Conduct of Business Pending the Election of Directors Clause Samples

Conduct of Business Pending the Election of Directors 

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• CONDUCT OF BUSINESS PENDING THE MERGER SECTION 5.1 Conduct of Business by the Company Pending the Merger. ----------------------------------------------------- Prior to the Effective Time, except to the extent that Purchaser shall otherwise consent (including by virtue of action by the Board of Directors of the Company approved by all of Purchaser's or Merger Sub's designees, as applicable, at such time as they shall constitute a majority of such Board), the Company shall, and shall cause its Subsidiaries to, except as expressly permitted by this Agreement, conduct their respective businesses in, and shall not take any action except in, the ordinary course of business in a manner consistent with past practice; and the Company shall, and shall cause its Subsidiaries to, use their respective reasonable best efforts to preserve intact the business organization of the Company and its Subsidiaries, to keep available the services of the current officers, employees and consultants of the Company and its Subsidiaries and to preserve the current business relationships of the Company and its Subsidiaries, including, without limitation, with customers, licensors, suppliers, distributors and others with which the Company or any Subsidiary has business relations. Without limiting the generality of the foregoing, and except as expressly permitted or specifically contemplated by this Agreement, the Company shall not, and shall not permit any Subsidiary to, between the date of this Agreement and the Effective Time, directly or indirectly do, or propose to do, any of the following without the prior written consent of Purchaser (except as otherwise expressly permitted by this Agreement): (i) declare, set aside or pay any dividends on or other distributions in respect of any of its capital stock (other than dividends and distributions by any direct or indirect wholly owned subsidiary of the Company to its parent), (ii) split, combine or reclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock or (iii) repurchase, redeem or otherwise acquire, or permit any Subsidiary to repurchase, redeem or otherwise acquire, any shares of capital stock; (b) issue, deliver, sell, pledge, dispose or encumber, or authorize or propose the issuance, delivery, sale, pledge, disposal or encumbrance of, any shares of its capital stock of any class or any securities convertible into, or any rights, warrants, calls, subscriptions or options to acquire, any such shares or convertible securities, or any other ownership interest other than (i) the issuance of shares of Company Common Stock upon the exercise of stock options granted under the Company Stock Option Plans outstanding on the date of this Agreement and in accordance with the current terms of such options, (ii) issuances by a Subsidiary of its capital stock to the Company or a Subsidiary so long as the Company will, after such issuance, directly or indirectly own all the outstanding capital stock of the issuing Subsidiary and (iii) the grant of stock options to new hires in the ordinary course of business consistent with past practice and with the written consent of Purchaser; (c) amend or propose to amend its Certificate of Incorporation or By- Laws; (d) acquire or agree to acquire, including, without limitation, by merging or consolidating with, or by purchasing a substantial equity interest in or substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof; (e) sell, lease, license, grant a security interest in, encumber or otherwise dispose of, or agree to sell, lease, grant a security interest in, encumber or otherwise dispose of, any of its material assets other than (i) sales or licenses of its products in the ordinary course of business consistent with past practice, (ii) equipment and property no longer used in the operation of the Company and its Subsidiaries' respective businesses and (iii) assets related to any discontinued operations of the Company and its Subsidiaries which operations were discontinued prior to the date hereof; (f) incur (which shall not be deemed to include entering into credit agreements, lines of credit or similar arrangements until borrowings are made under such arrangements) any indebtedness for borrowed money or guarantee any such indebtedness or issue or sell any debt securities or warrants or rights to acquire any debt securities of the Company or any Subsidiary or guarantee any debt securities of others, except in the ordinary course of business consistent with past practice; (i) grant any increase in the compensation of any of its directors, officers or employees, except for increases for employees in the ordinary course of business consistent with past practices, (ii) grant, pay or agree to pay any pension, retirement allowance or other employee benefit not required or contemplated by any existing employee benefit plan, program, arrangement, agreement or contract (including, without limitation, any "employee benefit plan", as defined in Section 3(3) of ERISA), maintained or contributed to by the Company or any Subsidiary, or with respect to which the Company or any Subsidiary could incur liability under Sections 4069, 4212(c) or 4204 of ERISA (the "Company Benefit Plans") as in effect on the date hereof to any director, officer or employee, (iii) enter into any new employment, severance or termination plan, program, arrangement, agreement or contract with any such director, officer or employee or (iv) except as may be required to comply with applicable law, become obligated under any Company Benefit Plan that was not in existence on the date hereof or amend any such plan in existence on the date hereof to enhance the benefits thereunder; (h) make any capital expenditure or expenditures which exceed $250,000 in the aggregate; or (i) authorize any of, or commit or agree to take any of, the actions described in paragraphs (a) through (h) of this Section 5.1.

