice practice; (iii) authorize any single capital expenditure which is in excess of $5,000 or capital expenditures which are, in the aggregate, in excess of $10,000 for Target; or (iv) enter into or amend any contract, agreement, commitment or arrangement to new any of the effects set forth in this subparagraph (e);
(f) increase the compensation payable or promoted to become payable to its officers or employees, so long as (I) the vesting except for increases in salary or wages of such Target Stock Options will not accelerate as a result of this Agreement, the Target Stockholder Agreement or the transactions contemplated hereby or thereby and (II) the exercise of such Target Stock Options would not result in the Target Stockholders failing to hold of record more than 50% of the outstanding shares employees of Target Common Stock (calculated on a fully diluted basis assuming the exercise of all outstanding securities who are not officers of Target that are then, or may become on or prior to August 31, 2000, convertible into or exchangeable or exercisable for, shares of capital stock or other voting securities of Target), and (B) the issuance of Target Common Stock upon the exercise of Target Stock Options or the Warrants outstanding as of the date hereof in accordance with their present termspast practices, or upon grant any severance or termination pay to, or enter into any employment or severance agreement with, any director or officer of Target, or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the exercise benefit of Target Stock Options referred to in clause (A) in accordance with their termsany directors, officers or employees;
(iiig) amend Target's certificate of incorporation or by-laws;
(iv) acquire or agree to acquire by merging or consolidating with, or by purchasing assets of, or by take any other manner, any business or any person;
(v) sell, lease, license, sell and leaseback, mortgage or otherwise encumber or subject to any Lien or otherwise dispose of any of its properties or assets (including securitizations), action other than sales or licenses of finished goods or services in the ordinary course of business and in a manner consistent with past practicepractice with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payments of accounts payable and collection of accounts receivable);
(vih) incur any indebtedness in excess of an aggregate principal amount of $250,000 for borrowed money or guarantee any such indebtedness of another person, issue or sell any debt securities or warrants or other rights to acquire any debt securities of Target, guarantee any debt securities of another person, enter into any "keep well" or other agreement to maintain any financial statement condition of another person or enter into any arrangement having the economic effect of any of the foregoing, except for short-term borrowings incurred in the ordinary course of business (or to refund existing or maturing indebtedness) consistent with past practice; 56 50
(vii) make any loans, advances or capital contributions to, or investments in, any other person;
(viii) make or agree to make any new capital expenditures, or enter into any agreements providing for payments which, individually, are in excess of $500,000 or, in the aggregate, are in excess of $5,000,000;
(ix) make any tax election that, individually or in the aggregate, is reasonably likely to adversely affect in any material respect the tax liability or tax attributes of Target or settle or compromise any material federal, state, local or foreign income tax liability;; or
(Ai) pay, discharge, settle compromise or consent to any arrangements concerning or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), or litigation (whether or not commenced prior to the date of this Agreement) other than the payment, discharge, settlement compromise, settlement, arrangement or satisfaction, satisfaction in the ordinary course of business and consistent with past practice or in accordance with their terms, of liabilities recognized reflected or disclosed reserved against in the most recent financial statements (or the notes thereto) of Target included in the Target Filed SEC Documents or incurred since the date of such financial statements, or (B) waive the benefits of, agree to modify in any manner, terminate, release any person from or fail to enforce any confidentiality, standstill or similar agreement to which Target is a party or of which Target is a beneficiary;
(xi) except as required by law or contemplated hereby and except for labor agreements negotiated in the ordinary course, (x) establish, enter into, adopt or amend or terminate any Target Benefit Plan or Target Benefit Agreement, (y) change any actuarial or other assumption used to calculate funding obligations with respect to any Target Pension Plan, or change the manner in which contributions to any Target Pension Plan are made or the basis on which such contributions are determined or (z) take any action to accelerate any rights or benefits, or make any material determinations not in the ordinary course of business and consistent with past practice, under any collective bargaining agreement, Target Benefit Plan or Target Benefit Agreement; (xii) (w) increase the compensation, bonus or other benefits of any current or former director, consultant, officer or other employee, except for (A) salary increases for non-officer employees as part of an annual review process or part of a promotion in job title or responsibility in an amount not to exceed 15% of such employee's salary as of the date of this Agreement individually and 5% of the total salary base of all non-officer employees of Target in the aggregate for all such increases or (B) salary increases for officers consistent with the salary for the respective officer set forth in such officer's Employment Agreement with Parent, (x) grant any current or former director, consultant, officer or other employee any increase in severance or termination pay, (y) amend or modify any Target Stock Option or (z) pay any benefit or amount not required by a plan or arrangement as in effect on the date of this Agreement to any such person;.
Appears in 1 contract
Sources: Merger Agreement (Safedox, Inc.)