• Conduct of Business Pending the Closing 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 or the Closing, the Company shall, and shall cause each of its Subsidiaries to, carry on the Business in the ordinary course of business and, to the extent consistent therewith, use all commercially reasonable efforts to preserve the Business intact and preserve the goodwill of and relationships with Governmental Entities, customers, suppliers, partners, lessors, licensors, licensees, contractors, distributors, agents, officers and employees and others having business dealings with the Business, provided that the foregoing shall not prevent Sellers from rejecting Contracts that are not Assumed Contracts. During the period from the date of this Agreement through the Closing Date, the Company shall endeavor to maintain the Net Receivables Amount, the Inventory Value and each component of Inventory at or in excess of the amounts set forth on Schedule 7.1. Without limiting the generality of the first sentence of this Section 7.1, during the period from the date of this Agreement through the Closing Date, the Company shall not, and shall not permit any of its Subsidiaries to, without the prior written consent of Buyer: (a) abandon any rights under any of the Assumed Contracts; terminate, amend, modify or supplement the terms of any Assumed Contract; or fail to honor or perform, the Assumed Contracts; (b) other than sales of Inventory in the ordinary course of business or the disposition of obsolete equipment, lease, license, surrender, relinquish, sell, transfer, convey, assign or otherwise dispose of any Acquired Assets; (c) mortgage, pledge or subject to Liens (other than Permitted Liens), any property, business or any of the Acquired Assets, other than as would not result in any Liability that would be or would increase an Assumed Liability as of or subsequent to the Closing; (d) incur or permit to be incurred any Liability (other than Accounts Payable or in connection with the performance of Assumed Contracts) that would be or would increase an Assumed Liability as of or subsequent to the Closing; (e) fail to replenish the Inventory and Supplies of the Business in the ordinary course of business; (f) increase the salary of any Identified Employee at or after the time such person becomes an Identified Employee, other than in the ordinary course of business consistent with past practice; (g) make or rescind any material Tax election or take any material Tax position (unless required by law) or file any Tax Return or change its fiscal year or financial or Tax accounting methods, policies or practices, or settle any Tax Liability, except in each case as would not reasonably be expected to affect the Buyer; (h) institute, settle or agree to settle any litigation, action or Proceeding before any court or Governmental Entity relating to the Acquired Assets, or modify in any manner that is adverse to the Business or the Acquired Assets, rescind or terminate a material Permit, allowance, or credit (or application therefor) relating to the Business or the Acquired Assets; (i) transfer or grant any rights under, modify any existing rights under, or enter into any settlement regarding the breach or infringement of, any material Intellectual Property; or (j) enter into any Contract to do any of the foregoing.

• Conduct of Business Prior to the Effective Time Except as expressly permitted herein, set forth in Section 6.1 of the Company Schedule of Exceptions, or required by Law, from the Execution Date through the Effective Time or the termination of this Agreement pursuant to its terms, the Company shall, and cause its Subsidiaries to, conduct its business in all material respects in the ordinary course of its business consistent with past practice and, to the extent consistent therewith, use its reasonable best efforts to maintain and preserve substantially intact its business organization and the goodwill of those having business relationships with it. Without limiting the foregoing, and except as otherwise expressly contemplated by this Agreement or as set forth in Section 6.1 of the Company Schedule of Exceptions, or required by Law, from the Execution Date through the Effective Time or the termination of this Agreement pursuant to its terms, the Company shall not, nor shall it permit any of its Subsidiaries to, without the prior written consent of Parent: (a) Declare, set aside or pay any dividends on or make any other distributions (whether in cash, stock, equity securities or property) in respect of any capital stock or split, combine or reclassify any capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for any capital stock, other than any such transaction by a wholly-owned Subsidiary of it that remains a wholly-owned Subsidiary of it after consummation of such transaction in the ordinary course of business; provided, however, that nothing herein shall be construed as prohibiting the Company from granting Company Options that are Ordinary Course Grants (as defined below); (b) Purchase, redeem or otherwise acquire, directly or indirectly, any shares of its capital stock or the capital stock of its Subsidiaries, other than repurchases of unvested shares at cost or for de minimis consideration in connection with either the termination of the employment relationship with any employee or upon the resignation of any director or consultant, in each case, pursuant to stock option or purchase agreements in effect on the date hereof; (c) Issue, deliver, sell, authorize, pledge or otherwise encumber any shares of capital stock, or subscriptions, rights, warrants or options to acquire any shares of capital stock or any securities convertible into shares of capital stock, or enter into other agreements or commitments obligating it to issue any such securities or rights, other than: (A) issuances of Company Common Stock upon the exercise of Company Options, Company Warrants or other rights of the Company existing on the date hereof in accordance with their present terms or granted pursuant to clauses (B) or (C) hereof, (B) grants of stock options to purchase Company Common Stock granted in the ordinary course of business consistent with past practice and on Ordinary Course Terms (as defined below) to new Company employees under the Company Option Plans outstanding on the date hereof, (C) grants of stock options to purchase Company Common Stock granted to existing Company employees (other than to directors and officers), under the Company Option Plans outstanding on the date hereof in the ordinary course of business consistent with past practice in connection with annual compensation reviews or ordinary course promotions and in each case on Ordinary Terms, and (D) subject to Section 3.7(b), issuances of Company Common Stock pursuant to the Company ESPP; provided, however, that the stock option grants pursuant to clause (C) shall not exceed grants of options to acquire 25,000 shares of Company Common Stock to all such individuals in the aggregate (the grants described, and subject to the limitations, in clauses (B) and (C), the “Ordinary Course Grants”, and for purposes of this Section 6.1, “Ordinary Course Terms” shall mean options to purchase Company Common Stock with the following terms (i) a per share exercise price that is no less than the current market price at the time of grant of a share of Company Common Stock and (ii) a vesting schedule no more favorable than one-quarter (1/4) on the one-year anniversary of the date of grant, and one-forty-eighth (1/48) on each monthly anniversary of the date of grant thereafter;

• Conduct of Business by the Company Pending the Merger (a) The Company agrees that, between the date of this Agreement and the earlier of the Effective Time and the termination of this Agreement in accordance with its terms (the “Pre-Closing Period”), except (i) as required by applicable Law, (ii) with the prior written consent of Parent (such consent not to be unreasonably withheld, conditioned or delayed, and such consent shall be deemed given if Parent provides no written response within five (5) Business Days after a written request by the Company for such consent), (iii) as expressly contemplated by any other provision of this Agreement or (iv) as set forth in Section 5.01(a) of the Company Disclosure Schedule, the Company shall, and shall cause the Company Subsidiaries to, use reasonable best efforts (A) to conduct the businesses of the Company Group in the ordinary course of business consistent with past practice and (B) to: (1) preserve substantially intact the business organization, material assets and material properties of the Company Group, (2) keep available the services of its Key Employees on commercially reasonable terms, (3) maintain in effect all Company Permits and (4) maintain in full force and effect its insurance policies (including, for the avoidance of doubt, paying all premiums thereon and renewing or replacing such insurance policies on or prior to their expiration). (b) Without limiting Section 5.01(a), and as an extension thereof, except as expressly contemplated by any other provision of this Agreement, as set forth in Section 5.01(b) of the Company Disclosure Schedule or as required by applicable Law, neither the Company nor any Company Subsidiary shall, during the Pre-Closing Period, do any of the following without the prior written consent of Parent (such consent not to be unreasonably withheld, conditioned or delayed, and such consent shall be deemed given if Parent provides no written response within five (5) Business Days after a written request by the Company for such consent): (i) amend or otherwise change its certificate of incorporation, bylaws or other similar organizational documents (including the Company Charter and the Company Bylaws), whether by merger, consolidation or otherwise; (ii) issue, grant, sell, dispose of, encumber or authorize such issuance, sale, disposition or encumbrance of, any Equity Interests of the Company or any Company Subsidiary (except for the issuance or withholding of Shares issuable pursuant to Company RSUs that are outstanding on the date of this Agreement (in accordance with their existing terms)); (iii) declare, set aside, make or pay any dividend or other distribution, payable in cash, shares, property or otherwise, with respect to any of Equity Interests of the Company or any Company Subsidiary, except for dividends or other distributions by any direct or indirect wholly owned Company Subsidiary to the Company or any other direct or indirect wholly owned Company Subsidiary; (iv) adjust, reclassify, combine, split (including any reverse stock split), recapitalize, exchange, subdivide or redeem, repurchase, or purchase or otherwise acquire, directly or indirectly, any Equity Interests of the Company or any Company Subsidiary; (v) sell, transfer, lease, sublease, license, mortgage, pledge, encumber, allow to lapse, assign, abandon, disclaim, dedicate to the public, incur any Lien on (other than a Permitted Lien) or otherwise dispose of, or authorize any of the foregoing with respect to, any of its properties, assets, licenses, operations, rights, businesses or interests therein (but not including Intellectual Property, which is the subject of Section 5.01(b)(xv)) except (A) pursuant to Contracts in force on the date of this Agreement and made available to Parent, (B) such dispositions of assets no longer used in the ordinary course of business of the Company’s or the applicable Company Subsidiary’s business as conducted as of the date of this Agreement, (C) such dispositions among the Company and the wholly-owned Company Subsidiaries, or (D) Company Products to customers in the ordinary course of business consistent with past practice; (vi) acquire (including by amalgamation, merger, consolidation or acquisition of Equity Interests or assets or any other business combination), directly or indirectly, (A) any assets, securities, or interests, other than in the ordinary course of business consistent with past practice or pursuant to Contracts in effect on the date hereof and made available to Parent, (B) any company, corporation, partnership or other business organization (or any division thereof or any Equity Interest thereof), or (C) any real property; (vii) (A) repurchase, prepay or incur any indebtedness for borrowed money or issue any debt securities, or issue or sell options, warrants, calls or other rights to acquire any of its debt securities, (B) make any loans, advances or capital contributions to, or investments in, any other person (other than a Company Subsidiary) or (C) assume, guarantee, endorse or otherwise become liable or responsible for the indebtedness or other obligations of another person (other than a guaranty by the Company on behalf of any Company Subsidiary), in each case, except pursuant to borrowings under existing lines of credit, letters of credit or similar arrangements as of the date hereof and Contracts for which are made available to Parent; (viii) enter into, materially amend, waive any rights under, or voluntarily terminate any Material Contract (or any other Contract that would be deemed a Material Contract if it had been entered into prior to the date of this Agreement), other than (A) with respect to Contracts that are Material Contracts solely as a result of clauses (i), (ii) and (iii) of Section 3.16(a), in the ordinary course of business consistent with past practice or (B) terminations as a result of a material breach or default of the counterparty, or the expiration of such Contract in accordance with its terms as in effect on the date of this Agreement; (ix) authorize, or make any commitment with respect to, capital expenditures that exceed $500,000 individually or $1,500,000 in the aggregate; (x) except to the extent required by applicable Law, or as otherwise required pursuant to the terms of any Plan in effect as of the date hereof or entered into, amended or modified after the date of this Agreement in a manner not in contravention with this Section 5.01(b)(x), (A) increase the compensation payable or to become payable or the benefits provided to any Employee or Non-Employee Service Provider (except for increases in the ordinary course of business consistent with past practice to Employees who are not Key Employees of not more than ten percent (10%) on an individual basis, and not more than ten percent (10%) in the aggregate, in annual base salary or wages in connection with promotions), (B) establish, adopt, enter into, terminate or amend any Plan, or establish, adopt or enter into any plan, agreement, program, policy, trust, fund or other arrangement that would be a Plan if it were in existence as of the date of this Agreement, (C) grant any retention, severance, termination pay, deferred compensation, change in control, transaction bonus or other incentive compensation (or enter into or amend any plan, agreement, program, policy or other arrangement providing for the foregoing), (D) grant any equity or equity-based awards to, or discretionarily accelerate the vesting or payment of any equity or equity-based awards held by, any Employee or Non-Employee Service Provider, (E) establish, adopt, enter into or amend any collective bargaining agreement or similar labor agreement, (F) hire any employees who, upon hire, would be a Key Employee, (G) terminate the employment of any Key Employee other than for cause; or (H) take any action that is reasonably likely to result in a reduction in force or terminations employment that would give rise to notice or payment in lieu of notice obligations under the WARN Act; (xi) (A) settle (or propose to settle) any Action, other than (1) settlements for monetary damages (net of insurance proceeds) involving not more than $250,000 in the aggregate and that do not (x) require any material actions or impose any restrictions or future payment obligations on the business or operations of the Company Group, or after the Effective Time, Parent or its Subsidiaries or (y) include the admission of wrongdoing by any member of the Company Group and (2) stockholder litigation, which is the subject of, and settled in accordance with, Section 6.10 or (B) settle or propose to settle any investigation or inquiry by any Governmental Authority, including by entering into any consent decree or other similar agreement; (xii) (A) change the Company’s financial accounting policies or procedures in effect as of December 31, 2023, other than as required by applicable Law or GAAP or (B) write up, write down or write off the book value of any of the Company’s assets, other than (1) in the ordinary course of business consistent with past practice or (2) as may be required by applicable Law or GAAP, as approved by the Company’s independent public accountants; (xiii) adopt a plan of complete or partial liquidation or resolutions providing for a complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the Company or any of the Company Subsidiaries; (xiv) (A) materially change or adopt (or file a request to change or adopt) any method of Tax accounting or any annual Tax accounting period, (B) make, change or rescind any material Tax election, (C) file any material Tax Return relating to the Company or any of the Company Subsidiaries that has been prepared in a manner that is inconsistent with past practice, as applicable, (D) settle or compromise any material claim, investigation, audit or controversy relating to Taxes, (E) surrender any right to claim a material Tax refund, (F) file any material amended Tax Return, (G) enter into any closing agreement with respect to any material amount of Tax or (H) waive or extend the statute of limitations with respect to any Tax Return other than pursuant to extensions of time to file Tax Returns obtained in the ordinary course of business consistent with past practice; (xv) abandon, disclaim, dedicate to the public, allow to lapse, sell, assign, transfer, license, sublicense, dispose of, or incur any Lien (other than Permitted Liens) on, or otherwise fail to take any action necessary to maintain, enforce, or protect, any material Owned Intellectual Property, other than non-exclusive licenses granted in the ordinary course of business consistent with past practice; (xvi) enter into, amend, waive or terminate (other than expirations or terminations in accordance with their terms) any Affiliate Transaction; (xvii) enter into any new line of business outside the existing businesses of the Company and its Subsidiaries as of the date of this Agreement; or (xviii) agree, resolve, announce an intention, enter into any formal or informal Contract or otherwise make a commitment, to do any of the foregoing.

• Conduct of Business Pending Closing Between the date of this Agreement and the Funding and Consummation Date, the Company will, except as set forth on Schedule 7.2: (i) carry on its business in substantially the same manner as it has heretofore and not introduce any material new method of management, operation or accounting; (ii) use its reasonable efforts to maintain its properties and facilities, including those held under leases, in as good working order and condition as at present, ordinary wear and tear excepted; (iii) perform in all material respects all of its obligations under agreements relating to or affecting its respective assets, properties or rights; (iv) use its reasonable efforts to keep in full force and effect present insurance policies or other comparable insurance coverage; (v) use its reasonable efforts to maintain and preserve its business organization intact, retain its respective present key employees and maintain its relationships with suppliers, customers and others having business relations with the Company; (vi) use its reasonable efforts to maintain compliance with all Licenses, laws, rules and regulations, consent orders, and all other orders of applicable courts, regulatory agencies and similar governmental authorities applicable to it; (vii) maintain present debt and lease instruments and not enter into new or amended debt or lease instruments without the knowledge and consent of TCI (which consent shall not be unreasonably withheld), provided that debt and/or lease instruments may be replaced without the consent of TCI if such replacement instruments are on terms at least as favorable to the Company as the instruments being replaced; and (viii) maintain or reduce present salaries and commission levels for all officers, directors, employees and agents except for ordinary and customary bonus and salary increases for employees in accordance with past practices.